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g Electronic bankin Banks here could

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Goodbye cash

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BUSINESS JOURNAL a local in Hungary, and s have become common e-trading still lags. mobile payment , although Retail solutions for g these solutions way in developin firm is leading the

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Hungary behind the curve in e-trading While digital banking is big on the retail level, financial institutions here are slow to take advantage of the possibilities of electronic trading, according to a local consultant for Hungarian banks. 24

NEWS

Commissioner talks Paks II and Uber The EC’s Margrethe Vestager explains her office’s involvement in several competition issues in Hungary, including a probe of whether the upgrade to the nuclear plant makes economic sense. 7

BUSINESS

Photo: Mátyás Pödőr

Survey finds CEOs in Hungary are upbeat When it comes to their own prospects, and their expectations for the global economy, company leaders in this country are more optimistic than the global average, a PwC survey shows. 16

Miklós Bán, head of the private translator’s association, says the official translation market should be opened up to more competition. 8

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You are not alone if you pay by phone

The biggest office delivery this year

Another year of growth in M&A

Mobile payment systems are all the rage in Hungary, and an increasing number of plans are being provided through partnerships of local telecoms, banks and major market players like MasterCard. 22

The inauguration of 24,500 sqm of space at Váci Greens comes at time when office vacancies are near record lows. Before it opened, ‘Building B’ was already 60% preleased by GE Infrastructure.

20

According to the latest report by EY, last year saw continued increases in mergers and acquistions activity in Hungary. The total value of the 130 deals closed in 2015 was more than $1.5 billion, the report said. 18

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Budapest Business Journal | March 11 – March 24, 2016

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BBJ

SPECIAL REPORT:

Electronic banking Banks here could

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Report Cellum payment

platform goes social

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Goodbye cash

ELECTRONIC BANKING

BUSINESS JOURNAL a local in Hungary, and have become common e-trading still lags. mobile payments Retail solutions for these solutions, although way in developing firm is leading the

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MARCH 11, 2016 – MARCH 24, 2016

HUNGARY’S PRACTICAL BUSINESS BI-WEEKLY SINCE 1992 | WWW.BBJ.HU

HUF 1,250 | €5 | $6 | £3.5

Speaking of tongues

SPECIAL REPORT

Hungary behind the curve in e-trading While digital banking is big on the retail level, financial institutions here are slow to take advantage of the possibilities of electronic trading, according to a local consultant for Hungarian banks. 24

Call +36 1 398-0344, or email circulation@bbj.hu Budapest Business Journal 1 year HUF 27,500+VAT 6 months HUF 13,750+VAT 3 months HUF 6,875+VAT

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Commissioner talks Paks II and Uber The EC’s Margrethe Vestager explains her office’s involvement in several competition issues in Hungary, including a probe of whether the upgrade to the nuclear plant makes economic sense. 7

BUSINESS

Photo: Mátyás Pödőr

Survey finds CEOs in Hungary are upbeat When it comes to their own prospects, and their expectations for the global economy, company leaders in this country are more optimistic than the global average, a PwC survey shows. 16

Miklós Bán, head of the private translator’s association, says the official translation market should be opened up to more competition. 8

SPECIAL REPORT

BUSINESS

BUSINESS

You are not alone if you pay by phone

The biggest office delivery this year

Another year of growth in M&A

Mobile payment systems are all the rage in Hungary, and an increasing number of plans are being provided through partnerships of local telecoms, banks and major market players like MasterCard. 22

The inauguration of 24,500 sqm of space at Váci Greens comes at time when office vacancies are near record lows. Before it opened, ‘Building B’ was already 60% preleased by GE Infrastructure. 20

According to the latest report by EY, last year saw continued increases in mergers and acquistions activity in Hungary. The total value of the 130 deals closed in 2015 was more than $1.5 billion, the report said. 18

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EDITOR-IN-CHIEF: Tom Popper ASSOCIATE EDITOR: Robin Marshall DEPUTY EDITOR: Aniko Fenyvesi NEWS EDITOR: Christian Keszthelyi EDITORIAL STAFF:

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THE EDITOR SAYS

President Áderʼs courageous defense of democracy By declining to take action on March 9, Hungarian President János Áder performed a brave act and a service to democracy for his country. Áder went against the wishes of the ruling Fidesz party that appointed him by refusing to sign legislation to allow the Post Office and the National Bank of Hungary (MNB) to spend public money without revealing how that money is spent.

The troubling aspect of the law classifying Post Office spending was that it was retroactive in nature – potentially allowing any corrupt practices that have already taken place to be hidden from view. Even more disturbing was the legislation making the spending of the MNB’s Pallas Athéné Domus Animae Foundation a secret.

The stated purpose of the central bank-funded foundation is to support education, especially education in the kind of “unorthodox economics” that the current Fidesz government ushered in, beginning around 2010.

For some reason, the Pallas Athéné Domus Animae Foundation has also been involved in buying high-profile historical properties.

The idea that hitting banks, telecoms and supermarket chains with special levies – and taking over private pensions as a way to fill holes in the state budget – is a new kind of economics that needs to be taught is questionable. The bank’s use of the money that is supposed to support such an educational initiative to purchase expensive landmark properties seems even more dubious. But the MNB’s desire to use HUF 260 billion in public money without accounting for that spending is absurd.

A judge sensibly ruled in early February that the foundation must open up its books. Rather than comply with

the order, the Fidesz government pushed through a law that says the MNB’s spending through foundations is no one’s business. The law is such an affront to the basic workings of democracy that even Fidesz stalwart Parliamentary Speaker László Kövér appeared loath to sign it, and waited the maximum six days before doing so.

There are two problems here: The first is that the central bank seems to be straying well beyond its natural remit, and the second is that the public has a right to know how its money is spent.

As for the first issue, a national bank is meant to be a lender of last resort and to protect the currency. The bank should control the money supply and promote financial stability. Speculating in real estate is not something that you want a central bank to do.

The second issue is more serious. Transparent governance should be a prerequisite, but the current leadership seems completely uninterested in the public’s right to know about any of the government’s fiscal dealings. This is only the latest in scores of instances involving the appearance of corruption by this government. Transparency International announced on March 4 that corruption in Hungary is rampant, when it comes to awarding European Union grants and public procurement in general.

President Áder surely faced intense political pressure to go along with the legislation and let the bank hide its use of public funds. Instead he cited the need for openness in public spending and sent the bill to the Constitutional Court for clarification by early April. Now it is the Constitutional Court’s turn to show courage. We hope they are as brave as the president, and decide to protect democracy instead of bowing to those in power.

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The Hungarian National Museum, shown in 1893, above, and in a recent photo at left, played a major role in the Hungarian Revolution in 1848, as this was where Sándor Petőfi read his 12 demands and called on Hungarians to ‘get on their feet’. The beginning of the revolution is remebered every year on March 15, which is a national holiday.

2016. 03. 09. 21:04

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NEWS

Hungary tiptoes around the edge of the eurozone  6

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Interview: EC’s competition commissioner

macroscope

7

Economic growth becomes more balanced Although Moody’s left the country’s rating in junk territory for now, the GDP growth figures show that it is more than just one sector that is doing well.

While growth here is above the EU average, our CEE neighbors are doing even better.

Consumer price index in Hungary Corresponding month of previous year = 100

ZSÓFIA CZIFRA

The country’s economic performance appears to be improving and growth is becoming more balanced, even if ratings agency Moody’s is not yet ready to acknowledge this – though the neighbors are doing even better.

Moody’s Investors Service left Hungary’s sovereign debt rating one notch below investment grade on March 4. Although the National Economy Ministry has been saying for a while that Hungary, based on its economic performance, deserves an upgrade, the decision by Moody’s did not surprise domestic or foreign analysts, as it had only changed its outlook on Hungary’s rating to positive on November 6, 2015, and rating agencies usually wait for a longer period of time between the outlook and the actual upgrade.

Analysts expect the upgrade to become a reality in the second half of the year – Moody’s will scrutinize the country again on July 8, and then again on November 4 – and the ministry says that it expects at least two of the three largest rating agencies to elevate Hungary back to an investment grade category this year.

“Hungary’s economic achievements warrant an upgrade in 2016. Falling state debt, low fiscal deficit, subdued inflation and economic growth figures all confirm that the Hungarian reforms are working.

The rate of bank tax has been reduced,” the Economy Ministry said in response to Moody’s decision to leave the country in the junk category for now.

The statement also noted that Hungarian economic policy is predictable and the country’s vulnerability to financial shocks has been mitigated.

But while the macro data is indeed quite good, there are other, so called “soft” factors that probably contributed to Moody’s keeping Hungary’s rating where it was. Such factors include a recent decision by the government that allows budget modification without involving

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SOURCE: Hungarian Central Statistical Office

“Hungary should do more in order to create an investor-friendly and predictable legal environment, and address the fact that Hungary’s state debt is significantly higher than that of our regional peers.” parliament, and the often-changed implementation date of the zero-balanced budget.

“Hungary should do more in order to create an investor-friendly and predictable legal environment, and address the fact that Hungary’s state debt is significantly higher than that of our regional peers,” Zoltán Török, senior analyst at Raiffeisen Bank said, adding that he expects Hungary to get back to the investment grade category with all three rating agencies by the end of the year.

Growth above EU-average, but below neighbors Just a few days after Moody’s didn’t take action on the country’s sovereign rating, GDP data for the fourth-quarter of the past year came out. Hungary’s gross domestic product grew by 3.1% yearon-year in Q4, according to the second estimate by the Central Statistical Office (KSH), which is the same as the data in the preliminary reading. Quarter-onquarter change came to 1%. The 3.1% Q4

growth comes after a 2.4% output increase in the third-quarter, and the 1% quarteron-quarter increase is the highest figure in the last 18 months.

The most important thing to note about the year-end data is that growth was more balanced than ever before; all except for two industries – agriculture and construction – contributed to the growth.

Detailed figures reveal that the role of the state was rather big in the acceleration of the GDP growth. On the production side, manufacturing performed better, and after a contraction in Q3, construction also expanded a bit, while the contraction in the agriculture industry become smaller.

As for the structure of consumption, actual final consumption of the government grew remarkably at the end of the year, due to the increased elbowroom in spending provided by the good figures in the budget. Investments also increased, mainly because of the accelerated absorption of European Union funds at the end of the year. Household consumption also grew, due to the low inflation rate and rising real wages.

Hungary did much better than the EU average, but its regional peers outperformed the country. Seasonally adjusted GDP rose by 1.6% in the eurozone and by 1.8% in the EU compared to the same period of the previous year, Eurostat data shows. Annual average GDP growth in the EU was 1.8%, versus 2.9% in Hungary, which posted the tenth highest average growth figure of the 28 member states last year. In the Central and Eastern European region, Czech Republic posted a 4.3% GDP growth for

Numbers to watch in the coming weeks After several busy weeks in terms of macro data, the upcoming period will be more relaxed. Construction figures for January will come out on March 16, followed by detailed earnings figures, also for January, on March 18, and the second estimate of retail trade for January on March 23. As for non-domestic events, all eyes will be on the March 10 rate-setting meeting of the European Central Bank, where analysts expect a moderate cut. the last quarter of 2015, while growth in Romania was at 3.8%, and reached 3.6% in Slovakia and Poland.

The European Commission, in its latest country report, underlines Hungary’s balanced, albeit modest, growth path.

The report mentions that the Hungarian economy has been on a stable growth path, household consumption has grown, the labor market has recovered, the government budget deficit has declined and the amount of general government debt has also been edging down, while the country’s net external position has improved. It also notes that Hungary has made progress in the implementation of country-specific recommendations issued in 2015.

Debt decreased, inflation slowed With the revised GDP data for the fourth-quarter of last year, it turned out that Hungary’s public debt ratio was 75.3% at the end of last year, down from 76.2% at the end of 2014. Inflation data for February was also released in the first week of March, showing that the consumer price index in Hungary had dropped to 0.3% on a year-on-year basis in February, from 0.9% in January. Core inflation slowed to 1.4% y.o.y. from 1.5%.

The end-February budget balance had a HUF 14.8 billion surplus. The central state budget posted HUF 63.7 bln deficit in January-February.

Economy Minister Mihály Varga noted that the end-February budget surplus was a historic achievement, as the balance had never been positive at the end of the second month in all the time that monthly data has been recorded.

As detailed data shows, tax revenues in the first two months of the year were about HUF 132 bln more than in the same period of 2015; every key tax type contributed to the increase, including personal income tax, value added tax, the social contribution tax and corporate income tax.

2016. 03. 09. 21:04

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Budapest Business Journal | March 11 – March 24, 2016

NEWS IN BRIEF Report: President Áder will not sign law limiting public info on MNB Hungarian President János Áder declined to sign two measures on March 9 to limit public information that were passed by Parliament on March 1: One allowing the Hungarian National Bank (MNB) to classify data on how it spends public money for its foundations and another restricting public access to information concerning the national postal service, according to reports. In connection with the MNB legislation, the president asked for a ruling from the Constitutional Court, which has 30 days to decide whether the legislation is against Hungary’s Fundamental Law (Constitution). The president said that the legislation is not in harmony with laws regulating the handling of public money and providing public information,

according to reports. The MNB legislation was passed by Parliament at the beginning of March after the Budapest City Court’s ruling that the MNBʼs Pallas Athéné Domus Animae Foundation must publish information on the flow of public money, amounting to approximately HUF 260 billion. Socialist MP Bertalan Tóth had gone to court requesting this information, and won the right to have it published, but the new legislation would have annulled the Budapest Court’s ruling. Áder noted that Hungary’s new constitution “places special importance on constitutional requirements affecting public funding and public information compared to the previous constitution”, according to MTI. Áder cited the retroactive effect of the amendments to the postal act as justification for sending that legislation to the Constitutional Court, Hungarian news agency MTI reported.

Hungary declares ‘migration state of emergency’ Hungary today declared a state of emergency for the entire country due to a “migrant crisis”, Hungary’s Interior Minister Sándor Pintér announced on March 9 between two parliamentary sessions, according to reports.

The state of emergency allows tougher measures by police and the army to patrol borders and to search for illegal immigrants throughout the country. The government has decided to declare a “migration state of emergency” after the Balkans route was closed down through special measures taken by Slovenia, Croatia and Serbia at their borders, and human traffickers started recommending refugees divert their path through Hungary, according to reports.

Pintér said they did not know what impact these steps would have among refugees and “illegal migrants” already present in those countries, which is why the government has chosen to strengthen the Hungarian border, Hungarian news agency MTI reported.

Although a decision has not been made on the possible construction of a fence along the entire Romanian border, such a fence could be completed in just ten days, the interior minister said according to reports.

Unexpectedly high taxes, contributions create surplus, says Varga Both tax income revenues and contributions came in higher than expected in the period of January-February, keeping the general

government balance in the black, Hungary’s National Economy Minister Mihály Varga said on March 8, according to reports.

Speaking on state-owned all news channel M1 from Brussels in the morning, the minister said that data released showing the general government ran a cash flow-based surplus of HUF 14.8 billion for JanuaryFebruary was unprecedented, Hungarian news agency MTI reported. He noted that higher revenue from personal income tax, corporate tax and VAT was a result of the government crackdown on tax evasion as well as wage rises late last year and early in 2016, according to MTI. The minister added that the Hungarian government is planning a balanced budget for the next year.

Moody’s leaves Hungary’s credit rating in ‘junk’ territory Hungary’s credit rating remains in “junk” territory, one step below investment grade, Moody’s Investor Service announced after the close of business on March 4, according to reports. Although the stock market had rallied earlier in anticipation of good news from Moody’s, the decision by the ratings agency to leave Hungary’s sovereign debt rating at “Ba1” had been anticipated by analysts. Most analysts polled last week said they thought Moody’s is likely to improve Hungary’s credit rating, but only some time later this year. In November, Moody’s changed the outlook on Hungary’s rating to “positive” from “stable”, and analysts said that means an upgrade is likely in July or November, when Moody’s next revisits Hungary’s rating.

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Budapest Business Journal | March 11 – March 24, 2016

Government increases scrutiny of taxi services Under a sanction the Hungarian government is planning to introduce, providers of dispatcher services for taxis without a permit could be fined HUF 300,000, according to the National Development Ministry, Hungarian news agency MTI reported on March 7. The measure was expected to come into effect on March 11, MTI reported. In February, the government amended a decree that would allow officials to immediately remove and confiscate the license plates of taxi drivers who operate without the necessary permits, MTI noted. The ministry said that the government will maintain regular communication with representatives of taxi drivers and taxi companies, and will continue to monitor the effects of measures it introduces as part of its crackdown on illegal taxi service providers. If necessary, the ministry will consider the introduction of further sanctions, it added, according to MTI. The ministry stressed that the Hungarian government supports legally operating, tax-paying taxi drivers. The government’s attention was drawn to the plight of taxi drivers in Hungary after they demonstrated in central Budapest for four days in January, requesting that Uber be shut down. Uber said at a press conference in February that it would stand by its drivers, after the government announced that unlicensed Uber drivers could lose their license plates if caught by officials.

More Hungarian firms consider new hires in Q2 Approximately 16% of Hungarian companies are planning new hires in the second quarter of 2016, two percentage points more than in Q1, according to a survey published by recruiting company Manpower on March 8. While most of the companies surveyed do not expect any headcount changes in their companies, approximately 3% foresee layoffs, according to the survey, Hungarian news agency MTI reported. The ratio of companies planning new hires was highest, around 18%, in the region of Central Transdanubia, home to the cities of Veszprém and Székesfehérvár, MTI noted.

Hungary’s automotive exports set records, says Szijjártó Exports generated by the Hungarian automotive sector reached a record €19.6 billion in 2015, increasing by 14%, or €2.4 bln, as compared to the preceding year, Hungary’s Minister of Foreign Affairs and Trade Péter Szijjártó said on March 7. Speaking at an automotive conference organized by the Hungarian Investment Promotion Agency (HIPA), Szijjártó said that production volume of the Hungarian automotive sector reached HUF 7.8 trillion in 2015, 17.6% more than in 2014, the Ministry of Foreign Affairs and Trade reported in a statement. Employment in the sector increased by 13% as compared to the preceding year, exceeding 149,000 jobs, the ministry added. HIPA is currently negotiating 169 possible investment projects, with approximately 40 of them being tied to the automotive industry, HIPA president Róbert Ésik said at the conference. According to the president, these 40 investment projects could create 8,000 new jobs. Of the successful investment projects HIPA has been

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Thinking about innovation Participants check out one of the exhibitions at the March 8-10 think.BDPST conference in Budapest’s Várkert Bazár.

The first gathering of what is meant to be an annual event, the conference brought together the worlds of business, government and science in a forum meant to encourage innovation and boost development in the CEE region. Organizers said they would like to establish a platform for Hungary, the region and the European Union to rethink the potential of innovation and to strengthen ties between various stakeholders in the innovation process. The conference was organized by the Antall József Knowledge Center with Hungary’s Ministry of Foreign Affairs and Trade and the International Visegrad Fund. (Photo: MTI/Szilárd Koszticsák)

involved in recently, half were connected to the automotive industry, and had brought €1.6 bln in investments to the sector in the last two years, and also created 8,000 jobs, according to Ésik.

Hypocrisy characterizes Europe today, foreign minister claims Europe at the moment is characterized by hypocrisy as solidarity is synonymous with disregarding Schengen regulations and European security, and allowing thousands of “migrants” to enter the continent or transporting them to neighboring countries, Hungary’s Minister of Foreign Affairs and Trade Péter Szijjártó said on March 7, according to a press statement by his ministry. The minister said it is absurd that even a tube of toothpaste needs to be placed into a transparent bag during an airport security check, yet thousands of people are allowed to enter Europe through its outer borders, without adequate information on who they are, why they are coming and what they are bringing with themselves, the ministry reported. Szijjártó said that solidarity means applying to joint regulations to prevent increasing pressure on neighboring countries, as such Hungary is one of the countries that has shown the most solidarity, given that no “immigrant” can transit through Hungary on route to Germany or Austria. He said that if Europe does not “return” to Schengen regulations in the near future, Europe’s economy “will be essentially decapitated”, the press statement quoted Szijjártó as saying. He noted that the Schengen zone is key to European economic competitiveness.

