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As the British Chamber of Commerce in Hungary celebrates its 25th anniversary, chairman Vazul Tóth looks for the opportunities in Hungary's labor crisis and a post-Brexit Britain.8-9 SPECIAL REPORT

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3

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Looking ahead to rosy, but disruptive times

Fuel prices drive inflation higher

Exploring Jewish Budapest, part two

Insurance companies are enjoying prosperity not seen since before the recession and are gearing up for the technological disruption likely to be caused by the IoT. 15

October's inflation figure of 1% was higher than the market consensus had expected, reaching a peak not seen in three years and confirming what will be regarded as a welcome trend. 3

The last part of the mini series looks at what exactly makes up the modern day Hungarian-Jewish identity, and explores its impact on the vibrant life of District VII.

20

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Ladybird farm flies away with win An eco-farm from a tiny village in Hungary’s Somogy County has won a European Business Award for the Environment title for its innovative and continuous environmental activities. 10

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Three out of three: top marks As the British Chamber of Commerce in Hungary celebrates its 25th anniversary, chairman Vazul Tóth looks for the opportunities in Hungary's labor crisis and a post-Brexit Britain.8-9 SPECIAL REPORT

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The much-awaited third upgrade for Hungary's credit ratings back to investment grade means the country's debt could be reduced by about HUF 10 billion in the next 1-1.5 years. 3

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Looking ahead to rosy, but disruptive times

Fuel prices drive inflation higher

Exploring Jewish Budapest, part two

Insurance companies are enjoying prosperity not seen since before the recession and are gearing up for the technological disruption likely to be caused by the IoT. 15

October's inflation figure of 1% was higher than the market consensus had expected, reaching a peak not seen in three years and confirming what will be regarded as a welcome trend. 3

The last part of the mini series looks at what exactly makes up the modern day Hungarian-Jewish identity, and explores its impact on the vibrant life of District VII. 20

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THE EDITOR SAYS

Historic, unprecedented, and survivable It was a historic victory alright, just not the one most people expected. No glass ceiling was shattered on Tuesday night, and yet the world did not end on Wednesday morning. And nor did the markets collapse.

Sure enough, the Budapest Stock Exchange opened 0.7% down from its Tuesday close, and within minutes was 1.2% down, but by noon it had clawed most of that back and was at 0.4% down. That hardly seemed to live up to the Washington Post assertion that, in the realization that Donald J. Trump would be the 45th President of the United States of America “global investors reacted as if the world had caught fire”.

Some markets fared better than other. Asia, still open as the news came in, had taken a battering by the time its markets closed on Wednesday morning. The Mexican peso, perhaps not surprisingly, plunged 7.86% against the dollar, falling to a historic low. Gold, the traditional safe haven, saw prices rise. So did oil. The yen and the Swiss Franc gathered in strength.

Europe’s traders, like pretty much everyone else, seemed to have accepted that the race would be close, but expected that Secretary Hillary Clinton would ultimately triumph. That was a scenario they felt comfortable with.

She was a known quantity; Trump, who will become the first President with no experience of either holding public office or as a military leader, is her polar opposite. The markets largely followed a similar pattern: opening falls, some sharp, before a gradual claw back during the day.

Franceʼs Cac index and Germanyʼs Dax had heavy falls at the start of trading, London’s FTSE 100 index fell 2%; by the end of the day, all were positive.

Even on the other side of the Atlantic, it had initially been predicted that the Dow and the S&P 500 would open about 1.5% lower, with the Nasdaq off by 1.9%. At the time of writing this, the S&P 500 was down 0.4% at 2,129 points, the Nasdaq down 0.7% at 5,156, and the Dow Jones 0.1% lower at 18,312.

It seems as if the markets everywhere took time to adjust to the news; they were shocked initially, but then came back, and much quicker than they did after the U.K. Brexit vote. Perhaps that, in some way, paved the way for Wednesday’s reaction. The markets did not get their preferred candidate, of course, and there must certainly be question marks over what a Trump presidency will mean for trade, but the markets will get on with their business, as there is nothing else they can do.

Trump does bring some degree of certainty, with the Republican party now holding all three branches of the government with control of both the House of Representatives and the Senate. He will not face the gridlock that made life so difficult for much of President Barack Obama’s time in office.

More than anything, though, Tuesday’s vote changes nothing immediately. Trump does not become president until January. It seems that, for now, at least, most are taking a wait and see approach.

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At left, dead trees being replaced in Budapest’s Széll Kálmán tér, still probably better known by its former name of Moszkva tér, a major hub for the capital’s public transport on the Buda side. The building in the background is the Postal Palace (Postapalota). For many years, this was the main Post Office of the capital, but it has been a ghost building waiting for a new owner until recently, when a central bank foundation purchased it and announced the renovation of the building. The square was first known as Széll Kálmán tér from 1921-51. In that year, from which the black and white photo above dates, it was renamed Moszkva tér, which it kept until 2011.

2016. 11. 09. 21:01

1 News BBJ

macroscope

NEWS

Green Economic Forum returns to Budapest

4

NEWS

Government congratulates President-elect Donald Trump  5

Good news for Hungary: Three out of three How Hungary’s credit ratings changed in the past five years November 4 finally brought the much-awaited third upgrade for Hungary: Moody’s Investors Standard & Moody’s Fitch Ratings Poor’s Investors Service Service raised the country’s credit ratings back to investment grade. As a result of the move, Hungary’s BBBBBBBaa3 debt might be reduced by about HUF 10 billion in the November 4, 2016.

September 16, 2016 BBBBBBBa1 next 1-1.5 years. Not such good news from the past weeks, however, is that the latest industrial output May 20, 2016 BBBBB+ Ba1 data has, again, seen a big setback.

ZSÓFIA CZIFRA

Moody’s Investors Service upgraded Hungaryʼs long term issuer and senior unsecured government bond ratings by one notch to Baa3 from Ba1 at the beginning of November. The outlook on the rating is stable.

According to a statement the ratings agency issued following the decision, among the key drivers for the upgrade was the fact that the government debt burden, which now benefits from a lower share of foreign currency denominated debt, would continue to gradually decline. Moody’s expects the debt-to-GDP ratio to drop to around 72% of GDP next year, from a peak of around 81% in 2011.

Moody’s also noted that structural economic improvements would help sustain positive growth rates of 2-2.5% in coming years, supporting economic strength. “Hungary’s economy has responded to a number of significant government policy measures, resulting in a consistent improvement in investment and consumption trends, which, together with economy-wide deleveraging and an improvement in cost competitiveness, will support economic performance in

the coming years, with growth of around 2-2.5%,” it said.

Moody’s expects that Hungary’s economic growth will benefit from sizeable EU fund inflows over the next five years, equivalent to annual average inflows of around 3% of GDP, one of the highest in Central and Eastern Europe.

Sustained improvement The third driver supporting the upgrade of Hungary’s government bond rating is the country’s reduced external vulnerability, which improves the resilience of Hungary’s Baa3 credit rating to future external shocks.

Hungary’s external position has benefitted from persistent current account surpluses over the past few years, averaging 3% of GDP since 2013 compared to deficits of around 7% before 2008. This reflects a robust and sustained improvement in the trade balance and gains in export product diversification. Furthermore, Hungary no longer relies on external financing as its capital account benefits from the growing absorption of EU funds such that the combined current and capital account surplus reached

March 20, 2015

BB+

BB+

Ba1

November 23, 2012

BB+

BB

Ba1

January 6, 2012

BB+

BB+

Ba1

December 21, 2011

BBB-

BB+

Ba1

November 24, 2011

BBB-

BBB-

Ba1

Source: BBJ compilation

around 10% of GDP in the last quarter of 2015. Moody’s expects Hungary’s external vulnerability to continue to decline as current account surpluses reduce the country’s large negative net international investment position.

The stable outlook on Hungary’s Baa3 rating reflects the balanced risks to the credit rating over the coming years. Moody’s expects that the greater predictability in policy making seen in the last couple of years will be

sustained, resulting in a more stable, growth-friendly policy environment in Hungary than in the past. “At the same time, and while we expect some further improvements in the country’s key fiscal and external metrics, in some areas such as the public sector debt burden, the country will continue to lag its Baa-rated peers,” Moody’s noted.



Continued on page 4

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2016. 11. 07. 17:23 2016. 11. 09. 21:01

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04 News

Budapest Business Journal | November 11 – November 24, 2016

The very fact that the country has been restored to the investment grade category by all three agencies could mean the cost of debt financing may decrease by some HUF 10 billion in the central budget in the next 12 to 18 months, economy minister Mihály Varga said at a press conference a day after Moody’s’ decision.

