THE YEAR AHEAD - 2014 BUDAPEST
VOL. 22. NUMBER 01
PAGES 08-12 JAN 17, 2014 – JAN 30, 2014
BUSINESS JOURNAL HUNGARY’S PRACTICAL BUSINESS BI-WEEKLY SINCE 1992 | WWW.BBJ.HU
HUF 1,250 | €5 | $6 | £3.5
NEWS
POCKET− SIZED BANKS
On the fence about bond issuance Hungary’s neighbors have decided to take advantage of the last days of pre−taper jubilation and go to the markets with foreign currency bond issues. Hungary hasn’t chosen a clear direction yet – it has several aspects to consider – although time is of the essence. 03 NEWS
Edging closer to a banking union
You may not be aware of it, but if you ever bank online, there is a good chance you’re using a software solution provided by IND Group, a leading Hungarian firm that is quickly expanding throughout the world. The company’s founder Balázs Vinnai spoke to the Budapest Business Journal about the future of the industry and how technology will better cater to customers’ needs. 14-15
NEWS
SOCIALITE
Left−wing marriage
Austria calling
The political left has begrudgingly reached a deal on a comprehensive multi−party cooperation, despite an abundance of foreboding, from polling numbers to concerns about whether they’ll be able to overlook old grievances. 07
Skiing has become something of a religion for enthusiasts of the sport. For Hungarian worshippers, Austria is the nearest and most easily accesible sacred ground, and perceived as such with very good reason. 18-19
The government still hasn’t a firm stance about the long−anticipated banking union in Europe, pointing out it has yet to join the eurozone and has no immediate plans to do so. In the meantime, European Union finance ministers have decided on the basis of the eventual union, the EU’s most ambitious project since the launch of the euro. 06 NEWS
Budapest bourse aims for lively 2014 The Budapest Stock Excahnge continued to see muted turnover during 2013, something it aims to change this year. A revised issuer categorization and the launch of the Xetra trading platform will, it is hoped, bring the much needed boost. 07 Q&A
TRANSLOG Connect Congress managing director Dennis Lantos. 13
WWW.BBJ.HU
Budapest Business Journal | Jan 17 – Jan 30
SUBSCRIPTIONS Call +36 1 398-0344, or email circulation@bbj.hu BUDAPEST BUSINESS JOURNAL 1 year HUF 27,500+VAT 6 months HUF 13,750+VAT 3 months HUF 6,875+VAT Newsletters HUNGARY A.M., ENERGY TODAY, REGIONAL TODAY 1 year HUF 179,000+VAT 6 months HUF 104,900+VAT 3 months HUF 58,900+VAT BOOK OF LISTS 2012-2013
HUF 19,120+VAT
DIGIBOL Subscription fee: HUF 49,900 + VAT
MANAGING EDITOR:
Patricia Fischer COPYEDITOR/PROOFREADER:
Robin Marshall EDITORIAL STAFF:
Levente Hörömpöli-Tóth, Gabriella Lovas Gergő Rácz, Robert Smyth, Zsófia Végh LISTS: BBJ Research (research@bbj.hu) NEWS AND PRESS RELEASES: news@bbj.hu DESIGN:
Absolut Design Stúdió (production@bbj.hu) LAYOUT:
Norbert Balázs
THE EDITOR SAYS
PAINFULLY PREDICTABLE New years are supposed to be about turning over new leaves, making resolutions to change life for the better amid optimism that things can only get better, and, as a logical consequence, will get better. This couldn’t be more true for Hungarians, who have every reason to surrender to some wishful thinking in light of the past difficult years. An Ipsos survey found that 83% of us believe 2014 will be better, and 92% of the younger gen− eration believes there will be changes this year to make the country a better place to live in. Yet all we’re seeing so far are things that we first saw approaching from many miles away, and not one of them seem to be the herald of a new golden age anxiously await− ing admittance at the country’s gates. As was the case with the bedrock−solid constitution, not to mention a myriad of other laws Fidesz has enacted, the government is now planning to revise its own regulations on tobacco shops. The eyesore non−transparent storefronts will be a thing of the past for the simple reason that they’re just too easy to rob. Since their introduction in July, 54 stores have been attacked, making them one of the most common and easiest targets. One might rejoice over com− mon sense prevailing if it wasn’t for the fact that this was among the very first concerns raised by retailers last year. True enough, the opaque windows make it easy to rob a store, with the potential that a clerk could be lying on the
floor wounded with nobody the wiser about what had hap− pened inside until it was too late. Thankfully, nobody has been killed thus far. Hopefully, Hungary’s gullible minors, who were sup− posed to be protected by the tinted windows, will overcome the obvious temptation of the sight of a distant stack of cigarette boxes on the shelves of a store they can’t legally enter anyway. On a grander, political scale, the government’s oppo− nents also did exactly what was expected of them in reas− sembling its 2010 ‘dream team’. Those who were hoping for a surprise, a new face, a new voice, a new direction, clearly haven’t been paying attention. Every statistic, every move pointed in one direction and one direction only, and that is for Attila Mesterházy to face off with Viktor Orbán for the premiership for a second time, once more in the light of sta− tistically insurmountable odds. It seems that despite the fact that the obvious outcome is usually right there in front of our faces, we are still sur− prised that our expectations are coming true, and that we can’t come to terms with the fact that we are mostly stuck with the same old same old, regardless of whether it’s a dif− ferent day, or a different year. Then of course, someone went and blew up a bank, which is new. But that’s the kind of change we could do without, thank you.
ADVERTISING:
Absolut Media Zrt (hirdetes@amedia.hu) SALES: sales@bbj.hu CEO:
Balázs Román
A RADIANT MOSCOW WELCOME
PUBLISHER:
Tamás Botka CIRCULATION AND SUBSCRIPTIONS: circulation@bbj.hu PRINTING:
Absolut Print Kft
MEDIA REPRESENTATION: Absolut Media Zrt Address: Madách Trade Center 1075 Budapest, Madách Imre út 13-14., Building A, 8th floor Telephone +36 (1) 398-0344, Fax +36 (1) 398-0345, www.bbj.hu BBJ-PARTNERS
What We Stand For: The Budapest Business Journal aspires to be the most trusted newspaper in Hungary. We believe that managers should work on behalf of their shareholders. We believe that among the most important contributions a government can make to society is improving the business and investment climate so that its citizens may realize their full potential. The Budapest Business Journal, HU ISSN 1216-7304, is published bi-weekly on Friday, registration No. 0109069462. It is distributed by HungaroPress. Reproduction or use without permission of editorial or graphic content in any manner is prohibited. ©2011 BUSINESS MEDIA SERVICES LLC with all rights reserved. The Budapest Business Journal’s print run is audited by MATESZ, 1034 Budapest, Bécsi út 122-124, a member of IFABC.
BBJ.HU YOUR DAILY DOSE OF INFORMATION IN BBJ QUALITY
Prime Minister Viktor Orbán and a prominent entou− rage made a surprise trip to Russia that ended with a deal that commits Hungary to the country’s biggest investment in democratic times. State−owned Rosatom will oversee the construction of new blocks at the Paks nuclear power plant, with the additions starting to go online a little less than a decade from now. Unsurprisingly, the political opposition, as well as energy insiders, were caught off guard by a reticent communi− qué that the prime minis− ter would be meeting Rus− sian President Vladimir Putin, only to find that the two had reached an agreement that Rosatom will construct the second phase of the Paks facility. Moreover, Russia will also finance some 80% of the overall expenses with €10 billion, a sum almost too large to even comprehend. It seems Budapest is now destined to be the best of friends with Moscow, even though that was not always the case. Apart from the obvious thorn that is the two countries’ historic heri− tage, there have been times in opposition when Orbán has urged taking any option other than siding with the Russians, which led to diplomatic strains; he even accused the political left, when it was in government, of working against the best interests of the home country in negotiations with Russia. Lately, Orbán’s government has gone out of its way to tighten the relationship, something the Russians are
all the happier to accept. It is no secret that Putin has used his country’s abundant energy reserves not only as a key source of revenue from exports, but also as a very viable geopolitical tool. It is no wonder that the European Union is striving to make efforts to distance itself from the sphere of Rus− sian interests. Just lately, the European Commission has intensified opposition to the South Stream natu− ral gas pipeline that would supply Eastern Europe, cit− ing legal grounds. There are now also reports that the Commission will investigate the Paks deal, since there was no open tender called. However, Orbán seems determined to go against Brussels on the Russia issue. He has adamantly advocated the construction of South Stream, and now opted for a Russian con− tractor in tandem with Rus− sian financing to carry out a major project that amounts to an astronomical sum equal to around 12% of Hun− gary’s GDP. Russia has fully realized that energy exports alone won’t sustain its revenues, not to mention its ambi− tion to maintain a politi− cal sphere of influence. As such, it is now also ready to put up the money to go with a project, like that in Paks, in order to maintain its hold over Europe, even if it is only the edge. Con− sidering the value and duration and of the loan for the project, our friends from Moscow are here, and they’re here to stay.
THERE HAVE BEEN TIMES IN OPPOSITION WHEN ORBÁN HAS URGED TAKING ANY OPTION OTHER THAN SIDING WITH THE RUSSIANS
BBJ
1 News
NEWS
Next EU budget 04 NEWS
Banking union
06
macroscope
HUNGARY ON THE FENCE ABOUT BOND ISSUANCE The state is planning a relatively quiet year in terms of its financing outlook. That is, of course, unless the state debt manager follows the example of its regional peers and hops on one of the final waves of favorable sentiment before the United States scales back its much−loved stimulus campaign. GERGŐ RÁCZ
Market participants know that all good things must come to an end, which is why the start of the year brings a sequence of foreign currency bond issuances across Central Europe in order to capitalize on the upbeat mood buoyed by the United States’ stimulus effort and the resulting abundance of dollar liquidity. In the first few weeks of 2014, Poland has sold €2 billion in paper and Slovakia €1.5 bln. Slovenia is set to make a €3.5 bln issue that it needs to support its troubled banking system. Romania and Latvia are planning to follow suit. The question is whether Hungary will also. The answer remains open, since the deputy chief executive of the stated debt management agency ÁKK would neither confirm nor deny any speculation about Hungary’s plans. László András Borbély told reporters that although the 2014 financing plan is largely similar to 2013 in terms of volumes, ÁKK will respond flexibly to any new developments on the market, hinting that an issuance may come if conditions are highly tempting, or if there are additional unforeseen state expenditures. Similar conditions led to a second dollar−bond issuance in 2013, when Hungary issued $2 bln in November, an amount that was five−times oversubscribed. PLENTY TO CONSIDER Based on the ÁKK’s plans for the year, it has several aspects to consider. Borbély stressed that not only will Hungary stick to its established practice of repaying maturing foreign currency debt in the same currency as the original issuance, but also the government has formed expectations to increase the role of forint−based debt while reducing forex obligations. As such, the main focus group for ÁKK this year will be households that are already increasing their share in overall financing. The debt manager is planning
STORY HIGHLIGHTS ■
Hungary undecided on taking advantage of pre-taper sentiment ■ Debt manager wants to reduce exposure by pushing forintbased debt
to launch new types of government bonds targeted specifically at private individuals, especially papers that have longer maturities, Borbély said. Demand remains high for government bonds, not least because the National Bank of Hungary’s extended rate cutting cycle has lowered interest rates to such an extent that compels clients to seek out alternative forms of savings, typically investments funds and government bonds. ÁKK’s projection for 2014 is that it will raise the share of domestic buyers to 46% (from 44% in 2013 and 31% in 2012), while increasing the share of forint−based debt to 62% from 59% in 2013. Furthermore, worse−than expected labor figures in the United Sates have stoked hopes that the Federal Reserve won’t begin the taper at its month− end meeting as previously expected, Raiffeisen analysts have said. This would give ÁKK more time to evaluat
Breakdown of 2014 issuance by maturity (%)
Source: ÁKK
THE HUNGARIAN BANKING STORY FOR US IS THE PERFECT MIX OF BIG MACRO IMPACT ON THE ECONOMY TOGETHER WITH UNDER-APPRECIATION BY THE MARKET the situation. According to earlier comments made by Borbély, a foreign currency bond issue can be conducted around three weeks after the decision to go to the market is reached. RISK SCENARIOS Economy Minister Mihály Varga said that last November’s issuance means the country’s finances are solved until the spring, meaning all is in order for the run−up to the general election that will likely bring yet another chapter of utility price cuts for the public. Any potential risks that may offset macroeconomic
expectations are more likely to emerge in the second half of the year. Nomura’s latest regional risk projection mentions government plans for additional foreign currency debt relief measures and the resulting losses for the banks sector as an underappreciated factor, just as the possibility that major banks will begin exiting Hungary later this year. “The Hungarian banking story for us is the perfect mix of big macro impact on the economy together with under−appreciation by the market,” Nomura regional analyst Peter Attard Montalto said.