Curia: Socialist MP prevented from submitting referendum Hungary’s Supreme Court ruled that a group of heavy-set bald men obstructed Socialist MP István Nyakó on February 23

when he attempted to submit a proposal for a referendum to kill the Sunday closing law, Hungarian daily Magyar Nemzet reported on March 5. The Curia ruled that the men were assisting one “Mrs. Erdősi”, who is said to be the wife of a former Fidesz mayor, in her submission of a referendum in support of the law, moments before Nyakóʼs submission, however, it was never proven whether Erdősi and the men were cooperating with each other, the daily reported. The daily added that the Hungarian Police launched an investigation in connection with the events and that Nyakó attended a hearing on March 7. Since Erdősi was able to submit her question four seconds before Nyakó, and the two referenda address the same law requiring most stores to close on Sundays in Hungary, the referendum handed in first would be considered by the National Election Committee (NVB), and the second referendum immediately rejected, according to reports. The events, which took place at the National Election Office (NVI) on February 23, spurred a demonstration later that night, and although reports initially suggested Nyakó’s referendum would be accepted, it was later reported that it was in fact rejected and only Erdősi’s was put forward by the NVB.

EU funding for Hungarian projects supports corrupt practices, TI claims

The inflated costs of Hungarian projects funded by the European Union and the centralization of organizations receiving these funds give rise to increased corruption, said József Péter Martin, the executive director of Transparency International (TI) Magyarország during a press conference on March 4. The head of TI’s local unit, Gabriella Nagy, added that with the vast sums of money flowing into Hungary from EU coffers, corrupt practices

are more prevalent largely because of the speed with which funds tend to be absorbed and the challenges in accurately tracking such spending. Public procurement and its lack of transparency in Hungary is also a key issue on TIʼs agenda. In a report published by the European Union last week, there appears to be an unfair advantage provided to Hungarian firms with close alliances to the government to the extent that competing bids for a given project seldom exist.

Another fence can help protect women from ‘gangs’ says PM Orbán

Vowing that “gangs will not be hunting for our wives and daughters”, Prime Minister Viktor Orbán said on March 4 that Hungary would increase its vigilance against asylum seekers, possibly by building a fence on the Romanian border in the next two-to-three weeks. We are not “turning Hungary into Europe” when it comes to allowing migrants into the country, the prime minister said in his regular fortnightly interview on Kossuth Radio. He also reiterated his stance that the European Union is not taking steps to solve the issue, even though Hungary protects the country and the EU. He said a decision on a fence along Hungary’s Romanian border would be made soon if Macedonia cannot prevent migrants from entering Europe. Commenting on the EU summit scheduled for mid-March, when EU leaders are expected to discuss the quota-based distribution of refugees, Orbán said, “we are facing nerve-wracking weeks”. The prime minister also mentioned the Oscar awarded to the Hungarian film “Son of Saul” and praised government film commissioner Andrew G. Vajna for choosing to support the film. Orbán called Vajna “one of the bravest Hungarians”, for straightening out the chaotic Hungarian film subsidies the government inherited in 2010.

2016. 03. 09. 21:04

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Budapest Business Journal | March 11 – March 24, 2016

CEU BUSINESS SCHOOL

On the likelihood of the euro replacing the forint Paul Marer Professor of Business CEU BUSINESS SCHOOL

Weighing costs and benefits, there are plenty of reasons for Hungary to stay out of the eurozone.

Orbán questions wisdom of joining eurozone

Prime Minister Viktor Orbán suggested skepticism about Hungary’s entry into the single-currency eurozone in a speech on February 29, during which he reportedly asked: “How is it possible that the economic performance of those in the eurozone lags behind as compared to those who are outside?”

While he insisted that he had not decided on the issue, during a meeting of ambassadors organized at the Ministry of Foreign Affairs and Trade, Orbán did say that joining the eurozone would result in a mutual tax, pension and social benefit system, and if all these are harmonized “what makes us an independent state?”, origo.hu reported. He added that in such a system decisions would be made “somewhere else” and not in the “capital”, origo.hu said.

Orbán said that one of the most important questions in the upcoming years will be whether Hungary gives up its sovereignty and joins the core of Europe or “undertakes the risks of staying outside”, according to origo.hu. He did mention benefits of joining the currency union, saying that he believes there is a “core community” inside the European Union which is in an ever tightening cooperation due to the mutual currency, and the countries outside the eurozone are being left out, origo.hu reported.

Will the euro ever replace the Hungarian forint?

“Yes, it will, because it must” is a (2) Competition is enhanced due to the logical answer, because the obligation ease with which costs and prices can be to eventually adopt the euro was a treaty compared across the eurozone countries. condition of Hungary’s EU membership (3) The irrevocable fixing of the – as it was for all the Central and East exchange rate vis-à-vis other euro European (CEE) countries that joined the members insulates the economy from EU in 2004 or later (in contrast with the currency speculation and thus from the Western European countries that became economic problems caused by it.

EU members earlier and were given the Adopting the euro also has financial right to “opt out”, as the U.K., Sweden and costs: Contributions to the subscribed Denmark did). capital of the European Central Bank and “No, the euro will never replace the to the various eurozone “rescue funds”. forint” is also a logical answer, for two (Although the quotas are proportional reasons. Firstly, the wording of Hungary’s to the economic size of each member accession treaty (and those of all the country, they are more burdensome for CEE countries) leaves the timing open: the poorer members.)

A country joins the common currency Giving up exchange rate flexibility and “when ready”. The EU considers a country the other tools of monetary policy may be “ready” when it has met all seven of the considered a cost or a benefit, depending so-called Maastricht (Treaty) conditions. on a country’s situation at a given moment By contrast, when a candidate country’s (as illustrated below). government should declare that it is “ready” is not specified. This means that Six ‘in’ and five ‘out’ its position can remain, permanently, that “we are not ready”.

It is in assessing the conditional benefits The other reason that “no” is plausible of adopting the euro (directly or by tying is that since 2009 the Eurozone has been their currency’s exchange rate irrevocably facing severe problems, the origins of to the euro) that the 11 CEE countries which can be traced back to the “design differ, based on their historical, political, faults” of the Maastricht Treaty. This ideological, and economic situations, makes a “let’s wait and see” attitude which of course can change over time. prudent.

The three Baltic states of Estonia, This essay focuses on three issues: (1) Latvia, and Lithuania tied their domestic The advantages and costs of adopting currencies irrevocably to the euro the euro; (2) Why six of the 11 CEE promptly when they became EU members countries that became EU members in and then adopted the euro as soon as the 2004 (or later) adopted the euro directly EU said, “OK, you now qualify.” Adopting or indirectly (by tying their currencies the euro was a political declaration that to the euro), while the other five decided they place a high value on joining this to retain their own currencies and keep “Western” monetary arrangement so as their exchange rates flexible; and (3) to distance their countries even further What were the “design faults” of the from Russia’s orbit. For Slovenia – a monetary union? successor state of the former Yugoslavia – demonstrating that it is more stable than its messy former partners was one of the Benefits and costs of euro adoption perceived benefits, so in this respect it There are unconditional as well as may be grouped with the Baltic states. conditional advantages and costs of The fifth “in” country is Bulgaria. adopting the euro. The unconditional Following a major economic crisis, including runaway inflation during benefits are: (1) Saving on transaction costs with 1996-97, it was eager to import economic other euro countries. (The more “open” an credibility and stability by tying its economy and the larger the share of its currency firmly first to the Deutsche external economic transactions with other mark and then to the euro, thus becoming euro members, the greater the savings.) a sort of backdoor eurozone member.

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The most fundamental design fault of the euro was the establishment of a monetary union prior to fiscal and political union; the sequencing should have been the reverse.

However, not only did the objective of “keeping Germany down” (by replacing the Deutsche mark with a multilaterallymanaged euro) fail, but imposing a common currency on countries so different in levels of development, institutions, competitiveness and cultures also created severe new tensions within the EU. Another design fault was proceeding with a monetary union without a banking union. During the Great Recession, banking problems (due in no small measure to lax banking rules by national banking supervisors) spilled over into fiscal difficulties as the states had to intervene to stabilize financial institutions in trouble. The effective transmission mechanism of a single monetary policy requires a healthy financial system in the member countries to sustain similar monetary conditions throughout the union. This necessitates a banking union as a complement to monetary union, with a centralized banking supervision, a common bank resolution mechanism, and a unified deposit insurance system.

If a banking union had been in place, it is doubtful that the excessive indebtedness of households, corporations, and governments in several countries – a situation that eventually caused such havoc in those countries’ public finances – would have been allowed.

Other design faults include the nonenforcement of the Maastricht Treaty’s budget-deficit and country-public-debt limits, which were breached, repeatedly, by just about all eurozone members.

The most fundamental design problem was the assumption that the eurozone would function like the United States, where differences in per capita incomes, say, between California and Mississippi, have not been sources of major economic or political problems. Thus, the EU’s large costs of its hasty decision to create a common currency before achieving fiscal and political union is now revealed by the much weaker – and deteriorating – solidarity among the historically, politically, and culturally very different nations in Europe as compared with the “melting pot” tradition and wellfunctioning central institutions of the United States.

By keeping the leva’s exchange rate unchanged vis-à-vis the euro for almost 20 years now, Bulgaria has achieved its economic objective.

Slovakia was the sixth CEE country to adopt the euro directly. Doing so was part of a comprehensive economic reform package that the government that came to power in 1998 introduced.

In sum, the reasons of the three Baltic states and Slovenia for adopting the euro were mainly political, while those for Bulgaria and Slovakia were mainly economic. Other reasons also played a role for both groups. One important common denominator of the six is the very small size of their economies, which enhances the benefits of a fixed exchange rate, other things being equal.

None of the other five CEE states that joined the EU in 2004 or after – Hungary, Czech Republic, Poland, Romania, and Croatia – perceived any of the above Conclusion mentioned political or economic benefits to be large enough to warrant giving up To answer the original question, it is most the advantages of flexible exchange rates unlikely that the euro will ever replace and independent monetary policies. the forint.

Paul Marer is a professor of business at the Central European University (CEU) The most fundamental design fault of the Business School. For country-specific euro was the establishment of a monetary details on the evolving relationship union prior to fiscal and political union; between individual CEE countries and the sequencing should have been the the eurozone, see the author’s “The Euro reverse. This happened because the and East Europe” (http://business.ceu. decisive political reason for setting up edu/projectSetup/files/workingpapers/ the eurozone was not the establishment workingpaperpm.pdf). This column is part of a truly well-functioning monetary of a continuing series of opinion columns arrangement to deepen European from experts at the CEU Business School integration, but to try to “control” the in Budapest. The opinions stated here prospective economic (and thus political) do not necessarily reflect those of the might of Germany following reunification. Budapest Business Journal.

The euro’s design faults

2016. 03. 09. 21:04

News 07

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Budapest Business Journal | March 11 – March 24, 2016

EC official on Paks, Uber and a level playing field European Commissioner for Competition Margrethe Vestager gives an exclusive interview to the Budapest Business Journal covering a range of issues that her office is investigating or monitoring in Hungary.

ZSÓFIA VÉGH

European Commissioner for Competition Margrethe Vestager is in charge of fighting unfair monopolies and ensuring a level playing field for businesses in the European Union.

Her office is now investigating the fairness of the Paks II project, a €12 billion upgrade to Hungary’s sole nuclear power plant that is just beginning.

Because analysts say building two new reactors at the plant might not produce electricity at a competitive market rate, Vestager’s office is investigating whether the Hungarian government’s support for Paks II amounts to illegal state aid.

Vestager spoke to the Budapest Business Journal about the challenge of ensuring competitiveness in Europe, the case against Uber and the state of the Paks II investigation.

Q

Lately, we have seen the European Commission launch several investigations into tax deals between countries and large multinational companies.

What accounts for this number of investigations and their timing? Is the Commission taking a stricter stance on these firms?

A: This line of work goes back all the way to Commissioner [for Competition Mario] Monti, who saw that state aid, in terms of fiscal aid and tax benefits, was also important to make sure that we have fair competition. You find decisions over the years but the work has intensified now also due to much more knowledge about selective tax advantages. These concerns led to us opening the cases of Starbucks, Fiat, Apple and Amazon – the Belgian scheme we have taken decisions on a couple of weeks ago.

Q

Last month the Commission approved Hungarian state aid given to Audi Hungaria to expand its factory in Győr based on the positive effect this will have on local employment and investments.

How much do factors like employment matter and could this be a precedent for other ongoing cases in Hungary?

A: What we do is to make sure that businesses compete on a level playing field, and do not enable one member state to pour money into a business that then competes with a business in another member state that cannot support them.

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European Commissioner for Competition Margrethe Vestager. (Photo: Trine Sondergaard)

“I think it is quite obvious that, just as we need innovation in business models, it is only fair that new businesses also have to pay their taxes, to take care of their customers’ security with insurance, etc.”

business models and the legitimate demands of paying taxes and taking care of customers’ security.

Q

Is there going to be a Europe-wide regulation to control these businesses?

A: This is too early to say. We haven’t finalized the work we are doing, so that is still open. Probably, we will have wider discussions with member states as it is in the interest of all countries. We won’t conclude until we have finalized our work.

We look at what member states do and then we may be able to find a common approach.

A: When we open an investigation, we do so because we may have concerns and want to make sure that the project doesn’t lead to distortion of competition on the energy market or other undue distortions in the single market. But we do this with an open mind: We take on board the answers and the arguments to the questions we ask, therefore I have no in-between conclusion.

Q

What happens if the Commission finds that state aid is involved in supporting Paks II, or the project cannot be Sharing economy businesses managed on market terms? have been on the radar of regulators in the EU and In the case of Paks II, the A: We can have different outcomes. We member states – in part owing to tax Commission is investigating can have one that it is no aid, or it can issues. The Hungarian government’s whether state aid is involved. be illegal aid in general, or it can be aid recent regulation requires Uber How do you see this question at this that is compatible with the treaty. In a drivers to comply with the same stage? number of circumstances you can give rules as taxi drivers – including tax A: It is still early in the investigation, aid – but it is too early to say, as we payment. What is the EU’s current therefore it is difficult for me to say investigate neutrally. stance on the sharing economy when anything about it. What we are looking it comes to competition, taxes and into is if the investment in the nuclear plant The Commission opened consumer protection? the floor for third parties is being undertaken on market terms or to comment on Paks II. How A: I work closely with Violeta Bulc, the not. We assess the business case for the commissioner for transport and Elżbieta construction, operation and commissioning much weight will you give to what Bieńkowska, the commissioner for the of the two reactors on the basis of the third parties say? single market, in order to get a full agreed transaction terms and in view of the A: One of the good things about opening understanding of the workings of new EU’s energy market protection. That’s what an investigation is that people know business models that are disruptive in we have done before, most recently, in the what is being said and can share their comments. For us it is important to make their character. I think it is quite obvious case of Hinkley Point. sure that we treat these comments in a that, just as we need innovation in neutral and unbiased way, basing our business models, it is only fair that new In defense of Paks II, the businesses also have to pay their taxes, Hungarian government often eventual decisions on the facts of the case. take care of their customers’ security cites the Hanhikivi power I think it is important that people can say how they see things, offer the facts they with insurance, etc. We see that member plant in Finland, which they say was want to produce and put them on the states take initiatives that we take on set up based on a similar business table in a transparent democracy like the board, in an effort to hold the balance model, and won the approval of the between this need for innovation in European Commission.

European Union.

Q

Q

Q

Q

2016. 03. 09. 21:04

2Focus BBJ

Translation

Hoping to open the world of translation

Since 1986, one state-approved agency has held an effective monopoly on the translation of officially certified documents, but the country’s private translators would like to see that situation changed.

ANIKO FENYVESI

“Other countries have hybrid

The Hungarian Office for Translation and solutions, but no central stateAttestation (OFFI) maintains a virtual monopoly in the certified translation owned agency exists inside the industry in Hungary, operating under EU with an exclusive license to legislation enacted in 1986. That means that most translations submitted to a certified translation.” government body must be done by OFFI. Little has changed with legally are attested translations of company recognized translations in the past documents – such as copies of the 30 years, even though the private register, and articles of incorporation or translation business has blossomed into disclosure statements, says Bán and in a full-blown industry since then. Many the realm of certified translation that is in the private translation world criticize the system, saying OFFI is costly, slow only a tiny piece of the pie. and sometimes even inaccurate in its The email from OFFI maintains that work. The critics say this is just the sort this situation is normal. “There is no other of malaise a bit of healthy competition control-free European model of certified translation where certified translations could eradicate. are carried out without state control or According to a statement sent by OFFI in response to an email query, no regulations,” it says. other organization that handles certified But according to Bán, the level of translations currently has sufficient control here is outdated. Unlike other European countries, he says, Hungary background and knowledge of Hungarian has failed to adapt to market conditions, and foreign documents to be able to which have changed in the last 30 guarantee the required level of accuracy years. According to research conducted on the translation of legal documents,

by Proford, among the 12 European and to be able to prove the authenticity of countries surveyed, none has a system questionable documents.

But Miklós Bán, chairman of Proford, Miklós Bán, chairman of Proford, the translator’s association. (Photo: Mátyás Pödőr) like Hungary’s. the Hungarian Association of Professional “Nine countries had a central Language Service Providers, disagrees. other active Proford members are in a rather lengthy turnaround time of ten professional register of translators and He says the members of his association continuous communication with OFFI. days, charging doubled fees for rush interpreters who are entitled to carry are capable of handling the work, and are “We are working with OFFI and MFTE jobs. But another concern is accuracy, out certified translations and court (an association of freelance translators’ which a number of private individuals interpreting tasks; one country has a lobbying for the right to do so.

Established in 2012, Proford counts and interpreters) on a proposal that will using the service have complained chamber of translators that is licensed more than a dozen translation companies take into account the best interest of all about, according to a report published by to attest translations. Other countries among its members, including many parties involved,” explains Bán. online news portal origo.hu in 2014. In have hybrid solutions, but no central who were members of the now defunct “We regard the industry as one, and our that same report, the portal highlighted state-owned agency exists inside the Association of Hungarian Translation differences as secondary to our common a high-profile slip up of a Hebrew EU with an exclusive license to certified Agencies (MFE). Proford’s primary interests,” says Bán who adds that he translation contained on the pedestal of translation,” explains Bán. mandate is to lobby for professional is hoping to achieve a better regulated, the World War II memorial at Budapest’s On the financial end, that monopoly language service providers and certified more transparent and more mature Szabadság tér. amounts to as much as one-third of translators and translation companies translation marketplace.

According to the 1986 legislation, the market share or HUF 1.5 billion, and to employ a strength-in-numbers OFFI has the exclusive right to complete according to Bán. The remaining HUF approach, to fight for change to the Concerns with OFFI certified translations, the certification 4.5-5 bln-translation market is split of translations and foreign language among all the translation companies legislation that ensures OFFI’s monopoly of the certified translation market.

Critics argue that OFFI’s monopoly gives certified copies unless otherwise operating in Hungary, but the private Rather than admit defeat against it the privilege to charge higher fees stipulated by law. The only documents translation firms would obviously like to the all-powerful state entity, Bán and than the industry standard and maintain that do not fall under that jurisdiction expand their reach.

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2016. 03. 09. 21:04

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Budapest Business Journal | March 11 – March 24, 2016

09

Language training adapts with the business Businesses and professionals are helping to drive an improvement in the level of education provided to Hungarian students of translation.

DIANA SEFTON

As customers require that complex texts are not only converted to another language but are also well-written, prepared for digital use and rendered easy for all to understand, the demands placed on professional translators are increasing, according to those in the industry.

“Ten-to-15 years ago, the work was about translating text and now it is so much more,” says Dr. Ildikó Horváth, director of the Eötvös Loránd University (ELTE) Department of Translation and Interpreting. A translation job or assignment involves translating the text but also preparation, planning, revision, editing and some research of the topic or industry, she said. And at the center of everything is a demand for service and quality.

In this environment, translators require an education that adjusts to the demands of our fast-changing world, members of the industry say.

Professional translators also say that instruction needs to produce more meaningful, standardized certification. It seems that the major training programs for translators in Hungary are heading in this direction.

“The upcoming millennial generation of translators currently being trained has an entirely different approach to knowledge acquisition,” according to Miklós Bán, chairman of Proford, the Hungarian Association of Professional Language Service Providers. “Their mindset and motivations are different than previous generations of translators, and we have to respond to that.”

To help the profession of training translators stay strong and adapt, Proford has created a pilot University Partnership Program that aims to pair universities and professors with translation professionals. Participating companies provide speakers for the universities’ courses and participate in a job fair, says Bán. And university professors have access to training as well.