The latest upgrade might also trigger increased attention from international investors in Hungarian assets, and issuing FX-denominated bonds might therefore be a good opportunity for the government to ensure cheaper financing of the state debt. But it seems that is not on the agenda, at least for the time being. When asked whether the government is preparing to issue FX bonds, Varga said that “the fundamental intention remains the reduction of the sovereign debt and the raising of the percentage of forint debts”, making it clear that there are no plans for the issuance of foreign currency bonds in the near future. However, he noted that in the improving yield environment there is scope for improving the structure of the foreign currency debt through offerings with “terms and conditions that are more advantageous than at present”.

While international credit rating institutions admit Hungary’s improving performance on the macroeconomic level, some

disappointing data has come to light recently. Poor figures show that the Hungarian industry is not back to its feet yet, as the volume of industrial production decreased by 3% month-on-month in September (following an upturn of 11% in August), and had decreased 3.7% on a year-on-year basis.

Negative impact First estimate data released by the Central Statistical Office also shows that, looking at the first nine months of the year, industrial production is only 1.5% higher than it was in the same period of 2015.

Industrial performance in the third quarter of the year was also rather weak, which will have a negative impact on this year’s GDP growth.

According to economic news portal portfolio.hu, the consensus among

analysts it canvased is that the “contribution” of the sector to Q3 GDP growth will be between -0.3 and -0.5 of a percentage point, and its contribution to full-year GDP could be about zero.

The main reason for this weak performance is most likely the vehicle manufacturing sector, as this was the case in previous months. This year, there are no large-scale investments in the sector that could boost capacity, so the weaker output of the industry has been predictable.

The automotive sector greatly influences the performance of the entire industrial sector, but because it is a low value-added sector, its contribution to the whole GDP is somewhat smaller. However, detailed industrial performance figures are yet to be published for September.

NUMBERS TO WATCH IN THE COMING WEEKS The reasons behind the poor September performance of Hungary’s industry will come to light on November 14, together with agricultural producer prices. One day later, we will find out how industrial performance affected the GDP, as the Central Statistics Office will publish GDP figures for the third quarter. Construction data for September will also be released on November 15. Earnings for the January-September period will come out on November 22.

Green Economic Forum Budapest will host a Green Economic Forum on November 14, focusing on the importance of creating a global business model in harmony with environmental needs.

The forum is aimed at those organizations and companies that share friendly-environment values and practices to support a sustainable economy. According to organizer European Chamber (EUCham) “understanding the concept of the circular economy is the key to identifying the biggest opportunities for improvement of businesses and changing the take, make and dispose approach”. The concept has been discussed at the World Economic Forum in Davos, and the European Union shares the model too, considering environmental change one of the most important area to focus on.

Delegates of several organizations will share knowledge, experiences and ideas on how to achieve and promote a greener future. Speakers will include EUCham president Michele Orzan, MOL Group senior sustainability expert Áron Horváth, the Ambassador of Ecuador María del Carmen González Cabal and the Ambassador of Slovenia Ksenija Škrilec.

The event is being held at the EUCham conference room at Szabadság tér 7 (Bank Center) from 5 p.m.

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2016. 11. 09. 21:01

News 05

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Budapest Business Journal | November 11 – November 24, 2016

NEWS IN BRIEF Government congratulates Donald Trump Hungary’s Prime Minister Viktor Orbán and several senior ministers issued statements congratulating Donald Trump, who will become the 45th president of the United States of America, following a “historic” election resulting in Trump’s victory, according to reports. Posting a message on his official Facebook page, Hungary’s Prime Minister Viktor Orbán wrote: “Congratulations. What a great news.

Democracy is still alive.” During what many saw as a controversial Trump campaign, Orbán was one of the few leaders worldwide to praise some elements of Trump’s campaign. Orbán was reported as saying that “Trump’s foreign policy would be the best for us […] Trump defends the monitoring of migrants. He also opposes democracy building in other countries, and I agree with him on this.” Although Orbán has insisted he never endorsed Trump, he did agree with his

position on the matter of migration.

Minister of Foreign Affairs and Trade Péter Szijjártó also expressed his appreciation of the U.S. election results, shortly after their announcement. “The Hungarian government congratulates Donald Trump on his presidential election victory. Hungary is ready for cooperation,” the minister said.

The minister added that Americans have made a decision, and democracy has been strengthened in an extraordinary election campaign. He added that the world economy and global politics have entered a new era, posing historical challenges for the whole world, the tackling of which will require a new and courageous approach, and new and innovative politics, according to a report by Hungarian news portal origo.hu. Hungary’s Minister for National Economy Mihály Varga also congratulated Trump. According to Varga, it has been proven that democracy works in America, origo.hu reported. Varga said he expects a new era to begin in Hungarian-American relations.

October’s 1% inflation a 3-year high Hungary’s October inflation figure of 1%, announced on November 8 by the Central Statistical Office (KSH), was higher than the market consensus of approximately 0.8%, reaching a peak not seen in three years, CIB Bank noted in a flash report sent to the Budapest Business Journal. Reaching a three-year peak, Hungary’s inflation was 1% in October compared to the same month of 2015. “Fuel prices supported the rise as a two-year trend has been clearly broken – with a 1.6% rise y.o.y. and 3.9% m.o.m.,” the CIB flash adds. Food prices also moved higher in October, while the rise in clothing prices was above average due to the usual seasonal factors, CIB Bank states.

While the pickup in inflation may also reflect stronger domestic demand, this was not reflected in the month-on-month shift in service prices, nor in the prices of durable goods in October, the report adds. Core inflation came close to the expected average for this year, at 1.4% in October, compared to the corresponding month a year earlier, CIB observes. “Though inflation is still far away from the central bank’s target of 3% and may be considered low in absolute terms, the upward trend has become clear,” the CIB analysis says. “Inflation was 1.4% y.o.y. in September 2013 and this October’s figure is the first to touch 1% since then. Nevertheless, according to our calculations, annual average CPI may be close to 0.5%, i.e. the October figure does not alter this year’s outlook. Also, we do not expect any shift in the monetary policy outlook.”

Christian Keszthelyi

Trade surplus over EUR 1 bln in September Hungary’s trade surplus reached EUR 1.04 billion in September, up EUR 175 million compared to the same month a year earlier, the Central Statistical Office (KSH) said on November 9 in a first release of data.

In EUR terms, exports increased by 1.9% and imports decreased by 0.2% during September, compared to the same month of 2015, KSH data shows. The value of exports amounted to EUR 8.4 bln, and that of imports

to EUR 7.4 bln. The share of European Union member states was 79% both in exports and imports, the KSH reported. In the JanuarySeptember period of the year, the value of exports was EUR 69.4 bln, while that of imports equaled EUR 61.7 bln, giving a trade surplus of EUR 7.7 bln in the period, the KSH said. Compared to the same ninth months a year earlier, exports and imports were up by 2.9% and 1.2% respectively in EUR terms, with the trade surplus growing by EUR 1.22 bln, the KSH added.

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2016. 11. 09. 21:01

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COMPANY NEWS MOL bids for Anheuser-Busch brands, Reuters reports Hungary’s oil and gas company MOL is one of at least six companies submitting indicative offers by industry players and buyout funds for a group of beer brands being sold by Anheuser-Busch InBev (ABI.BR), Reuters reported on November 8 citing unnamed sources familiar with the matter. The brands, worth more than EUR 5 billion, have been put up for sale as part of AB InBevʼs USD 100 bln-plus takeover of SABMiller, which closed last month, Reuters recalled. First-round bids for the brands of the company, including Pilsner Urquell in the Czech Republic and Tyskie and Lech in Poland, were due on November 7, Reuters reported, citing sources wishing to stay anonymous due to the private nature of the deal.

Marks & Spencer to shut up shop in Hungary As part of a major restructuring affecting more than 100 stores in the U.K. in response to shrinking profits, British multinational clothing, home products and luxury foods retailer Marks & Spencer is closing stores in ten foreign markets, including Hungary, news agency MTI reported on November 8. The retailer announced it will be focusing its international business on a franchise model in future, closing 53 stores across international markets, including ten stores in China, seven in France, and all its stores in Belgium, Estonia, Hungary, Lithuania, the Netherlands, Poland, Romania and Slovakia, MTI added. The Hungarian unit of Marks & Spencer broke even on revenues of HUF 3.6 billion last year, public records show, according to MTI, adding that turnover was up from HUF 3.1 bln in 2014. U.K. newspaper reports noted that Marks & Spencer is shutting 30 U.K. stores as part of a major overhaul that will cut floor space devoted to its struggling clothing lines.