Besides potentially over−ambitious growth expectations, there are also vulnerabilities to consider. It is no surprise that ÁKK is trying to reduce exposure to international developments by pushing forint bonds, but even so, the majority of financing will still come from foreign sources, keeping alive risks stemming from exchange rate fluctuations. Although there are no major shocks that are clearly visible in the pipeline, a turn for the negative on the international stage could have significant negative implications for Hungary, as has been the case several times in the recent past.
04 News
WWW.BBJ.HU
NEWS FOR THESE PAGES IS TAKEN FROM THE BUDAPEST BUSINESS JOURNAL’S DAILY BRIEFING, HUNGARY A.M.
NEWS
IN BRIEF
Budapest Business Journal | Jan 17 – Jan 30
The Hungarian government is committing a coup against its own people Viktor Orbán in 2008, criticizing the then−reigning MSzP government for signing a long−term energy agreement with Russia encrypted for ten years
EXPLOSION ROCKS BANK BRANCH IN BUDAPEST
ECONOMY BOND ISSUE IN YEN, YUAN, OTHER CURRENCIES Hungary’s state debt manager ÁKK is looking at the possibility of issuing bonds not only in forints, dollars or euros, ÁKK CEO István Töröcskei said at a Euromoney conference in Vienna on January 14. The government debt manager is reviewing the Japanese, Chinese and other Far Eastern markets and is also investigating the possibility of tapping the Russian and Turkish markets, Töröcskei said. Hungary is to issue bonds of up to €3.5 bln on international markets this year, down from €4 bln last year, he said, reiterating the goals set out in the annual issue plan announced last week. Investors mainly look at a country’s economic fundamentals when making decisions to invest, therefore Hungary is not adversely affected by the Fed−tapering. LENDING IN PHASE II OF MNB’S FUNDING SCHEME REMAINS LIMITED National Bank of Hungary (MNB) figures show only HUF 14.8 bln of fresh central bank refinancing to banks in December, suggesting that lending in the second phase of the MNB ‘Funding for Growth’ scheme, launched in October, has remained limited. The stock of central bank refinancing to banks – the line on the MNB’s balance sheet that includes the refinancing the central bank provided to banks related to its SME lending scheme – rose by a mere HUF 7 bln in October and HUF 7.5 bln in November, end−of−month figures show. The MNB launched the second phase of the scheme, in which it opened an initial HUF 500 bln, on October 1. The MNB plans to grant
at most HUF 2,000 bln zero−interest refinancing in the second phase until the end of 2014. TENDERS FOR 2014-2020 EU FUNDING COULD BE CALLED BY MID-YEAR The first tenders for European Union funding available for the 2014−2020 budget period are expected to be called by the middle of this year, deputy state secretary for development programs Nándor Csepreghy said. Smaller tenders, with less risk attached, could be called in the spring, he added. State secretary for economic strategy Zoltán Cséfalvay said Hungary’s development strategy for 2014−2020, as outlined in a ‘partnership contract’, is expected to be submitted to the European Commission at the end of January, after its approval by the government. Operative program plans could be submitted by the end of February, he added. Member states have until April 22 to formally submit partnership contracts to Brussels and another three months after that to turn in operative programs. GOV’T DEFICIT HUF 929.2 BLN, 82.6% OF TARGET Hungary’s cashflow−based general government deficit was HUF 929.2 bln in 2013, the National Economy Ministry reported via preliminary statistics. The figure is in line with last week’s forecast on the matter by National Economy Minister Mihály Varga and represents approximately 82.6% of the HUF 1.1252 tln deficit target. The ministry further reported that revenue from VAT, personal income tax, car registration tax, the new bank levy and the selling of radio−frequency rights exceeded 2012 levels and contributed significantly to cashflow. The ministry reported,
Photo: Zoltán Mihádák / MTI
An explosion took place at a bank branch in Budapest’s District XIII on the early morning of January 13, the National Police Headquarters (ORFK) said on its website. “According to data available at present, the explosion was caused by an explosive material of unknown type and composition,” the police said. “The criminal act was not intended to kill or maim, and nobody was injured.” The blast occurred at 4:18 am. The police are looking for the driver of a motorcycle without number plates who left the scene of the crime. MTI’s correspondent at the site said the blast damaged the entrances to CIB Bank and Budapest Bank. Branches of Erste Bank, FHB, UniCredit and OTP Bank are in the immediate vicinity.
Numbers in the news
51st Hungary’s rank among world economies in terms of freedom, a fresh review by the Heritage Foundation shows. Hungary falls into the ‘moderately free’ category.
$2.4 bln sent back to the country from Hungarian citizens living abroad in 2013, the equivalent of 1.8% of GDP or about $5,200 per émigré, World Bank figures show.
without giving specifics, that central government spending on healthcare, social welfare, education, rail and road infrastructure and home construction support was up for 2013.
DOMESTIC SOME 90% OF SUGAR BURDENED WITH TAX FRAUD Around 80% to 90% of the sugar sold in Hungary is distributed while avoiding the payment of value added taxes, deputy CEO of Magyar Cukor Zrt told political daily Magyar Nemzet. Hajós noted that although there were some HUF 5 bln worth of exposed tax fraud cases connected to sugar distribution in the past two years, the actual extent of the phenomenon is far broader. Hajós’s claims support the scandal recently exposed by a former employee of the tax and customs authority, who made similar assertions about sugar distribution, adding that the authorities are aware of the process and are ignoring it. NON-PROFIT UTILITIES: NOT JUST YET Parliament may wait until after the general election to approve legislation on transforming public utilities providers into non−profit companies, Fidesz parliamentary group leader Antal Rogán said on commercial television, noting the bill on the transformation had still not been submitted to Parliament. “Perhaps debate of the bill will start [before the general election], but it’s not sure at all that it will be approved,” he said. He confi rmed that the current government still aims to turn the household utilities sector into a non−profit one.
POLITICS FIDESZ ELECTION VICTORY TO BRING CABINET RESHUFFLE If Fidesz wins the upcoming general elections, the members of the cabinet will largely consist of familiar faces but in revised positions, political daily Népszabadaság reported. The paper’s sources said current Justice Minister Tibor Navracsics would replace János Martonyi as foreign minister, but there is also a chance he would be Hungary’s next member of the European Commission. The relatively unknown Roland Mengyi would lead the Defense Ministry, and current caucus leader Antal Rogán would serve as development minister. Mihály Varga, Sándor Pintér and Zoltán Balog are expected to continue in their current positions. HUNGARIAN, SLOVENIAN PREMIERS SIGN DECLARATION OF INTENT ON OPENING BORDER LINKS Prime Minister Viktor Orbán and his Slovenian counterpart Alenka Bratusek have signed a declaration of intent on developing road infrastructure and creating six border crossing points between the two countries. At their meeting in Apátistvánfalva, one of Hungary’s westernmost villages bordering Slovenia, Hungary’s trade chief Péter Szijjártó, acting as the event’s moderator, said that in order to boost central European competitiveness it is indispensable that borders should link people together rather than separate them. The crossings will be built using funds available in the EU’s 2014− 2020 development program.
WWW.BBJ.HU
News 05
Budapest Business Journal | Jan 17 – Jan 30
COMPANY NEWS
Croatian oil company INA, a unit of Hungarian oil and gas company MOL, has signed contracts worth a combined HRK 240 mln (€31.5 mln) with four consortia of Croatian companies related to the Medimurje county gas extraction project.
Photo: Zoltán Máthé / MTI
COMPUTACENTER INAUGURATES SERVICE CENTER IN BUDAPEST
HITA PRESIDENT JÁNOS BERÉNYI AND COMPUTACENTER CEO MIKE NORRIS
TRIGRANIT FOUNDS COMPANY IN UNITED ARAB EMIRATES Hungary-based TriGranit Management has established the new company, TGM Consultants (Dubai) FZ LLC, in the United Arab Emirates, with the move explained in an official statement from the company as “part of its endeavor to actively pursue new property/facility management and leasing mandates”. The creation of TGM Consultants represents entry into a sixth new market for TriGranit in the past 12 months, and the company now has a presence in 14 countries. TriGranit also announced plans to open a second facility in Armenia by April after beginning business there in 2013.
Hungarian oil and gas company MOL has sold its stake in gas storage operator MMBF to the Hungarian Development Bank (MFB) and the Hungarian Hydrocarbon Stockpiling Association (MSzKSz). MMBF is the operator of the 1.9 bln cubic meter capacity gas storage facility built at Algyő in 2009, which stores commercial reserves in addition to the strategic reserves of Hungary. Listed pharmaceutical company Richter has rejected market rumors that it would be bought by its U.S. partner company Forest. The rumor took off after Forest announced another takeover and said that it is looking into further options for expanding. Australia’s Wildhorse Energy has welcomed Hungarian lawmakers’ recent approval of amendments that establish a legal framework for the development of underground coal gasification (UCG) projects. The company said it was “delighted” that Hungary has taken a “progressive stance” on UCG technology. Hungarian vintner Danubiana’s net revenue rose by a little more than €3 mln to €11.5 mln last year as the German−owned company sold more wine on export markets, managing director Győző Schmidt told MTI. Danubiana sold 120,000 hectoliters of wine last year. About 90% were sold on markets in Germany, the UK and overseas. German−owned steering system maker ZF Lenksysteme Hungária has inaugurated a vehicle technology laboratory at the University of Debrecen. ZF Lenksystem Hungárian spent HUF 2 mln to set up the lab and another HUF 1 mln to outfit it. Vodafone Magyarország has won a HUF 4.5 bln tender to provide telecommunications services to government offices and organizations. The arrangement will provide some “tens of thousands” of government employees in more than 100 institutions, with the contract running into 2015. After two years of incurring losses and nearly three of seriously declining activity, international global management consultancy Gallup has officially closed its Budapest office, according to a report from Portfolio.hu. All 20 members of staff have been laid off and Hungary−based customers are to be served through Gallup’s London office in the future. Road freight companies in eastern Hungary have expressed worries about the scheduled arrival of Russia’s Magnit retail giant, which has announced plans to set up a massive logistics base in that region of the country. MKFE, an umbrella organization representing road haulers’ interests, believes that although Magnit is set to create 1,500 new jobs, the sudden, drastic change in the operation of the market will actually cause thousands of Hungarian jobs to be lost.
UK−based IT infrastructure service provider Computacenter has inaugurated a €1.2 mln service center in Budapest, opened by Computacenter CEO Mike Norris and Hungarian Investment and Trade Agency (HITA) chairman János Berényi. It will employ 50 multi−lingual Hungarians initially, but numbers are expected to rise to 250 by the end of 2015, and eventually to 500. The increase in headcount would be accompanied by another €1.2 mln investment. Norris said Computacenter picked Budapest because of the well−educated local labor force.
German automotive industry supplier Continental will move production lines worth tens of millions of euros into its plant in Budapest in the second half of this year, business daily Világgazdaság said. The new production lines follow a generation change in the product palette and will not raise headcount, the paper said. Hungarian student−loan provider Diákhitel Központ has invited a public procurement tender for stand−by loans totaling HUF 12.5 bln. The state− guaranteed revolving credit facility would consist of a HUF 6 bln, a HUF 4 bln and a HUF 2.5 bln credit line. Regional electricity distributor ELMŰ has inaugurated a HUF 3 bln transformer station on the outskirts of Budapest. The station will ensure a secure energy supply for Liszt Ferenc International Airport Budapest. A consortium of OVIT and CG Ganz built the station. Gotthard−Therm spa company and WEST UNION INVEST were named companies of elevated strategic importance by a government decree published in the official gazette Magyar Közlöny. The decision was made according to the bankruptcy procedures act. A hotel attached to the thermal spa of Sikonda is undergoing a HUF 658 million renovation and expansion, the hotel said. The developments, financed mainly from European Union funding, are scheduled to be completed by the end of February when the hotel will reopen under the name Ambient Hotel and AromaSpa. The National Competition Office has fined the Hungarian unit of fast food chain McDonald’s HUF 15 million for misleading consumers. GVH said McDonald’s had fried chicken products it had advertised were “grilled”. It also failed to inform consumers that products advertised as “chicken breast strips” also contained ground chicken skin. Representatives of Hungary−based television station TV2 confirmed at the end of last year that CEO Zsolt Simon and CFO Yvonne Dederick have bought out Germany− based media company ProSiebenSat1 for ownership of the company for an undisclosed amount.