Current regulations concerning translator certification in Hungary date back to the 1980’s, and industry leaders have long been pushing to update certification and make it more relevant.

The legislation is vague and difficult to enforce, which means there is a broad range in quality among the work of those holding, or claiming to hold, translation certifications, according to people in the industry. For lack of a meaningful certification system, experts say, clients and companies who hire translators often put more emphasis on professional references and work samples.

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Dr. Ildikó Horváth, director, ELTE Department of Translation and Interpreting.

Tünde Zameczné Lázár, president of MFTE.

“We must think in terms of “Curiosity, dedication, selfcooperation across the translation improvement and life-long scene. ... We are trying to seek learning are all essential.” out synergies where several stakeholders are involved.” trends. The Budapest University Those in the industry say they hope to improve the situation by improving the quality of translation training programs here in Hungary.

University training

The most prevalent means of becoming a professional translator in Hungary is to enroll in a university degree program.

The gold standard in this realm is ELTE. It has the oldest translator training program in the country, dating back to 1973, and it was the only program in Hungary until 1989. With nearly 200 students, the program continues to be the largest of its kind in Hungary, and it is growing.

Program director Horváth notes that enrollment has tripled over the past ten years. She attributes this growth not only to increasing market demands, but also to ELTE’s history and reputation in the field. Horváth notes that the university is the only Hungarian institute to offer European Master’s in Translation (EMT) and European Masters in Conference Interpreting (EMCI) certifications.

To stay on top, ELTE has adapted its training programs to meet changing market demands – for example by developing four new one-year, post-MA programs in the last two years, says Horváth. Among these is a course to train students in audio-visual translation for cinema, the first of its kind in Hungary, she explains. ELTE is partnering with Mafilm Audio, a leading dubbing studio in Hungary, to offer this course.

ELTE is not the only institution developing more dynamic training programs in order to keep up with market

of Technology and Economics (BME) has partnered with Proford to design a-new curriculum for its translation program.

“The initiative was brought to life by two distinct needs: Translation market players, mostly language service providers, need translation graduates whose learning curves upon hiring will be steeper, while the university aims to provide training that will make its students suitable for well-paid language industry jobs, or ready for a freelance translation career,” says Patrícia Beták, program coordinator of the Interpreter and Translator Training Center at BME. A committee composed of Proford members, BME professors and students created the three-semester program, which is practice-oriented and encourages students to be reflective in their evaluation of quality, according to Bán of Proford. The program is set to launch in 2017. BME and Proford’s collaboration also includes a mentoring program that pairs students with professionals and gets the students involved in pro-bono translation work for local NGOs. “We must think in terms of cooperation across the translation scene as a whole.

We are trying to seek out synergies where several stakeholders are involved,” explains Márta Fischer, head of the BME’s Interpreter and Translator Training Center. “In this case, this is a situation where all parties win: The students get real life experience already during their training, the market players get better trained young translators who are more easily employable, NGO’s get pro bono work to support their activities and the university is more attractive to future students.”

Sándor Sojnóczky, managing director of Hunnect.

Other training courses

Outside of the universities, innovative training centers in Hungary also offer courses designed to match market trends and needs. Hunnect Academy began its e-learning, or distance-learning, courses for translators in 2011, focusing on the technological challenges of the industry.

Sándor Sojnóczky, managing director of Hunnect, says the demand for translation training is growing in line with the demand for translation services, because more companies are localizing their content into new markets. The company’s TAUS (Translation Automation User Society) course, offering 27 languages, had 115 students enrolled in 2014. By 2015 this figure increased to 500 students Sojnóczky says. “We expect this is only going to increase over the coming ten years,” he adds, noting that the most popular languages studied are Spanish, Swedish, French and Chinese.

As with Hunnect’s focus on technology, other training programs offer specializations for particular industries, like legal or medical translations. But opinions are mixed as to the effectiveness of this approach. According to Tünde Zameczné Lázár, president of the Association of Hungarian Translators and Interpreters (MFTE), such specializations can make a translator more competitive in “big” languages such as German, English or French, but may be limiting in “smaller” neighboring languages where specializing may not bring you enough business.

“You must be flexible in this profession.

We are constantly learning. Language changes, it requires practice,” she says.

“The most important thing is to learn how to learn and also how to communicate with subject-matter experts and gather the information that you require.”

Others agreed that the profession demands a readiness to keep learning.

“It’s like playing the piano, you have to practice,” says ELTE’s Horváth.

According to Sojnóczky, to keep an edge in the translation field “curiosity, dedication, self-improvement and lifelong learning are all essential.”

2016. 03. 09. 21:04

10

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Budapest Business Journal | March 11 – March 24, 2016

Quality is key in tight language market

Mark Ellmann, CEO of Consell Translations CEE Kft.

Miklós Bán, CEO of espell translation and localization ltd.

Representatives of some of Budapest’s more established translation companies say that the key to keeping busy in this competitive market is to promise quality, and deliver. Specialization is also another way they stand out.

András Szalay-Berzeviczy, managing director, TranzPress Ltd.

Tibor Palásti, CEO of APT Hungária Kft.

Alistair Binks of Albion Languages Kft.

keep up with our outstanding revenue we are getting a lot more requests is for of 2014.” marketing-related translation services,” For Tibor Palásti, CEO of APT such as blogposts and other corporate Hungária Kft., the economy in general communication materials, he says.

For Palásti’s firm, almost all the work is improving, and so is his business. “I think there is a positive trend in the is “urgent” and much of it is about market that we also experience,” he says. energy. “APT Hungária has always been Alistair Binks of Albion Languages Kft. a prominent language service provider also notes slightly improving business, in the energy industry, which is still but cautions “a longer upbeat period one of our key sectors,” he says. “As would be needed to talk about a lasting regards the languages, Russian is going rising trend.” to catch up with the all-time number one Veronika Mendel, executive director English, but also the languages of nearby of Intercontact Budapest Kft. similarly countries are emerging.”

Bán says his firm sees all kinds of observed “a minimal improving trend, but not close to the magnitude of earlier work: “In 2015 espell translated into years (i.e. before 2010).”

100-plus languages. We have relatively BBJ STAFF little translation volume where the Hungarian language is involved, Specialization helps Established translation companies in around 20-25%.

In terms of verticals Hungary say the last year has seen For many of these firms, specialization is it’s mostly ITC and heavily multilingual demand on the rise, a trend that may be key to their success. localization, finance, law, life sciences “Our company primarily deals attracting increased competition. But and technical translations.” financial, legal, insurance, these firms maintain that they can keep with their edge by competing through quality, pharmaceutical and EU documents,” rather than price, and also by focusing says Mendel. “Basically, English is the Quality trumps price most common language (almost 90% of When it comes to staying competitive, on their own specialty areas.

“Business over the last year has the translations) followed by German, most of the experts said that quality is much more important than price. been very successful, with Consell French, Spanish, Italian, and Chinese.”

“Our overhead costs and the premium At Albion Languages, “We are mainly Translations exceeding many of its targets,” according to Mark Ellmann, focused on serving technical and infrastructure we run means that we CEO of Consell Translations CEE Kft. “The medical companies,” says Binks. “Our cannot compete on price in Hungary, industry appears to finally be coming out most active sectors are automotive, we must compete on quality,” notes Bán. devices, pharmaceuticals, “espellʼs clients are mostly buyers who of its recession-induced hibernation and medical and manufacturing.

Key language need way above average performance, clients’ budgets for translation seem to be combinations for us are English/ both in terms of linguistic output and growing again.”

Miklós Bán, CEO of espell translation German into Central and Eastern overall service quality. Those companies who come to us have usually tried other and localization ltd., also says 2015 was European languages.”

TranzPress Ltd. does many types providers and decided to change because good. “Our turnover is slightly better but it’s the company’s profitability that improved of translation, according to Szalay- they needed more.”

Palásti describes a similar situation significantly,” he says. “This is mostly due Berzeviczy, but he adds that “undoubtedly the software industry” is the biggest area at APT Hungária. “We have come to a to an internal restructuring of the company for growth.

“Localization of enterprise point where we do not need to compete in 2014 and consolidation in 2015.” resource planning, business intelligence with the prices of all market players,” he Restructuring also took place at TranzPress Ltd., though it did not applications and website contents are says. “We offer high quality services boost the bottom line, according to challenges we need to meet more and at a reasonable price.” He also notes Managing Director András Szalay- more often,” he adds. “Our busiest that specialization is important, as is Berzeviczy. “Over the last year, we have language pairs continue to be English- marketing. “I am constantly looking for international companies who have their concentrated on the consolidation of Hungarian and German-Hungarian.”

At Consell, “we have seen continued regional headquarters in Hungary and our internal procedures, optimization of stability in all of our sectors,” which who need a flexible partner that offers our workflows in both of our branches tailor-made solutions,” he explains. include technical, automotive, software, of operation, rather than sales and While he acknowledges that “there is a marketing,” he says. “It is mostly due to e-learning and medical translations, this fact that we have not been able to says Ellmann. “However, one area where lot of competition”, TranzPress’ Szalay-

BBJ_2405_biz.indd 10

Veronika Mendel, executive director of Intercontact Budapest Kft.

Berzeviczy says that, in fact, “the number of reliable, long-lasting and professional translation companies is small”. Like others, he notes the importance of specialization. “Our core team is focusing on processing and managing translation and localization services in more than 50 Eastern European languages in four domains – IT, business, legal, and technical – for mostly Western European customers,” he says.

Binks of Albion Languages Kft. agrees that, if you count everyone, the market seems crowded. “Competition in translation is complex as both other translation agencies and freelancers can be considered to be competitors in a way.

Trends similar to Airbnb and Uber also appeared in translation much earlier,” he says. To stand, out, Binks says, “we aim to highlight certain key sectors and language combinations for clients to associate us with (e.g. English). This can be supported by appropriate branding activity and communication.”

Like the others, Ellmann of Consell says there is a lot of competition, but less so at the top end of the market.

“There are some large translation buyers who are willing to pay good rates for high quality and good service, and this group seems to be growing slightly,” he explains. “Our partners tell us that they prefer working with us because we offer a level of reliability, quality and service that none of our competitors can match.

We ensure this by rigorously testing our team and only selecting the best resources.”

Intercontact’s Mendel, however, notes a tightening market overall. “The number of new translation companies is continuously on the increase.

Prices are going down or at the best stagnating,” she says. “Customers want better, faster and cheaper translation.”

Despite, the tight competition, Mendel says that Intercontact is able to keep its customers happy by providing the best work. “We strive to work for clients who require high quality and proficient services and appreciate the added value they receive,” she says.

2016. 03. 09. 21:04

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2 Focus

Budapest Business Journal | March 11 – March 24, 2016

11

Translation agencies

www.offi.hu

Ÿ

2

amplexoR magyaRoRszág kft.

876

876

✓ ✓ ✓ ✓ ✓ ✓

–

European Union Publication Office, IBM, Defense Ministry, EMMI, Coca Cola, Probate

3

HunneCt kft.

418

418

✓ ✓ ✓ ✓ ✓ ✓

–

Ÿ

4

5

www.amplexor.com

www.hunnect.com

leg magyaRoRszág zRt. www.leg.eu

espell tRanslation and loCalization zRt

392

363

398

363

✓ ✓ ✓ ✓

–

Printing, packaging, education, ✓ terminology management

✓ ✓ ✓ ✓ ✓ ✓

–

362

362

✓ ✓ ✓ ✓

inteRContaCt budapest kft.

7

www.icontact.hu

340

340

✓ ✓

–

–

✓

–

Ÿ

8

9

affoRd foRdító- és tolmáCsiRoda kft. www.afford.hu

tRanzpRess kft.

10 www.tranzpress.hu

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279

267

240

310

267

245

✓ ✓

–

✓ ✓ ✓

✓ ✓ ✓

–

–

Ÿ

Translation preparation

Milengo Ltd., Siemens Zrt. Morningside Translations, Erste Bank, Unicredit Bank, ENSZ

gabriella németh Zoltán Ignácz Katalin Hamada

1062 Budapest, Bajza utca 52.

(1) 428-9600 (1) 269-5184 budapest@offi.hu

2002 41 120

– Amplexor Luxembourg (97), individual (3)

jános muth – –

1061 Budapest, Andrássy út 12.

(1) 555-0100 (1) 555-0199 peter.varga@ amplexor.com

Sándor Sojnóczky (50), Anikó Sojnóczky (50) –

sándor sojnóczky Nóra Paronai Péter Lepahin

6726 Szeged, Sepsi utca 5.

(62) 950-222 (62) 950-222 mail@hunnect.hu

2005 15

György Kovács (75), János Zelenák (25) –

györgy kovács – –

1054 Budapest, Tüköry utca 5.

(1) 439-0650 (1) 439-0651 info@leg.eu

liaison inteRpReting

–

–

–

✓ ✓ ✓

–

–

–

✓ ✓ ✓

fields of speCialization Cat tools used

Ÿ

SDL Trados Studio 2014 Professional

Life sciences, legal, business, marketing

Ÿ

ISO 9001:2009, EN 15038

Ÿ

Technical translation, complex and multi-language document management SDL Trados, MemoQ

Ÿ

–

Translation: Finance, law, life sciences, medical, pharmaceutical. Software and website localization: ITC, bank and healthcare software MemoQ, SDL

17100:2015

1982 19 400+

Individuals (100) –

miklós bán Edit Takács –

1075 Budapest, Károly körút 3/A (1) 239-8043 (1) 270-0205 forditas@espell.com

–

Life Sciences, Automotive Industry, Software Localization, Marketing, IT, Technical Documentation, e-Learning and Training Translation MemoQ, SDL Trados Studio, STAR Transit NXT, Memsource

ISO 9001:2008, ISO 15038:2006

1996 16 150

– Consell Consultancy B.V. (50), Zsuzsanna V. Ellmann (50)

mark ellmann – –

1073 Budapest, Erzsébet körút 23.

(1) 373-0112 (1) 269-4780 info@consell.hu

EU, pharmaceutical, financial, banking, legal SDL Studio, MemoQ

MSZ EN ISO 9001:2009, EN 15038:2006

1991 14 200

Veronika Mendel Lehel (50), Dr. László Lehel (50) –

veronika mendel lehel – –

1054 Budapest, Hold utca 15.

(1) 269-1153 (1) 312-5408 office@icontact.hu

Ÿ

1997 17 350

Individuals (Ÿ) Individuals (Ÿ)

alistair binks Péter Márton –

1111 Budapest, Bartók Béla út 28.

(1) 793-3610 (34) 381-915 info@ albionlanguages.com

2004 18 200

Individuals (100) –

andrás Winkler-virág Erika Antal András WinklerVirág

1053 Budapest, Veres Pálné utca 14.

(1) 310-7168 (1) 310-7169 afford@afford.hu

2002 11 500

(100) –

andrás szalayberzeviczy Réka József Anita Salát

1022 Budapest, Detrekő utca 12.

(1) 225-1426 (1) 225-1427 info@tranzpress.hu

–

Medical equipment, medical image creation, pharmaceutical, vehicle industry, machine production, IT, software localization, law, finance SDL Trados Studio, Memoq, Across, Star Transit

Medical, medical technology, pharmaceutical, health care, tourism, business, economic, finance, IT, ISO telecom, technology, 9001:2009 ✓ ✓ ✓ ✓ vehicle industry, electrical and MSZ EN engineering, legal, sociology, 15038:2006 sports, technical sports MemoQ, Across, SDL Trados

SAP SE, Nissan Sales CEE, Phoenix InternaContact, tional media European Parliament, ✓ ✓ ✓ ✓ ✓ watch and MET Group, analysis TriGranit Fejlesztési Kft.

2003 18

–

Attested European Parliament, translation, European interpreCommission, EU tation Translation Center, ✓ ✓ ✓ ✓ ✓ ✓ ✓ equipment, Sanofi-Aventis Zrt., editing, Chinoin Zrt., OTP copying, Bank, K&H Bank copy-editing

✓ ✓ ✓ ✓ ✓ ✓

Hungarian State (100) –

✓ ✓ ✓

albion languages foRdítóiRoda kft.

www.albionlanguages.com

1869 150 250

✓ ✓ ✓

Consell tRanslations Cee kft.

6

ISO 9001:2008

Public administration, ISO production 17100:2015; – SDL Stúdió, Memoq, Transit, ISO Accross 9001:2008

www.espell.com

www.consell.hu

addRess pHone fax email

–

Magyar Suzuki Zrt., Suzuki Motor Corporation, Alpine Electronics GmbH, Weidmüller Keres– kedelmi Kft., Hitachi High-Tech Corporation, Takata Safety Systems Hungary Kft.

Ÿ

top loCal exeCutive Cfo maRketing diReCtoR

✓ ✓ ✓

ConseCutive

Attested translation, translation attestation

yeaR establisHed no. of full-time employees on feb. 1, 2016 no. of subContRaCtoRs

✓ ✓

Quality assuRanCe

–

tRanslation

inteRpReting

desktop publisHing

–

majoR Clients in 2015

otHeR

softWaRe loCalization

native pRoofReadeRs

pRoofReading

total net Revenue in 2015 (Huf mln)

1,678 1,776 ✓ ✓

oWneRsHip (%) HungaRian nonHungaRian

sign language inteRpReting

HungaRian offiCe foR tRanslation and attestation (offi) zRt.

inteRpReting

seRviCes

ConfeRenCe

1

Company Website

net Revenue fRom tRanslation and inteRpRetation in 2015 (Huf mln)

Rank

Ranked by total net revenue from translation and interpretation in 2015 (HUF mln)

Software localization, technical and business translations, news extracts – MemoQ, Across, SDL Trados, Smartling

ISO 9001:2008

Ÿ

2016. 03. 09. 21:04

www.bbj.hu

2 Focus

223

foRduna foRdító 12 kft. www.forduna.hu

business team 13 inteRnational kft. www.businessteam.hu

mind poWeR

14 HungaRy kft. www.mindpower.hu

15

penna-euRópa kft. www.penna.hu

ils nemzetközi foRdító szolgálat 16 kft.

221

multi-lingua kft. www.multi-lingua.hu

tRm kft.

18

www.sosforditas.hu

sign language inteRpReting

liaison inteRpReting

ConfeRenCe

ALSTOM, Magyar InterpretaPosta Zrt, SIEMENS, tion equipWaberers Group, ✓ ✓ ✓ ment rental, National Investment translation Agency, National Deattestation velopment Ministry

ISO 9001:2009

2005 12 500

Márta Balázs (50), Edit Balázs (50) –

márta balázs, edit balázs Edit Balázs –

1123 Budapest, Alkotás utca 39/C (1) 209-2688 (1) 799-9904 info@edimart.com

Individuals (100) –

ferenc jantner, zoltánné lehel – –

1113 Budapest, Bartók Béla út 86.

(1) 209-2482 (1) 386-8626 forduna@forduna.hu

163

–

B2B translations for large companies in the long run, technical translation, software localization, website localization, legal, business, bank and financeTRADOS SDL Group Share server, Xbench, Wordfast, GlobalSight

1999 8 1,126

129

–

–

Ÿ

129

127

107

–

–

–

–

✓

✓ ✓ ✓ ✓ ✓ ✓

✓ ✓ ✓ ✓ ✓ ✓

–

Dubbing, subtitles

–

Ÿ

✓ ✓ ✓

–

–

–

SDL

100

92

✓ ✓ ✓ ✓ ✓ ✓

✓ ✓

–

–

✓ ✓

–

ISO 9001:2009

Ÿ

2008 1

Ÿ

73

emeRald kft.