Alteo shares go for a little over IPO price on first trading day Shares of Hungarian energy supplier and trader Alteo traded at a little over their IPO price about an hour into their first trading day on October 7, according to Hungarian news agency MTI. The shares traded at HUF 4,680 at 9.50 a.m. that day, close to the HUF 4,630 issue price

BBJ_2421_biz.indd 6

in an IPO that ended three weeks earlier.

Alteo raised about HUF 1.4 billion through the IPO and private placement, a little less than half of what it had aimed for. Alteo sold 106,672 shares in the IPO and another 193,320 shares in the private placement.

AAA Auto figures reveal used car preferences of Hungarians Some 58,000 vehicles were sold by Czech car trader AAA Auto across its Czech, Hungarian, Polish and Slovakian markets in the first ten months of 2016, according to in-house data for sales across the network of more than 40 dealerships and outlets in the four countries, says the company. The average price of cars sold across the entire group was HUF 2,145,000, while in Hungary the average price was HUF 1,628,000, a press statement said. “Hungarian used car buyers clearly have very different preferences from AAA Auto customers across the rest of our sales network,” said CEO Karolína Topolová. “While much of this is obviously related to the domination of Opel and Suzuki manufacturing facilities in Hungary, versus Škoda in the Czech and Slovak markets, there are some common trends, making Fords and Volkswagens sound choices across the entire region, especially when backed up by market-leading services and value-adding offerings from AAA Auto,” she added. Some 12% of buyers prefer automatic transmission in the region, while in Hungary the figure is 10%, AAA Auto reported. At group level, 55% of AAA Auto’s customers prefer diesel to petrol, while in Hungary, 67% favor diesel.

Accenture opens technology delivery center in Budapest Global professional services firm Accenture has opened a new Accenture Delivery Center for Technology in Budapest, its seventh such location in the CEE, aiming to deliver technology services to clients powered by the local pool of science, technology, engineering and mathematics (STEM) talent, according to a press release sent to the Budapest Business Journal. Over the next two months, Accenture is planning to hire more than 150 people in the newly opened delivery center, the statement says, noting that currently a total of 6,000 people are employed by the firm in the region. Accenture serves clients across a range of industries through

ITSH creating 360 more jobs here Hungary’s foreign minister Péter Szijjártó discusses the latest HUF 4.6 billion investment of IT Services Hungary (ITSH) with Pécs Deputy Mayor László Őri and ITSH CEO Chris Wilson on November 3. The investment, which is being realized with support of a HUF 650 million grant from the Hungarian government, will affect ITSH’s bases in Szeged, Debrecen and Pécs, and is expected to create another 360 jobs. The company already employs 4,400 people in those three cities and in Budapest. The company says it will cooperate with several educational institutions in order to introduce students to new technologies.

Photo: MTI/Zoltán Máthé

the Accenture Delivery Center for Technology, with a focus on the AustriaSwitzerland-Germany region and CEE. “Our investment in Hungary and plans for future expansion reflect our continued commitment to better serve our clients, locally and globally, with our innovationled approach and helping them in their digital transformation journey,” said Peter Škodný, managing director for Central and Eastern Europe at Accenture.

“We are excited to recruit and grow top technology talent from Hungary and contribute to the economic growth and development of Hungary and the region,” the managing director added. “We are building teams with advanced skills in core and new technologies, and expertise in the most advanced delivery models, including agile delivery, continuous integration, DevOps and highly automated delivery processes, to help our clients rotate to New IT,” said Tomáš Volek, managing director of Accenture Global Delivery Network – Central and Eastern Europe. “The Accenture Delivery Center in Budapest provides our clients with access to the right mix of local and global resources, using state-of-the-art technologies, intelligent tools, artificial intelligence, lightweight architectures and industry assets,” he added.

More Budapest flights planned by easyJet

U.K.-based low-cost airline easyJet’s first flight from Venice to Budapest touched down on November 3 at the capital’s Ferenc Liszt International Airport, according to the airline. Next year, easyJet plans to add Amsterdam to its destinations from Budapest. In keeping with its commitment to “fastpaced” expansion of Budapest flights, easyJet announced the launch of three new Budapest routes this year, the press statement said. By February, easyJet will be flying from Budapest to London Gatwick, Berlin, Paris, Lyon, Geneva, Basel, Venice and Amsterdam.

MTel to raise payroll HUF 2.4 bln, after union talks After reaching an agreement with workers’ unions on November 3, Magyar Telekom announced it will increase payroll costs by approximately HUF 2.4 billion next year, according to reports. MTel is reportedly not eyeing any layoffs. As of the beginning of next year, employee salaries will be raised by 5.5% at Magyar Telekom, while workers of MTel’s IT unit T-Systems Hungary will see wages rising by 3.1%, according to reports.

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DVM group appoints head of project management

Márkus Schüller has been appointed head of project management at integrated building services firm DVM group, according to a press release sent to the Budapest Business Journal on November 6. Schüller has been responsible for leading the team since this fall, the press statement said, adding that the professional joined DVM group last year. Schüller received an MSc degree in Architecture from Budapest University of Technology. He gained experience in general construction and property management in Hungary and abroad. Prior to joining DVM group, he

worked for companies such as Strabag Zrt., Market Építő Zrt., and Voith Industrial Services Kft. “Project managers are key for delivering wellcoordinated, cost-effective projects. At DVM group they receive internal technical support from in-house architects and engineers. This unique, organic approach results in innovative, value-engineered, sustainable solutions, and guarantees reduced investment costs, improved constructability and flawless end products,” said Tibor Massányi, managing partner of DVM group. “We are proud to have an internationally trained professional as the leader of our project management team. Márkus’ expertise and work has been acknowledged by our clients. The cornerstone of DVM group’s success is that we provide outstanding services with top experts.”

MFB welcomes new chairman-CEO Tamás Bernáth has been appointed chairman-CEO of the state-owned

Hungarian Development Bank (MFB) as of November 12 by Minister of National Development Miklós Seszták, MFB told Hungarian news agency MTI late on November 8. The previous CEO, Csaba Nagy, is leaving by mutual agreement. Bernáth was recommended for the position by Andrea Bártfai-Máger, government commissioner for postal affairs and national financial services. Bernáth was chairman-CEO of insurer BNP Paribas Cardif Hungary from 2014 , having earlier worked as managing director of OTP Bankʼs micro and small business division.

CMS names new head of compliance projects

Mária Dárdai has joined the Budapest office of international law firm CMS as head of compliance projects as of October 3.

Prior to her new role, Dárdai had served as VP general counsel, compliance and data privacy officer of UPC Hungary (Liberty Global) from 2009, after holding various key

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positions at ABB Hungary, Magyar Telekom and Nomura. Dárdai has vast experience in compliance investigations, but also deep insight into the technology, media and telecommunications (TMT) sector, the press release said. “We are very excited about the addition of Mária to our compliance, anti-bribery and investigation practice. She will be essential to the further building of the practice in Hungary and regionally,” commented managing partner Gabriella Ormai. “Mária’s experience with high-profile compliance matters in a diverse range of sectors, coupled with massive international experience in Central and Eastern Europe, will be extremely beneficial to clients who must navigate in an increasingly complex global business environment,” said Zsolt Okány, CMS global co-head of disputes, and the Budapest-based disputes and investigations partner. “I am very excited to join CMS’s investigation team and looking forward to developing this practice further,” said Dárdai. “I strongly believe that compliance has tremendous importance in our clients’ operations, which might be even more essential in Central and Eastern Europe than in other parts of the world. I am committed to serve clients to the highest standards and certain that clients will benefit from our strong experience in this practice area,” she added.

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Budapest Business Journal | November 11 – November 24, 2016

Opportunities in challenges: BCCH at 25

Photo: Mátyás Pödőr

You don’t need to spend much time looking at Hungarian business news to realize there are now serious concerns about labor shortages in almost every sector and profession, all the way from engineers to cleaners. But Vazul Tóth, chairman of the British Chamber of Commerce in Hungary, celebrating its 25th anniversary this year, sees opportunities in such challenges.