ADVERTISEMENT
Luxury flat for rent in the City Center. Fully furnished, 2 bedrooms, 90 sqm, €1,200/month Contact: annah@freemail.hu
WWW.BBJ.HU
06 News
Budapest Business Journal | Jan 17 – Jan 30
EDGING CLOSER TO BANKING UNION Photo: The Council of the European Union
The European Union made significant progress last December towards a banking union, its most ambitious project since the launch of the euro. Hungary is taking a wait−and−see approach. GABRIELLA LOVAS
The ECOFIN Council reached agreement on the single resolution mechanism, the second leg of a banking union, at a meeting on December 18. This provides a base to start negotiations on the SRM with the European Parliament. The council expects the proposal to be adopted before the European elections in May 2014. The SRM will form one of the key elements of Europe’s projected banking union, along with the single supervisory mechanism that should become operational by fall 2014. The SRM would enter into force on January 1, 2015. Bailout and resolution functions would apply from 2016. The SRM will cover all countries participating in the single supervisory mechanism, namely the euro area member states and those non− eurozone countries that decide to join the SSM. The banking union will not be a closed club. It will be mandatory for euro area countries with their approximately 6,000 banks, but it is also open to all non− euro EU member states that want to join, although none have thus far expressed an interest to do so. Denmark and Romania seem to be willing, while the UK and Sweden do not want to be part of it. The
ECOFIN MEETING, DECEMBER, 2013
other Central and Eastern European countries, Bulgaria, Czech Republic, Hungary and Poland, are also reluctant (Slovakia and Slovenia are within the euro area and thus have no choice). European Commission officials hope that once a decision is made on the SRM and the SSM has been up and running for a period, some of these countries will decide to join. The single rulebook, the foundation of the banking union, is applicable in all 28 member states, therefore the standards applied in terms of supervision and resolution should be the same. The difference is that within the euro area, there are more integrated institutions and mechanisms within a generally more integrated framework. WAIT AND SEE Hungary’s approach is to wait until the whole picture is available. Commenting on banking union after the EU summit in December, PM Viktor Orbán said that
REGIONAL NEWS FOR THIS SECTION IS TAKEN FROM THE BUDAPEST BUSINESS JOURNAL’S DAILY BRIEFING, REGIONAL TODAY NEWSLETTER AT WWW.BBJ.HU/STORE/NEWSLETTER-PACKAGE
POLAND FACING DEMOGRAPHIC CATASTROPHE In 2060, over a third (34.5%) of Poles will be aged 65 or more, the Warsaw Business Journal reported, citing a forecast from Eurostat. No other EU country, bar Lat− via, will have as many senior citizens. In the past 25 years, the number of children under the age of 15 has dropped by an as− tounding 40% to 5.8 million. At the same time, the number of Polish citizens aged 65 and over has risen by more than 50% to 5.6 million, it said. “This means that a decreasing number of workers are going to be maintaining an increasing number
of pensioners,” WBJ quoted Krystyna Iglicka−Okólska, a demography expert from the Lazarski University, as saying. In order to balance the equation, Poland would have to import at least 5 million immigrants by 2050, she said. CZECH PARTIES TO SEAL COALITION Czech President Milos Zeman will ap− point Social Democrat leader Bohuslav Sobotka as prime minister within days, he told Reuters on January 9, opening the way for a center−left coalition to try and revive the economy after months of
Hungary is not a eurozone member and more details need to be assessed before the country’s parliament makes a decision on whether to join. Orbán added that he called on the economy minister at the end of last November to prepare a banking resolution bill similar to that of the EU’s banking union. Regardless of whether Hungary joins the union, it will be necessary to have regulations at a national level to protect Hungarian taxpayers from having to bear the consequences of banks’ mismanagement. TOWARDS A BANKING UNION The 2008 financial crisis and the 2011 eurozone debt crisis exposed weaknesses in the EU’s financial sector, and the EU heads of state and government agreed to set up a banking union in June 2012. The main underlying reason given for establishing banking union was “to break a vicious circle between banks and sovereigns”.
political stalemate. Czech parties signed an agreement to form a government that will face a dispute over whether to raise corporate taxes to finance increased state spending after a record−long recession. Leaders of the Social Democrats, the ANO party and the Christian Demo− crats signed the deal in Prague on Janu− ary 6, ending negotiations following an October 25−26 snap election. The Social Democrats nominated Sobotka as the country’s prime minister, while billion− aire businessman Andrej Babis, the head of ANO, is poised to take the reins of the Finance Ministry. The new government will aim to end the policy paralysis trig− gered by the collapse of former PM Petr Necas’s cabinet in a spying and corrup− tion scandal in June. NEARLY A QUARTER OF POLES HAVE NO BANK ACCOUNT According to National Bank of Poland data, 23% of Poles did not have a bank account in
Based on the financial regulatory framework of the 28 EU members, the single rulebook, the EC proposed a roadmap towards banking union. The first element was the establishment of the SSM, which entered into force in November 2013. Under the SSM, responsibility for bank supervision in the euro area will shift from national authorities to the European Central Bank. The ECB is currently carrying out a balance sheet assessment of the 128 biggest banks that will be under its direct supervision, coupled with a stress test in close cooperation with the European Banking Authority. The asset quality review of the banks, due to be completed in the spring, is already underway. Ultimately, a third element of the union is a common deposit guarantee scheme to protect savings, but this is not currently on the agenda. Instead, the priority is to reach an agreement on a common network of national deposit guarantee schemes.
2012, Radio Poland reported. The reasons why are varied: 50% of respondents said that they don’t need one, 25% said they pre− fer keeping their savings in cash, while 23% claim they don’t have any savings to keep in a bank account. The same study revealed that 63% of Poles use payment cards, while 14% don’t have a single card and another 4% have a card but never use it. QUARTER OF SERBIANS ‘EXPOSED TO POVERTY RISK’ Some 24.6% of Serbian citizens are exposed to the risk of becoming poor – those aged up to 18 being most at risk, the Beta news agency reported. At the same time, those older than 65 and pensioners are least ex− posed, according to the Serbian Statistics Office. Households comprising two adults with three or more dependent children had the highest at−risk−of−poverty rate in 2012 (44.4%), as well as single parents with one or more dependent children (36.2%), the statistics office said.
WWW.BBJ.HU
News 07
Budapest Business Journal | Jan 17 – Jan 30
POLITICAL LEFT TO FIGHT ELECTION HAND IN HAND
GERGŐ RÁCZ
Left wing parties have finalized the terms of a new, expanded cooperation agreement that includes not only the socialist MSzP and former PM Gordon Bajnai’s E2014−PM group, but also Ferenc Gyurcsány’s DK, not to mention another familiar old face, late arrival Gábor Fodor. According to the pact, MSzP chairman Attila Mesterházy will lead the joint party list, making him Viktor Orbán’s challenger for the premiership. The top five include Bajnai, Gyurcsány, Fodor, representing his Liberals party, and Tímea Szabó of PM. The biggest debate was over the role of Gyurcsány, who still has a loyal following, but is a highly controversial figure and is essentially reviled by a large part of the public for his activities as prime minister prior to 2009. The agreement called for revising the constituency arrangement that the Mesterházy−Bajnai deal laid out, giving the Gyurcsány party districts mostly at the expense of E2014−PM. Occupying the top five slots of the party list, the leading figures will surely have a seat in the next parliament, but it is doubtful whether any
of the parties themselves will have the necessary votes to form a parliamentary caucus apart from MSzP. According to a projection from think−tank Political Capital, this would only be possible if their individual candidates are able to defeat the right in the districts where they are running, which may prove a tall order. The earlier the Mesterházy− Bajnai pact had been declared final, categorically stating that there would be no further participants. This was directed at Gyurcsány, who was seen as too much of a liability and a throw−off in the eyes of many voters. However, the former socialist premier campaigned actively for a reconsideration of the pact, to the extent that his DK party gained strength, mostly at the expense of the Bajnai party, prompting a wider cooperation. The governing parties and other opposition groups have criticized the agreement, saying that it is nothing but the reunion of the same group of politicians that once ruined the country and consequently suffered a huge defeat in 2010. “The political left has failed in three aspects, even after a year and a half of long bickering and bargaining. It has failed to nominate a genuine candidate for prime minister. It has failed to introduce a single new face. And it has failed to protect the country from Ferenc Gyurcsány,” head of the parliamentary
Russia’s state−owned Rosatom will expand Hungary’s sole nuclear power plant in Paks, with the financing for the project also to come from a credit line from Russia.
Photo: Szilárd Koszticsák / MTI
It has come as little surprise to anyone that the political left has reconciled its differences and reached an agreement to tackle the 2014 general elections with a unified front.
group for the governing Fidesz party Antal Rogán reacted. “The pact announced by the opposition parties should be called ‘Together 2006’ since it is held together by those who governed the country between 2002 and 2010,” said the co−chairman of the green LMP András Sciffer. “LMP remains the only hope for those who wanted a change in governance in 2010 and still want the same now,” he added. While the participants of the leftist pact expressed positivity and confidence, even in unison, they have plenty of ground to make up. A Századvég poll from the end of December has Fidesz at a 31% approval rating in the entire population. In contrast, adding up the support rate of the newly united opposition only yields 24%. Another Századvég survey conducted after the announcement found that the majority finds Gyurcsány’s presence a major deterrent.
BSE HOPES FOR REBOUND IN 2014 Although the Budapest Stock Exchange’s main BUX index rose in 2013, the bourse saw drops that it hopes to recover from in 2014 following revisions to the way it works and the launch of a new trading system. GERGŐ RÁCZ
The Budapest Stock Exchange remains hopeful that Hungary’s tiny equities market will finally start to show some growth this year after changes implemented in 2013. There is plenty of ground for progress, seeing that daily turnover values and capitalization both dropped last year, according to the BSE’s newly published annual review. Average daily stock market turnover was HUF 9.5 billion last year, down from HUF 9.9 bln in 2012, while capitalization fell to HUF 4,268.2 bln by the end of 2013 from HUF 4,604.1 bln a year earlier. The five blue chips continued to account for the bulk of trade with a massive 95.5% of stock market turnover. Richter raised its share to 16.7%, OTP’s
new platform, accepted as an international standard, gives Other investors in a host of different countries easy access to Hungarian stocks, which alone is expected to serve as a major boost to activity. It could allow for changes in the composition of those playing the markets in 2013, when foreign investors generated half of the turnover in the first ten months; households had a 30% share, brokerages’ trade made up 13% and domestic institutional investors made up nearly 8% of the total. The bigger stocks themselves could use a better year as well. In 2013, Richter was dropped then reentered MSCI’s emerging market index, largely through a revision to the nominal price of its shares, while Magyar Telekom was also dropped near year’s end. Also, France’s Servier chose 2013 to delist the fifth blue chip company, drugmaker Egis. There are uncertainties surrounding MOL and the future of its Croatian asset INA in the light of political disputes, and OTP is also prone to suffer from the announcement of any additional government measures to aid troubled debtors.