20 www.emerald.hu

BBJ_2405_biz.indd 12

82

✓ ✓

–

✓ ✓ ✓

72

✓

–

✓

–

–

✓

9023 Győr, Szigethy A. utca 95.

(30) 639-8294 (96) 814-909 info@mindpower.hu

Sándor Tóth (50), Balázs Fejes (50) –

sándor tóth, balázs fejes – –

1078 Budapest, István utca 5.

(1) 321-6606 (1) 413-0424 translations@penna.hu

Wolters Kluwer Kft., Candy Hoover Hungary Kft., Weishaupt Hőtechnikai Kft., E.ON Hungária ✓ ✓ ✓ Energetikai Zrt. , AVLAutokut Kft., CMS Cameron McKenna LLP

Technical, legal, finance Across, MemoQ, Trados

ISO 9001:2009, MSZ EN 15038:2006

1989 5 78

László Reha (80), Lászlóné Reha (20) –

lászló Reha Annamária Puskás –

1114 Budapest, Móricz Zsigmond körtér 3/A (1) 209-6386 (1) 372-0136 ils@ils.hu

Ÿ

Ÿ

–

Főgáz Zrt., DHL Freight, Magyar Energetikai ès Közműszabályozási Hivatal

–

elek istván Csóka – –

2000 3 50

–

✓ ✓ ✓

✓ ✓ ✓

–

SDL Trados, MemoQ, Wordfast, Across, Passolo, Idiom Worldserver

–

Ÿ

Trados 2015

✓ ✓ ✓

–

Energy industry, geology, legal, technical Memoq

Ÿ

–

–

–

–

SDL Trados Studio, Idiom, Translation Workspace, Passolo

3V Systems Kft. (50), László János Végső lászló jános (35), Gergely Végső Balázs Végső (5), Péter Zsolt Sándor Rónai Végső (5), Liza Dávid Hegedűs Borbála Végső (5) –

1011 Budapest, Bem rakpart 26.

(1) 202-0202 (1) 212-2329 multi@lingua.hu

ISO 9001:2009, MSZ EN 15038:2006

1982 8 100

ISO 9001

2004 7 150

Individuals (100) –

istván fülöp – –

1015 Budapest, Hattyú utca 14.

(1) 599-9299 (1) 599-9298 info@sosforditas.hu

–

2003 3 48

Tibor Palásti (70), Norbert Hegedűs (20), Gyula Kovács (10) –

tibor palásti Mónika Tajcs dr. Bence Györög

1076 Budapest, Thököly út 25.

(30) 561-8454 (28) 389-432 apt@apthungaria.hu

Zsolt Kunos (100) –

zsolt kunos – –

1116 Budapest, Fehérvári út 130.

(1) 464-3144 (1) 464-3145 zsolt.kunos@emerald.hu

Ÿ

72

Elek István Csóka (100) –

–

apt HungáRia kft.

19

1036 Budapest, Dereglye utca 2.

(1) 250-6729 (1) 240-9291 info@businessteam.hu

Legal, pharmaceutical, finance, life sciences, IT, machine production, insurance, electronics Trados, SDLX Trados Studio, MemoQ, Déja-Vu

–

www.apthungaria.hu

anita nagy Roland S. Rácz Ráczné (90), Anita Nagy Roland S. Rácz Ráczné (10) Brigitta – Somogyi

Bristol-Myers Squibb, Deloitte&Touche, FedEx, General Electric, Groupama, ✓ ✓ ✓ ✓ IT Services Hungary, Novartis, Icon Clinical Research, Lenovo

Ÿ

92

addRess pHone fax email

Terminology manageCOLGATE-Palmolive ment, video Magyarország Kft., and voice ASUS HOLLAND materials B.V., Wizzair, UVEX ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ in foreign Hungária, SWIETlanguages, ELSKY Vasúttechnika interpretaKft., Ceva-Phylaxia tion equipZrt. ment

163

100

top loCal exeCutive Cfo maRketing diReCtoR

1989 13 305

–

www.ils.hu

17

Ÿ

Technical, legal, food industry, marketing, distance ✓ ✓ ✓ ✓ interpretation, voice over MemoQ 7.8

oWneRsHip (%) HungaRian nonHungaRian

Business, technical, medical, EN ISO legal, financial, IT, trademark 9001:2008, MSZ translation EN15038:2006 SDL Trados 2014

✓ ✓

107

Distance interpretation, voice over, interpretation equipment

fields of speCialization Cat tools used

–

231

127

ConseCutive

tRanslation

inteRpReting

desktop publisHing

✓ ✓ ✓ ✓ ✓ ✓

www.edimart.com

otHeR

softWaRe loCalization

native pRoofReadeRs

pRoofReading

majoR Clients in 2015

yeaR establisHed no. of full-time employees on feb. 1, 2016 no. of subContRaCtoRs

223

inteRpReting

seRviCes

Quality assuRanCe

edimaRt tolmáCsés foRdítóiRoda 11 kft.

Budapest Business Journal | March 11 – March 24, 2016

total net Revenue in 2015 (Huf mln)

Company Website

net Revenue fRom tRanslation and inteRpRetation in 2015 (Huf mln)

Rank

12

–

1998 3

Ÿ

2016. 03. 09. 21:04

www.bbj.hu

2 Focus

ConCoRd 21 foRdítóiRoda kft.

www.concordforditoiroda.hu

kfi foRdítóiRoda 22 kft.

64

www.kfi.hu

teCH-lingua bt.

23

63

www.tech-lingua.hu

tuRRis babel kft.

23 www.turrisbabel.hu

25

foRdítunk kft. www.forditunk.net

57

www.enco-f.eu

m-pRospeCt kft.

50

www.m-prospect.hu

H-net nyelvi 28 központ kft. www.h-net.co.uk

HelpeRs HungaRy

29 kft. www.helpers.hu

l.C. bt.

NR

www.lcbt.hu

Ÿ= would not disclose, NR = not ranked, NA = not applicable

BBJ_2405_biz.indd 13

63

62

enCo-f kft.

26

27

66

66

65

115

63

62

57

146

✓ ✓

–

–

✓ ✓ ✓ ✓

✓ ✓ ✓

✓ ✓

–

✓ ✓ ✓

–

–

–

–

✓ ✓

27

209

✓ ✓ ✓

✓ ✓

–

–

Video and sound material translation with dubbing or subtitles

–

–

✓ ✓

Ÿ

✓ ✓ ✓

✓ ✓ ✓

–

–

–

Technical, pharmaceutical, printing, IT, business MemoQ

–

Legal, finance, construction industry, technical Trados

–

Vehicle industry, IT, machine tools, measurement technology, construction industry SDL Trados

Ÿ

–

Ÿ

✓ ✓ ✓

–

Trados, Wordfast, Passolo, Idiom

Translation attestation

Közlekedésfejlesztési Koordinációs Központ, Nemzeti Fejlesztési Minisztérium, Hungerit Zrt., GE Hungary Kft.

✓ ✓ ✓

–

Ÿ

–

Company education, language training, language tests

MOL, MOL Petrolkémia Zrt., MOL-LUB Kenőanyag Gyártó Forgalmazó és Szolgáltató Kft., – Mélyfúrási Információ Szolgáltató Kft., Signal Biztosító Zrt., FER Tűzoltóság és Szolgáltató Kft.

✓ ✓

Gestamp-Hungária Kft., Harman Becker Automotive Systems Kft., Becton Dickinson Hungary Kft., Com- ✓ ✓ ✓ merzbank Zrt., Sysmex Hungária Kft., Galika Szerszámgépek Kft.

MemoQ, Trados

Ÿ

Ÿ

Ÿ

ISO 9001

Ÿ

Oil and gas industry, ERP systems, geology, production & maintenance, lubricants, ISO 9001 : – contracts, logistics, sourcing, ICH 060627 finance-accounting Transit NXT, MemoQ

yeaR establisHed no. of full-time employees on feb. 1, 2016 no. of subContRaCtoRs

13

oWneRsHip (%) HungaRian nonHungaRian

top loCal exeCutive Cfo maRketing diReCtoR

addRess pHone fax email

(100) –

andrás zsolt muhi – –

1025 Budapest, Pusztaszeri út 70/C (1) 336-1148 (1) 326-5670 info@ concordforditoiroda.hu

László Busa (90), Dorottya Busáné Ferenczy (10) –

lászló busa – –

1125 Budapest, Szilágyi Erzsébet fasor 10.

(1) 459-0400 (1) 459-0401 info@kfi.hu

Individuals (100) –

Csaba szekeres Dóra SzekeresSimon Mónika Pap Mohainé

8052 Fehérvárcsurgó, Páskom utca 2.

(22) 792-959 (22) 792-959 info@tech-lingua.hu

Péter Gárdos (50), Ádám Dániel BreuerZehevi (50) –

péter gárdos, ádám dániel breuer-zehevi – –

1054 Budapest, Tüköry utca 3.

(1) 329-0161 (1) 329-0161 info@turrisbabel.hu

Individuals (100) –

katalin kovács – –

1132 Budapest, Váci út 14.

(1) 781-1926 (1) 781-1927 forditunk@forditunk.net

1990 2 85

Miklós Gábor Szigeti (90) Brigita Jaklin (10)

miklós szigeti Istvánné Kovács Miklós Szigeti

1025 Budapest, Verecke lépcső 20/A (70) 373-0665 (1) 887-7563 enco-f@outlook.com

Csaba Hajdú (50), Márta Hajdú (50) –

Csaba Hajdú, márta Hajdú Márta Hajdú –

8000 Székesfehérvár, Szörényi utca 59.

(22) 311-653 (22) 311-653 office@m-prospect.hu

2012 6

Ÿ

2003 2 100

2007 7 100+

2004

Ÿ

100+

2008 2

Ÿ

–

Industrial technical, medical technology, financial, marketing MemoQ

MSZ EN ISO 9001:2009

1996 6 200

✓ ✓ ✓

–

Technical and financial translations Trados

Ÿ

1999 3 15

zsuzsanna Zsuzsanna Tóth tóth (100) Melinda Dóczy – Zoltán Helyes

1132 Budapest, Nyugati tér 4.

(1) 239-2254 (1) 239-2254 info@h-net.hu

–

–

Energy industry, pharmacology, telecom, marketing MemoQ

–

2006 13 100

Barbara Ürögdi (50) Nenad Ignjatovic (50)

andrás bocz – –

1094 Budapest, Tompa utca 9.

(1) 317-8570 (1) 328-0363 info@helpers.hu

Ÿ

1990 4 150

Gábor Pataki (100) –

gábor pataki – –

1026 Budapest, Rügy utca 12.

(1) 394-4758 (1) 200-5740 lcbt@lcbt.hu

✓ ✓ ✓

–

Daimler Mercedes, Harley-Davidson Europe, The Big World, Scheidt & Bachmann, Díjnet, DBR, Saasco

–

–

–

Ÿ

–

Interpretation BM NOK, MLSZ, HM, ✓ ✓ ✓ ✓ ✓ equipment OPEL, OBA

✓

fields of speCialization Cat tools used

Quality assuRanCe

sign language inteRpReting

liaison inteRpReting

ConfeRenCe

Humansoft, Sodexo Magyarország, Egis Gyógyszergyár, Mercedes - EVOBUS

Ford Europe, Nikon Software Metrology, Omax, sale, MAN Trucks&Busses, – ✓ training, KÉSZ Csoport, Jabil consultation Circuit Hungary Kft.

✓ ✓

✓

ConseCutive

tRanslation

✓ ✓

✓ ✓ ✓ ✓ ✓ ✓

49

Ÿ

inteRpReting

desktop publisHing

✓ ✓ ✓ ✓ ✓ ✓

34

Ÿ

majoR Clients in 2015

otHeR

softWaRe loCalization

native pRoofReadeRs

pRoofReading

Company Website

inteRpReting

seRviCes total net Revenue in 2015 (Huf mln)

net Revenue fRom tRanslation and inteRpRetation in 2015 (Huf mln)

Rank

Budapest Business Journal | March 11 – March 24, 2016

–

–

–

Police, legal, financial

Ÿ

This list was compiled from responses to questionnaires received by March 9, 2016 and publicly available data. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time.

While every effort is made to ensure accuracy and thoroughness, omissions and typographical errors may occur. Additions or corrections to the list should be sent on letterhead to the research department, Budapest Business Journal, 1075 Budapest, Madách Imre út 13–14., or faxed to (1) 398-0345. The research department can be contacted at research@bbj.hu

2016. 03. 09. 21:04

3Business BBJ

COMPANY

NEWS Wabererʼs International launches German subsidiary

Hungarian road haulage company Wabererʼs International began operations on March 4 at its new German subsidiary, parent company Wabererʼs Deutschland GmbH told Hungarian news agency MTI. In 2015, Wabererʼs International transported more than two million tonnes of cargo between Germany and other European Union member states. The companyʼs revenue from the German market grew by 18% last year and accounted for onethird of total turnover. In addition to Germany, Wabererʼs International has units in France, the United Kingdom, the Netherlands, Italy, Poland, Romania and Slovakia. Wabererʼs International had revenue of €392 million in Q1-Q3 of last year.

Qatar Airways Cargo’s BudapestDoha route relaunched

The first scheduled Qatar Airways Cargo flight landed in Budapest on March 3, departing from Doha, for the first time since the route was cancelled in 2013, said Budapest Airport Zrt., the operator of the capital’s Liszt Ferenc International Airport, according to reports. The company announced on January 28 that it would relaunch the route. With a load capacity to carry 62-68 tons, the company began operating an Airbus A330 aircraft, which will fly on Thursdays and Sundays.

According to earlier reports, the plane will have a stopover in Prague. The company previously operated flights on the Doha-Budapest route twice a week from 2012-2013.

Spar Magyarország sales rise 3% in 2015

The turnover of supermarket chain Spar Magyarország was up 3% compared to the previous year, reaching HUF 488.2 billion in 2015, managing director Gabriella Heiszler said on March 2, as the firm celebrated 25 years in Hungary.

Spar had 456 stores in Hungary at the end of the year, including 75 operating as franchises, Heiszler said, adding that the number of Spar Express stores in gas stations had reached 45. Together with a Spar supermarket opened in Budapest last year, overall foothold was 393,000 sqm by 2015 year-end, according to Heiszler. The company expanded its meat factory in Bicske, a HUF 1.7 bln

BBJ_2405_biz.indd 14

investment in 2015, which covered the addition of an education center to the facility. Spar Magyarország employs more than 13,000 people, Heiszler added. Erwin Schmuck, the managing director of the parent company, said Spar has invested approximately €1 bln in Hungary over the past five years.

Russian UTAir eyes Moscow- Héviz flight

Russian airline UTAir is planning to relaunch a scheduled flight between Moscow and Héviz-Balaton Airport as of July 10, operating the flight once a week until November 6, Péter Faragó, the head of Hungarian state-owned tourism agency Magyar Turizmus said on March 3, according to reports. Speaking at the travel expo in Budapest, “Utazás 2016”, the head reportedly said the flight would be resumed as a result of joint efforts between Magyar Turizmus, the Russian embassy in Budapest, tourism industry representatives and the local council of Héviz. Magyar Turizmus and the Tourism Destination Management Association of Héviz will jointly launch a HUF 30 million campaign to promote the relaunched flights, Hungarian news agency MTI reported. Due to the weak ruble and the state of the Russian economy, UTAir suspended its scheduled flights between the two cities in the spring of last year. Héviz, near Lake Balaton, is one of the largest thermal lakes in the world and is a popular holiday destination for Russian tourists.

Grant Thornton Hungary enhances services in the region

International auditing and financial advisory company Grant Thornton has strengthened its position in Hungary through the purchase of a majority stake in Valuation Partners and through the establishment of Grant Thornton Valuation Kft., according to a press release issued on March 3. “We are happy to see that there is a growing demand for advisory services among the companies in the CEE region. That is the reason why Grant Thornton wishes to further strengthen its growing regional role by expanding its advisory services,” said Waltraud Körbler, CEO of IB Grant Thornton Consulting Ltd., during a press conference. The company’s main focus remains on

Hungary’s first dual graduates receive degrees Students at Kecskemét College toss their mortarboards in the air to celebrate the completion of their studies during a February 27 graduation ceremony. The class included 17 students of the first dual training program launched in Hungary. The dual training students completed a three-and-a-half year course that included practical training at local factories. László Palkovics, state secretary of Hungary’s Ministry of Human Capacities, called the university an “institution of the future” due to the dual training it provided to students in cooperation with MercedesBenz Manufacturing Hungary Kft. and Knorr-Bremse Fékrendszerek Kft., MTI reported. Piroska Ailer, the rector of the college, reportedly said the training that was launched as an experiment in 2012 has grown into an exemplary, country-wide acknowledged course. (Photo: MTI/Sándor Ujvári)

the valuation of property and assets; providing technical advisory, property and investment consulting related to project financing; as well as transfer pricing. These activities are enhanced by its corporate finance services line.

Grant Thornton Hungary refers to all companies operating in Hungary under the Grant Thornton umbrella, including IB Grant Thornton Consulting, IB Grant Thornton Audit Kft., Grant Thornton Valuation Kft. and Corporate Finance Kft. Grant Thornton has been present in Hungary since 1991.

thyssenkrupp Hungarian plant to begin operations in 2018 Germany-based technology group thyssenkrupp is expected to complete construction of its plant in Hungary’s Jászfényszaru by 2018, city mayor Márta Czeglédi said on March 1 at the launch of the project, Hungarian news agency MTI reported. Thyssenkrupp announced last week that it will build a new automotive components plant in Jászfényszaru, with an investment of €100 million. “This investment follows our strategy towards standardization and cost optimization in the automotive components business. For the first time

in Europe we are localizing production of two different technologies at one site.

That will be an immense help in offering competitive cost structures,” said Dr. Karsten Kroos, CEO of thyssenkrupp’s components technology business.

AAA Auto opens new branch in Pécs

AAA Auto opened its newest branch in Hungary on March 1 in the city of Pécs, providing a full range of service from purchasing, to sales, to financing and insurance of used cars, according to a press release. The new branch created 25 jobs and had an initial stock of 200 vehicles across a total area of 8,800 sqm, with plans to increase this to 300 vehicles in the coming months, the statement added. Car financing and insurance is available from partners such as Budapest Bank, Merkantil Bank, Generali and BNP Paribas Cardif. AAA Auto now offers up to 1,000 vehicles for sale and spans a total area of 25,000 sqm in Hungary. “Our business in Hungary continues its buildout, and we are striving to deliver better service to customers from more locations,” said Csaba Takács, country manager of AAA Auto Hungary. “We have

2016. 03. 09. 21:05

www.bbj.hu

3 Business

Budapest Business Journal | March 11 – March 24, 2016

15

WHO'S NEWS

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UPS Hungary names new country manager

Gov’t grants poultry firm HUF 3.6 billion László Bárány, the CEO of poultry processor Master Good Magyarország, speaks during a March 8 press conference at the Ministry of Foreign Affairs in Budapest to announce that his company will receive a HUF 3.6 billion grant to support a HUF 8.9 bln expansion of its export capacity. Foerign Affairs and Trade Minister Péter Szijjártó was quoted as saying that Master Good, already one of the top 20 poultry slaughtering companies in Europe, would become one of the top ten as a result of the development. Bárány said Master Good currently breeds and processes one-third of Hungary’s stock of chickens, and this ratio will come close to 50% in two years as a result of the investment. Master Food currently exports more than 55% of its output, and this percentage will reach 70% as output grows 30-35%, he told MTI. Bárány added that headcount is expected to grow to almost 1,300. The group had consolidated revenue of HUF 43.5 bln last year and expects annual revenue to reach HUF 60 bln in three years as a result of the investment. (Photo: MTI/Szilárd Koszticsák)

already bought and sold some 10,000 cars in Hungary since our return here, and we are expanding to consolidate our presence in the Hungarian used car market,” he added. “We are glad to see even further expansion of the AAA Auto Group, repeating its success in other markets. The AAA Auto brand is one of the top ten modern Czech brands according to a 2013 study by Ogilvy & Mather. The company also ranks Number 52 on the Czech list of the 100 largest companies,” added Juraj Chmiel, Ambassador of Czech Republic in Hungary. “We welcome and salute AAA Auto’s debut in south-western Hungary.”

Insurersʼ revenue from premiums edge up 2% in 2015 Hungarian insurersʼ revenue from premiums edged up 2.2% to HUF 869 billion last year, the head of the Hungarian Insurers Association (MABISZ) said at a conference on March 1, Hungarian news agency MTI reported. Premiums revenue from life insurance fell 2.6% to HUF 443 bln, due to a 12% drop in single-premium policy premiums revenue, while premiums revenue from general insurance rose 7.7% to HUF 409 bln, Anett Pandurics said at the insurance conference organized by portfolio.hu. Revenue from premiums on pension insurance policies rose overall, she added. The liability and health insurance segments also show promising growth, she said.

Market concentration was little changed last year, with the top five of Hungaryʼs 25 insurers operating in the country as

BBJ_2405_biz.indd 15

companies limited by shares and taking 57.8% of market share. The market share of the top ten edged down to 82.3% from 84.2%. Pandurics said a recent survey by MABISZ reveals that industry insiders think over-regulation is the biggest obstacle to market growth, though the low-yield environment is also a threat.