ROBIN MARSHALL

“I am a huge fan of hiring talented trainees who are hungry to learn, extremely hard workers who want to prove themselves, solve significant problems and deliver results,” says the head of quality management at Budapest Bank Zrt. “I ADVERTISEMENT

Vazul Tóth, chairman of the British Chamber of Commerce in Hungary and head of quality management at Budapest Bank Zrt. have to admit that, in this segment, there are challenges, not only in Budapest but also at our unit in Békéscsaba, but I am

confident there is also light at the end of the tunnel.”

Some of that light, at least, comes from a realization of how best to handle the next generations of workers: Y, Z, and Alpha.

Too much is made of them being different (subtext difficult) to previous, more traditional generations such as Tóth’s own. They want a better work/life balance and more flexible structures such as home working. “They want opportunities to grow, and are significantly more hungry to develop more rapidly,” Tóth says.

And therein lies the potential, provided you can balance that hunger with the necessity to have some “rubber on the road” in terms of experience and still deliver a quality result.

“Look, there is a significant challenge from labor shortages, we can sense that from our own members, but British companies like BT, like BP, like Vodafone, have made decisions to start or expand their SSCs and customer care centers in this country, and clearly they would not have done so if they were not comfortable about being able to find the talent they require to deliver excellent service.”

Labor shortages are not unique to Hungary; indeed, a recent ManpowerGroup survey found it to be something of a European phenomenon.

What exacerbates things here is the low level of wages, making working abroad that much more attractive. But

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Budapest Business Journal | November 11 – November 24, 2016

“Hungary and the U.K. have an extremely good relationship both on a trade and a political level. I think there will be lots of opportunities to build on that.” the BCCH chairman says that is only a temporary problem, with potential longer term benefits, because he believes most workers will return, bringing with them valuable experience. And he is a point in case, having worked in Australia for seven years, learning English and forging a career in consulting after arriving Down Under “with just one suitcase to my name”.

“Of course it was hard to leave my comfort zone and challenge myself somewhere else. Was it worth it?

Absolutely. Did I come back? Yes, indeed.” Tóth believes people will return for one of two reasons, either because of personal circumstances, or because the wages here have moved closer to those in Western Europe, and he says moves need to be made on that front. But the additional experience and knowledge these returnees will bring and apply to middle management positions and above are true added value.

Added value is something the BCCH itself has sought to offer its members.

Tóth was first involved in 2005, before he left to take up a position in the Netherlands, and returned to the chamber in 2013 when he was elected chairman. He says the difference between those periods is marked.

“In the early ’90s and into the 2000s I think life for all the chambers was somewhat more comfortable. There was all the euphoria around the market economy and multinationals [MNCs] coming to this part of the world. It was an obvious choice to be a member of a chamber; they put on some good events and you could build your networks.

But after the global economic crisis, it became clear that we needed to up the ante and provide more value to members.”

Battered That, he says, is what attracted him to the idea of taking on the chairmanship.

“The chamber had been battered by the economic crisis and lost a lot of members; I saw an opportunity to revamp and reposition it.”

That materialized as what he calls BCCH 2.0, which is built on three key pillars. The first is facilitating knowledge transfer to the SMEs, which the chamber found “were very hungry to learn from multinationals how to grow

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to the next level”. This is typified by the SME breakfast series, in which MNC leaders are invited to come and speak to representatives from the chamber’s SME membership.

The second pillar involved company leaders. “We found there was a desire for CEOs to discuss topical issues with C level executives.” That is met through exclusive CEO Dinners for C-suite members to discuss sectoral issues and challenges.

The third pillar looks at disruptive technologies, and working with the British government’s Department for International Trade (former U.K. Trade and Investment) to see how Hungarian startups can step out beyond the borders here.

Disciplined management The approach is working, the chairman says, because board members all have areas of responsibility and use their own expertise and networks to help organize events, invite speakers and the like. “It is not rocket science, just good old-fashioned structure and disciplined management.”

One significant change in the past couple of years has been the creation of the British Business Center, a joint initiative with the British Embassy that is based in the same offices as the BCCH. It came from a British government decision to help British SMEs move into emerging markets, with Hungary being among the first pilot schemes. “It offers continued export support. If an SME is interested in coming here, we will do the market research for them to see what opportunities are available, offer a hotdesk opportunity for them to come and negotiate, and then offer startup support. In two-and-a-half years we have helped 500 British SMEs enter the market; in terms of signed contracts that’s GBP 0.5 million.”

Tóth is coming to the end of his tenure, having been elected for the first time in 2013 for a two year period, and then reelected in 2015. A chairperson can only be reelected once. He says his successors will see a future ever more based on digitalization and how companies deliver a genuine customer experience that is reactive to what the customer really wants.

It will also likely see a European Union without the U.K., though the details of how that plays out are far from clear at this stage. But, again, Tóth sees an opportunity here. British chamber members across Europe are being canvassed for their opinions, and the BCCH chairman says it seems clear the future will involve a lot more bilateral trade agreements for Britain. “Hungary and the U.K. have an extremely good relationship both on a trade and a political level. I think there will be lots of opportunities to build on that.”

INNOVATION

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Insight

Startup public funds in a post-JEREMIE world Telenor Accelerate is the first corporate startup program in Hungary, and therefore it is a one-of-a-kind effort. But several other channels also exist out there where young firms can access a large pool of public funds.

The local startup ecosystem must be pleased by the fact that ever more money taps get opened of which sole purpose is to help them make it to the next level. However, VC resources are only one part of the equation. Public funds entered the domestic startup landscape in form of the Jeremie scheme provided by the European Union budget, but now that those resources have dried up, the post-Jeremie world still has to offer a thing or two.

True enough, the very first statesponsored effort called Gazella I back in 2013 was rather a flop since the incubators selected for the grants still haven’t seen a dime of the promised money. The next episode of the same sequel should bear more fruit. Under the call for proposal Gazella II not less than HUF 5 billion was up for grabs and in August eight applicants, all located in the countryside, were granted a maximum amount of HUF 600 million each in form of non-refundable funds. At least 80% of it must be spent on toperation expenses of selected startups and only the remaining 20% can be used to run the hosting incubator.

Another soon-to-start scheme will feature a HUF 50 bln government fund where 30 bln comes from EU sources and the rest is provided by Magyar Fejlesztési Bank (MFB) with the purpose of making capital available to businesses hatched in local incubators. By contrast, direct Brussels funds can be applied for under Horizon2020, the EU’s seven-year development program, which publishes calls for proposals for startups as well at regular intervals. Millions of euros are at stake each time and the next submission period is scheduled to open in early December.

INPUT, another startup program is just being launched by the Hungarian Government IT Development Agency with total financial resources of up to HUF 2.4 bln. They target the less developed regions of the country and their aim is to help two hundred ICT-focused startups go global within the next three years.

“INPUT will not provide direct payments to applicants, though,” says Imre Hild,

founder of Global Platforms, which is dedicated to assist startups for the same end as INPUT. “Only mentorship and sales and management training will be offered because experience shows that if earlystage firms get used to being showered by free money, they start concentrating on securing such money flow and they forget about their customers’ needs.”

The Hungarian National Trading House (MNKH) seems to have an identical philosophy. Their InnoTrade initiative is committed to train startups with a prototype and a mature intention to enter the world stage. Part of the package is the opportunity to take part in global flagship startup events from Boston to Tel Aviv.

Those hopefuls that are more into cash regardless, should consider to submit an application for a recently opened call for proposals entitled “Development of the region’s innovation potential by setting up innovative startups” under Széchenyi2020. Eligible will be projects with a budget HUF 6 to 9 million.

After the success of DTAC’s accelerator program in Asia, Telenor, which owns the Thai company, launched the program in Hungary, where it is the first corporate accelerator program. Telenor not only provides financial and infrastructural support to the chosen startups, but also gives technical assistance too with the help of the program’s mentors and other experts. Telenor Accelerate has proved to be so successful that more than 140 startups registered, with applicants covering the whole economy; from e-gaming through e-commerce to culture, truly diverse companies have chosen to take part in the program.

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Budapest Business Journal | November 11 – November 24, 2016

Ladybird farm wins environmental award

An eco-farm in Hungary’s Somogy County has won a European Business Award for the Environment (EBAE) title for its innovative and continuous environmental activities.