DISTRIBUTION OF STOCK TRADE IN 2013 (%) OTP
Richter
MOL
5%
Magyar Telekom
Egis
4%
7%
13% 53%
17%
Source: BSE
ratio dropped to 53.25% and MOL also dropped to 13.5%. Magyar Telekom accounted for 7.3% of turnover and 4.9% went to Egis, which was delisted last December, altogether contributing to an annual 2.2% rise in the BUX index. Last year the Budapest bourse, a member of the CEE Stock Exchange Group, introduced a new categorization; ‘Standard’ and ‘Premium’ tiers replaced the earlier baskets. Issuers in the premium category have made commitments to enhanced levels of transparency in their operation, which it is hoped will encourage investors. Even more importantly, the BSE took another step towards addressing its chronic issue of low turnover by introducing the Xetra trading system in December. The
PAKS FACILITY TO RECEIVE NEW RUSSIAN ADD-ONS
GERGŐ RÁCZ
The agreement signed by National Development Minister Zsuzsa Németh and Rosatom chairman Sergey Kiriyenko in the presence of President Vladimir Putin and Hungarian Prime Minister Viktor Orbán is expected to double the Paks facility’s 2 gigawatt capacity. Orbán hailed the deal as an “excellent professional agreement”, adding that the extent of the Russian credit for the venture would be no more than €10 billion, although the details have yet to be finalized. The exact costs of the project are currently unknown. Kiriyenko noted that it would take further extensive preparatory works to finalize the ultimate tally. The Russians will provide a 30−year inter−government loan for the project, and the first new block could start operating in 2023, state secretary János Lázár told reporters. Orbán received extensive criticism at home for the deal. The socialist MSzP said he had no mandate to make a commitment of such significance. “The government calling itself a patriotic freedom fighter is currently busy selling out its country to Russia,” said co−chairman of the green LMP András Schiffer. Economy Minister Mihály Varga insisted that the government would strive to reach the most financially beneficial agreement at the end of the talks. He stressed that the maturity terms offered by the Russian side aren’t available on the open market, and this was the basis of the contract. The Paks facility meets approximately 40% of Hungary’s annual electricity needs.
BBJ
2Business insight
THE YEAR AHEAD Welcome to 2014, the year when everything will change for the better, at least that’s what the majority of the surveyed public, not to mention the most key sectors of the economy are hoping for. Looking forward to an eventful year both in political and economic terms, here are the key factors to watch out for.
BANKING BANKING SECTOR ORDEAL NOT OVER YET Bank lending continues to be hindered by excessive burdens on banks and an increasing ratio of non−performing and restructured loans. The overhaul of Hungary’s banking system kicked off last year. In 2013, the government put further strain on a banking sector already burdened by the extraordinary bank levy and the forced foreign currency loan subsidies. Last year banks took another hit via the introduction of a
financial transaction tax, intensified by its later increase. As of August 2013, the rate of the tax was increased to 0.3% from 0.2% on wire transfers and to 0.6% from 0.3% on cash withdrawals, while the cap of HUF 6,000 on the latter was removed. Furthermore, a one−off duty of 208% of the amount paid as transaction tax on cash payments between January−April 2013 was levied on banks. Another element of the summer tax package was the introduction of a 6% healthcare contribution on the interest income acquired by private deposit holders, which does not apply to forint− denominated debt securities. The costs of allowing customers two free cash withdrawals of up to HUF 150,000 from personal bank accounts per month are also borne by the banking sector. The sector was in the black in the
first nine months of 2013 after making losses in the previous two years. Data released by central bank MNB shows that Hungarian banks had combined after−tax profits of HUF 36.2 billion in Q1−Q3, compared to a loss of HUF 10.5 bln in the same period a year earlier. Corporate lending stock was practically flat, while retail loan stock fell 3%. Within that, forex−based loans accounted for 58% of the total. The ratio of non−performing loans in the combined portfolio rose to 14.5% at the end of Q3 2013 from 13.8% 12 months earlier. The banking sector’s outlook remains rather grim in 2014. The big rating agencies have maintained a negative outlook on the sector due to high non−performing loans, low credit demand, a sluggish economy and
Credit institutions in Hungary, Q1−Q3 2013 (HUF BILLION)
Net interest revenues
593,682
Non−interest revenues
33,31
Operating costs
410,637
Risk provisions
−158,24
Operating profit
58,115
Extraordinary result
−3,552
Pre−tax profit
54,563
After−tax profit
36,248
Source: National Bank of Hungary
14.5% the ratio of non− performing loans at the end of Q3 subdued performance. In 2014, banks are particularly concerned about the government’s forex−based loan bailout plans, while the changing conditions of the MNB’s ‘Funding for Growth’ scheme pose new challenges to the sector. The original scheme has been extended until the end of this year and another HUF 2 trillion has been added to the HUF 750 bln of refinancing. The government’s unorthodox and unpredictable measures have significantly reduced foreign banks’ commitment to Hungary. Several banks have been on sale for years. According to Fitch Ratings, Austrian banks “may consider a complete exit” from Hungary. While central bank governor György Matolcsy foresees four out of the eight major banks leaving the country, economy minister Mihály Varga says there are only a couple of such banks. The most likely candidates are the local units of Italy’s Intesa Sanpaolo CIB Bank and Germany’s BayernLB MKB Bank, although there were mixed messages about a potential exit from other banks, such as Erste and UniCredit. Although Varga insisted that establishing state−owned banks in Hungary is not a long−term goal, the state was quite busy acquiring stakes in financial institutions in 2013.
WWW.BBJ.HU
2 Business
Budapest Business Journal | Jan 17 – Jan 30
INSURANCE A BETTER YEAR ENSURED? While Hungary’s insurance market players describe 2013 as a mixed year, they foresee a slight upturn in 2014 driven by the country’s economic growth.
In 2014, there is a good chance that the life segment will start growing and the decrease in the non−life business will stop. Market players hope that the current price competition will be replaced by non−price competition based on the quality of products and services this year. If long−awaited legislation is introduced, Hungary’s health insurance segment could see an upturn. Insurers would welcome any boost to the long−term savings of households this year, something which could be generated by a planned 20% tax refund on pension insurance. There will be significant changes in the regulatory environment in 2014. The new Hungarian Civil Code, effective as of March 15, will fundamentally change the rules applicable to insurance companies. Changes at the European level include the second version of the EU’s insurance mediation directive with an increased scope and enhanced sales standards. Another important piece of legislation
Insurers’ market share based on gross premium income, Q3 2013 (%)
Source: MABISz
Insurers are expected to take a wait− and−see approach in 2014; consolidation in the market could gain momentum only in 2015. The top three players are Allianz with a 16.6% share followed by Generali Providencia (13.6%) and Groupama (10.9%). Due to the improving macroeconomic indicators, households were slightly more optimistic and thus more willing to spend in 2013, especially in the second half of the year. The construction sector, one of the most important industries for insurers, also showed some weak signs of recovery. On the other hand, the insurance tax introduced last year seriously hurt insurance companies’ profitability. In addition, extreme weather conditions in the spring had a huge negative impact on the non−life segment. According to the latest figures of the Hungarian Insurers Association (MABISz), insurers generated HUF 617.6 bln premium revenues in the first three quarters of 2013, which represents a 4.1% increase. However, adjusted figures applying 10% weight to one−off life− insurance premiums revenues show a 1.1% decrease. Revenues from life−insurance premiums accounted for 55.4% of the total.
is the Solvency II directive, which harmonizes insurance legislation in the EU. The program has three pillars, namely capital requirements, governance and supervision and disclosure. (The Budapest Business Journal would like to thank Groupama’s sales and marketing deputy CEO István Csonka for his contribution to this outlook.)
HUF
617.6 bln premium revenues in Q1−Q3
EXPERT OPINION
A STRATEGIC CONNECTION POINT Mr. Ákos Kovacs Hungary Country Manager of EKOL LOGISTICS In 2013, we had several successes. We have maintained full steam our investments in Europe, most recently in Hungary. Never ceasing our investments, with a view to offering higher quality services to our customers, we founded Ekol Hungary with an investment of €1 million in one of the most strategic spots on the geopolitical map of Europe. Ekol Hungary gives us a strategic connection point to Europe with the company’s existing intermodal network. Intermodal transportation, combining rail, road and sea, will provide Hungarian customers with reliable, cost-efficient and sustainable solutions. In Hungary, we commenced our operations as of October 1, offering our customers international road transportation, intermodal transportation, customs clearance and third-party logistics services with an office in Budapest and our storage facilities of 1,500 sqm, located near the customs office. Ekol Hungary, expects a turnover of €7.5 mln in 2014, and aims to become the market leader in the Turkey-Hungary route. We obtained AEO (Authorized Economic Operator) certificates for all four of our facilities – where all export operations take place – located in Bursa, Izmir, and on the Asian and European sides of Istanbul. With the AEO speeding up trading, our customers will not be slowed down by the bureaucracy of customs procedures, since we can provide them with full customs services at our own facilities 24/7 without needing to go to the Internal Customs Administration or queuing; the customs procedure, which is the significant issue for the sector, is solved by the AEO Certificate. We acquired Transuniverse Nakliyat ve Lojistik Ticaret A.Ş., the Turkish subsidiary of the Transuniverse Group, a leading logistics firm in Belgium. We continue to expand in Europe by incorporating the Turkey Branch of KLG Europe, the leading logistics service provider in Holland. We provide faster and easier transportation between Turkey and Holland through this acquisition. In parallel to such growth, in 2013, we added the Ro-Ro line to our portfolio of investments with the aim of offering sustainable and competitive services to our international customers located mostly in Europe. The service between the ports of İstanbul and Trieste runs three days a week with three modern Ro-Ro vessels (‘Hatche’, ‘Paqize’ and ‘Qezban’), each equipped with state of the art technology, and with a capacity of 240 trailers. WHAT TO EXPECT IN 2014? We think that the Turkish logistics sector will keep producing double-digit growth in 2014. Within this, we will again increase our share for the next three years. We will focus on reducing
bureaucracy, dealing with international physical and non-material obstacles, our surrounding geographies and the disturbances they can pose to small-scale enterprises, and consolidation. 2014 will bring a move toward the program of ‘Efficiency Coming with Profitability’, reaping its fruits and maintaining the many challenges of realizing the program. These topics will be on our agenda. Green logistics is raising value in our sector. This concept will maintain its importance. Now, many important companies expect that their suppliers will be sensitive to environmental concerns as well. We offer solutions by adopting a ‘green logistics’ concept. Recently, we were awarded a Green Office Diploma by WWF - Turkey (World Wildlife Fund for Nature). We have achieved reductions in our impact on nature from our various practices in waste management and office operations to the lowest level, as well as making savings on our electricity and water costs within the framework of our program. We joined in the WWF Green Office Program near the end of 2010, and we are privileged to be the first Turkish brand participating in the program. We have once again been awarded a significant award for environmentally responsible operation. On May 14, we were granted a European Eco Performance Award 2012, which was presented in a ceremony in Hamburg, Germany. The European Eco Performance Award is organized by St Gallen University. We have made an important step to lower greenhouse emissions in implementing block train services. Using this system, less contaminating materials are emitted because no trailer trucks are used during the main phases, noise contamination is prevented, a considerable energy saving is achieved and minimizing the amount of CO2 is possible on a large scale. FUTURE AMBITIONS We aim to become one of the first five names that come to mind in logistics in Europe. We are proceeding confidently towards this goal through substantial investments. Logistics has been the fastest growing sector in Turkey in recent years and will continue to grow in the future due to its potential and increasing foreign trade volume. Today, companies look for a way to provide a competitive advantage in production costs and quality and the most common means to do so is to manage the supply chain in one single resource by cooperating with a pioneering integrated logistics service provider. Companies have recognized this and are starting to conduct their work in cooperation with skillful suppliers such as us. In this sense, along with a general acceleration in the sector, a very efficient place may be found for logistics processes thanks to the geographical location of Turkey, and in this manner, the significance of the sector is increasing on an international scale.
NOTE: ALL ARTICLES MARKED EXPERT OPINIONS ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY
After buying a share in Takarékbank, it took over savings cooperatives. Now, the sale of its 54% holding in Takarékbank is underway. The state also acquired 49% stakes in Gránit Bank and Széchenyi Bank. Raiffeisen eventually decided against selling the bank at a reduced price after reviewing offers, including one from the tiny Széchenyi Bank, for its loss− making Hungarian business.
09
WWW.BBJ.HU
10 2Business AUTOMOTIVE INDUSTRY STILL THE ENGINE OF THE GROWTH The automotive industry has assumed huge importance in its single−handed effort to save the entire industrial sector. While most subsectors shrank last year, it was due only to the car segment’s performance that industry as a whole should end up with a 1% growth for 2013, GKI Zrt, a leading economic think− thank estimates. The last economic year’s events hint at more success to come. The Mercedes’ plant in Kecskemét, the mass production of the new Audi 3 models in Győr and the continuous growth at the Suzuki headquarters in Esztergom are expected to rev up speed further in 2014. The investments of the two German makers are bound to give an extra push to the numbers:
Budapest Business Journal | Jan 17 – Jan 30
some 250,000 cars were produced in 2013, which figure should reach 400,000 this year. In parallel, suppliers have also changed into a higher gear, so by now the car industry accounts for 10% of the Hungarian GDP, with 92% of the production aimed for export. Accordingly, JP Morgan counts on ever− expanding capacity in the sector that should add even more to GDP, now projected by the firm to reach 2.3% in 2014.