Report: Tesco Mobile clients entitled to cancel service immediately

The Hungarian clients of Tesco Mobile are eligible to cancel their subscriptions effective immediately if the level of service deteriorates in any way, as per current regulations, Hungarian online daily origo.hu reported on February 28, in response to a possible termination of Tesco Mobile services in Hungary.

According to reports from last year, the operations of Tesco Mobile could come to a close in Hungary by April 16, with the carrierʼs services will be taken over

by Vodafone Hungary. What this means is that some packages may change or be eliminated, while fees could also be revised, according to reports. Tesco and Vodafone announced the launch of Tesco Mobile in September 2011 and in one year’s time the service provider had more than 70,000 subscribers. The company works as a virtual service provider and uses the infrastructure of Vodafone, origo.hu said. Vodafone is expected to take over all of Tesco Mobileʼs clients during the period of April 6-16, although operations will be uninterrupted, origo. hu said. Vodafone will inform each subscriber about the changes.

Jim Kearney was appointed country manager at UPS Hungary, however, his responsibilities will also include managing the Romanian and Greek subsidiaries, taking over from Tim Helsen, who will become country manager in the Netherlands. In his new role, Kearney, a 27-year UPS veteran and native of Ireland, will be responsible for approximately 650 employees, as well as UPS’s operations, business development, and strategy across the three countries. “Jim Kearney’s wealth of knowledge and experience makes him well-equipped to further develop our business in Hungary, Romania and Greece,” said Daniel Carrera, president, UPS East Europe. “With his guidance, our customers in the region will continue to benefit from the innovative logistics services and solutions they have come to expect from our company”, he added.

Kearney started his UPS career in 1989 as a billing clerk in UPS’s U.K. finance & accounting department, based in London.

Kearney holds a professional accounting qualification from the Chartered Institute of Management Accountants (CIMA).

Wizz Air appoints new CFO Sonia Jerez Burdeus was appointed Chief Financial Officer and member of the Leadership Team of Hungarian low-cost airline Wizz Air, as of June 1. A graduate in Physics and Engineering from the University of Barcelona and the University of Chicago with a Master of Business Administration, Jerez joins Wizz Air from Vueling Airlines S.A., a member of the International Consolidated Airlines Group S.A., where she has been the Chief Financial Officer and a Vueling board member since 2011. Jerez was also a member of the founding management team of Clickair S.A. and was its Chief Financial Officer from 2006 to 2008 when Clickair S.A. merged with Vueling.

NNG names new CEO Giles Shrimpton was appointed CEO of NNG, Hungarian-founded supplier of automotive navigation software, content, and services, as of March 1, succeeding founder Péter Balogh.

Balogh stood down as CEO of the company from July 1, and became chief advisor to the board, appointing Péter Szombathelyi, long time COO at NNG, as acting CEO until a

replacement was found. Shrimpton brings with him a proven track record of success as a leader in the automotive industry. “I am honored and excited to lead NNG into the future,” said Shrimpton. “Innovative product offerings and strong partnerships are top priorities in today’s ever-evolving automotive infotainment industry, so my focus is on leading the research and execution that our customers need and expect from us. The growth opportunities for NNG are significant, as drivers and OEMs alike are demanding a safer and more enhanced core driving experience.

NNG is leading the way in answering that demand, and will continue to do so.”

Shrimpton began his career as a software engineer and has held senior positions at Philips, Siemens, Valeo, TomTom, and Mirror Controls.

DHL Express Hungary appoints new CEO Zoltán Bándli was appointed CEO of DHL Express Magyarország, effective from tomorrow, succeeding John Lucas, who will lead the South African unit of DHL. Bándli has worked in the logistics sector for 20 years, and in managerial positions for more than 15 years. He joined DHL Express in 2009, with more than ten years of experience in the field of operation and commerce. While at DHL, he worked as corporate commercial and marketing director, and was also active in sales and company development. Under his lead, DHL Express Magyarország has become one of the most dynamically growing companies in air cargo express services.

In his new position, Bándliʼs main task will be to further strengthen the company’s market position and realize its strategic plans. “I am enthusiastic about the new challenges my promotion is bringing,” Bándli said. “My aim is to contribute to the further dynamic growth of the company, in the name of innovation, centered around our clients,” he added.

Citi Hungary appoints new CEO Kevin A. Murray was appointed the new CEO of the Hungarian division of Citibank, as well as the head of Citi in the region, which includes Hungary, the Balkans and the Baltic States. During its 30 years of operation Citi Hungary has been a forerunner in innovation and the team here has built a strong business, Murray said. Murray had previously headed Citiʼs Western and Central Africa region and was CEO of Citi Ivory Coast and Citi Senegal.

He joined Citi in 1987 and worked mainly in corporate and investment banking as well as in the private banking divisions, risk management and internal control.

Murrayʼs appointment was effective as of March 1 and he will be succeeding Aftab Ahmed, who is moving to another position within the firm.

2016. 03. 09. 21:05

Hungarian CEOs exude optim While PwC’s annual survey of company leaders found most expect growth, CEOs here also expressed concerns about sourcing good workers.

BBJ STAFF

The heads of Hungarian companies apparently feel good about their future.

In PwC’s annual CEO survey, which includes Hungary for the fifth year now, 84% of CEOs in this country are confident about their prospects for revenue growth, compared with 82% of CEOs worldwide.

The global survey included more than 1,400 CEOs, and the Hungarian survey, conducted in cooperation with the Confederation of Hungarian Employers and Industrialists (MGYOSZ) included more than 150 CEOs in this country. While acting as an essential indicator of overall confidence, the survey also provides detailed information on challenges and opportunities that CEOs are seeing.

When they look at the global economy, 54% of Hungarian CEOs expect growth, compared to only 27% of global CEOs, the survey found. Hungarian CEOs are also more optimistic about the Hungarian economy’s growth prospects: 59% expect growth, which is up from 51% last year. It is also clear from this year’s responses that the lack of qualified professionals is of particular concern to CEOs in this country, and they say it makes them value their existing employees more.

While noting that this is the first time Hungarians are more optimistic than the world average, Nick Kós, Country Managing Partner at PwC, said CEOs here “perceive the lack of qualified professionals and skilled workers as a serious impediment to growth, which they will need to overcome in order to stay competitive.”

The survey shows that traditional target markets remain attractive. While globally the US, China and Germany are once again the most attractive targets for investment, among Hungarian CEOs Germany ranks as the most important target market. Neighboring markets, like Romania, Russia, Slovakia, Austria and Czech Republic are also said to be of interest to Hungarian CEOs. The survey found that most CEOs anticipate a multi-polar world rather than a globalizing one – as multiple value systems, rules of law, economic and trading models are expected to hold sway in various parts of the world. Most of the CEOs queried said they only expect convergence with regard to free and open access to the internet. The two trends that CEOs see as having the highest impact on their business operations are technological advances and demographic changes.

The lack of qualified professionals is of particular concern to Hungarian CEOs, as 54% of them said they expect to hire over the next year. This marks a notable increase over last year, when only 42% of company leaders here said they expected to increase headcount.

BBJ_2405_biz.indd 16

Growth: High expectations; neighboring count

Respondents who are confident about global and 4 Hungarian economic growth and their own prospects for revenue growth over the next year

?

Hungarian CEOs

Global CEOs

Targets for market growth

“We launched the Hungarian CEO Survey five years ago, and this is the first time we see that CEOs in Hungary are somewhat more optimistic than their global counterparts.”

–Nick Kós, PwC Country Managing Partner

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–Dr. Péter Futó, MGYOSZ President

“Many CEOs reported using feedback from employees to measure their success, while 37% also said that customer loyalty and feedback were key.”

–Anita Mekler, Partner, Tax & Legal svcs., PwC

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2016. 03. 09. 21:05

REAL ESTATE NEWS

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BBJ_2405_biz.indd 17

2016. 03. 09. 21:05

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3 Business

Budapest Business Journal | March 11 – March 24, 2016

Hungary has another big year for M&A activity According to EYʼs annual report, 2015 was a busy year in this country from the perspective of mergers and acquisitions.

In this interview with the Budapest Business Journal, EY partner Margaret Dezse explains why this is also good news for the Hungarian economy.

the IT deals represent a healthy mix of various types of M&A transactions: They include local JEREMIE as well as other types of local financial and strategic investors investing into local businesses; local entrepreneurs exiting from their successful businesses; and foreign private equity making a first investment into the entire CEE region.

We may look at these deals from the sellers’ perspective also: Sellers included local entrepreneurs; JEREMIE funds; and the companies themselves (issuing new shares), some of which were already backed by JEREMIE funds.

All the buyer groups have different motivations, naturally. We believe the reason for a healthy deal flow is the existence of larger strategic deals in the country and the CEE region, which raises the confidence of private equity investors to support local companies. Their increased investment appetite provides a ground for venture capital to make even earlier bets on some of the local prospects and assist in the commercialization of ideas and further the domestic market, but also to support in becoming an international player.

CHRIS KESZTHELYI

There were 130 merger and acquisition deals in Hungary in 2015, with a value exceeding $1.5 billion, an increase of 27% in volume and 2% in value over the previous year, financial advisory firm EY announced on March 2.

That is the best M&A performance in Hungary in six years, EY said, as it released its annual “M&A Barometer” report.

Hungary ranked fourth in the region in volume of transactions, following Turkey (312), Poland (278) and Czech Republic (185), according to the report.

Domestic transactions continued to dominate the Hungarian market last year, as in 61% of closed deals, both the buyer and the seller were Hungarian-based companies, similar to last year’s figures.

When it came to foreign buyers, investors from the United States and Germany closed the most deals – six each – closely followed by the United Kingdom and Czech Republic with five deals each.

The Hungarian IT and technology sector represented 28% of all M&A transactions, while the energetics and mining sector represented 13% and the processing industry 9%.

Margaret Dezse, partner and head of transaction advisory services at EY Hungary spoke to the Budapest Business Journal about the significance of the “M&A Barometer” findings.

Q

What does the positive M&A trend mean for the Hungarian economy in

general?

A: M&A activity does not necessarily have an immediate direct correlation with the overall performance of a particular economy. However, where there are willing buyers and willing sellers there is a market, and thus a positive impact on the economy. As such, usually an increase in appetite for acquisitions reflects that the owners/managers have a positive outlook for the future.

One can draw a number of conclusions from the numbers. For example, the increasing proportion of local deals may reflect that there is an increasing volume of capital within the country, thus impetus for growth and acquisitions.

BBJ_2405_biz.indd 18

Q

What makes Hungary an attractive place for foreign Margaret Dezse, partner and head of transaction advisory services at EY Hungary. firms to invest?

A: Foreign investors consider various factors prior to investing abroad.

In short, more confidence, more One of these factors is to enter or “The interest of foreign investors funding/capital available, cash on enhance their presence in the Central the balance sheet, and valuation gaps and Eastern European market, and shows not only their trust and Hungary is considered if there is a between buyers and sellers narrowing. good company to acquire with this interest in the target companies, strategic or synergistic base. This also How do EU funds contribute but also the macroeconomic applies to financial investors looking to M&A deals? Could for bolt-on acquisitions in the CEE the expected decrease environment, which increases region or consolidation in the region, in available EU funds in the future and Hungarian assets provide a good the confidence in the economy.” negatively affect M&A deals?

A: EU funds contribute to M&A deals opportunity for this strategy. mainly through the JEREMIE funds, Another valuable aspect that makes On the other hand, a number of which were established through the Joint Hungary and Hungarian companies Western companies have also decided to European Resources for Micro to Medium attractive for investors is the talent and focus on their core, home markets and Enterprises program, with on average lower staff costs available in the country. have sold their businesses to domestic 70% governmental capital and 30% For example, Hungary has high-quality private contributions. The deadline for engineering education, not only in investors.

An acquisition is usually beneficial JEREMIE funds to invest their resources Budapest but in the countryside as well, for both the seller and the buyer and is May 2016, which on the short-term which definitely drives the enhanced the main goal of each party is to create could negatively affect the Hungarian interest in IT and technology-based value in the end. The interest of foreign M&A market. However, funds also need companies. The cost of Hungarian investors shows not only their trust and to start working on the exits from their engineers is still below the Western interest in the target companies, but also first rounds of investments, closed back European and U.S. salary levels, which the macroeconomic environment, which in 2010, which can generate more deals is an important consideration for increases the confidence in the economy. on the market. investors.

Additionally, the activities of the [EU’s] JEREMIE funds creates opportunities for How do the M&A How do you see the transactions of the upcoming years in terms of Hungarian SMEs to enter international Hungarian government M&A activity in Hungary? markets and become visible to global A: We currently see no reason for clients, therefore creating further jobs in contribute to the market’s overall performance? this positive trend not to continue in Hungary.

A: The Barometer excludes M&A upcoming years, although continued transactions by the government. These growth depends not only on the What is the main driver for deals are low in number compared to Hungarian economy but also the global the positive trend?

A: In 2015, foreign investors the overall market, and variable in economy and events. In the mid-term, continued to invest in Hungary and terms of values, and generally do not the presence of financial investors JEREMIE funds were also very active, directly impact or relate to the trends among the acquirers and the fact that since it was the last full year to invest of the private-to-private M&A market JEREMIE funds will start exiting from their portfolio companies may lead to their resources until the end of May 2016. performance. further waves of transactions. We also Further, there were a relatively high see that high net worth individuals, number of foreign financial investors What makes the Hungarian amongst the acquirers; and also the IT sector the most attractive including successful entrepreneurs who have sold their previous companies, are first wave of Hungarian entrepreneurs field for M&A transactions? started to retire, which led to yet more A: Good talent, ideas and innovation also actively looking for investment in the Hungarian market. We see that opportunities.

M&A activity.

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2016. 03. 09. 21:05

www.bbj.hu

3 Business

Budapest Business Journal | March 11 – March 24, 2016

19

Online ads take top spot as overall spending grows Despite regulation that industry insiders say hurts the business, 2015 saw moderate growth in the ad sector.

Share of the Hungarian advertising market

LEVENTE HÖRÖMPÖLI-TÓTH

Total advertising spending in 2015 amounted to HUF 194.37 billion in Hungary, which represents 2.81% growth over the previous year, according to data presented by the Hungarian Advertising Association at the Evolution Conference, the largest annual gathering of the Hungarian digital economy. The moderate growth rate was welcome, but the bigger news is that online advertising now leads the market.

Growth of overall ad spending was more dynamic in 2014, reaching 7.7%, but that was an election year and related political advertising activity fuelled the exceptional performance. So the 2015 performance was OK, though it could have been better according to those in the industry.

“Although the market is on the way to recovery, the entire industry growth is scrapped, nearly in full, by the amended advertising tax, now at 5.3%. Predictable and market-friendly regulation is needed in order to enable the advertising sector to play its role as an engine of the economy appropriately,” Zsolt Urbán, chairman of the Hungarian Advertising Association said.

The new regulation put an extra burden on domestic players, badly affecting their position in the digital segment.

International counterparts, in turn, profited from the situation. In 2015, up to half of total online spending landed with foreign-owned entities.

Yet despite this, the overall picture looks far from gloomy. Although government spending was down by 20% last year compared to 2014, the advertising market still fared well, mainly due to the record performance of internet-based advertising.

2014

2015 SOURCE: Hungarian Advertising Association

“Now the digital segment has become the biggest slice of the advertising pie in Hungary. It soared by 14%, surpassed the HUF 50 bln mark, and hit HUF 56 bln,” said Zoltán Baróth, chairman of IAB Hungary.

TV now number two

This also implies that television has been deprived of its number one position and now ranks only second in the race for advertisers’ money. Its share of 26.4% shows, however, that it kept a key role.

“Spending in this segment went up by 3.15% which provides evidence for the permanent trust marketers place in it.

The efficiency of TV spots still cannot be questioned not only in terms of brand building, but also consumption promotion,”

“The efficiency of TV spots still cannot be questioned, not only in terms of brand building, but also consumption promotion.” stressed Krisztián Kovács, chairman of Association of Hungarian Electronic Service providers (MEME).

Print media ranked third, and had to live with going downhill in terms of decreasing advertising revenues. Yet, in spite of shrinking by 6.95%, distribution and online revenues keep the sector afloat.

Direct marketing was one area where nothing really changed at first glance, as the figures from 2015 ended up almost

identical to those of 2014. However, there were major shifts between individual channels. Whereas addressed and nonaddressed shipments saw a backlash, database, e-mail marketing and call center activity compensated for this slump.

“The latter development is great news, as trends suggest that further market expansion will be determined by these areas’ growth,” György Huszics, chairman of the Association of Direct and Interactive Marketing noted.

The outdoor market is typically over exposed in non-election years, so it was no wonder that its performance in 2015 lagged behind that in 2014. Radio suffered losses as well due to the general uncertainty over regulation on the market, but still raked in some HUF 9 bln.

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Electronic tills the mandatory electronic The reach of which cash registers directly till system, in businesses are for all kinds of tax authority, has been connected to the since it began in 2014. expanding steadily every sale is instantly The system means authority, and it makes tax reported to the on VAT. it harder to cheat originally introduced, When it was that most cash-heavy the law required in Hungary install businesses operating in the fall of 2014. run up tills by the deadline to do so could Fines for failure After a long and rocky to HUF 500,000. upwards of 190,000 end of start to the program, installed by the e-tills had been operation throughout in 2014, and were last year.

Hungarian the November, In plans to expand tills to government announced use of electronic the mandatory taxis, laundries ANIKO FENYVESI include auto mechanics,offices. had and currency exchange end of 2014, NAV with their taxes on earnings Already by the of cases As companies file most should find that encountered thousands companies in the made last year, fined several huge differences shortfalls and following a series there are not the new regulations, for failing to complyNAV also noted a by amount owed under experts interviewed of targeted audits. in VAT revenue of according to tax tabs on trucks.

Journal. of the subsequent increase authorities keep the Budapest Business billion by the end regulations help enforcement measures come nearly HUF 200 according more EKAER Still, stricter in the years to tills’ operation, some firms pay most to have higher burdenslose their tax losses first year of the may mean that that the measure previous tax before. And they will to reports. It appears of tax losses in Minister Mihály this because than they did explains Antretter. probably already great deal to benefit from what Economy from previous years,” that are able reduce amount periods would be able “shadow economy” companies have was changed calls Hungary’s increase in the Conversely, companies experienced an involved in reporting measure, but the legislation Antretter of of the new gross Varga success.

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– so companies to for invoicing see such exponential had a tax years from 2015 if someone used tills. be advantageous yet companies that “Changes may for example freight electronic on the measure have not of carry forward, Details in other forms specific sectors, confirmed, but tax companies operating in VAT been electronic monitoring by the forwarders or by a decrease closer place. sectors affected ADVERTISEMENT Lunczer of VGD authorities are already in might rates,” notes Katalin 1, the tax authority Kft. “Companies As of January software Ferencz & Partner new tax base and taxnew invoicing introduced a the government benefit from the income tax items, requirement that will help more credits reducing corporate a business’ activityadd-on donations and tax and scrutinize software including easier cultural purposes local closely. The new to as for sport and function referred as a growth as well includes a built-in audit, tax & for tax inspection” tax credits for includes tax allowances the “supplying of data installed by all accountancy be business tax that feature that must with a VAT number. on R&D costs.” of electronicbusiness all more Hungarianon the new requirement, Given the introduction requirements, a “Based Partner should have tills, new software additional VGD Ferencz & partner returns, and invoicing software that allows the frequent VAT believes that, even data export function your strategic to request is paperwork, Antretter tax authority nominal tax burden query if a taxpayer’s less than Hungarian to perform a data even slightly up taxpayers invoicing-related information no higher or they will end says VAT Kuntner Andrea on their concerning Thurn Erik in previous years, Adótanácsadás data structure,” Ferencz Gyöngyi income or profit Könyvelés, könyvvizsgálat in a pre-defined Vékási. “If M&A Könyvvizsgálat, including more their payable taxes expert and EY Partner Tamás returns and therefore www.vgd.eu are likely to increase.

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REAL ESTATE NEWS

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Budapest Business Journal | March 11 – March 24, 2016

Atenor delivers latest phase of Váci Greens The 24,500 sqm office opens at a time when vacancies are near record lows.

“The Budapest office market has re-calibrated to a more landlordfavorable position. I expect the current positive momentum to continue in 2016 as occupational activity remains relatively robust, supported by very little new speculative supply.”

