Budapest, 15 December 2021
The first step of the merger timetable of Hungarian Bankholding has been approved, Budapest Bank and MKB will merge under MKB Bank Plc. name in the spring of 2022
According to the plans of Hungarian Bankholding, the establishment of the superbank will be implemented in two stages
On 15 December, the highest authorities of MKB Bank, Budapest Bank and Hungarian Takarék Bankholding Ltd. – which owns Takarék Group – have approved the first step of the merger timetable of Budapest Bank, MKB Bank and Takarék Group. Accordingly, the two member banks of the banking group, Budapest Bank and MKB Bank, will merge on March 31, 2022, while the Takarék Group will join the merged bank by the end of the second quarter of 2023. The supervisory authorization required to implement the merger is in progress.
Hungarian Bankholding Ltd. (HBH) has reached another important milestone on 15 December: the general meeting of MKB Bank, listed on the Budapest Stock Exchange, and the highest authorities of HBH, Budapest Bank and Hungarian Takarék Bankholding – which owns Takarék Group – approved the proposals published on 15 November regarding the merger of Budapest Bank, MKB Bank and Hungarian Takarék Bankholding. The owners have thus confirmed the merger process, which is in accordance with the strategy previously announced. This is the first actual step towards the establishment of the superbank with a key role in the Hungarian financial market.
The two member banks of the banking group will merge in the spring under the temporary MKB Bank Plc. name
According to the plans of Hungarian Bankholding, the first significant step of the triple bank fusion, the merger of Budapest Bank and MKB Bank will take place on March 31 2022. As part of the fusion of the two commercial banks, Budapest Bank will merge into MKB Bank. The Takarék Group will join the merger by the end of the second quarter of 2023, while the Hungarian Bankholding Group will continuously unify its operations.
The merged bank, which will be established on March 31, will temporarily continue to operate under the name MKB Bank Plc. The development of the brand name, logo, values and other image elements of the emerging large bank is in progress. The final brand of the integrated financial institution is planned to be introduced in early 2023.
The merger does not represent a change in the ownership structure of the banking group, Hungarian Bankholding Ltd. continue to be the defining owner of the banks participating in the merger process.
“With the now approved decisions, the planning phase of the merger will be finally complete, which is of historical significance not only in the Hungarian banking sector but unique in the region as well. In parallel, the merger of the three separate banking groups can begin. The merger process is progressing successfully and as planned. Our set purpose, confirmed by the highest authorities, is to create a bank that looks to the future and aims to serve the Hungarian people and businesses in the best ways possible,” said dr. Zsolt Barna, Chairman of the Board of Directors of Hungarian Bankholding Ltd.
The first step of the merger process will be taking place with the permission of the MNB, the related supervisory procedure of which is currently pending.
Domestic-owned banking group under unified management
An important element of the merger is the establishment of a unified organizational governance structure in Hungarian Bankholding and its member banks. Accordingly, the Deputy CEOs, and Managing Directors of Bankholding exercise the professional and employment law management in the member banks of the bank group, Budapest Bank, MKB Bank and Takarék Group from 16 November 2021.
As of December 1, 2021, Hungarian Bankholding took further steps to establish a unified management. Dr. Zsolt Barna, Chairman of the Board of Directors of the banking group took over the position of CEO and will manage the Bankholding as the Chairman and CEO of the company from 1 January 2022. Levente Szabó, the Deputy Chief Business Officer of Bankholding for individual services, and the current Deputy CEO of MTB Ltd. and Takarékbank Ltd. will also serve as Chairman and CEO of MTB Ltd. from 1 January 2022, who will continue to perform the duties associated with his existing position in the holding organization.
Client service will be uninterrupted even after the merger
Prior to the merger on 31 March 2022, existing clients of Budapest Bank and MKB Bank will be able to handle matters related to banking products and services based on current, customary channels and processes.
Following March 31, mutual service for retail and corporate clients will be ensured: in addition to their usual bank branches and administration channels, clients of Budapest Bank and MKB Bank will be able to manage their finances in new locations and in a larger branch network.