REAL ESTATE NOWHERE TO BUILD BUT UPWARDS The office market is expected to start on a path of stabilization stemming from the later quarters of 2013.
In contrast, the building industry saw a much needed recovery in 2013, which will hopefully continue this year, backed by the utilization of European Union funds as well as an uptick in domestic home construction. This is due to the stabilization of household spending potential, coupled with low interest rates that are seen boosting the
Construction industry output (% YOY, January−October, 2013)
The car industry accounts for
10% of GDP
Cars made in Hungary by Suzuki, Audi and Mercedes (thousand units)
Source: KSH
Given that there were no new office openings in the second half of 2013, the participants are hopeful that the market for speculative office development
volume of home−building loans issued by 10% this year. The construction industry saw continued growth every month last year
Participants are hopeful that the market for speculative office development bottomed out last year.
Source: Car makers’ own data *Estimate Note: Mercedes started its production in 2012
Number of workers employed by car makers in Hungary
Source: KSH
bottomed out last year. Given the stagnant nature of office developments in the past years, analyst say that the filtering effect has had a stabilizing impact on the overall market and shifted focus to higher−quality projects. The trend has turned and tenants are no longer predominantly looking for lease extensions; new contracts are the main factor. This is one of the reasons 2014 will see a notable 70,000 square meters in new office space coming to the market, while there are also several valid permits that could pave the way for further developments, if the conditions are right. Developers and operators are particularly aiming at the shared service centers that are flocking to Hungary. In the meantime, the latest figures show the industrial property market is under pressure, with vacancy rates at 23.8% in the third quarter of 2013, which marks a 4.7% increase from the corresponding period of 2012. This could be attributed to the dropping appeal of logistics parks while city logistics grew stronger.
starting from February. The biggest year−on−year increase was in August with 14.6%, whereas the same month in 2012 saw a contraction of 8.7%, just as almost every month of the year brought negative figures. (Sources: Budapest Research Forum, DTZ, Eston International, Otthon Centrum, KSH)
The biggest year− on−year increase was in August:
14.6%
WWW.BBJ.HU
2 Business
Budapest Business Journal | Jan 17 – Jan 30
RETAIL HOTTER SALES IN 2014 2013 marked the turn of the tide for retail in Hungary. After continuously falling for six years in a row, the sector finally produced positive growth rates, especially in Q4. An estimate by the Hungarian Statistics Office (KSH) dated January 8, 2014 indicates an expansion of as large as 4.9% for last November in comparison with the year before. That development coupled with the routine Christmas shopping craze should generate a hike of 1% for the whole of last year, Gergely Suppan, senior financial analyst told state
Up to
3% growth is expected in the sector in 2014
due to record low inflation of around 2%, and the government−enforced energy price cuts. Increasing the pay of public sector staff, in particular teachers, will also add to purchasing power. Although full−blown optimism would be an overstatement, the consumer confidence index does show remarkable improvements. Thus, retail might look forward to a handsome overall growth rate of up to 3% in 2014
ENERGY LOW EFFICIENCY
news agency MTI. The unexpected dynamism is projected to get a further boost in 2014 from the same factors as last year: growing real wages, mostly
The government is likely to acquire more stakes in energy companies that, due to lowered energy tariffs and increased tax burdens, are reporting shrinking profits
11
calculates the expert, who does not foresee any events that would modify this trend. Hungary ’s domestic energy consumption continued to decrease: it is expected to remain below 1,000 Petajoule in 2013 in part owing to mild weather. Following massive cuts in 2013, a third round of utility price cuts will probably take place. The timing, however, is dependent not only of political will, but sector−related factors too, György Drucker said in a television interview. Because of the financial stresses being felt by the energy companies, the country will lack investments by them this year. The Hungarian government’s plans to transform energy distribution in the household sector into a non− profit activity is thought likely to meet hurdles from Brussels.
Volume indices of retail sales Energy consumption in Hungary (PJ)
Source: KSH Total retail sales in 2013 (without adjustment); same period of the previous year = 100
Consumer price index in 2013 (corresponding month of previous year = 100%)
Source: KSH
Sources: GKI, Eurostat, MEKH
Further utility price cuts, steady energy prices and cancelled investments will be the highlights of 2014, energy experts predict. According to experts, steady energy prices, that are in line with global tendencies, can be expected in 2014 in Hungary. Two−thirds of Hungary ’s energy comes from abroad so global factors like stock exchange prices or the dollar−forint/dollar−euro exchange rates will continue to shape Hungarian energy prices, analyst Miklós Hegedűs said. Global excesses in energy supplies and a curb in demand will result in price levels similar to those of 2013,
Domestic energy consumption in 2013 remained under
1,000 PJ
WWW.BBJ.HU
12 2Business IT TWO-DIGIT GROWTH AHEAD Software exports are forecast to remain the main driver of the Hungarian IT market. A segment with 90% added value could be the Hungarian economy’s breakthrough point, an expert claims.
Budapest Business Journal | Jan 17 – Jan 30
the IVSz. These point not only to the sector’s breakthrough opportunities in the future, but also those of the Hungarian economy, holds Laufer. With a saturated market for cell phones, ever more of which are smartphones, bandwidth will be more in the focus of service providers this year. Smart metering, however, will probably take more time to spread, thought the year after the elections is thought likely see more intelligent
Cloudbased service users in Hungary (share from all users, %)
Source: Sicontact Kft * forecast
IT, one of the very few sectors not to be curbed by the 2009 recession, has not ceased to increase ever since. It may not be delivering its earlier growth rate, but it is still expanding and is likely to produce a two−digit figure in 2014, says Tamás Laufer, head of the ICT Association of Hungary (IVSz). Software exports and services have been the sector’s main engines with HUF 180 bln and HUF 240 bln in 2011 and 2012, according to the figures of
In 2012, software exports and services amounted to HUF
240 bln
MACRO GROWTH IN NUMBERS The majority of market analysts, along with domestic and international institutions, agree that after muted but nonetheless positive growth in 2013 – to be confirmed upon the publication of fourth−quarter
for the governing side. Once it starts its second term, it will then be able to make any corrections as needed in the second half of the year. One of the main hopes for increasing growth is how cheap loans have become as a result of the central bank’s rate− cutting campaign, making financing more readily available for households. True to form, rate−setters decided on yet another cut to the key indicator in December, bringing the benchmark to
MNB base rate in 2013 (%)
Source: MNB
cities. Governmental commissions of equivalent volume and value to the introduction of e−toll and cash register replacement (still ongoing) are not expected in 2014. A highlight of the year is Microsoft XP’s phase out, something that poses a challenge to antivirus makers and companies alike. Since Microsoft will not provide any update to the program, users may have to switch to newer versions or other operation systems. Public entities and authorities have another deadline to meet: they need to inspect their electronic information systems before July 1 and appraise whether they are in line with security criteria related to the Information Security Act introduced last July. Rather than banning BYOD, companies against the movement should take precautions and prepare to defend sensitive data with solutions developed for mobile devices, said Péter Béres, head of IT at Sicontact Kft, a software distributor. Contributors: Gabriella Lovas Gergő Rácz Levente Hörömpöli−Tóth Zsófia Végh
GDP statistics in February – 2014 will continue to bring favorable developments in the overall economy. The high end of the estimates, such as that of the National Bank of Hungary, predict growth at 2% or more, while even lower expectations like that released by the International Monetary Fund foresee expansion well above 1%. Most segments of the economy continued to produce improving figures throughout 2013, grounding expectations that growth will continue at a healthy rate. The government won’t let anyone forget that Hungary was finally released from the European Union’s excessive deficit procedure in 2013, a scrutiny that was in place ever since it joined the bloc in 2004. The European Commission nonetheless attached a firm warning that lifting the procedure doesn’t mean a free pass to start reckless spending. Still, even the most pessimistic forecasts put Hungary just on the verge of the 3% of GDP tolerance threshold for its annual deficit figure, meaning there is no immediate danger of reentering the EDP. Experts also note that if the government were to decide on further handouts in the run−up to the general elections in the spring, the next review that could result in a proposal for relaunching the EDP will only come later, after the vote, which is currently seen as bringing reelection
3%. According to central bank officials and market analyst alike, the National Bank of Hungary will continue reduction
2.1% growth projection by the National Bank of Hungary for 2014 well into 2014, potentially lowering the rate as low as 2%. Given that consumer price inflation has ceased to become a concern – the latest, December statistics showed an essentially nonexistent 0.4% headline figure – lower rates are all but guaranteed.
WWW.BBJ.HU
2 Business
Budapest Business Journal | Jan 17 – Jan 30
13
A UNIQUE GATHERING WITH AN EDGE Kick−started by TEG Group in 2011 for the first time, TRANSLOG Connect Congress is a special cross−industrial business summit offering a hub for those involved in transportation, logistics and supply chain management. Managing Director Dennis Lantos talks about the event’s edge and what is up next for the industries concerned. LEVENTE HÖRÖMPÖLI-TÓTH
Q
What makes TRANSLOG Connect Congress unique compared to other events in the CEE region? A: TRANSLOG Connect is the only cross− industrial business summit for transportation, logistics and supply chain management. Strictly operating on an invitation only basis guarantees that the highest−level delegation is present. The key recipe is our unique TEG Meeting Scheduler, which has been acknowledged as the best in the industry worldwide. Furthermore, the online software ensures that each participant can customize their agenda with a series of one− to−one meetings, presentations and specially organized plant excursions. In addition, our renowned program advisory committee is formed of global experts from multiple industry sectors, which guarantees a state−of− the art event.
Q
The milieu surely suited the premium content of the gathering. A: The event is organized in a five−star environment to comply with our equally five−star business summit to offer every single participant the most convenient setting for formal and informal business discussions. To sum it up with a recent statement from Andrzej Michalak, Logistics Operations Director Eastern Europe, Turkey and Russia at Delphi: “This is the best event I have ever attended.”
Q
Did participation figures meet your expectations? A: Each year the number of delegates, both internationally and locally, are increasing, as well as the amount of delegates holding Europe−wide or global positions, which clearly shows that TRANSLOG is heading in the right direction. To talk numbers, more than 500 senior decision makers from 23 countries gathered together and conducted more than 2,000 pre−scheduled and ad−hoc business meetings, making the third edition an outstanding success. From my point of view, I’m pleased with the development and I believe the figures speak for themselves.
Q
What were the most exciting presentations about? A: Cost saving potentials, distribution network optimization, talent management, supply chain assessment and efficient packaging solutions are just a few examples of the wide range of topics presented during the two days by our highly renowned speakers. Prof. Dr. Sebastian Kummer, Head of the Institute of Transport and Logistics
STORY HIGHLIGHTS at the Vienna University of Economics and ■ TEG Group has brought together the leading actors of logisticsrelated industries for the third time ■ The event provides exceptional networking opportunities thanks to a customizable agenda
Business presented his views about supply chain management in a multi−polar world, while Miguel Suarez, director of supply chain & purchasing manager at Lafarge Central Europe shared examples on how to assess a supply chain in order to implement a successful strategy, emphasizing the CEO’s support as an obligatory criteria. Stefan Putzlocher, logistics director at Mercedes−
Dennis Lantos, a Canadian and Hungarian citizen who was born and raised in Canada, moved to Budapest in 2001. He has comprehensive experience of more than nine years in the event management industry, and held several senior European management positions before he founded TEG (The Events Group) in 2009. He likes tennis, golf, skiing, traveling and spending time with his three-year-old son.. Benz Manufacturing, also a big supporter of TRANSLOG, shared the secrets behind the successful JIS processes at Mercedes−Benz. Chaim Huijsman, head of corporate sales at Gebrüder Weiss was presenting a case study on the logistics of Tegeta Motors.
Q
The first CEE Logistics and Supply Chain Excellence award was also granted. A: The award has been established to honor, recognize and promote outstanding logistics and supply chain management achievements in the rapidly growing CEE region. Manufacturers, retailers and solution providers from all industry sectors were welcome to apply with their most innovative projects and methods implemented in the region. The award was brought to life to provide CEE with a platform to boost innovation, recognize exceptional achievements and to encourage logistics professionals to further strengthen the development of the region. In 2013 the winners were Gebrüder Weiss and SMR.