GARY J. MORRELL

The Belgium Atenor Group has officially delivered the 24,500 sqm “Building B”, the third phase of Váci Greens, the biggest office project in Budapest, after a nine-month construction period. Atenor plans to continue with the construction of a fourth phase this year. The phased project will eventually consist of six buildings with around 135,000 sqm of total office space on completion.

“Building B” has a “Very Good” BREEAM sustainability rating and was designed by the TIBA architects studio.

The new building is already 60% preleased to GE Infrastructure, which has leased 15,000 sqm and overall GE will have close to 4,000 employees at Váci Greens; the 17,000 sqm second phase “Building C” is 100% let to the company.

The supply of well-located class “A” stock is limited as Budapest office pipeline for 2016/2017 is put at circa 90,000 sqm, representing an improvement on post-crisis delivery levels, although much of this is prelet. Vacancy is put at 12% in a market of 3.28 million sqm, and could fall below vacancy levels in Prague and Warsaw.

“The Budapest office market has re-calibrated to a more landlordfavorable position. I expect the current

A view of Váci Greens. positive momentum to continue in 2016, as occupational activity remains relatively robust, supported by very little new speculative supply and increasingly favorable macro-economic prospects,” commented David Johnston, head of office agency at Cushman & Wakefield Hungary. “In 2016, demand will continue to outstrip supply and vacancy continue to fall.”

In what has been a difficult market in the post-economic crisis period, only those developers with their own equity and the ability to attract pre-leases have been able to develop in a Budapest office market where debt finance is expensive. Olivier Ralet, executive officer at Atenor emphasizes that the company

undertook the Váci Greens project when Budapest was generally perceived to be a very difficult development market, and says the project is being financed from the company’s own equity. “We commenced the project due to a need for office space in Budapest, the supply of large development plots in Váci út with excellent public transportation links and the support of the local authority,” he said.

In recent years the 13th district has arguably established itself as the “business center of Budapest”; international developers such Atenor, Skanska, HB Reavis, Wing, Futureal and CPI have developed office centers attracting such tenants as GE and E-On, who have established international

offices in the so-called Váci út business corridor.

Dr. József Tóth, mayor of the District XIII municipality comments that Váci út is continuing to attract office and residential development as it has a very good public and road transport infrastructure, it is relatively cheap to develop plots, and it has established a planning regulation system that encourages inward development.

Váci út also dominates the immediate Budapest office pipeline, as Skanska is due to complete the first 6,600 sqm phase of its two-phased Nordic Light in May, with the second phase due to be delivered in August. Wing will also deliver its 12,000 sqm V17 office project in the summer.

Elsewhere in CEE, Atenor Group has completed the fully leased 18,000 sqm phase 1 of the Hermes Business Campus (HBC) in Bucharest. The three phased project is planned to deliver an eventual total of 78,000 sqm of space.

CEU campus redevelopment project wins award The project is one of the few educational buildings in Europe to receive a high BREEAM rating for its environmental sustainability.

GARY J. MORRELL

Phase one of the Central European University (CEU) Campus Redevelopment Project has won the “Best Planned Project of the Year 2015” award in the Office of the Year competition at an annual ceremony organized by the Hungarian real estate media group, iroda.hu.

The Campus Redevelopment Project is a new building that is being constructed onto elements of the existing structures in the historical fifth district of Budapest.

This first phase of the project is due to be completed this August, with a second phase in the summer of 2018. The project brings together issues of how to develop a modern high-tech functional building while at the same time maintaining the

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classic Central European integrity of the historical center of Pest.

A jury of property professionals chooses the winner of the award. The jury specifically cited “the elegant character of the facade of a public building” that fits into the neighborhood and which will last for another 100-200 years, rather than the modernistic facades of many new office buildings. In addition, the use of the building was cited; the library facilities will be open not only to CEU students, and the conference facilities will be some of the most modern in Budapest.

From a development perspective, the designers of the new building, Irish architectural firm O’Donnell and Tuomey, were faced with how to construct a 21st century functioning university building that fits into the historical urban landscape and the architectural heritage of the city. “We were interested A sketch of the plans for the CEU project. in preserving the old courtyards and using these to connect the different parts The project reflects CEU’s commitment Environmental Assessment Methodology) of the existing buildings into a physical unit. This also creates an interaction with to sustainability and green building accreditation. The project is only the other classic buildings in the centre of that is conducive to an educational second higher education institute in Budapest,” said Sheila O’Donnell of the environment. Energy efficiency is a major continental Europe – and the first in CEE design process. Sustainable features were element of the development and the CEU – to receive this distinction, according to incorporated in the planning process campus has a “Very Good” BREEAM Baross Pál, director of the CEU Campus (Building Research Establishment Redevelopment Office. from the outset.

2016. 03. 09. 21:05

4Special Report BBJ

Electronic banking

Banks here could do more e-trading

 24

Cellum payment platform goes social

 26

Goodbye cash

Retail solutions for mobile payments have become common in Hungary, and a local firm is leading the way in developing these solutions, although e-trading still lags.

BBJ_2405_spec_report.indd 21

2016. 03. 09. 21:05

22 4

www.bbj.hu

Budapest Business Journal | March 11 – March 24, 2016

EXPERT OPINION

WHY IS IT NECESSARY TO AMEND THE SECURED TRANSACTION REGIME OF THE CIVIL CODE? Dr. Gergely Szalóki Attorney at law SCHOENHERR HETÉNYI ATTORNEYS AT LAW

NOTE: ALL ARTICLES MARKED EXPERT OPINIONS ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY

The Ministry of Justice intends to amend the secured transaction regime of the Civil Code. The initiative is widely supported by banks and legal professionals.

However, it is criticized by the courts and legal professors who were mainly involved in the preparation and drafting of the Civil Code. Both parties have their arguments and counter-arguments, but what is the main problem with the secured transaction regime of the Civil Code?

The new Hungarian Civil Code entered into force two years ago and provided brand new concepts regarding secured transactions, which generated discussion among legal professionals and gave rise to severe criticism. The Ministry of Justice, recognizing these critics, entered into discussions with leading law firms, courts, banks and professors and such discussions may lead to the amendment of the secured transaction regime of the Civil Code. The Ministry of Justice is currently scrutinizing the critics and the suggestions of legal professionals and the business sector.

The Ministry of Justice also faces criticism regarding its initiative mostly by professors and the courts claiming that the Civil Code should not be amended within such short period of time and the court practice should be given time to resolve those regulatory uncertainties that are unquestionably present in the Civil Code.

The counter-argument is that certain problems are so severe that they need the immediate intervention of the legislator.

But what rules of the Civil Code received such severe criticism and were thought to cause such problems that jurisprudence cannot resolve? Without intending to go into an exhaustive list, we would like to highlight two examples. The current rule of the Civil Code renders that security interests be terminated in the case of transfer of contractual position regardless which position is affected by the transfer or if the security provider has given its consent to such transfer or not. The

BBJ_2405_spec_report.indd 22

amended law would foresee that the security interest does not terminate under any circumstances but remains in place; and the consent of the security provider will only be required in the event that the debtor transfers its contractual position (i.e. it would be possible to implement a change in the creditor’s position without the involvement of the security provider).

Secondly, it is also being criticized that the Civil Code abolished the nonaccessory mortgage when it entered into force on 15 March 2014, which caused a hiccup in the market of the mortgagebacked instruments.

The Hungarian National Bank intends to stimulate that market. For years such instruments relied on the non-accessory mortgages which were transferable without the transfer of the underlying loan. Thus, it is now envisaged to re-introduce this type of security interest for the sake of mortgagebacked instruments.

Beside listing the severe problems, the pro-amendment side argues that even in the event of smaller regulatory uncertainties, the legislator should rectify the wording of the Civil Code. The banks, who are supposed to make business decisions today, cannot wait three, five or even ten years until the courts develop a uniform practice on these uncertain rules.

The businessmen expect the lawyers to tell them how and what they may do and how and what they may not do. By the principle of rule of law, lawyers should be able to provide definitive advice. However, the uncertainties of the Civil Code prevent lawyers from providing such advice.

Therefore, if it is possible, the banks would avoid applying such uncertain rules.

As a consequence, one may not even expect that the awaited court practice will develop at all. Given that not only banks, but generally, market players would exclude the application of the uncertain rules of the Civil Code, the eventual legal disputes could not concern such rules; therefore, the courts would not be in the position to give interpretation to such rules in their decisions. Provided that such legal disputes would see court rooms at all, since even in Hungary, alternative dispute resolution techniques become increasingly preferred.

www.schoenherr.eu

Money goes mobile in H Local banks and mobile “Although the cost of service providers are developing and implementing competing to offer the such a unique system is quite most convenient, secure high, we believe that the world and widely accepted is heading in the direction payment systems. of mobile payments and this means that, in the long term, ANIKO FENYVESI we will see a return on our investment.”

With upwards of 3.3 million smartphone users in Hungary, a little more than onethird of the population, local mobile companies and financial services providers are eager to expand into the rapidly growing mobile payments market.

Smartphone services available range from straight-forward bill payments, to third-party money transfers to paying for parking and leisure activities, to tracking spending through loyalty programs.

Big operators like T-Mobile, Telenor and Vodafone, all of which provide mobile wallet apps, dominate Hungary’s mobile payments market. Leading banks or financial services providers such as OTP, Erste and MasterCard facilitate the financial backend and security features. There is a broad range of payment interfaces in Hungary, and their number is growing.

app’s location function, and shop online wherever a MasterPass logo is displayed.

Kadlok says payments are not only more reliable through the interface, but also faster because several steps have been eliminated. In the MasterPass enabled version of the virtual wallet, users only have to register once and provide their phone number to complete each purchase.

The entire credit card number is never stored on the smartphone, and when a user is ready to pay, all the necessary details to complete the transaction are retrieved from the cloud, temporarily, for each transaction, explains Kadlok.

Although the MasterPass enabled version is barely a few weeks old, the Telenor Wallet, pre-MasterPass had already been downloaded 250,000 times, making it the most popular mobile wallet in Hungary, according to Telenor.

MasterCard a leader Another advantage of the system is that MasterCard is the motor behind you don’t have to be a Telenor customer several local mobile payment apps. Its to use it. Anyone with a MasterCard, Visa first contactless payment system was or Amex debit or credit card can register launched in Hungary 2009, followed and get access to approximately 150 local by wallet solutions for Magyar Telekom, online vendors and exponentially more Vodafone and Telenor. international vendors.

Its MasterPass digital platform is designed to simplify the process of Location matters making payments via mobile or any other device and either remotely or Magyar Telekom was the first mobile through contactless payment. “The operator to launch a mobile wallet technology enables a number of app in Hungary, creating the platform functions, some of which are not yet to operate through a near field available in Hungary, but are expected communication (NFC) chip on the to be launched in the future. These user’s SIM card where bank and loyalty include online and in-store checkouts, cards, and other relevant information wallet services for our partners and are stored, but the limitation of this other value added services,” says László system is that your NFC enabled mobile Szetnics, business leader at MasterCard. phone must be near an NFC terminal to MasterCard is also sufficiently complete the transaction. experienced in this field to be able to “What makes Telekom’s Mobile Wallet address security issues well before unique is that not only can you make they arise, guaranteeing safe payments payments with it, but we also offer a through a multi-level security system. loyalty card for collecting points, and “Bankcard data is never stored on the tickets for events purchased through the smartphone,” says Szetnics. wallet can also be stored in the wallet,” Telenor, the second largest mobile says Magyar Telekom’s press department. operator in Hungary, is the first mobile To use the system, the client must have a operator in the world to launch a Telekom voice and internet subscription MasterPass enabled wallet, which the and an Android NFC device that is company’s Corporate Communications mobile wallet enabled, adds Magyar Expert, Nelli Kadlok says is more secure, Telekom. Additionally, if the client wants faster and more convenient than its to request an OTP MasterCard mobile predecessor. Through its partnership PayPass virtual bankcard, they have to with MasterCard, the Telenor Wallet, have an OTP bank account or bankcard which features a slick interface that is – OTP is one of Telekom’s main partners Android and iOS compatible, allows users in this game. to top up their mobile phone balance, “The virtual OTP card which is buy motorway passes, electronic lottery located in the Telekom Mobile Wallet tickets and travel insurance as well is the same as that available through as pay for parking with the help of the other mobile operators’ services. There

2016. 03. 09. 21:05

www.bbj.hu

EXPERT OPINION

T-SYSTEMS A KEY PARTNER IN E-BANKING IN HUNGARY Gabriella Csanak Senior Industry Expert Financial Services Business Unit T-SYSTEMS HUNGARY LTD.

OTP Mobile CEO Péter Benyó. is no difference in pricing or user experience regardless of the service provider, but the applications differ in other ways,” explains Magyar Telekom.

The company anticipates that soon enough it will be able to offer sufficient services to eliminate a user’s need for their actual wallet. “When that happens, user numbers will grow exponentially,” Magyar Telecom adds.

Erste Bank Hungary’s Szilvia Egri.

“The technology enables a number of functions, some of which are not yet available in Hungary, but are expected to be launched in the future.”

Scan your bills

OTP passes 100,000

Erste Bank Hungary has also had its own mobile payment application since 2014, available to all Erste Bank customers holding a valid bankcard. The services allow users of both Android and iOS phones to pay bills by scanning the standard issue yellow or white checks that normally get paid at post offices.

The app also extends to top-ups on prepaid mobile phones, the ability to transfer money to third parties, pay parking fees and purchase motorway vignettes, according to Erste Bank Hungary’s Head of Digital Channels, Szilvia Egri.

“Our service is bankcard-based; the user needs to register at least one bankcard (either debit or credit – VISA and MasterCard are acceptable) in the app issued by Erste,” explains Egri.

The security features of the system have been well addressed – to the point where some users feel it may even be a hindrance. “We’ve received feedback about our system being ‘over-secured’.

Users need to provide an mPIN each and every time they enter the app or initiate a payment. In addition to this, the app, at the moment, cannot be used on rooted mobiles at all.” Despite these concerns, Erste’s mobile wallet user base is growing fast and is accessible through the 900,000 bankcards already issued by the bank.

As Hungary’s leading financial institution, OTP is involved in a number of mobile payment apps, but also has its own platform known as OTP Simple, which just recently passed 100,000 users since it began operating in 2014. To date users of Android, iOS and Windows Phones have the option of buying motorway passes, paying for parking through an interactive map, or buying tickets for the cinema using the GPS function, as well as ordering home delivery or hailing a cab, among others, explains CEO of OTP Mobile Péter Benyó. It also stores discount and loyalty cards so you don’t have to carry them in your actual wallet.

You don’t, however, need to have an OTP account to use OTP Simple. “This was a very important factor, even from the initial stages of the apps development, not to limit the number of users that can have access to the system,” explains Benyó. All you need is a MasterCard, Maestro, Visa, or American Express card and a plan with any local mobile provider and you’re good to go.

“Although the cost of developing and implementing such a unique system is quite high, we believe that the world is heading in the direction of mobile payments and this means that, in the long term, we will see a return on our investment,” Benyó adds.

BBJ_2405_spec_report.indd 23

What are the developments you are seeing with ebanking in both the retail and corporate sectors in Hungary?

We live in a world where Uber, AirBnB, and the Sharing Economy are everyday topics, where people check their phones every ten seconds for e-mails, kids shop on-line, school moms communicate in googlegroups, TVs are being replaced

by Netflix on a tablet and you can close the window in your apartment from 1,000 miles away, using your mobile phone.

In this world, traditional banks need to rethink their Modus Operandi as well.

More and more banks realize that e-banking is no longer simply a matter of providing an alternative to traditional banking with a well-designed website.

Digitalization in today’s world has become the main way that banks serve their customers. Their approach to digitilization determines the customer experience and the way they process transactions. Entire front and back office processes could change dramatically in a short time. Right now pilot projects look at what part of banking businesses and services can be made completely digital, mobile based, paperless, faster and easier to use.

As banks seek to expand their digital services, what kind of work are they handling internally and what are they outsourcing?

This really depends on each bank’s set up, organizational size and business strategy.

Just a few examples: Nearly all banks have an E-channel director, but they want consultants to help turn the web e-channel into an efficient sales/acquisition channel.

Typically, the CRM/BI teams have in-house own data miners and analysts, but they want consultants to help them better utilize the world of Big Data. Digitalization of entire sales processes or back-office work flows is a more challenging task. It is always a dilemma whether it is better to make “patchwork” improvements on traditional processes with internal teams or to just start from scratch and involve outside consultants. Integration of new solutions are always huge projects and a result of tight cooperation between internal and external IT experts.

What can T-Systems offer in this area?

Are there “out-of-the-box” solutions that can be customized, or is each package based on individual need?

T-Systems Hungary has a goal of joining

banks as an innovation and transformation partner. The company can prepare proposals for digitalization of banking processes and help its clients make front and back office operations easier and more cost-effective, while making client services faster and more efficient. Some concrete examples: • Though in-person bank visits are less frequent, banks can make these more enjoyable with an app that allows them to find the branch with the shortest queue, and that lets them request a queue number online.

• Banks’ client call systems can also be improved, so that the system recognizes clients with a scan of their bank card.

And clients can receive product offers while they are on hold, or fill out forms with their phones. Systems can direct clients to specific account managers.

• Digital technology can make signatures easier too. Using T-Systems’ electronic signature and a person’s biometric information, it is easy to prepare a document that is accepted as legally authenticated. Since the signatures are followed by time stamp and preserved electronically, the signed documents can be traced in a secure way.

What kind of local partnerships has T-Systems developed?

We have many partnerships in the Hungarian market, from globally wellknown large providers to relatively small tech companies that offer single innovative solutions. We believe in continuous consultation and a close relationship with our client banks, and we seek a complete understanding of their strategic needs, to act as a business partner, providing better solutions to help them manage their businesses for better results. The solutions we come up with could be a packaged one, or customized to the individual need of our client bank or insurance company.

What are the future challenges and possibilities of e-banking and how is T-Systems getting out ahead of the issue?

Banks are decreasing customer traffic in branches to rationalize their networks, and this trend will continue in the future. At the same time, keeping clients remains a challenge that can be addressed with the right digital solutions. The T-Systems digital banker solution is an integrated tool made of modules that cover the whole sales process. It allows the banker and the client to converse via a video call, jointly revise and fill out official forms and documents, and then forward these documents to the appropriate background branches electronically. This can happen immediately, regardless of geographical location or time, without any paperwork.

NOTE: ALL ARTICLES MARKED EXPERT OPINIONS ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY

n Hungarian market

23

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Budapest Business Journal | March 11 – March 24, 2016

2016. 03. 09. 21:05

24 4

www.bbj.hu

Budapest Business Journal | March 11 – March 24, 2016

Unrealized potential: Electronic trading in Banks in Hungary are slow to take advantage of the possibilities of electronic trading, according to László Dorgai, CEO of DKNV Consulting.

“Electronic trading offers a significant advantage that has yet to be fully realized in most markets. What I see in electronic trading on a global scale is a trend towards a growing concentration of market players.”

ANIKO FENYVESI

Despite the growing popularity of electronic trading throughout the world, innovation in the Hungarian sector has been slow to take hold. This is due in large part to scores of new laws in the sector, cumbersome bank levies, costly FX loan conversions and the consolidation of the industry, leaving little room for banks to focus on real developments, explains László Dorgai, CEO of DKNV Consulting. The problem is further aggravated by an underdeveloped investment culture in Hungary.

Dorgai has been working as a consultant in the telecom, IT and financial sectors in Hungary for more than 15 years, and more recently he has focused on the design and development of systems for interbank transactions as well as client electronic trading solutions.

He spoke to the Budapest Business Journal about the state of the Hungarian electronic trading landscape in a global context.

Q

What exactly is electronic trading?

A: Electronic trading is when two counterparties interact electronically, starting with the request for a quote or the placing of an order through to the routing of that order, its execution and confirmation of the trade. Everything is done electronically. Electronic trading platforms have quickly gained ground in financial markets around the world; developments in Hungary, however, are happening much more slowly.

Q

What are some of the trends you are seeing in the sector?

A: Electronic trading is the main tool by which foreign exchange products are traded, and it is rapidly gaining ground in the world of fixedincome trading as well. It has primarily been used for transactions of liquid and standardized instruments; however, it is now being implemented in markets where counterparty risk is a key issue, using risk management functionality.