CLAUDIA PATRICOLO

The Ladybird Farm Leisure Center (Katica Tanya), from the village of Patka, about 200 km southwest of Budapest, won the EBAE Management Award (for micro and small entities), which is given to organizations “with a strategic vision and management scheme that enable it to continuously improve its environmental performances”. The award was presented this year in Tallinn, Estonia, on October 27

by Estonia’s minister of the environment, Marko Pomerants.

“It is a great honor and prestige,” Katica Tanya owner János Handó tells the Budapest Business Journal. “We have already received several awards in Hungary, but this lifts us to a European level. This means that we are doing

Award winner: From left, Joanna Drake, deputy director-general, DG Environment, Janos Hando, owner of Ladybird Farm Leisure Center, and Marko Pomerants, Estonian Minister for the Environment. something good and we do it well! This inspires us to do more, innovate and develop creative products that meet our development strategy.”

Ladybird Farm was founded in order to promote a lifestyle in harmony with nature and the environment. “The idea of the farm was conceived in the U.K. back in 1992-93, when I was studying on a MBA course in London,” explains Handó.

“I saw multiple farms that people visited to see household animals and also had a variety of play areas/attractions. I found it

strange that families paid to see household animals.” At the time, homeyard husbandry was not popular in the U.K., while in Hungary it was present in every village.

“By 2002 this situation had changed drastically in Hungary also. Household husbandry disappeared, as did the animals, therefore, the need to show them in a nice place became stronger.”

Nowadays Ladybird Farm attracts 65,000 visitors per year, and does so while developing a lifestyle that consumes as few non-renewable sources as possible.

“Some 80% of our energy needs are covered from renewable sources and we would like to increase that to 90% by the end of 2017, and 100% by the end of 2018,” says Handó. “We try to develop a sustainable supply chain process also, minimizing the number of suppliers and the number of transports to our farm, treating our sewage locally and in an ecological way, selectively collecting the waste and using electric cars for local transport.”

Ladybird Farm is home to lots of traditional Hungarian animals, together with agricultural tools and machines, giving visitors more than 50 different activities. “The first investment was in 2001 when we built a 72-bed high-quality but affordable bunkhouse hostel. Then we started to build the leisure center that by now has more than 4,000 sqm of buildings, 250 animals and more than 60 indoor and outdoor attractions. We are the only leisure center in Hungary that is open the whole year round,” Handó says.

“We are very much principle driven people. And principles you never compromise. Such a principle is that a social value has an equal importance to financial results.” A good example of that is the farm’s “pay by waste” concept. “Our visitors can pay a part of their entrance fee through reusable waste. Is it a revenue loss? Yes. Is it a good step to distinguish real waste from useful waste, therefore making people think differently? Yes. And these two things are equally important.”

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International Association of Lawyers adopts basic principles on refugees at Budapest congress

The International Association of Lawyers (UIA – Union Internationale des Avocats) adopted “Budapest Principles” on the status of refugees at annual international congress held in the Hungarian capital.

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“Given the observation of the mass violation of the human rights of migrants currently and the fact that the status of refugees is being called into question, even in the most democratic countries, UIA’s aim is to review the concept of ‘refugee’ through these principles,” the UIA said in a statement. The association is asking that the global community of lawyers also adhere to these principles.

“The international community must set up solidarity mechanisms that make it possible to share the pressure resulting from the crisis equitably, in order to help the most affected countries to manage it,”

Laurence Bory became the first woman to be made president of the UIA in Budapest. said Jean-Jacques Uettwiller, outgoing UIA President. “That is why UIA calls upon states to honor the commitments made, in particular in the September 2016 New York Declaration.”

The association elected its first female president in its near 90-year history during the closing session in Budapest.

Laurence Bory, a lawyer at the Geneva Bar and one of the founding partners of the law firm Bory & Associés, has been involved with the UIA since 1993. In her investiture speech she urged congress attendees to think deeply about the importance of the rule of law, and the dangers of

using the public interest as a pretext to reduce the protection of individuals. She acknowledged the “remarkable work” of her predecessor on refugee rights and stressed the role of the legal profession in defending the rule of law: “I therefore urge each of you, in your respective countries, to fight so that the separation of powers becomes or remains a reality.”

The 60th Congress of the UIA ran from October 28-31 at the Marriott Hotel Budapest.

More than 300 international speakers from 70 countries shared their expertise in sessions attended by more than 1,000 legal professionals. Business law, human rights, art law and robotics law, as well as the general practice of law, were among the topics addressed, with the key themes being compliance and data protection.

The local organizers were delighted with the way the event went, and particularly with the feedback they had received. The tone was set at the opening ceremony held at the Academy of Music, including “an elegant combination of speeches, celebration and music”. That continued at the informal evening, which featured several partners of local firms dressed in traditional Hungarian folk costumes, and performances by Fono Folk Ensemble, Fricska, and various artisans.

For congress president András Szecskay, founder and managing partner at Szecskay

Attorneys at Law, personal highlights included the turnout of local legal dignitaries, including the presidents of the Curia (the highest judicial authority in Hungary) and the Constitutional Court, as well as Minister of Justice László Trócsányi and former Minister of Foreign Affairs János Martonyi, both lawyers by training. “We were able to bring into the limelight Hungarian lawyers who had an opportunity to speak at the congress, which isn’t something you get to do very often.

Another very nice moment was the forum for CEE countries where representatives of the various bar associations talked about the state of the legal profession in their country.”

Judit Budai, a partner at Szecskay Attorneys at Law and also part of the organizing committee said the congress was a great showcase for the capital. “I think it is important to bring international conferences like this to Hungary because it proves that we can handle, at a minimum, 1,000 people. Unlike some venues, you are right in the heart of the city here, there are world class service providers, you are surrounded by culture and entertainment, which is important for the spouses who come with the delegates, and there are easily accessible excursions. People who had never visited before, or who had not been here for many years, were surprised and delighted with what we can offer.”

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Budapest Business Journal | November 11 – November 24, 2016

Property Systems opens latest New Work serviced offices center

The Budapest-based Property Systems is continuing to expand its New Work Office Solutions network in the capital with the delivery of the first 1,800 sqm phase of B52 on Baross utca in the eighth district.

GARY J. MORRELL

Property Systems Group is setting up serviced office centers across Budapest, with the interior design reflecting the different locations and types of buildings, from classical central European to contemporary. All the offices provide 24 hour access, flexible reception, technical support and cleaning and catering services, according to Property Systems.

The B52 Business Center will extend to three levels with so-called five-, four-, and three-star office areas, allowing companies to occupy a whole floor if necessary. “The basic design was something ‘urban’ as we are in the city center. At the same time I wanted to bring out an element of sun and nature,” says András Lesták, interior designer for

Hubert Abt and Csaba Zeley, head of asset management at ConvergenCE, at the B52 opening ceremony. the project. “With BJ48, another New Work center, I did a more classical design in line with the historical building. Some tenants go for something more historical, while others prefer space with a more mainstream or fashionable design.”

Property Systems opened its first New Work project on two floors at the R70 Business Center in Rákóczi út in 2012, providing 200 workstations. A second complex, the Ankerköz Business Center, was opened in the central sixth district, providing 220 workstations. The complex is being given a “funky style” design concept. Outside of Budapest, the company established the 1,200 sqm Budaörs Business Center Terrapark,

consisting of 125 work stations on four levels, last year.

According to Hubert Abt, CEO of Property Systems, the company has invested around EUR 1 million to date in the New Work project. The developments are financed by the 100% family owned company, which calculates development costs as EUR 1,000 per sqm. “The aim is to have 2,000 workstations in Budapest by the end of next year, although this is a moving target, depending on the market. If we attract bigger tenants then we could easily increase our office stock to 30-40,000 sqm. We currently have 10,000 sqm and next year this will be 20,000 sqm in at least ten locations, and then we will

see where we go,” he explains. “Every building is different and we know that people spend more time at work than at home and therefore we want to make the offices as comfortable as possible. Each building has a different design concept and this serves the different tastes of the tenants,” Abt adds.

A recent opening was the abovementioned BJ48, a classical protected building dating back to the end of the 19th century on Bajcsy Zsilinszky út that provides 160 work spaces. “We undertook the interior design to complement the building. This includes the original windows, lamps, balconies and facade,” commented Márk Standavári, operations and sales manager at Property Systems. The European Investment Bank (EIB) has established its Budapest headquarters at the complex.

Property Systems will open a further New Work Center with 200 work stations on Andrássy út by the turn of the year and has signed letters of intent for two locations on the Váci corridor. The aim is to have a total of ten business centers by the end of 2017, the company says.