Q
Is there any specific feedback from the participants on the success of their networking activities provided by the conference, with special regard to their one−to−one discussions? A: One of the key factors for attending this event is to reduce the sales cycle process
CV
dramatically. We received feedback that the types of decision makers we attract in most cases are not available for meetings and very rarely are they reachable. They are what I like to call the “difficult to reach decision makers’’. Providing a platform to reach them in a short space of time in a focused and controlled buying and selling environment is resulting in new collaborations on not just the local but also regional and European levels.
Q
How productive has that platform turned out to be? Based on the direct feedback from our customers following TRANSLOG 2012, the event resulted in more than €1 billion of newly signed agreements, which is more than remarkable. In two days, the number of contacts and tangible business meetings achieved on average are at least equivalent to a 6−12 month timeframe using other methods. To quote one of our sponsors from 2013, Roland Havranek, area manager Germany, Far East Land Bridge, “100% of our meetings were absolutely new contacts; I’m certain we will sign new business with a minimum of 20% of the contacts we met during TRANSLOG.”
Q
What are the current and future trends of logistics and supply chain management? A: The logistics industry in CEE is experiencing substantial growth. China and the United States remain the top sourcing locations but a new trend is emerging, as companies shift from low−cost country sourcing towards near sourcing, which puts CEE in the spotlight. We also see the tendency that leading manufacturers and service providers are shifting from traditional to collaborative business models, but at the same time shortening contract lengths and selecting the best providers in order to reduce operational costs has become more important than ever.
Q
What are the plans for TRANSLOG Connect Congress for the future? A: To maintain the quality and to increase the numbers of delegates and countries in order to become unquestionably the number one logistics and supply chain business summit in Europe. We have already received feedback that we are better than the biggest events in Europe such as the Munich Fair, e.g. Prof. Sebastian Kummer who chaired both days mentioned: “I spoke with many people and they say it’s better than the biggest conferences in Europe because there are much more opportunities to talk, to discuss, so I think it’s really unique and the number of participants who come every year show that this concept is something that not only serves one time, but is sustainable.” TRANSLOG will be taking place again in November 2014 in Budapest, for further information please visit: www.translogconnect.eu.
Q
When will the next TEG event take place? A: We are working on PHARM Connect 2014 at the moment, the largest and most important pharmaceutical and biotechnology business summit in CEE, which will be running for the fourth time at the Corinthia Hotel Budapest on February 26−27. PHARM Connect is equal to TRANSLOG not only in volume, but in structure and professionalism as well. Leading service providers such as GE Intelligent Platforms, FESTO, Aptar Pharma, Xellia (part of Novo Nordisk) and Finesse have the opportunity to meet key decision makers of the pharmaceutical and biotechnology sector, e.g. István Király, managing director of GlaxoSmithKline Biologicals or Yoram Eshel, senior director, global transportation and logistics at TEVA. To learn more about the upcoming event, just visit our website: www.pharmconnect.eu.
WWW.BBJ.HU
14 2Business
Budapest Business Journal | Jan 17 – Jan 30
KEEPER OF THE With the omnipresence of technology and the ever− competitive nature of the banking segment intensifying, the finance sector is striving to connect the two to bring the most appealing services to existing and future clients. Hungary−based IND Group has become the global frontrunner in giving banks the best solutions to offer their clients. The Budapest Business Journal spoke with IND boss and founder, EY’s entrepreneur of 2013, Balázs Vinnai about the shape of things to come in digital banking and his company’s ambitious plans for the future.
STORY HIGHLIGHTS ■
Banks will focus more on improving customer experiences though technology ■ IND expects to keep up dynamic growth and continue expansion in 2014
Q
What kind of competition do you face? A: I like to say that for us, the biggest competition is the internal IT department of any major bank, these big, bulky organizations that typically like to retain control of all aspects of IT provision, even areas that they aren’t
proficient in. We have to convince them that what we provide is far more extensive than a technological service, which we can implement far more efficiently than the internal IT people. We seriously invest into innovation – this is the key element of our international success. And innovation
GERGŐ RÁCZ
Vinnai was born and educated in Miskolc, where he got a law degree. He founded Interactive Net Design in 1997 with college friends. Vinnai himself has received several commendations throughout his career from the profession as well as the state, most recently being named EY’s Entrepreneur of the Year in 2013.
Q
IND Group specializes in providing banking IT solutions. What does that mean in practice, what is it exactly that you do that bank customers can experience? A: If you ever bank online, there is a good chance you have encountered our product, which is essentially a complete software solution for the entire digital banking process. We don’t consider ourselves a technology supplier, but a comprehensive service provider, since we don’t only integrate our net bank solutions into the operation of our client banks, but we are also keeping a close watch on trends of customer habits and how digital customer service work in other areas of commerce.
CV
Q
Do you make money from licensing or through additional services? A: For the time being, our revenue mainly comes from licensing fees and expanding our range of clients as well as the maintenance that goes along with that. Even though I’m convinced that there should be closer cooperation between banks and providers like us, financial firms are still fairly reluctant to take these business relationships further, for instance by creating a profit− sharing arrangement in return for the development of new and better services. I used to say: ‘Our commitment, cooperation will not be finished when we close the implementation process and hand it over to the client; that will be the point when the real journey begins instead!’
PEOPLE WANT TO LIVE THEIR LIVES, ENJOY IT, MANAGING THEIR GOALS AND ACHIEVING THEIR DREAMS. BANKS SHOULD SUPPORT THIS APPROACH
WWW.BBJ.HU
2 Business
Budapest Business Journal | Jan 17 – Jan 30
15
MONEY GATE is the area where banks quite often struggle if they want to manage within their own organization.
Q
What are the main observations that you see in general customer use of banking services? A: The main aspect is to make the banking experience more service− oriented, to better account for customer demand. People don’t want to do banking. People want to live their lives, enjoy it, managing their goals and achieving their dreams. Banks shouldn’t approach this business from their perspective: today, the customer’s experience is based on the terminology banks use for products and actions (what customer understands these?), banks’ processes and rules, etc. The most successful companies nowadays are those that build up their entire structure, processes, products and organization purely from the customer’s perspective. There is another point: your average online bank management screen already offers a multitude of options, but if you think about it, you’re only using a fraction of them. Banks already have all the information about their clients.
ADVERTISEMENT
Based on somebody’s past bank account activity, we can predict their spending at an accuracy of more than 80%. Thirdly, there is a boom in mobile technologies that completely changes our world, redefines entire industries and how people are managing their lives. I believe this is the future of our industry too: via smart devices, banks can provide an excellent experience to their customers. But these require completely new functions and new services: a new concept for mobile phones/banking. What the banks now need is to provide services and counseling that takes these individual habits and needs into account.
Q
If mobile is the future, are you confident that wireless technologies can provide the same degree of security that wired devices or desktops can? A: I’d reverse the aspect of that question. Consider the fact that there are still banks that accept transfer commissions via fax, or think about how much easier it is to forge a signature on a piece of paper in a branch office than getting through all the security features digital banking offers. As far as I’m concerned,
the electronic banking solutions we already have are by far the safest available among all other options.
Q
Besides the internal IT departments, what is the competitive environment like, how many other vendors like you are on the market? A: There is very intense competition and there are quite a few very good companies on the market. Fortunately, most of them are about our size, meaning the playing field is level and there isn’t one or two multi−billion dollar corporations dominating the segment that we would somehow have to overcome. IND Group is a leading player in this game.
Q
How was 2013 for you and what are your plans for 2014? A: We are aiming to keep the current dynamic and continue growth, as we did in 2013. We are looking at revenues of HUF 5−6 billion in 2013, which compares to HUF 3.5 bln the year before. We are constantly looking at new opportunities and new markets.
Q
Does this mean the expansion of your clientele or expanding on the agreements that you already have going on? A: Right now, our main focus is the introduction of new clients. We currently have the opportunity to set up our business with new companies and new parts of the world, which is something we definitely want to take advantage of. Thanks to the nature of the business, we could easily provide our services on a global scale without the need for personal presence.
IND develops software solutions that are integrated into core banking systems, such as online banking or various finance management platforms. IND operates offices in nine cities, servicing 40 clients in 18 countries, and is rapidly boosting its annual revenues as it enters new markets. During its 15 years of existence, IND has received numerous awards and recognitions.
ADVERTISEMENT
BBJ
Socialite
BOOK REVIEW
Be bulletproof
PEOPLE ON THE MOVE
22
RESTAURANT REVIEW
Great Russian culinary revolution
23
RÓBERT KESZTE Continental Automotive Hungary / managing director
AUSTRIA CALLING
➜ PAGES 18-20
Photo: Franz Weingartner
Skiing has become a religion. For Hungarian worshippers, Austria is the nearest sacred land, and perceived as such with reason.
18
WWW.BBJ.HU
3 Socialite
Budapest Business Journal | Jan 17 – Jan 30
AUSTRIA CALLING Austria is the absolute number one on the destination preference scale for Hungarian skiers. Quality service, perfect skiing conditions and flexible packages do the trick. LEVENTE HÖRÖMPÖLI-TÓTH
Photo: Steinthaler - Kärnten Werbung
“Vienna calling!” goes the chorus of a track from the ’80s by a gentleman named Falco, a late native of Austria, also known for his hit ‘Rock Me Amadeus’. Whenever crossing the border to neighboring Austria in your car, you are destined to hear one of his songs. However, in wintertime, it is not Vienna per se, but rather Austria calling, or to be more specific, the mountains. And the number of Hungarians feeling the urge to obey such a call is on the rise. In the past ten years their overnights have more than doubled, with an average length of stay of 3.4 days in 2011. In the last winter season alone, some 265,000 Hungarians decided to vacation there. Such figures give Hungary substantial weight, being the country sending the 11th largest number of skiers to the Austrian Alps.
TOP 10 DESTINATIONS* Town (region)
Number of guest nights
Sankt Georgen ob Murau (STMK)
77,187
Schönberg−Lachtal (STMK)
40,953
Hermagor−Pressegger See (K)
30,538
Bad Kleinkirchheim (K)
29,125
Ossiach (K)
27,508
Finkenstein am Faaker See (K)
25,381
Gaming (NÖ)
18,957
Vordernberg (STMK)
17,358
Obertauern (SLT)
14,362
Predlitz−Turrach (STMK)
14,095
*Most popular winter destinations for Hungarians in Austria
Hungarian tourists in Austria
Sources: Statistik Austria, www.tourmis.info, Österreich Werbung − Länderstudie Ungarn 2011, Tourismusanalyse im Auftrag des BMWFJ
CALL IT AFFECTION The chemistry between the two nations of the former Dual Monarchy works exceptionally well. Among Hungarians, Austria is the most popular skiing region with a 54% share. That leaves Slovakia a distant second with 28%. By now most people seem to have realized that paying somewhat less in Slovakia does not compensate for wasting much of the time lining up, just to come down some surprisingly short slopes. In addition, snow can often be a scarce commodity in our northern neighbor. Guaranteed snow due to its high altitudes, a modern infrastructure, vast ski areas and a diverse range of packages make ever more Hungarians die−hard followers of Austria. But the country has an edge in comparison to other Western rivals as well. “Austria serves our customers best, offering shorter stays and the advantage of proximity. In France or Italy, you are expected to stay at least seven nights, whereas Austrian hotels are a lot more flexible. They don’t insist on long stays and you can pick your own arrival days,” Tamara Pálinkás, marketing director of tourist agency Vista told business daily Világgazdaság. “ZWEIMAL GLÜHWEIN BITTE!” Prices are also an issue. When you want to have your well−deserved break on the piste, the last thing you need is an €18 onion soup, which is routine in France. You’d rather go for €3 wurst or a steamed germknödel mit mohn (yeast dumpling with plum filling and poppy seed on top) with vanilla sauce. Yummy! Whether having a mug of hot glühwein or a cold hefeweizen (wheat beer), either will give you the perfect finish to your meal on the sunny terrace of any hütte.
If you look at the map of Austria, it’s like an infinite skiing area in itself. Countless resorts await guests all over the place. The two provinces most popular with Hungarian skiers are Steiermark (Styria) and Kärnten (Carinthia), best demonstrated by the fact that four destinations in each province are among the top ten resorts visited by them. These two regions are the closest to Hungary that have large enough areas for a great value for money.