In the interdealer market, trading is moving away from bilateral over-thecounter (OTC) relationships towards a more transparent marketplace.

Most players are present in several marketplaces/trading facilities and clients can also have access to multipledealer systems, rather than just quotes from one dealer.

Electronic trading is more cost effective than traditional trading. In my experience, the scope of straight-through processing

BBJ_2405_spec_report.indd 24

László Dorgai, CEO of DKNV Consulting: ‘Hungarian interbank trading is mainly driven by international practices.ʼ

“In a segment such as the Hungarian forint market, automated quoting is limited in terms of trade size, and as a result, larger trades are still made using old-fashioned methods.” means that electronic trading offers a significant advantage that has yet to be fully realized in most markets. What I see in electronic trading on a global scale is a trend towards a growing concentration of market players.

Q

How would you describe the local retail electronic trading market?

A: Retail electronic trading in Hungary comprises mainly FX and equities trading.

While many players offer online Forex platforms aimed at retail customers, electronic trading on stock exchanges is still very concentrated.

The number of clients who frequently execute trades online on the Budapest Stock Exchange (BSE) has declined in the last few years. These clients are not the focus of universal banks and the local market is dominated by two major players: Erste and

practices. Access to liquidity is essential to the whole banking system, including the Hungarian National Bank. Foreign investors are major holders of Hungarian assets. These securities are traded primarily electronically on platforms such as Bloomberg, which only requires a small upfront investment from banks.

But with new regulations in place, and especially after the shock of the credit crunch, the larger international banks implemented stricter rules to manage trading counterparty risk and as a result the importance of international settlement institutions has grown significantly. Post-trade processing, therefore, is becoming increasingly electronic-based and automated as well.

To have access to the liquidity required for their daily operation, Hungarian banks have no choice other than to join international clearing houses and adopt practices and implement systems to settle their trades with their counterparties.

Q

What is the cost structure of IT investments in Hungary?

KBC. FX and other derivatives are traded A: The retail electronic trading platform on international markets and individuals market is not as concentrated as often opt for international trading platforms that of interbank trading. In-house as a result. developments are not uncommon in retail segments. Hungarian banks are What about the corporate small and they often face the make-orsegment? buy dilemma. There are many factors to A: Most companies are consider before making a decision, but not traders. Their aim is to hedge in general banks tend to significantly their currency rate exposure, or their under-estimate the cost of implementing exposure to interest rate fluctuations or and maintaining such systems. Cloud the volatility of commodity prices. Some solutions, which existed long before the banks provide the option of electronic term “cloud” emerged, allowed banks to FX trading to corporate clients, but in have access to industry best practices a segment such as the Hungarian forint without the burden of having to operate market, automated quoting is limited the system. For smaller banks, “white in terms of trade size, and as a result, label” partnerships could provide an larger trades are still made using old- optimal solution, with virtually zero fashioned methods such as telephone or, up-front investment in exchange for a in the case of major clients, Bloomberg percentage of the margin being paid to or Reuters terminals. the white label service providers.

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What are the key drivers of electronic trading?

A: Banks offer electronic trading to clients to retain their business or to attract new customers. Retail electronic trading is used more for smaller rather than for larger transactions, but this may change in the future.

Entry costs can be considerable if fixed costs for the initial development of the IT infrastructure are taken into consideration. Hungarian interbank trading is mainly driven by international

Q

What is the role of mobile platforms in electronic trading?

A: Smartphones are used mainly by private individuals to check their account balance and to see how their trading positions are performing. This is not likely to change anytime in the near future. Research shows that security is not a consideration for most smartphone users, but the usability of these platforms dramatically reduces the number of trades being carried out.

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Q

What are some of the innovations you see the most in electronic trading in

Hungary?

A: There are no game changing products on the radar. Alternative solutions, including peer-to-peer electronic platforms such as Ireland’s currencyfair.com and “economy of sharing” applications are not nearly as popular here as they are abroad.

While major exchanges such as NASDAQ and some of the bigger investment banks like Goldman Sachs are seriously investigating the potential of bitcoin trading, I haven’t seen any real interest in bitcoin trading in Hungary.

Recent U.S. legislation that allows equity to be issued through crowdfunding sites is a major step towards helping raise share capital. Hungarian startups could certainly benefit from access to such venture capital and this could also facilitate the emergence of angel investors in the country, but current legislation does not allow for this to happen.

A: The quoting of the BETa market and the certificates’ market is fully automated.

The future of these markets is, however, in doubt, due to their moderate success, especially the BETa market.

Program trading accounts for one-fifth of trading on the New York Stock Exchange.

The BSE, on the other hand, does not encourage high frequency trading. We have seen very few attempts to implement high-frequency strategies on the BSE. Orders can now be routed to the BSE from virtually any part of the world, and many people feared that the Xetra platform combined with the so-called direct market access capabilities of larger players would eventually lead to a smaller number of brokers and the increase of electronic order flow, but so far their impact is moderate.

Q

How does electronic trading affect the economy?

A: A country’s financial stability is dependent on its markets’ efficiency, liquidity and resilience and electronic trading has the ability to impact all of Apart from trouble in the banking sector, why are these. Electronic trading affects the job Hungarian banks not market as well. In late 2013, two Oxford innovative in the field of electronic academics published a paper claiming trading? that 47% of American jobs are at ‘‘high A: Being a tiny piece of a giant global risk’’ of being automated within the next ecosystem of interbank trading, 20 years. Since the banking industry is Hungary is inevitably an adopter of built on processing information, it has international practices. In this world, more jobs at high risk of automation de facto standard global solutions than any other skilled industry. But electronic trading also creates jobs, dominate the infrastructure landscape.

The retail fintech segment is no especially in the IT field where there’s different from any other segment of already a short supply of skilled workers information technology, in that it faces in Hungary. I predict that within the same challenges. The biggest four-five years, the salaries of these problem, however, is the moderate professionals will be 60%-70% of what demand from household investors for Western European salaries are today. sophisticated trading platforms and the relatively underdeveloped wealth What are some of the biggest challenges in implementing management/private pension system. electronic trading?

A: Electronic trading typically What is the share of represents lower trading margins, electronic trading on the Budapest Stock Exchange? therefore banks focus on higher volume.

A: Nearly half of the retail trading The number of trades is very high and volume of the BSE cash market comes on the decentralized OTC markets, from electronic channels and its share is many of the transactions are still settled growing moderately. Shares directly traded bilaterally. Managing counterparty risk by institutional clients (those responsible in near real-time in such a high-volume for the largest chunk of the cash market) business is crucial. Fully automated without a broker is still relatively low, with processes from automated quoting nearly 90% of trades still being executed engines to straight-through posttrade processes in this segment are through a broker.

The BSE’s open outcry system [the use not uncommon. The more complicated of vocal bids and hand signals for trading] the products, the bigger the challenge. ceased to exist in 1999, but the BSE is and Complex derivatives and structured has always been primarily an exchange products’ trading present the greatest for shares, and to a minor extent, futures. challenges at the moment.

Turnover of commodities, FX and fixedincome products are virtually non-existent How big is the business of electronic trading for on the BSE, no matter what the system, consultants and software open outcry or electronic.

Some products are different, however. companies in Hungary?

Market makers are providing liquidity for A: Investments in what is known as fintech the BETa and the investment certificate tripled between 2013 and 2014, reaching markets. These products could not exist $12.2 bln in the United States. In Hungary, without electronic trading. Trading and financial institutions are also investing hedging of exchange traded funds are also heavily in information technology, but the two trends are to a large extent essentially electronic. fundamentally different. Technology How do you see electronic spending in Hungary is mostly driven by trading evolving on the regulation and, for the most part, by the Budapest Stock Exchange? consolidation of the market.

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EXPERT OPINION

M&A of financial institutions in Hungary Dr. Erika Papp Partner, Head of Banking and International Finance CMS BUDAPEST

money-market products. According to this law, the National Bank must approve all portfolio sales. Loan portfolios can still be sold without National Bank oversight, but the loan customers must provide consent.

And non-performing loans can be sold in portfolios since customer consent is not required for expired loans.

To understand the changes in the Hungarian banking Mergers and Acquisition (M&A) SELLING A BANK OR SELLING A market we have to go back a couple of BRANCH? years to the financial crisis when several Many Hungarian financial institutions foreign financial institutions were given an were transformed into branches due to ultimatum by their owners and the EU. Sell recent capital and regulatory requirements. their Hungarian branches, or if that was Branches are not independent, but are part not possible, cut costs and focus on core of their parent institution. Hence, they do not have shares that can be sold if a player business. decides to leave Hungary, making the sale At the same time local banks faced their of a branch much more complex than selling own difficulties: Their customers were the shares of an entity. And it takes longer. in a dire financial condition, and foreign “Migration”, as these processes are called, exchange rates skyrocketed. can take anywhere between three to nine In response, the government stepped months, and demand considerable IT and in: It passed new regulations, laws and operational investments on the part of buyers. court decisions affecting both the retail and corporate lending sector; and it increased its ownership in the financial sector by NEW ENTRANTS MUST HAVE PLATFORMS acquiring banks both large and small.

New portfolio investors must have a proper The National Bank of Hungary worked platform.

What is this? Platforms are to cope with this changing landscape. Not financial licenses for acquiring portfolios of only did it have to oversee new regulations, active loans.

There are three ways to acquire laws and rulings, but the National Bank also a platform in Hungary: through passporting, had to deal with increased M&A activity by branches, or by acquiring local vehicles. providing approvals for changes in control Passporting is relatively easy. It means of financial institutions and transfers of that the foreign player must notify its home portfolios. regulatory authority about its intention to do business in Hungary. The home-country WHAT DO MARKET PARTICIPANTS DO? As a result, many players either fully or regulator will then notify the National Bank partially left the Hungarian market. Those of Hungary, and within one month the player who remained, mainly domestic banks, are will receive permission to operate. The only either repositioning themselves or picking drawback to this highly convenient system up reasonably priced assets from their is that passporting only applies to regulated financial institution within the EU. exiting competitors.

Creating a branch is another way of Players who fully left the market did entering into the Hungarian financial sector. so for strategic reasons. For example, Again this mainly applies to EU financial Credit Agricole closed down operations in institutions.

So if an institution is not a Hungary to focus on its core markets. Like regulated bank or other financial institution others, it gradually decreased operations within the EU (or in rare cases outside of the in Hungary, resold portfolios, and handed EU), it may not create a branch. back its license, a process that was carefully Acquiring a Hungarian entity with a managed to protect consumers. (Issues license is the easiest way of entering this included what to do with dormant assets market.

But again, the National Bank must and accounts.) approve after looking into the background Those banks who partially exited the market usually did so for strategic and business plan of the potential buyer.

Clearly, the local market has adapted well divestment reasons, such as banks that to the new legal framework of 2015, and streamlined operations and sold portfolios M&A activity in Hungary remains strong. to save costs. Portfolios often include M&A deals may be complicated and live products and non-performing loans. at times challenging, requiring high-level Divestments weren’t without problems. input from management advisors, lawyers, Before 2015, only the sale of deposit or accountants, and regulators, but the bank account portfolios was regulated. booming business in this market proves Portfolios of loans, credit cards, and moneythat Hungary can yield great rewards for market assets could not be sold in large investors with skill, vision, and determination. quantities without customer consent, which was a showstopper given the thousands of customers involved.

Needless to say, everyone welcomed the new legislation in 2015, which now regulates local financial and capital markets, and also applies to loans, credit cards and

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NOT E: A L L A R T IC L E S M A RK E D E XP E R T OP INION S A RE PA ID P ROMOT ION A L C ON T E N T FOR WHIC H T HE BUDA P E S T BUSINE S S JOURN A L DOE S NOT TA K E RE SP ON SIBIL I T Y

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Budapest Business Journal | March 11 – March 24, 2016

Banks told: Local mobile wallet is going social Get more In partnering with Cellum hopes digital or get tofastacash, cash in on social messaging and payment left behind as a way to increase its E-banking summit in Budapest surveys industry challenges.

CHRISTIAN KESZTHELYI

If banks do not do more to provide convenient e-banking solutions, they will lose their customers according to experts who spoke at the E-Banking Summit 2016, held in Budapest on March 3.

Apparently it is not just competing banks that the industry has to worry about.

“Competitors for banks are coming from outside of their sector,” Pawel Wiacek of SAP said at the conference.

He noted that PayPal, Google and others are providing solutions that facilitate electronic payments with a convenience that few banks can rival.

“Fewer people want to physically appear in a branch of their bank to deal with banking tasks,” Antal Kerekes of PwC said during his presentation at the conference. “Some 25% of today’s population has been born into the internet generation,” Kerekes noted, stressing that if banks do not follow the latest technological trends they can lose clients. “Biometric, paperless and many other technologies make it possible to do banking electronically,” Kerekes said.

“As everything is becoming smart nowadays, software developed by banks needs to be following the trend of smartphones,” István Gyimesi of Hungarian software developer firm Cardinal Kft. told the conference. He stressed that internet bank software needs to be easy to use and to offer intuitive solutions.

Such solutions can include electronic bank software learning the behavior of users, offering them tasks to deal with without searching through the menu for them; an intelligent notification system that reminds users of taxes and bills to be paid and offering to initiate the transaction with one click; and most importantly education programs that teach users how to use the bank’s software.

PwC’s Kerekes said that designing the right software is a matter of understanding customers.

“Clients need to be reached and understood,” he said. “Clients want get their questions answered, and want to know what other people in their situation do, so banks need to offer tech solutions keeping this in mind,” Kerekes said.

Going digital is more important because younger customers expect this convenience, according to Wiacek.

“Millennials are the largest consumer group in every field and this tendency is also true for the banking sector,” he said.

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penetration in Asia.

ZSÓFIA VÉGH

A Hungarian firm that provides a mobile wallet is hoping that social media will help it expand its reach as it seeks to grow from hundreds of millions of customers to more than one billion.

Mobile wallet provider Cellum and fastacash, a company that facilitates mobile payment through social media and messaging apps, signed an agreement in February targeting a market of one billion users in Asia and Europe. The agreement combines Cellum’s secure platform with fastacash’s social experience, and its user base now concentrated in Central and Eastern Europe and also in South East Asia.

Social messaging and payment is becoming ever more widespread around the world, and that is especially so in Asia, where countries entered the mobile data market quite late, but have been growing at an unprecedented pace.

Cellum, a Hungarian startup founded about five years ago, has moved to the Cellum CEO János Kóka. forefront of the competition to provide mobile payment systems. As a Cellum press statement explains, “Our flagship product, Cellum Mobile Next is a “Our last four years was about modular, end-to-end remote payment system that turns any smartphone development: Annually we into a virtual payment device capable spent roughly HUF 500of conducting transactions from any registered payment instrument, from 600 million on it. We wish bank cards and mobile phone account to introduce a contactless to loyalty cards and coupons.”

Currently, Cellum reaches 200 payment system and are million customers, including Indonesia, where the company has partnered with working on other fascinating Evercoss, a mobile phone maker whose new products in our lab.” devices will run Cellum apps as a default. With the planned expansion, its potential market may reach two billion users in three years, company will exceed 100 million”, János Kóka, Chairman and CEO told the Budapest officials say.

Business Journal.

The boom forecast in these Asian Commonly used by drivers markets may never come to Hungary Two-thirds of Cellum’s users now use though. According to a GKI and FinTech the company’s apps to pay parking and Group survey last fall, only 150,000 of highway toll fees. Other remote payment the 4.6 million mobile phone users in options, such as pre-paid top-up, bill Hungary have downloaded some mobile payment, e-commerce checkout, QR payment apps. Kóka explains this with code payment, and mobile gambling, the availability of legacy financial constitute the remaining third. services in Hungary. The market here is This is going to change though as well developed; access to these services parking payments, which will likely is easy. Internet penetration is high and rise to 20% in total, will be overtaken by one has no difficulty finding a bank or others, including proximity solutions, post office within short distances, he when you are physically present in a said. The situation is quite the contrary shop and touch your card to pay: This in Asia, where most countries Cellum is could increase by 100-200% annually. targeting entered the mobile finances “We are at a very early stage to calculate; market late. Indonesia, for example, conservative estimates suggest that in is a huge market where internet and three years’ time transaction numbers bankcard penetration are low, distances

are long, and the proportion of the most susceptible young generation is high.

All these, coupled with very advanced mobile communications – smart phones being virtually the only IT devices – means there is much more room to grow than in local CEE markets.

“Our last four years was about development: Annually we spent roughly HUF 500-600 million on it. We wish to introduce a contactless payment system and are working on other fascinating new products in our lab,” said Kóka. “It is up to the banks and MasterCard when this takes place, hopefully this year.”

But to help keep up growth and be the first in the newest technologies, Cellum wants to raise a couple of million dollars, Kóka said. Cellum’s group revenue was HUF 861 mln in 2015, and at least 20% organic growth is forecast – but far more is needed as market entry costs around $1-1.5 billion per country, whereas the upfront revenues coming from each client are much smaller. The company would like to establish representation in Japan, Singapore, Thailand and Australia’s Sydney, as well as in several European and U.S. cities. “Our major competitors have $10-100 mln budgets while, in the past five years, we raised €5 mln,” said Kóka. “We are much more efficient when it comes to innovation, but will still need at least another €10 mln to remain a frontrunner in Europe and Asia.”

The CEO is confident that Cellum will close a Series B round of market funding within a year.

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RESTAURANT REVIEW

Bringing the farm to Szabadság tér The two young partners behind kiSSBende scour the Hungarian countryside for the best organically grown ingredients – and then prepare them with an awareness of the importance of flavor.

You can get authentic Hungarian food fresh from the farm by driving around the countryside, or you can let Éva Kiss and Zsófi Bende do the driving for you.

Before opening the kiSSBende contact dining bistro, and lending it their last names, the two young women partners spent a year and a half combing the Hungarian countryside. They were on a mission to find the best produce available and to develop connections with the farmers producing it. The result is a tiny oasis of rural Hungary in one of the country’s most urban areas – District V, a couple blocks from Szabadság tér.

This is farm-to-table dining that does not neglect the dining aspect: While the food is sourced from individual farmers who use traditional methods and fewer chemicals, and the staff is happy to explain exactly who grew what, the most important facet of the cuisine, the flavor, gets a lot of attention here.

The carefully selected ingredients are only the start. As head of the kitchen, Kiss subjects these traditionally produced country foods to a very untraditional treatment.

The gomolyá cheese balls wrapped with mangalica ham, aubergine and beetroot is hardly a standard Hungarian dish. It is, however, very tasty with a delightful texture. The cheese is soft and molten; the strips of meat, from Hungary’s own furry breed of pig, is thin, with a mild crunch – more like bacon than ham. You can ask for their deli platter starter to get a good sampling of everything, from goat carpaccio to the delightful smoked quail eggs.

Also untraditional and delicious are the varieties of sauces that Kiss whips up, from ingredients like eggplant or Furmint vinaigrette.

Then there’s the bread: baked fresh, in-house daily, with a variety of special flavors. They also offer kenyérlángos, which is baked while you wait, and well worth the 15 minutes it takes. Lángos

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is a traditional Hungarian bread, and you may have seen deep fried versions of it on sale in market halls, but kenyérlángos is baked, and has more subtle flavorings.

The menu is relatively small, and changes frequently, based on what’s in season and available from the exclusive group of suppliers. All the dishes on offer are paired with a recommended wine, and that recommendation is generally worth taking. Several of the wines served at kiSSBende are “bio” style, made with fewer chemicals. Many of them are lesser known wines from small vintners. All of them are well chosen, and the staff will offer you a small taste if you want to make sure.

The fine food and wine is served in a small, brightly lit spot with a high ceiling and an attractive open kitchen that makes the food preparation part of the decor. Its located near the Danube, in the ground floor of a landmark building designed by the famous Hungarian architect Miklós Ybl and completed in 1874.

Adding to the aesthetics are the special clay or concrete plates and unusual steel utensils, made exclusively for the restaurant by local artisans who Kiss and Bende happen to know. There are also large posters of Hungarian actors and dancers, who posed with foodstuffs, especially for the restaurant.

Clearly the two young women running the place have a lot of artistic friends, which makes sense, since they both exude creativity themselves.

Their energy and spirit contribute to a wonderful atmosphere. While Kiss spends a lot of time in the open kitchen, Bende works the front of the house, making sure that diners feel cared for, but also comfortably relaxed.

