Hungary offloads 15% stake in Erste Bank

Hungary is set to sell its 15% stake in Erste Bank back to the Austrian parent bank, Erste Group Bank AG. The Vienna-based bank will pay HUF87.6 billion (€230 million) for the stake currently held by the state-owned Corvinus International Investments. The financial closure of the agreement is expected to be completed before the end of 2023.

Hungary had acquired the 15% stake in Erste Bank’s Hungarian unit in 2016 for HUF38.9 billion. Over the subsequent seven years, Erste Bank paid HUF 20 billion in dividends to Corvinus. The sale aligns with the government’s strategy, and the proceeds from the transaction will be directed toward the purchase of Budapest Airport, though the €230 million represents only a fraction of the total €4 billion to €4.5 billion needed for a complete acquisition.

The sale is not driven by budgetary purposes, according to Economic Development Minister Mate Loga, who stated that Hungary views Erste as an important partner despite the divestment. The strategic agreement, which involved cooperation between Erste Bank, Hungary, and the European Bank for Reconstruction and Development (EBRD), has been deemed successful, contributing to Erste Bank Hungary’s growth over the past seven years.

Erste Group CEO Willi Cernko emphasised the positive outcomes of the three-party cooperation, making Erste Bank Hungary one of the most dynamically growing banks in the country. The original deal in 2015 was contingent on the Hungarian government’s commitment to reducing the bank levy, but the government did not fulfil this condition, opting to maintain the bank tax and impose additional burdens on the sector over the years. The sale is expected to contribute to Erste Bank Hungary’s continued stability and growth.