STYRIA:
WORLD CHAMPIONSHIP QUALITY IN EVERY REGARD When you come to book your skiing holiday, you are truly spoilt for choice. In Steiermark, where the season started this year as early as on November 2, one of the most frequented places is Schladming aka Planai where four mountains merge into one single ski park. Entering the main building at the Talstation (the valley station) alone feels like arriving at JFK Airport. That shouldn’t come as a surprise; February 2013 wasn’t the first time that Schladming has hosted a ski world cup. Since other world−class winter sports events will follow in the upcoming years, premium conditions are guaranteed. The hosts seek to take advantage of the hype by involving skiing stars in their tourist programs. A special package allows fanatics to ski with the athletes. The world cup ski runs are part of “Ski amadé”, the biggest skiing center in Austria. The ski pass gives you access to these runs and all 300 ski lifts.
WWW.BBJ.HU
3 Socialite
Budapest Business Journal | Jan 17 – Jan 30
get a free hand to manipulate snow by moving, flattening and compacting it. Snowboarders will not be bored, either. Kreischberg, a major center, has the largest half pipe in Europe on the Snowboard World Championships circuit and six more skiing mountains make the region around Murtal a top destination for boarders, free riders and skiers alike. Kids and families receive royal treatment
Photo: Steinthaler - Kärnten Werbung
SNOW GROOMERS WANTED Apart from the high altitude, the most up−to−date snowmaking facilities in Europe ensure there is always plenty of snow. If you look for natural all−year− around solutions, then Dachstein with its glacier is your thing. At 2,700 meters an unbeatable panorama serves as a bonus. The brave among you may want to sign up for a snow groomer ride where you
19
in the region. Styria has 69 ski schools and an awful lot of ski kindergartens, practice lifts and magic carpets. You can’t go wrong with Schneebärenland in Tauplitz or Riesneralm/Donersbachwald in this regard. The latter is the “the first Austrian children’s ski circuit with five hectares of pistes and four lifts only meant for them,” Pálinkás explained. “Kids can have a superb time in Kreischberg’s Flintstones’ themed Yabba Dabba Doo−land.” Another activity is to feed and stroke wild animals as part of a snowshoe tour in the woods of Gesäuse National Park.
CARINTHIA: Photo: Steiermark Tourismus / ikarus.cc
FAMILY DEAL INVASION
Carinthia is another top winter destination for Hungarian snow fans. There is plenty of distance to cover by speeding down the slopes in this province. If you are new to the sport, big numbers of ski schools offer a money− back guarantee. If you don’t make it
in three days, your course was for free! Forget the language barrier: courses are available in German, Hungarian, French and English. Remember to book online before hand in order to make use of special rates. This applies to renting skis as well. Return visitors are also taken care
1.3% Hungarian share of tourist arrivals in Austria in 2012
EXPERT OPINION
TRAVELING ABROAD WITHOUT WINTER TIRES NOT RECOMMENDED Though it is not mandatory in Hungary to fit cars with tires corresponding to the season, it is suggested those leaving on a ski trip install winter tires and pack snow chains as well. “Many people are not aware of the fact that the usage of winter tires during the winter is mandatory in almost all neighboring countries, and the police can also fine you for an insufficient tread depth,” advises Illés Menkó, a technical expert at Continental Hungaria.
W
hen preparing for a trip, one should not forget that in the neighboring countries to the west and north, fitting winter tires is mandatory from November 1, when specific weather conditions apply. The Austrian authorities can impose a considerable penalty ranging from €35 to €5,000 on those who forget. In Slovakia, the use of winter tires is mandatory from November 15 to March 15. “Those who
frequently drive in Romania must also pay attention to select the appropriate tire, since the Romanian authorities can impose a penalty on those who leave for the snowcovered mountains of Transylvania with their summer tires on,” adds Menkó. Tread depth is also important In most of Hungary’s neighboring countries, not only is the use of winter tires prescribed by law, but also the depth of
the tires as well, in order to spot potential damage. With the necessary precautions, travelers can save themselves a great deal of trouble and expenses,” explains the technical expert of Continental.
ILLÉS MENKÓ
TECHNICAL EXPERT AT CONTINENTAL HUNGÁRIA
tread. In Slovakia and Slovenia, it should be at least 3 mm deep, while it is 4 mm in Austria and Serbia. “In order to ensure road safety, it is definitely recommended to use winter tires in wintertime. When someone leaves for a longer trip, besides checking the tread depth and the tire pressure, it is also suggested to inspect the sidewall of
NOTE: ALL ARTICLES MARKED E XPERT OPINIONS ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILIT Y
Chains are mandatory, winter tires are not The law in Hungary does not currently stipulate the use of tires corresponding with the season. However, in the case of a heavy snowfall, the use of chains is mandatory on certain roads – also indicated by road signs – although that does not imply the mandatory mounting of winter tires. Continental, one of the world’s leading auto industry suppliers, warns drivers that in winter weather conditions it is extremely dangerous to travel with tires not suitable to the season – regardless of the current regulations in neighboring countries.
20
WWW.BBJ.HU
3 Socialite
Budapest Business Journal | Jan 17 – Jan 30
Photo: Steinthaler - Kärnten Werbung
skiing anyone? Part of the exclusivity is a thriving gourmet culture. Among award winning restaurants in Europe, the Verwallstube operates at the highest altitude. In addition, the area hosts an exceptional number of places awarded with the Gault Millau, one of the most prestigious French guides. In spite of the posh environment, traditions are fostered here with the utmost care. One indication is the fact that ‘Der Weisse Ring’ (The White Ring) race has been organized every year since 1955. Welcome to the world’s longest and most peculiar skiing contest, with 22 km to cover! Space for skiing in general is abundant in Arlberg, thanks to the fact that the Warth−Schröcken ski area will also been connected from this 2013/2014 season on. So how could you resist the invitation whispered by the peaks? As they say in German: “Der Berg ruft!” (“The mountain is calling.”)
131
million
ARLBERG: :
GIGANTIC FUN FOR A PREMIUM
of, with tailor−made courses on the menu. “Nassfeld, Bad Kleinkirchheim and Gerlitzen rank high on Hungarians’ preference list among Carinthian destinations, but they book only accommodation and boarding in advance. They refrain from buying ski passes before their journey, as they want to make sure there is snow,” Pálinkás said. Families receive special attention in Carinthia. In the Glossglockner/ Heiligenblut ski region, with the purchase of each regular adult ticket, children under 10 can get a “Snowman Ticket” for €2 per day. And with the new currency, the “Family Euro”, children up to 12 years of age can ski for €1 per day (January 4 – March 7, 2014). At guaranteed−snowy Nassfeld, children’s ski rentals are priced at €1, and adults can rent for €11, making a day of skiing especially affordable. FROM THE COLD TO THE HEAT AND VICE VERSA “From the pistes into the hot springs,” is the slogan of Bad Kleinkirchheim, a leading thermal center.It has a very
Many claim it’s a must for every skier to go to Arlberg at least once in a lifetime. They have a point, indeed. The figures speak for themselves: 340 km of pistes, 200 km covered by deep snow, 94 lifts and a long season await those who are into variety in terms of slopes and have the cash to pay the surcharge due for such premium conditions. No wonder the region has won the Top Skiresort Award several times. In addition, Arlberg has become a member of the Best of Alps alliance, an organization comprising the top 12 ski places. Arlberg prides itself on being the cradle of Alpine skiing. St. Christoph, St. Anton, Stuben, Lech and Zürs form the “five star alliance” that have been the destination of royal families, celebrities and regular skiing fans alike since the early 1900s. THE MOUNTAIN’S CALLING Arlberg counts as Austria’s most expensive ski resort, and there’s luxury around, no doubt about it. Helicopter
Photo: Arlberg - TVB St. Anton
Total number of guest nights in Austria in 2012
flexible schedule for anyone who wants to visit this skier’s paradise: every ‘Multiday−Ski−Pass’ entitles the holder to a day’s skiing from 9 am to 4 pm or to enter one of Bad Kleinkirchheim/St. Oswald’s two thermal baths. Moreover, during their Ski/Thermal Weeks, the ‘All−Inclusive Ski pass’ offers a 50% discount on admission to the thermal spas (March 8−30, 2014). In case you have had enough of the heat, you can head back to do some skating. Frosty fun awaits you on lake Weissensee, Austria’s largest natural frozen ice surface of 6.5 sq km. Ice diving for lunatics only!
Photo: St Anton am Arlberg - TVB St. Anton
Content for this article was provided by austria.info
WWW.BBJ.HU
3 Socialite
Budapest Business Journal | Jan 17 – Jan 30
21
WINE REVIEW
NEW YEAR NEW RELEASES AND MATURING OLD FAVORITES As ever the New Year is serving up a host of new releases, but it also gives us time to reflect on a couple of fine wines from earlier vintages and chart their development. Pannonhalmi’s Hemina 2012 is a flavor− filled fuller−bodied white blend of Chardonnay, Sauvignon Blanc and Viognier
that’s ideal for cuddling up with on long winter evenings. It exudes ripe stone and tropical fruit, alongside considerable creaminess thanks to the frequent battonage (i.e. lees stirring), as well as the fermentation and ageing for around half a year in new 500−liter barrels. The Chardonnay element is the so−called ‘virgin vintage’ of a plot replanted in 2010 and the first harvest is known for an explosion of flavorsome juice. For those looking to cross new vinous frontiers in 2014, Bálint Losonci’s
spontaneously fermented Magyarfrankos 2012 from Mátra is just the ticket. This is distinctive and outside the box with a bright purple color, really earthy and smoky aromas, plus a touch of beetroot and a savory− spicy palate. This rarely encountered grape is a crossing of Kékfrankos and Kadarka and previously featured in this maverick winemaker’s Siller and red Nyitnikék blend. Back in the more familiar realm of Kékfrankos, Pálffy’s 2011 from Köveskál in the Káli basin is a bargain at around the HUF1,500 mark. It oozes blackcurrant rather than the varietal’s more usual red fruit, although this is a grape that varies in its flavor profile, according to its place of origin. This is a wine of contrasts; with richness in the form of liquorish and dark chocolate notes, yet it still slips down very easily. While it doesn’t have a massively complex acid structure and disappears fairly quickly, it nevertheless brings a flavorsome few seconds. It was spontaneously fermented via natural yeast, and then aged for two years in small barrels. Frigyes Bott, who makes wine just over the Slovakian border in the Muzsla wine region and is a regular fixture on the Hungarian tasting scene, has just released a stunning Kékfrankos from 2012 that’s packed with a mélange of red fruit (especially raspberry), green herbs, caramel and savory minerality. This medium− bodied, but somehow also fairly rich wine, stays with you for ages on the palate without overloading the senses. Kékfrankos also makes it into Heimann Birtokbor 2011, which is essentially the estate blend of the Szekszárd winery and also comprises Cabernet Franc, Merlot and Syrah. Red fruit certainly puts in an appearance in this one with juicy strawberry, raspberry and sour cherry positively jumping out of the glass. On top of all that, there’s also some eucalyptus and comforting winter spices. It spent 20 months in oak, mostly in large barrels, which helped it to round out but didn’t block out the sprightly and all− important freshness that this medium plus bodied wine possesses whatsoever. ADVERTISEMENT
Ferenc Vesztergombi’s Csaba Cuvée 2011 was one of the standout reds in an impressive lineup at the Pannon Wine Guild’ Christmas tasting and marks a real return to form. This Bordeaux−style blend is soft, luxurious, ripe and balanced, with real elegance and depth of flavor. I must admit that I’d been put off this pioneering Szekszárd cellar due to some not very palatable flavors in recent vintages, but it looks like a case of problem solved if this wine is anything to go by. Like 2011, 2009 is considered another excellent red vintage in Hungary, preceding the substandard, rainy and cold 2010 when many vintners chose not to release their flagship wines. Sauska’s varietally pure, full− bodied and concentrated Syrah 2009 from Villány is currently drinking beautifully with its pure and pronounced violet, blackcurrant, eucalyptus, plum, dark chocolate and green herb aromas and flavors. The 2011 version of this wine is still young, wild and hedonistic with almost a bit too much richness and alcohol, but it is showing considerable promise with succulent black fruit and classic Syrah black pepper notes. With time it should lose its rough edges as the youthful intensity is replaced by more refined elegance. 2008 is a year less associated with top reds than 2009 but I find Tulipán 2008 from south Balaton’s Ikon winery much nicer than its 2009 contemporary. The 2008 was the first release of Tulipán, which marked this large, great value producer’s first foray into high−end Bordeaux blends. This really impressed on its debut a couple of years back, possessing all the power and finesse (and then some) of big reds set at a considerably higher price point. It has matured beautifully and still has plentiful juicy fruit, such as blueberry, blackcurrant and pomegranate, vibrant acidity and a lovely silky palate. This is 50% Merlot with the other half coming from the Cabernets Franc and Sauvignon, and was made by János Konyári, the Hungarian Wine Academy’s Winemaker of the Year in 2008. A magnum (1.5 liters) now costs a very reasonable HUF12,000.
