Budapest / Reuters
Hungary’s state-owned MKB Bank posted a loss of 76.4 billion forints ($277.3 million) last year, down from 148.1 billion in 2014, as the costs of spinning off a large chunk of distressed debt still pushed it deep into the red, it said on Wednesday.
Last year MKB disposed of a gross 213 billion forints worth of bad loans, triggering losses due to higher provisioning costs and writedowns. The assets were transferred to a special purpose vehicle in a procedure monitored the European Commission.
MKB said its stock of non-performing loans fell by 40 percent after the process.
Adjusted for the costs of restructuring, MKB posted a loss of 1.24 billion forints, it said, reaffirming its guidance that it would turn profitable in 2016 due to a 20 percent reduction in costs, lower taxes and the clean-up of its books.
The central bank has agreed to sell MKB for 37 billion forints to a consortium of three investors, Hungarian private equity fund Metis, Luxembourg-based fund Blue Robin Investments SCA and Hungarian pension fund Pannonia.
MKB Chief Executive Adam Balog, a former central bank Deputy Governor, said that represented a price to book value of about 0.35, somewhat below the average seen in market transactions, but reflecting the impact of restructuring.
MKB Bank’s consolidated capital adequacy ratio had fallen to 11.3 percent by the end of last year after booking the losses, down from 14.1 percent at the end of 2014.
The MKB Bank is the fourth-biggest commercial bank in Hungary, and was the first to be privatised, in 1994. It is controlled by BayernLB and is the main sponsor of the MKB Veszprém handball club.
MKB Bank was founded in 1950. The objectives of its foundation were to take part in the international payments and trade finance, primarily to manage banking services related to Hungary’s foreign trade. The Bank’s range of activity has been expanded soon with structuring, managing, financing and executing tasks of complex foreign trade deals.
During the bank-reform in 1987, when the two-tier banking system was created, MKB got a full-scale commercial banking licence, based on that – in addition to strengthening the traditional activities – new business lines have successfully been initiated and accelerated.