Hungarian Bankholding pays special attention to ensure that the steps of the merger process occur smoothly and at the usual high standard of service for the clients of Budapest Bank and MKB Bank. For the time being, the existing clients of the Takarék Group are not affected by these steps.
A new banking world is coming
The merger process is accompanied by significant IT developments: Hungarian Bankholding is currently building a new digital banking platform that will change the era in terms of both technology and customer experience. The first products of the new platform are expected to be launched in the fourth quarter of 2022, which will address the day-to-day banking needs of retail clients.
Through the digital developments, the opportunities for clients are also significantly expanding. The transition between individual products and their combination will be much simpler, and the instruments will become even more customizable by the full operational merger, which is planned to be concluded in 2023.
The technological transformation of the Hungarian Bankholding is led by dr. Balázs Vinnai and Roland Pecsenye, internationally recognized experts in the digital banking sector through the internal workshop of the banking group, the Foundation movement, which brings together Hungarian and international technology professionals, fintech specialists, designers, and product development managers.
Aspiring to be a market leader in the field of leasing as well
As another important milestone of the bank merger, MKB-Euroleasing, Budapest Leasing, Takarék Leasing and the Car Finance Division of Budapest Bank will continue to operate under the Euroleasing brand name, under common management and in an integrated manner from January 1 2022.
The four leasing companies are already dominant players in the Hungarian market, and under the Euroleasing brand, they have a market share of significantly more than 20% in terms of newly leased aggregate portfolio*. The new brand has an even higher market share of over 30% in the automotive and agricultural machinery leasing segments, allowing the brand to rightfully aspire to a market-leading position. After the integration, Euroleasing will become a single leasing business under unified management, with 110,000 customers and a nationwide network of nearly 450 employees.
The many benefits of the merger
By approving the related proposals on 15 December 2021, the companies confirmed the objectives of the merger of the member banks of Hungarian Bankholding announced in the strategy, based on which the full operational merger of the three financial institution groups will take place in 2023. As a result, second largest commercial bank of Hungary will be established.
The banking group is currently the second largest market player in Hungary in terms of balance sheet total, and also has the largest branch and ATM network. It is a market leader in a number of areas, like the lending corporate clients, and to the micro, small and medium-sized enterprise sector as a key aspect of the national economy, and the leasing market. With an overall market share of 25%, the business unit serving the agriculture and food industry sectors is among the leading players on the market**, with the group also having a strong position in the private banking market as it manages the assets of approximately 6,000 customers in excess of HUF 1,000 billion.
The forming superbank will introduce flexible, internationally leading digital solutions and will build on the strengths, values and best practices of the three strong domestic commercial banks, including the many decades of expertise accumulated by member banks, or their commitment to high-quality customer service. The emerging large bank aims serve the full market spectrum and all customer segments in the future, with a significant emphasis on the provision of new, affordable and modern range of products and services to retail, micro, small and medium-sized enterprise and agricultural customers.
One of the long-term goals of the strategy of Hungarian Bankholding is to build a domestically owned superbank, which will be able to carry out acquisitions in Hungary and abroad by 2023, and which may appear in other countries in the region over time. The management also aims to expand the presence of the banking group on the stock exchange, relying on the existing capital market experience of MKB Bank Plc. The initial public offering of the superbank may be carried out by 2025 at the earliest.
* Source: Hungarian Leasing Association, 31 December 2020
** Sources: MNB, 31 December 2020; OPTEN, 31 December 2020; Hungarian Ministry of Agriculture, 31 December 2020
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Hungarian Bankholding Ltd.
Hungarian Bankholding Ltd. is a domestically owned financial holding company, which aims to implement the merger of Budapest Bank Zrt., MKB Bank Nyrt. and Takarék Group. The company commenced its effective operation on 15 December 2020, after MNB (acting as the central bank of Hungary) approved the merger of three credit institutions, and the shares of the key owners were transferred to the joint holding company. By transferring the in-kind contributions, the second largest banking group in Hungary has been established.
In March 2021, the Board of Directors and the Supervisory Board of the Hungarian Bankholding approved their five-year strategy for the merger of the member banks, based on which the fusion of the three credit institutions is planned to be concluded in 2023.