Between their hospitable approach and the traditional foods, it can really feel like you’ve dropped into a country home for a sumptuous meal. But since you’re in the heart of town, home is just a cab ride away.

Photo: Dániel Dömölky

BBJ STAFF

Immediately above, Zsófi Bende, seated, and Éva Kiss at their restaurant. At left, an exterior of the Ybl-designed building.

Elsewhere on this page is their food.

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Budapest Business Journal | March 11 – March 24, 2016

WHAT’S

ON PETER KRUDER March 11, Akvárium Club A legendary figure in the electronic music scene, Vienna-based DJ-music producer Peter Kruder will be playing an all-night DJ set of techno and house tunes. Kruder is one half of the renowned Kruder and Dorfmeister duo whose “DJ Kicks” and “K&D Sessions” are still considered some of the most ground-breaking works on the electronic music scene. Kruder has been working solo for several years and over the last decade has produced such acts as Marsmobil, Urbs and DJ Hell. akvariumklub.hu HUNGARIAN STATE FOLK ENSEMBLE’S SUN LEGEND March 13, Palace of Arts Featuring the music of Nikola Parov, a popular but unusual blend of ancient motifs peppered with saxophone, drums and brass instruments, the Hungarian State Folk Ensemble brings the energetic movements of the country’s folk dances to life. Using the region’s musical and dance traditions as its foundation, the ensemble produces a kind of modern dance theater that visualizes the cult of the sun and the important role it plays in our daily lives. mupa.hu BUDAPEST PHILHARMONIC ORCHESTRA March 14, Hungarian State Opera With a history spanning more than a century and a half, the Budapest

Fun things to d o in Budapest for the nex t t wo weeks.

Philharmonic is Hungary’s oldest functioning orchestra, having performed world premieres of more than 100 works.

This concert is part of a series featuring ten different concert programs, each led by a world-renowned conductor and highlighting an acclaimed soloist. This evening’s performance includes works

by Barber, Gershwin and Schumann under American conductor John Fiore, with Swedish pianist Peter Jablonski. opera.hu SELAH SUE March 16, A38 Belgium singer-songwriter-guitarist Selah Sue had no intention of becoming an artist when she first began pouring her heart into her songs, turning her teenage troubles into soul, funk and reggae melodies under the influence of such idols as Lauryn Hill, Erykah Badu and Amy Winehouse.

Thousands of fans began following her MySpace page and soon enough she had a record deal with Because Music. Fast forward to last fall, when Prince offered her a supporting slot at his show in Antwerp, Belgium and the rest is history. Her music is a melting pot of electric rock, organic hip hop and soul-funk. a38.hu GARDENEXPO AND ORCHID FESTIVAL March 18, Papp László Budapest Sportaréna

Hungary’s largest living outdoor exhibition is back this year with myriad

Peter Kruder. (Photo: Lukas Gansterer) solutions for your garden from furniture, to machinery and tools, outdoor cladding, shading technology, outdoor lighting, irrigation, heating and cooling systems, pools and saunas. Learn about the latest in gardening trends and get advice from the pros on how to plan the garden of your dreams. Also part of the festival is an orchid exhibit where visitors can learn everything they need to know about growing the perfect orchid. gardenexpo.hu

AUTO, MOTOR AND TUNING SHOW March 18-20, Hungexpo Steadily growing in popularity since its inception, the Tuning Show is not only the country’s largest car and motorcycle event, it is also considered by the international car and tuning community to be one of the most important professional and entertaining exhibitions of its kind. In addition to reconstructed cars, visitors can check out auto salons and factory car

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Budapest Business Journal | March 11 – March 24, 2016

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Selah Sue. novelties, as well as scheduled programs, such as motorcycle shows and races. amts.hu MACARON DAY March 20, Akvárium Club The annual Budapest Macaron Day was inspired by the Jour du Macaron held on the same day in Paris and the Macaron Day in New York City. Itʼs dedicated to the famous French macaron, a round crunchy pastry sandwiched together with a soft creamy center. On March 20 visitors will be able to taste, smell and even learn how to bake macarons. The program begins at 2 p.m. and includes a macaron fair, a macaron competition, programs for kids and plenty of delicious pastries. maraconnap.hu

BLUE RABBIT HAMMOND BAND March 24, Palace of Arts Founded by gifted and very prolific organ player Mátyás Premecz, the Blue Rabbit (Kéknyul) Hammond Band showcases colorful compositions that appeal to fans of all musical genres, despite the music’s distinct jazz-funk leanings. The band’s debut album “Nahát babám” was released in June 2010 and shortly after American-born singer Andrew Hefler joined as front man. This cooperation resulted in the 2014 soul-funk release “The Wind Plays Me”. On this evening the band will present material from its third album “Crowded Universe”, released at the end of 2015. mupa.hu

Budapest Philharmonic Orchestra. (Photo: László Emmer)

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Budapest Business Journal | March 11 – March 24, 2016

Wine: Eger, Szekszárd lock horns in bullʼs b has been unkind to the blend, gored as it was by the mass production ideology of the former regime, whereby the focus was While neither the winemakers of Eger or placed on quantity not quality, although Szekszárd have collectively succeeded in it was still snapped up appreciatively hitting the bulls-eye in terms of pinning by cash conscious students in the U.K., down a definitive style for their Bikavér, among other places. Indeed, the reason plenty of good and ever-improving Bull’s why the English translation of Bull’s Blood Blood oozed out of this year’s edition of is rarely used these days is due to its not so the Eger-Szekszárd párbaj (duel). Vintners prestigious past as a bottom shelf wine on from the two regions to produce Bikavér foreign markets.

(Bull’s Blood) lined up side by side to pour While real progress is being made as their blends in the majestic ballroom of the Bikavér is slowly shaking off its shoddy Corinthia Hotel Budapest, on February 26. communist-era reputation, confusion Bikavér is an important wine style that still reigns supreme about style and to enables local heroes Kékfrankos and some extent quality (especially in Eger).

Kadarka (the latter mainly in Szekszárd) While a broad distinction may be drawn to combine with the international grape between the Bikavér of the typically Sampling Bikavér at the Eger-Szekszárd ‘duel’. brigade to delicious effect. Kékfrankos cooler northern region of Eger, which provides the lean and focused backbone should manifest itself in leaner, tighter for most Bikavér, but it can be fleshed out wines with livelier acidity and more segment by the winemakers themselves. who is a relative newcomer to Bikavér, delightfully by fuller bodied and more finesse, and the often sweltering southern However, huge differences could still be having previously been put off by its poor intense grape varieties like Cabernet Franc region of Szekszárd with its richer, more felt in the contrasting styles of Szekszárdi reputation, continues to impress with what (particularly good in Hungary), Cabernet robust wines with riper fruit – this often Bikavér, even in the same vintage. For is only his third effort.

Sauvignon and Merlot, among others. isn’t actually the case. example, Péter Vida’s Szekszárdi Bikavér In Szekszárd, at least 40% of the blend Bikavér also packs a good dose of history 2013 is a lean, precise, agile and elegant must be made up of the local Kékfrankos into the bottle, especially the legend that Szekszárd grabs bull by horns matador, and worlds away from Takler’s and Kadarka grapes, and it is a few the successful defenders of Eger Castle Bikavér 2013, which is a bulky, brooding, percent of the latter grape that can bring were fuelled by the wine as they saw off Of the two Hungarian wine regions, seething, stamping and charging bull. an exciting spiciness to its Bikavér. Tüske Ottoman attacks (the besiegers allegedly Szekszárd appears to have taken the bull Note that Takler’s offering is so muscular Pince’s Csaba Halmai explains that believed the defender’s red-stained beards by the horns to create the more recognized and intense that it generally takes a Bikavér from Szekszárd should be fruity were proof they were drinking bull’s style and stable quality across the board, couple of years to calm down and show and not too big, without much in the way of blood) during the siege of Eger in the 16th where for the most part Bikavér already its very good best. These two wines have oak influence – hence he ages his in large century. However, more recent history tends to be treated as a fairly high-end not yet been released. Incidentally, Vida, 500-liter and 12-hectoliter barrels. I raved ROB SMYTH

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In Szekszárd, for the most part, Bikavér already tends to be treated as a fairly high-end segment by the winemakers themselves.

about his 2011 version in this column two years ago, and the 2013 vintage (50% Kékfrankos, 12% Kadarka, approximately one-third Cabernet Franc and the rest Merlot) is even better and a bit plumper in terms of body. Great value at just HUF 2,400 a bottle. János Németh’s Signo Bikavér Classic can be made from. That 2013 (50% Kékfrankos, 15% Kadarka, 15% means that Bull’s Blood can run extremely Zweigelt, 10% Merlot and 10% Cabernet thin and lame wines do still make it to Franc) is another excellent buy at less market. OK, “Classic” may be the entrythan HUF 3,000, with lots going on with level, but that should still mean a pretty notes of cranberry, raspberry, lace, rose solid foundation on which to build up hip, anise and black pepper. It is also to the higher categories. Petrény’s Egri very balanced and its alcohol level of 13% Bikavér 2012 (Kékfrankos, Cabernet is pleasantly restrained for Szekszárd. It Sauvignon, Cabernet Franc, Merlot and underwent wild fermentation (i.e. from Syrah) contained that “northern soul” I was Lacking a definitive style, the range of Bull’s Blood wines is wide. indigenous yeast) in open vats and was looking for in the Classic: It’s tense and aged in second-fill 500-liter barrels. nervy with tongue tingling acidity (a rarity of playing more of a supporting role) oozed class, juicy black and red fruit, Another of the 2013s to impress from in this hot vintage), with perfumed red fruit, are excellent wines in this category. The plethora spices, power and potential with Szekszárd was Eszterbauer’s Tüke 2013 anise, and a touch of earth and leather.

2013 version of the latter had a bit of an no rough edges, as well as a complex floral (Kékfrankos, Kadarka), which is a real red Eger has the capacity for greatness, odd note about it that will hopefully pass note that was for the most part missing in other Bikavérs. See also St. Andrea’s fruit and spice party with nice body and something that it clearly believes for as the wine settles. juiciness. Heimann’s 2013, which even itself, having a further two categories Eger’s Grand Superior category further mesmerizing Grand Superior from Nagycontains a few percent of the über tannic on the Bikavér hierarchy: “Superior” and reduces the maximum to 35 hl/ha, which Eged that has a price to match its wow Umbrian grape Sagrantino, is as good as “Grand Superior”. The yields drop to a is equivalent to the yield of some of the factor. Pajdos Grand Superior 2012 (50% it gets, with lots of everything in the right hardly low 60 hl/ha for Superior, which world’s great red wines, and has to show Kékfrankos with a few percent of Kadarka must be made from a minimum of five the place of growth more prominently, in the six grape mix) from Lajos Gál, place but with nothing sticking out. grapes compared to Classic’s three, while which makes it a single vineyard wine. which hails from the shallow rhyolite the ageing is longer. However, does Several of these come from Eger’s tuff soil of the renowned Pajdos vineyard Broad range in Eger the use of more grapes really make a prized Nagy-Eged hegy, the hill of pure showed real ethereal elegance and again In Eger you can still find anything from more complex wine? Any vintage of St. limestone that overlooks the town and that fabulous floral factor. Gál is one of an the stunning to the stomach turning Andrea’s Hángacs and its Merengő 2011 rises out of a sea of otherwise volcanic increasing number of Eger winemakers thanks to the remarkably lax upper limit (with Kékfrankos handed the starring rhyolite tuff and brown forest soils. In this who have Kadarka and I feel it really adds of 100 hectoliters per hectare that the role in this blend after several vintages category, Thummerer’s Nagy-Eged 2012 something to the Bikavér blend.

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GRUPPO T.F.M. KFT. 1068 Budapest, Király u. 102.

1ST DISTRICT

3RD DISTRICT

7TH DISTRICT

5TH DISTRICT

12TH DISTRICT

15TH DISTRICT

53 SQM – 2 ROOMS, HUNYADI JÁNOS STREET

47 SQM – 2 ROOMS, DÉVAI BÍRÓ MÁTYÁS SQUARE

81 SQM – 2 ROOMS, VÁMHÁZ CIRCUIT

115 SQM – 4 ROOMS, ERZSÉBET CIRCUIT

220 SQM – 6 ROOMS, MÁTYÁS KIRÁLY STREET

190 SQM – 6 ROOMS, RÁKOSPALOTA

Close to the Chain Bridge, in a nice period building with elevator, this renovated, street facing apartment has separate rooms and sleeping gallery.

This completely renovated, well divided, garden facing apartment benefits of separate rooms, private gas heating and it is situated in a building with nice front garden.

We offer a completely renovated, furnished apartment in a renovated building, near to the Vámház körút.

This apartment is a perfect solution for anybody seeking a renovation project in a nice area within a period building in perfect shape.

22.900.000 HUF

43.000.000 HUF

This two storey family house in good condition built on 510 sqm of lot, has 2 bathrooms, 25 sqm of terrace, balcony, garage and it is located in the garden suburb area.

24.900.000 HUF

42.900.000 HUF

On the Sváb Hill, next to forest, this duplex part of a house has panorama from the balcony over the Buda Hills, 2 bathrooms, private garden and garage.

95.000.000 HUF

39.500.000 HUF

+36.1.201.0403

1ST DISTRICT

+36.1.430.1403

3RD DISTRICT

+36.70.3156.116

6TH DISTRICT

+36.70.3156.087

9TH DISTRICT

+36.1.789.2846

12TH DISTRICT

+36.70.398.8754

15TH DISTRICT

98 SQM – 3 ROOMS, ATTILA STREET

163 SQM – 4 ROOMS, KARÁCSONY SÁNDOR STR.

96 SQM – 3 ROOMS, ARADI STREET

112 SQM – 3 ROOMS, RÁDAY STREET

920 SQM – 13 ROOMS, FELHŐ STREET

163 SQM – 9 ROOMS, RÁKOSPALOTA

At the foot of the Buda Castle, this completely renovated, very spacious apartment has ample kitchen with dining room and it is situated in an elegant period building with elevator.

In a quiet and green area, this spacious, two storey family house built on 439 sqm of lot, has big terrace and parking lot in the garden.

Prime location adjacent to Oktogon Square.

Sunny apartment in good shape within a nice period building. The windows has been replaced to double glazed windows.

In a nice pedestrian street, this completely renovated, spacious apartment has separate rooms, 2 bathrooms, balcony and it is situated in a period building with elevator.

This three storey family house built on 2140 sqm of lot, has beautiful panorama from the balcony, 2 bathrooms, terrace, swimming pool in the garden and 4 garages.

This completely renovated, well divided, two storey family house built on 420 sqm of lot, benefits of solar heating system, spacious kitchen, 2 bathrooms, well kept garden and two car garage.

34.900.000 HUF

48.990.000 HUF

300.000.000 HUF

46.000.000 HUF

43.800.000 HUF

+36.1.201.0403

2ND DISTRICT

63.900.000 HUF

+36.1.430.1403

3RD DISTRICT

+36.70.3156.087

6TH DISTRICT

+36.1.720.2433

10TH DISTRICT

+36.1.789.2846

13TH DISTRICT

+36.70.398.8754

DUNAKESZI

83 SQM – 3 ROOMS, PETREZSELYEM STREET

160 SQM – 4 ROOMS, TÁBORHEGY

77 SQM – 3 ROOMS, PODMANICZKY STREET

280 SQM – 11 ROOMS, BODZA STREET

87 SQM – 2 ROOMS, TAKSONY STREET

95 SQM – 4 ROOMS, DUNAKESZI

This very sunny, street facing apartment in good condition has separate rooms, 2 balconies and it is located in a quiet street, close to the Millenáris Park.

Beautiful panorama over the city, in a new, luxury subdivision, this very spacious and bright, duplex apartment has separate rooms, 2 bathrooms, balcony, 2 terraces and parking lot.

This apartment has a very convenient layout, and is situated within a nicely renovated period building in the tree-lined part of the street, very close to subway, tram.

This renovated, three storey family house built on 400 sqm of lot, has two bathrooms, terrace, fitness area, garage and playground in the garden.

Beautiful panorama from the balcony, this top floor apartment has separate rooms and it is situated in a building with elevator. Parking possibility in the courtyard.

This terraced house built on 784 sqm of private lot, has living room with open kitchen and 3 bedrooms, balcony, garage and it is located in Pest county, 20 minutes drive from Budapest.

43.900.000 HUF

119.000.000 HUF

42.990.000 HUF

79.900.000 HUF

29.500.000 HUF

31.500.000 HUF

+36.1.336.1706

2ND DISTRICT

+36.1.430.1403

4TH DISTRICT

+36.70.3156.087

7TH DISTRICT

+36.70.646.6818

10TH DISTRICT

+36.70.701.2348

13TH DISTRICT

+36.27.642.429

DUNAKESZI

115 SQM – 4 ROOMS, BIMBÓ STREET

74 SQM – 3 ROOMS + HALL, SZÍJGYÁRTÓ STREET

68 SQM – 2 ROOMS, DAMJANICH STREET

460 SQM – 8 ROOMS, LAVOTTA STREET

116 SQM – 2 ROOMS, VÁCI STREET

111 SQM – 5 ROOMS, DUNAKESZI ALAG

Very nice view over the Buda Hills from the balcony, this very well divided, bright and quiet apartment has spacious rooms and it is situated in a well maintained, small condominium.

This nicely renovated, very well divided apartment benefits of separate rooms, fully fitted kitchen, air conditioning system and it is located in a quiet area.

This bright, well divided, street facing apartment that needs renovation has private gas heating and it is situated in a period building with renovated facade, close to the City Park.

This two storey luxury house has 966 smq of lot, terrace, swimming pool in the beautiful garden and garage. There is a second building in the lot with 2 rooms, kitchen and bathroom.

In a renovated, eclectic style building with elevator, this completely renovated, luxury apartment benefits of jacuzzi and sauna. Ideal for investment.

Two storey family house under construction, has 350 sqm of lot, living room with open kitchen, 4 bedrooms and 2 bathrooms. Delivery at the end of the summer.

60.900.000 HUF

20.900.000 HUF

24.900.000 HUF

99.900.000 HUF

53.990.000 HUF

42.500.000 HUF

+36.1.336.1706

+36.1.782.7275

+36.1.351.0446

+36.70.646.6818

+36.70.701.2348

+36.27.642.429

WELCOME 2ND DISTRICT

4TH DISTRICT

7TH DISTRICT

11TH DISTRICT

185 SQM – 5 ROOMS, LIPÓTMEZEI STREET

51 SQM – 2 ROOMS, MEGYER

83 SQM – 2 ROOMS, ROTTENBILLER STREET

100 SQM – 3 ROOMS, BOTFALU STREET

In a quiet side street, this very spacious, duplex apartment benefits of private gas heating, balcony, winter garden and wine cellar.

In the garden suburb area, this semi-detached house in good condition built on 423 sqm of lot, has separate rooms, big terrace and garage.

In a beautiful style period building with elevator, this spacious, street facing apartment has private gas heating, air conditioning system and balcony.

In a quiet side street of Sasad, this family house that needs renovation built on 833 sqm of lot, has 3 separate rooms, balcony and garage.

68.000.000 HUF

21.900.000 HUF

26.500.000 HUF

79.000.000 HUF

+36.1.376.6080

2 DISTRICT ND

+36.1.782.7275

5 DISTRICT TH

+36.1.351.0446

7 DISTRICT

+36.1.720.2433

11 DISTRICT

TH

TH

670 SQM – 4 ROOMS, KONDOR STREET

64 SQM – 3 ROOMS, SAS STREET

100 SQM – 3 ROOMS + HALL, THÖKÖLY STREET

102 SQM – 4 ROOMS, BERCSÉNYI STREET

Panorama over the Buda Hills, this four storey semi-detached house has 400 sqm of wellness on the ground floor with indoor swimming pool, jacuzzi and sauna. Benefits of three car garage.

This apartment, with separated rooms, is located on a high floor in one elegant, renovated building near Deák Square and St. Stephen’s Basilica.

Close to the City Park, this very spacious and sunny, street facing apartment has separate rooms, private gas heating and it is situated in a well maintained building.

In a new built, modern style building with elevator, this extremely bright, high floor apartment benefits of 2 bathrooms, 2 balconies and 3 parking spaces in the garage.

168.000.000 HUF

36.800.000 HUF

34.900.000 HUF

89.990.000 HUF

+36.1.376.6080

+36.70.3156.116

+36.1.351.0446

+36.1.720.2433

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