Bayerische Landesbank, one of the second-biggest state-owned banks in Germany, agreed to dispose its ailing Hungarian banking operation, MKB Bank Zrt, to the Hungarian government.
The proposed divestiture is part of BayernLB agreement with the European Union for its bailout during the financial crisis of 2008.
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BayernLB CEO Johannes-Joerg Riegler was quoted by Bloomberg as saying that BayernLB will receive 55m ($74m) for MKB Bank Zrt that has cost it nearly 2bn since 1994.
Under the terms of the transaction, BayernLB will waive 270m in loans owed by MKB.
"It’s a clean cut," Bavarian Finance Minister Markus Soeder said at the conference. "It’s one more step to resolve BayernLB’s legacy issues."
The European Union ordered BayernLB in 2012 to offload Budapest-based MKB by the end of next year to avoid antitrust concerns following the government bailing out the German lender to prevent its collapse during the financial crisis.
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By GlobalDataThe sale is expected to conclude during September.
After acquisition, Hungary may ultimately sell MKB on the market, Hungarian Economy Minister Mihaly Varga told Bloomberg.
"Our aim is to create a stable, strong banking system, in which local ownership may increase gradually and the purchase of MKB Bank is a first step."