In terms of occupancy, Abt estimates that in general it takes about nine months to arrive at 80% plus occupancy. “With regard to the extension of the New Work brand beyond Budapest, we will decide next year whether we could role out as a franchise or through our own organization. We would consider Warsaw and possibly Prague, in addition to Milan and Vienna. However, for the moment, we are concerned with increasing our market share in Budapest,” Abt says.

V17 office center opened

The Hungarian investor Torony Ingatlan Befektetési Alap (represented by Diófa Fund Management) has handed over the 12,700 sqm V17 office center in Váci út.

GARY J. MORRELL

Diófa forward purchased the HUF 10 billion center last year and the successful preleasing, sourcing of debt finance, development, sustainability accreditation and selling onto an investor could be seen as a favorable reflection of the development strategy of Wing.

Construction of V17 was undertaken when the office market was not in the best shape. The office component of the project is fully let with only one retail unit available according to Diófa.

Designed by Aspectus Architect Zrt., V17 has achieved BREEAM “Very Good” accreditation. The development provides around 900 sqm of green space in addition to parking for 95 bicycles with changing rooms and showers, in addition to an electric vehicle charging system.

Other features at V17 include natural

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ventilation of the building, with natural sunlight maximized by large glazed surfaces that can be shaded as necessary.

V17 was financed by K&H Bank and preleased to E.ON Hungary with 600 staff now working at the complex.

According to Diófa, sustainability is a must for newly built modern office buildings, as it is considered a basic requirement from the tenant’s side. “For us, V17 is not only a fantastic building, one of the most advanced and greenest office buildings in Budapest, but also a long-term sustainable investment,” said Gergely Biró, CEO of Diófa Fund Management. “In our investment making decisions, we take into account a number of criteria, and a certificated green building with long-term tenants offers significant added value for us.”

In its latest construction project Wing have commenced construction of the Ericsson research and design headquarters at the Nobel Prize Winners Research & Development Park located on the Buda side of the Rákóczi Bridge.

The 24,000 sqm LEED Gold accredited complex has also been designed by Wing’s in-house architects, Aspectus.

The HUF 20 bln project has been financed by a consortium of banks consisting of UniCredit Bank Hungary, UniCredit Bank Austria and K&H Bank.

According to Noah Steinberg, CEO and chairman of Wing, the project will deliver at the end of 2017 with a further second

The V17 office center, on Budapest’s popular Váci corridor. phase of around 20,000 sqm planned. As with V17 he emphasizes the importance of a substantial prelease as part of Wing’s development strategy.

In another built-to-suit project in the neighboring ninth district, Wing is developing the 57,000 sqm Magyar Telekom headquarters. The project is designed by TIBA Építész Stúdió and due to complete in the second half of 2018. The consortium of banks financing the project consists of UniCredit Bank

Hungary, UniCredit Bank Austria and K&H Bank.

There is an increasing trend for speculative office development in Budapest, due to rising demand, falling vacancy, the increasing availability of debt finance and the low supply of contiguous quality office space. Cushman & Wakefield estimate that 18 new office centers totaling 350,000 sqm of speculative and built-tosuit space will be delivered by the end of 2018 as vacancy currently stands at 11%.

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Budapest Business Journal | November 11 – November 24, 2016

2 Business

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1,300 attend election night party Some 1,300 guests attended the quadrennial United States Election Party, jointly organized by the American Chamber of Commerce in Hungary and the U.S. Embassy, at the Corinthia Hotel Budapest on Tuesday. The party is said to be one of the biggest in Europe, and was attended by government, diplomatic and business representatives including, naturally, U.S. Ambassador Colleen Bell.

Highlights included live video feeds from the major U.S. news networks, two shows by dance group Freelusion, a mock election in the Oval Office, authentic campaign materials and decorations direct from the United States, a free “all you need to know” guide to the U.S. presidential elections 2016, a moderated policy debate and a quiz on American history, the candidates and the electoral system at various educational stations. Music by the Hungarian Air Force Band, with Americanstyle catering, including bagels, hot-dogs, burgers, and BBQ ribs.

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3Special Report BBJ

Insurance

Car coverage headed for low-key yearend campaign

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Growth won’t affect profitability, CIG insists

 17

Moving online

The insurance market is increasingly moving towards an online future, while newish sectors, like schemes that cover funeral costs, continue to gain ground.

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Budapest Business Journal | November 11 – November 24, 2016

Looking ahead to rosy, but disruptive times

Insurance companies are enjoying prosperity not seen since before the recession and are gearing up for the technological disruption likely to be caused by the internet of things.

LEVENTE HÖRÖMPÖLI-TÓTH

It took three years, but it has made it at last. The insurance market has recovered from the heavy impact of sectoral taxes – namely 10% levied on asset insurance and 15% on casco (voluntary vehicle insurance), respectively. According to data from the Hungarian National Bank (MNB), the figures for the first half of 2016 resemble the pre-financial crisis days with profits up by 20% compared to the year before. Revenues also soared, albeit at a slower pace. Life insurancegenerated revenues fell somewhat, but the non-life segment showed a healthy 9% hike and the number of insurance contracts also grew by 4%.

Companies surveyed by the Budapest Business Journal confirmed the positive developments.

Groupama reported dynamic growth, not only in the compulsory car liability segment, but also in the case of products concerning payment ability of debt installments.

CIG Pannónia has recorded promising statistics in terms of unit-linked insurances, more specifically pensionfocused savings.

“As several educational programs have been launched, public attention is increasingly turning to the importance of self-provision,” says Dr. Gabriella Kádár, CEO of CIG Pannónia Életbiztosító Nyrt.

“The same growing awareness can be detected with regard to health insurance.

And the reputation of the entire industry is bound to improve as the new requirements of the ethical life insurance

Insurance company market shares Signal 2,29%

Union 5,32%

UNIQA 6,83%

Vienna Life 1,34%

AIG Europe Fióktelep 1,57%

Allianz 15,43% Cardif 0,52%

NN 7,25%

Cardif Élet 0,19%

MKB Élet 0,66% MKB Általános 0,78%

CIG Pannónia Általános 0,59%

MetLife Europe Fióktelep 2,03%

CIG Pannónia Élet 1,13% Colonnade (QBE) 0,56%

Medicover 0,40%

Dimenzió 0,32%

Magyar Posta Élet 6,94%

ERGO Életbiztosító 0,54%

Magyar Posta 1,55%

Erste 1,48% KÖBE 0,98%

K&H 5,24%

Groupama 9,80%

Grawe 0,90%

Genertel 0,59%

Generali 14,24%

Európai Utazási Bizt.

0,22%

Source: MABISZ Q1, 2016

concept, effective from next year, will make the cost structure of products even more transparent.”

Market leader Allianz has recorded healthy business development and it has every reason to gaze into a rosy future.

“Demand for digital products is constantly ballooning, therefore innovation must continue,” Tamás Szőke, director for product and portfolio management of Allianz Hungária Zrt. noted. “There are huge reserves in the home insurance market and the SME sector, as both are under-insured, but agriculture has a lot of room for expansion as well.”

Satisfaction surveys from the conveyor belt The industry was among the first to realize the importance of measuring and improving the customer experience, and to that end serious efforts are being undertaken. Common practice shows that customers expect damage settlement to go in the smoothest possible way. One of the key goals of Allianz is to make its relevant service quicker and more effective.

“This is part of the overall digitalization program of customer relations, which

DRIVERLESS FAULTS Autonomous vehicles (AVs) will shape not only traffic, but also the realm of insurance. UNION predicts the legal environment will differ across jurisdictions, and it is betting on witnessing a decade-long process till an EU-wide regulation is implemented, which is a prerequisite for insurers to react.

“We are not expecting any legislative changes in the near future, but, in terms of vehicle use and incurred damages, we are monitoring the application of existing systems such as lane departure warning systems or pedestrian detection solutions meant to avoid accidents,” a statement from Groupama says. It also believes that insurance premiums should cost less for AVs, and companies should react by introducing special bonuses soon.

Although the number of accidents will surely drop, due to the connectivity between smart vehicles, Allianz expects accident claims to become more complicated.

“The current system, however, will probably not be dismissed completely in the short run,” says Tamás Szőke, director for product and portfolio management of Allianz Hungária Zrt. “Car liability insurance, for instance, should continue to exist since the fundamental purpose of this form of insurance is protection and compensation of those concerned by the damage, which will be needed in the future just as much. Compensation is expected to be arranged by the insurance company that will mediate with and consult those suffering and causing the damage as well as the manufacturer.”