22
WWW.BBJ.HU
3 Socialite
Budapest Business Journal | Jan 17 – Jan 30
BOOK REVIEW
IN THE FIRING LINE An essential guide for anyone looking to get ahead in the warzone that is often the workplace.
No matter how good you are at your job, there are always times when you find yourself under fire at work. Is it possible to turn these moments of crisis into opportunities? Is it possible to make yourself bulletproof? James Brooke and Simon Brooke argue that the answer to both questions is yes. These corporate trainers, who have been studying the psychology of communication for many years, have developed a range of practical solutions for strengthening your resilience so that you can bounce back from any setback, rejection or criticism. In ‘Be Bulletproof’, Brooke and Brooke identify three main themes that will help us become more resilient at work. The first is ‘mindfulness’ – being self−aware, conscious of our thoughts and alert to how they can affect our emotions. The second is ‘positive psychology’, which they stress does not mean, “pretending that everything’s
great”, but involves changing the way we view certain events. The third theme is ‘understanding your story’ – the idea here is that thinking about things as part of an ongoing story will help put them into perspective, so that we can learn from them and move on. Before breaking these themes down into strategies, the authors make sure that we understand our brains and our attitudes, hence two short chapters entitled ‘How the Bulletproof Mind Works’ and ‘Changing Your Mindset’. These give us an insight into how our emotions and reactions have been inherited from our evolutionary past. Our minds have evolved to make interpretations and see patterns, but in the modern world this can often result in distorted thinking. It was crucial for our ancestors to defend their reputations, but our drive to do this often causes us to overreact and lose focus. These first chapters remind us that being aware of our ‘inner cave dweller’ is an important part of the bulletproofing process. Subsequent chapters share a wide range of tips and techniques, with headings such as ‘Turning Rejection into a Springboard’ and
‘Decontaminating Toxic Feedback and Other Assaults’. They also help us to deal with company politics, hostile colleagues, layoffs, ‘toxic bosses’ and even our own mistakes, and to deliver feedback in a way that really works. This practical guidance is accompanied by plenty of examples, mini case studies and insightful details drawn from business leaders, psychologists and coaches. “The good news is that the benefits from using even a few tools from the bulletproof toolbox are obvious almost immediately,” the authors write. “When these tools are practiced, they become habitual responses to workplace ‘attack’ situations – those that are anticipated as well as those that are not.” ‘Be Bulletproof’ is a fascinating and accessible guide for anyone looking to improve his or her confidence, relationships, judgment and creativity at work. BE BULLETPROOF by James Brooke and Simon Brooke Published by Vermilion ISBN 9780091939816 Available to order through www.hungaropress.hu
PROMOTION
NOTE: ALL ARTICLES MARKED PROMOTION ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILIT Y
A FULL HEAD OF HAIR FOR EVERYONE! Although there have been solutions for hair loss and hair rarefaction – a problem that affects many – these methods are usually far from perfect. A revolutionary method created by Dr Tamás Mantse, founding doctor of the ProHAIR International Hair Transplant Clinic, guarantees a full head of hair without scars or traces. BREAKTHROUGH IN HAIR TRANSPLANT The acknowledged professional implants so−called follicular units without leaving any noticeable scars on the scalp. This method provides great help for those wary of hair transplant as such a procedure usually leaves the scalp scarred for weeks or, in some cases, for ever. Follicular unit extraction (FUE for short) is a procedure during which individual follicular units are extracted directly from the hair restoration patient’s donor area. While other methods of hair transplantation usually requires shaving off the donor area before the procedure, Dr. Tamás Mantse’s method makes this unnecessary, as the so−called NLHT (No−Look−Hair−Transplant) technology removes only the necessary amount of follicular units. This also makes this method available for patients with long
activities followed by heavy sweating (such as sports and sauna). Final results – depending on individuals’ hair growth rate – are noticeable within 8−12 months.
BEFORE
AFTER
hair, and even in their case, no one will notice that they had a hair transplant. The procedure features another novelty: pieces of hair are taken out in follicular units (each containing one to four pieces of hair) as opposed to the strip harvesting method, during which a strip of skin is removed from the patient’s head and then dissected into many individual follicular units. “According to the method I’ve implemented, follicular units are transplanted by very small, pin−point
like incisions, leaving the patient with no visible scars,” Dr Mantse says. The procedure, depending on the area treated, can take up to eight hours, but patients will practically feel nothing during that period due to the local anesthetic. Only one treatment can bring permanent results, because the new technology allows for the transplantation of up to 1,500 follicular units at a time. After the procedure, patients can return to their daily routine, except for
IS FUE FOR EVERYONE? Several domestic and international public figures, politicians and actors have gone through the procedure – the majority of them men. Genetic balding affects lots of men as dihydric−testosterone, a side product of testosterone, blocks the operation of the hair roots. Female hair loss can be detected in approximately 50% of women – typical signs of this are a high forehead and the triangle−shaped balding area at their temple (called triangular alopecia). The FUE method can be employed on nearly everyone with hair loss problems. However, it is not applied after giving birth (as in that case, hair loss is usually due to hormonal reasons), and the same applies to cases when hair loss is due to stress, inflammation or chemotherapy. In these cases, the FUE method can only be applied once recovery is complete.
Dr. T. Mantse, hair transplant specialist PROHAIR klinika 1125 Bp., Virányos út 23/D. 06−30−592−5476
WWW.BBJ.HU
3 Socialite
Budapest Business Journal | Jan 17 – Jan 30
WHO'S NEWS
Name BEA HORVÁTHNÉ SZABÓ
Szabó joined the tax advisory department of Deloitte Magyarország in January. She has 16 years of professional experience, spent with Big 4 company PwC Magyarország. She obtained her degree from the College of Finance and Accounting in 1985, and later completed another degree in 1990.
Current company/position DELOITTE MAGYARORSZÁG / DIRECTOR OF TAX ADVISORY
Name ATTILA TAPODI Current company/position NATURMED HOTEL CARBONA / CEO
Do you know someone on the move? Send information to research@bbj.hu
Name TAMÁS HORVÁTH
Horváth became the new account director at Adaptive Media Sales House on January 2. He has been with the company since 2008. Before that, he worked as project manager at advertising agency Café Connection. He graduated from the faculty of economic and social sciences at Szent István University in 2004.
Current company/position ADAPTIVE MEDIA SALES HOUSE / ACCOUNT DIRECTOR
Tapodi took over the management of NaturMed Hotel Carbona in Hévíz from January 1. He has gained experience at international hotel chains such as HungarHotels, Danubius, and Intercontinental. He was also food & beverage director of the five-star Spirit Hotel in Sárvár, and as hotel manager led the Lifestyle Hotel Mátra. His predecessor, Ferenc Lukács, is retiring after 40 years at the largest hotel in Hévíz, which he has been managing for the past 22 years.
23
Name ZOLTÁN LÁSZLÓ TÓTH Current company/position HYD PHARMA ZRT / HEAD OF QUALITY ASSURANCE
Name RÓBERT KESZTE Current company/position CONTINENTAL AUTOMOTIVE HUNGARY / MANAGING DIRECTOR
Tóth has been appointed head of the quality assurance team of cancer research and medicine developer HYD Pharma. He has some 13 years of professional experience, having started his career at Richter Gedeon Nyrt in 2001. In 2007 he joined medical instrument developer and designer MedRes Kft. His main responsibilities at HYD Pharma will include creating and implementing the company’s quality assurance system.
Name TAMÁS VAJDA Current company/position ORSZÁGOS FIZETÉSI SZOLGÁLTATÓ ZRT / CHAIRMAN-CEO
Keszte succeeds Luc Quisthoudt in the MD’s position, having started his career with the Continental group. In 2006 he worked at the group’s Romanian plant, moving to Nürnberg in 2007. In 2010, he was appointed director of the electronic units’ plant at Timisoara. He graduated from the Budapest University of Technology and Economics as a vehicle engineer, and gained a master’s degree at the faculty of vehicles and mobile machineries there. He also received a degree in economics at the Corvinus University of Budapest.
Vajda was appointed chairman-CEO of financial service provider Országos Fizetési Szolgáltató Zrt in October 2013. He has 20 years of professional experience, starting his career at the State Banking Supervision Authority in 1994. Between 2000 and 2007, he worked at the state financial supervision authority PSzÁF. He then spent six years as managing director of Sopron Bank Burgenland.
RESTAURANT REVIEW
GREAT RUSSIAN CULINARY REVOLUTION Refreshing traditional Russian cuisine at an eatery that is aiming for Michelin stars – Arany Kaviár sets the bar high and is working hard to make its dreams come true. We visited Arany Kaviár on a weekday for lunch, taking advantage of the great value for money lunch menu. The three− course menu costs HUF 5,900 (€20) the four−course meal HUF 6,990 (€23); both include a glass of wine and a cup of coffee. We opted for the four−course version, and could not resist of the luxury of trying caviar and blini (Russian pancake), and a variety of home smoked fish as an extra. As a welcome bite we got a beautiful composition of miniature vegetables and some spicy cottage cheese with homemade bread and herb butter. The design of the dish was amazing, like a spring bouquet, the butter was creamy and perfectly seasoned, and melted on the fresh, homemade bread. Than we shared a caviar trilogy served in a traditional way (with blini, smetana (sour cream), boiled egg, butter and onions). The caviar we tasted were Keta salmon, Siberian Sturgeon Royal Black and Osetra. The salmon caviar was fresh, so we could enjoy its clear taste (without preservatives). The black variety (one salty, the other less so) were made in Hungary from Siberian sturgeon, and they represent the best quality of their kind. The softness
of the blini made a perfect companion to the caviar, and the cream and some onion gave the dish a perfect balance.
a traditional Russian meat salad, created in a fresh and modern way here with ham, shallots mayonnaise, quail eggs (cooked medium in the Russian way) and
We also tried the mixed fish platter of home marinated and home smoked fishes: butterfish, salmon, gravlax, catfish, sturgeon and herring. The styling of the dish was exquisite, decorated with micro greens and fine garden vegetables, garnished with wasabi mayonnaise and laid on a sour cream bed. All the fish tasted perfect – this signature dish is a must−try. We also had Stolichnaya salad, which is
spring vegetables. We moved in a more traditional direction with our soups: we chose borsch and solyanka, both of which were rich and delicious. The borsch is prepared with beef, vegetables and, of course, beetroot, while the solyanka is more sour, with pickles and sour cream, and is prepared with pork and sausage. As a main course we had one of the most popular dishes of the region: chicken
Kiev, as we wanted to try the ‘real thing’ the authentic way. Our other choice was trout fillet with celery and caviar filled pancake. The chicken was perfect: breaded in a crispy coat, the meat was juicy, and the herb butter filling – seasoned only with garlic and parsley – creamy. It had a simple garnish: potato puree with parsley oil; a perfect dish with no extra glitters. The trout was also a treat, perfectly prepared, emphasizing the original taste of the fish and not overusing the spices. This meant we could enjoy the celery variations even more – consisting of celeriac puree and celery sauce with crispy celery bites. The dish was honest, simple, and exciting at the same time, a perfect choice. As a dessert we had a portion of Medavic, a Georgian dessert made of hazelnut cake with a vanilla cream, plum mousse and homemade almond ice cream – an indulgent finale to a fine meal. We also had a rustic Sirniki (Russian pan− fried curd cheese with soft curd cheese ice cream). Not too light, but very tasty, a real ‘grandma’s dessert’ of the best kind. We had an amazing time in Arany Kaviar and for sure we’d like to return to taste more of the wide selection of fish, have a rich soup in wintertime, or to try the back garden, which is a great hide away in the summer. RATATOUILLE
ARANY KAVIÁR 1015 Budapest Ostrom u. 19.