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Further Nationalizations in Hungary?

Published: September 23, 2013; 08:14 · (Vindobona)

In order to acquire further foreign-owned bank and energy companies, Hungary issues new sovereign bonds.

Further Nationalizations in Hungary? / Picture: © Flickr

This year, Hungary has to issue a US-bond worth $ 5bn and a Eurobond with a size of € 1.0bn. According to the Hungarian government, the funds are needed to repay foreign debts. At the end of August, foreign exchange reserves only came at € 3.1bn. This is the lowest level since 2008. The decline in foreign exchange reserves is mainly due to the early repayment of the € 25bn IMF loan in July.

However, political observers do not exclude that the centre-right government considers nationalizing companies in the banking and energy sector. Above all, Prime Minister Viktor Orban aims to reduce the share of non-Hungarian banks below 50%. The Hungarian financial sector must become more powerful, Orban said recently. At the moment, the market share of foreign banks comes at 80%. Orban announced that a complete nationalization of Takarekbank would increase the publicly owned share of the banking sector substantially. According to insiders, Hungary´s government also considers taking over MKB. Until 2015, the subsidiary of German BayernLB has to be sold anyway.

In the energy sector, Hungary plans to acquire the local subsidiary of German RWE. Already last year, Hungary nationalized the natural gas segments of German E.ON. Hungary paid about € 870m to MOL. Furthermore, Hungary´s government announced to acquire a natural gas tank of MOL. The expected price is expected to range between € 450 and € 600m.