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Aegon 10,32%

started in 2015. This year our web pages are being developed further for the sake of optimization, responsiveness and consolidation,” Szőke added.

Electronic support is deemed as a strategic asset by UNION Biztosító as well in the race for the hearts and minds of users. A newly introduced chat function has quickly become popular. “Customer satisfaction is measured in affiliates as well as on our online platforms,” Viktor Maják, director of communications at UNION said. “In September, a survey conducted in our customer relations offices concluded that up to 99.1% of respondents rated the service excellent.

Another poll concerned our online casco damage settlement service, in which case we are proud to report that 94% of our clients claimed they would recommend the service to their relatives and friends.”

Customer satisfaction is to be taken to the next level at Groupama with the help of a complex company survey that aims to address not only the needs of customers concerned by damage settlement, but other key processes at the firm too.

Accordingly, interactions that influence the corporate image, such as how contracts are concluded or conventional call services, will also be scrutinized with the purpose of optimization.

Embracing the smart revolution The expanding internet of things (IoT) market will not leaving insurance companies unaffected, either. According to a recent study by French multinational management consulting corporation Capgemini, 29.5 billion products with a web-based operation will have been sold and the consumer penetration of smart home appliances and wearables should hit the 40-50% mark on average by 2020. This also means that insurance companies will have a lot more data to work from.

“Big Data helps us get to know the needs of our customers better and develop more customized services and products,” Szőke said. Groupama is expecting to be able to calculate person-specific premiums by analyzing more detailed statistics.

According to its statement, the home and the car segments as well as agriculture are all about to experience huge growth.

The latest technology-bound products include Allianzʼs special liability insurance for drone operators, but the home insurance segment looks equally lucrative for development. “It wonʼt be long until your smartphone alerts you in the event of a home insurance incident and seeks help by informing the hotline automatically,” Szőke added.

ONLINE INSURANCE ON A GUARANTEED GROWTH TRACK Netrisk.hu is the market leader in the online insurance market and it doesnʼt take an astrologist to predict that this segment can look forward to especially busy times. As confirmed by Netrisk CEO László Sebestyén, habits are changing and the insurance market has been adapting to the process. “The online insurance market is dominated by two main products: compulsory car liability and travel. In both cases customers are becoming ever more conscious in their choices and the process is bound to intensify,” he told the Budapest Business Journal.

The world wide web was used to explore and compare car insurance premiums at first, then travel appeared on the horizon. It was a natural evolution, since people increasingly organize their own trips.

“Netrisk initiated a product development concept three years ago in which aim the was to serve personalized needs more by keeping the premium level, but extending the scope of services,” Sebestyén said. This is how it became routine to find offers specifically designed for trips by plane or car, focusing on sightseeing or skiing. Now there is even a pilgrimage template out there to choose. “This new approach allows customers to pick what they actually need, and nothing more,” the CEO added.

Some areas, such as home insurance still seem to leave customers looking for old fashioned help. They collect information on the internet, but then tend to seek advice at bricks-and-mortar affiliates before entering into an agreement. Netrisk wants to change that perception of uncertainty.

“Just because it is a more complex product, people should be able to make up their mind without having to leave their desk,” Sebestyén explained. “Since a call center has been set up by Netrisk, users increasingly go for completing their transactions online as they have an expert they can rely on immediately on the other end of the line.”

Relations with conventional insurance companies are excellent, Netrisk says, since they donʼt mind that it is an online player driving customers into their arms.

“Online growth is guaranteed as this is where everything is headed,” Sebestyén concluded.

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Budapest Business Journal | November 11 – November 24, 2016

CEU BUSINESS SCHOOL

Pension insurance schemes – the holy grail of pension savings in Hungary?

One can choose the level of involvement in the Assistant Professor management of the account of Accounting and Finance starting from absolutely none CEU BUSINESS to very active. This makes it SCHOOL superior to retirement savings account where one has no With the increasing choice but to actively manage lifespan and the decreasing reproduction the investment individually. rate in Hungary, we may This flexibility is an important reason why pension insurance safely assume that the pension provided by the schemes are becoming a state will not cover our popular form of saving. financial needs after retirement. Among Numerous funds offer a wide supply of investment options, where clients the several options can actively trade shares, or if they available to save money want less involvement, they can choose funds that are actively for our retirement years, investment managed – these latter have generated a 4-10% return in the past years. For privately financed risk averse savers or non-experts, it is pension plans combined possible to create a risk free portfolio – this gives at least a 2% return by law with insurance are at the moment until the end of the investment. Several companies offer gaining popularity.

Dr. Anna Turner

loyalty bonuses, which further increases returns – often by 10%. This, together with the 20% tax benefit makes this form If you live until 85 years, you will need of investment rather appealing. to finance 20 at least years after retiring, Moreover, the scheme includes assuming a retirement age of 65. (The insurance coverage, where individuals average time spent in retirement in can decide on the level of coverage in Hungary is 15 years at the moment, but case they become ill. The National Bank this may increase with the lengthening of Hungary introduced a cap on what life expectation.) The state has low costs fund management companies reserves in pension funds and currently can charge for their services, which relies on the contributions of the younger overall decreased the risk of this generations to finance the pension of investment form and purged the market the retired population. However, with a of inefficient funds. As this is a very reproduction rate of only 1.24 (one of the long term investment covering several lowest in the world), the current system decades, the final pension sum is very is not sustainable. The government has sensitive to costs and returns. A 1% introduced three tools to help individuals increase in costs, for example, means a save money for their retirement – private 20% decrease in the pension. pension funds, retirement savings There are several dozen investmentaccounts and pension insurance systems. linked insurance policy offers available, The latter has been gaining momentum giving savers a good variety of options.

In the past two years, contributions to in the last few years.

All three saving options include a 20% pension insurance schemes have more state-financed “top-up” to one’s annual than doubled with HUF 30 billion in contribution to the retirement fund in investments by 137,000 people. This the form of tax benefits of a maximum can further increase, as there is a of HUF 130,000/year. However, while large potential in the market, with two one has no direct input in the private million employees retiring in the next 15 pension funds’ investments decisions, years. With the tendency of the state’s the insurance combined solutions are slow withdrawal from financing our quite flexible. One can choose the level retirement, it is some comfort that it is of involvement in the management of giving us smart options to save money the account starting from absolutely ourselves. none to very active. This makes it superior to retirement savings account This column is part of a continuing series where one has no choice but to actively of opinion pieces from experts at the manage the investment individually. CEU Business School in Budapest. The This flexibility is an important reason opinions stated here do not necessarily why pension insurance schemes are reflect those of the Budapest Business becoming a popular form of saving.

Journal.

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Car insurance headed for low-key yearend campaign

While car owners must live with ever growing insurance costs, the usual end-of-year craze for switching insurance companies promises to be low-key in 2016.

LEVENTE HÖRÖMPÖLI-TÓTH

According to the data of market leading online insurance website Netrisk.hu, the average yearly premium for compulsory car liability insurance was HUF 32,000 in Q3 2016, which represents a year-onyear increase of 21%. However, there is worse to come. As shown by statistics of the recently launched end-of-the year campaign, where car owners have the chance to cherry-pick a better offer for the upcoming year, a further average hike of 10-12% should be expected.

“There is not much of a structural change for premium calculations. The biggest discounts can be raked in in the usual manner: by buying multiple insurance policies simultaneously, paying the annual fee in one go, opting for bank transfer payment and committing to maintain contact with the insurance company electronically,” László Sebestyén, CEO of Netrisk tells the Budapest Business Journal. As he highlighted, cross-sales methods are widely used during the process, as that is what gives a real boost to the revenues of the insurance firms.

Fewer vehicles are concerned by this campaign, though. As a result of a previous change in legislation, insurers are prohibited from offering better conditions to new clients than existing

ones. Therefore, there will be a lot less drivers this time who will terminate their agreement, just to enter into a new one with the same company. Last year such transactions carved out more than onethird of the total number of contracts ordered via Netrisk.hu.

A declining mood to hunt

On the other hand, prior to 2010, the default date of termination of insurance contracts was January 1; that is why November was the routine hunt for premium bargains. But that default date has now been moved to the time of the vehicleʼs purchase, so the number of cars concerned by the year-end extravaganza is going down gradually. “We are talking about slightly more than 1.1 million cars, and insurers apparently are focusing less on this period,” Sebestyén added.

“They are legally allowed to announce their premiums throughout the year, and now three firms have made use of this opportunity to the extent that they have even refused to announce new premiums tailor-made for the annual campaign.”

Two pieces of data sum up perfectly the evolving phenomenon: in 2016 there have been a total of 60 new announcements on the market, and two companies have gone as far as updated premiums every month.

As opposed to 180,000 people last year, this time around 100,000-120,000 may switch insurance companies, but that includes 25,000 drivers who have been with MKB Általános Biztosító; MKB will terminate their contracts unilaterally due to its acquisition by CIG Pannónia.

Another obvious trend is that people are giving up on consulting bricks-andmortar affiliates. “The proportion of contracts made online in the compulsory car liability segment amounts to 60%, and we are counting on this to grow further,” Sebestyén said.

The Netrisk.hu homepage.

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Budapest Business Journal | November 11 – November 24, 2016

Profitability remains top priority for CIG Pannónia after acquiring two MKB insurers

Maintaining and boosting competitiveness was behind the acquisition of the MKB insurance companies, CIG Pannónia says.

LEVENTE HÖRÖMPÖLI-TÓTH

At first glance it didnʼt look like the deal of the century. MKB Bankʼs life and asset insurance portfolio generated hundreds of millions of losses last year. And yet, CIG Pannónia decided to acquire its competitors from owner Versicherungskammer Bayern.

“We had to realize that the scope of organic development is limited on todayʼs market; the acquisition definitely served the purposes of competitiveness,” says Dr. Gabriella Kádár, CEO of CIG Pannónia Életbiztosító Nyrt. “After a change of strategy in 2014, we did start going down the path towards competitiveness, but the acquisition

Dr. Gabriella Kádár, CEO of CIG Pannónia Életbiztosító Nyrt. embodies the sort of the leap that paves the way for a new kind growth.”

CIG entered the market back in 2007 with the intention to become a leading player. However, in 2014 a change of course led to a concept that focused

instead on strengthening a mid-sized market position. A streamlined operation and intensified activity aimed at securing more clients and revenue helped ensure CIG was running a profitable operation.

Some analysts now fear that the large numbers of auto liability and home insurance policies that came with the deal may jeopardize this hard-won effectiveness. But Kádár is confident that the company can handle it.

“Our ultimate task is to run a profitable asset insurance segment, so any necessary measures from profile cleansing to re-pricing will be subject to this requirement,” she says. “It would be premature to reveal any specifics as to how this process would be implemented, but what is certain is that sustainable owner profits remain the top priority.”

The deal shortcuts what would have been years of hard work through organic growth, as CIGʼs asset segment will double as a result. On the other hand, the MKB insurance companiesʼ cost level provides favorable synergy options.

More importantly, MKB itself will become a major sales partner in the area of life insurance.

“We already have great business relations with banks, but a step like this

can add a sheer volume of growth to sales in the banking channel,” the CIG CEO adds. “Up till now we have been working on the development of our network and have found independent sales partners; however, the banking sector opens up whole new opportunities.” It was also a major factor that MKB is the only big bank in Hungary that had not committed itself towards any insurer, except, of course, for the MKB insurance entities that were up for sale.

Part of the reasoning behind the acquisition-related effort is to reach an elevated level of differentiation.

CIG plans to introduce new innovative products that tap into the opportunities presented by smart solutions.

The purchase price has not been disclosed, but experts suspect it must have been attractive to make the deal work. The total revenues of CIG and MKB from last year totaled some HUF 27 billion, which would have secured 11th place in the market ranking.

“We are not obsessed with crawling upwards in terms of ranking, but we do want to solidify our position, and we will certainly keep our eyes open for more potential acquisition targets,” Kádár says.

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Elderly turning to funeral insurance in growing numbers

Hefty funeral costs are pushing ever more people to insurance that is meant to cover them when the time comes.

LEVENTE HÖRÖMPÖLI-TÓTH

Burials can turn out to be a costly event in Hungary. Although in small countryside villages the final bill for a traditional coffin funeral may not exceed HUF 200,000, in Budapest the basic price tag can easily be anything north of HUF 700,000. It is no wonder, therefore, that around 70-90% of all funerals now end in cremation, a less expensive solution, not to mention the trend according to which people even take the ashes home, rather than to a cemetery plot, which further reduces the financial burden.

Still, death-related costs quickly add up, and so it should be no surprise that funeral insurance is gaining popularity with the elderly. Some 50,000 have already done so in the knowledge that a preset amount of money is due at the time of death of the insured irrespective of how long the premium has been paid, except for an initial period of grace of one-to-three years.

“The amount to be paid in the event of death is certainly subject to how much the monthly payment is and at what age the insured joined the scheme,” Katalin Bóna,

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“Whereas for a 56-year old person it will suffice to pay around HUF 3,000 per month in order to get half a million in the end, at the age of 70 the monthly payment amounts to HUF 5,700. managing director of UNION Biztosítóʼs life insurance division says. “Whereas for a 56-year old person it will suffice to pay around HUF 3,000 per month in order to get half a million in the end, at the age of 70 the monthly payment amounts to HUF 5,700. It makes a difference, too, what kind of funeral service is wanted, and whether the insured wants the due amount to be spent on anything else apart from the funeral itself.”

As Zsolt Raveczky, president-CEO of ERSTE Biztosító points out, there are additional advantages to this special kind of insurance. “The service does not fall under the scope of the inheritance procedure, so it is exempt from all taxes and duties; therefore, the whole amount can be spent on what it was meant for in the first place.”

Certain subtypes of funeral insurance also provide coverage in the case of a given list of illnesses. In the event of a severe accident-related disability a partial payment is made after the incident and a second one follows at death.

POWERING THE WORLD OF WORK WITH OUR RECRUITING EXPERTISE For more information please visit www.hays.hu or contact our consultants at hungary@hays.hu

hays.hu

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Budapest Business Journal | November 11 – November 24, 2016

Insurance companies [1]

total

NoN-liFe

GRoss pRemium iNCome iN 2015 (HuF mlN) iN Q1, 2016

CompaNy Website

bReakdoWN oF GRoss amouNt oF Claims paid iN 2015 (HuF mlN)

liFe

RaNk

Ranked by gross premium income pRe-tax pRoFit iN 2015 (HuF mlN)

maRket sHaRe iN 2015 (%)

oWNeRsHip (%) HuNGaRiaN NoN-HuNGaRiaN

top loCal exeCutive CFo maRketiNG diReCtoR

addRess pHoNe Fax email

13.80

– Generali CEE Holding B.V. (100)

Mihály Erdős Anna Hegedűs –

1066 Budapest, Teréz körút 42–44.

(1) 301-7100 (1) 452-3505 generali@generali.hu

13.72

– Allianz New Europe Holding GmbH (99.99), Allianz SE (0.01)

Péter Kisbenedek Gábor Bognár –

1054 Budapest, Bajcsy-Zsilinszky út 52.

(1) 301-6565 (1) 301-6100 ugyfelszolgalat@ allianz.hu

Bertrand Woirhaye Mihály Bácsfalvi István Csonka

1145 Budapest, Erzsébet királyné útja 1/C (1) 467-3500 (1) 361-0091 info@ groupamagarancia.hu

1

GeNeRali biztosító zRt.

2

alliaNz HuNGáRia biztosító zRt.

119,556 37,597

3

GRoupama iNsuRaNCe zRt.

91,850 23,892

36,500

24,348

60,848

6,335

10.54

– Groupama S.A. (100)

4

aeGoN maGyaRoRszáG általáNos biztosító zRt.

90,934 25,143

35,131

21,761

56,892

13,788

10.44

– AEGON Hungary Holding B.V. (50), AEGON Hungary Holding II B.V. (50)

Péter Zatykó Gyula Horváth –

1091 Budapest, Üllői út 1.

(1) 476-5765 (1) 476-5710 ugyfelszolgalat@aegon.hu

5

NN biztosító zRt. www.nn.hu

79,616 17,675

66,106

–

66,106

881

9.14

– NN Group N V. (100)

Imre Sztanó – –

1068 Budapest, Dózsa György út 84/B (40) 464-464 (1) 267-9093 nn@nn.hu

maGyaR posta biztosító / maGyaR posta Életbiztosító zRt.

59,313 20,675

6.81

Magyar Posta Zrt. (33.07) Talanx International AG (66.93)

Anett Pandurics Ferenc Pap Péter Mester

1022 Budapest, Bég utca 3–5.

(1) 423-4200 (1) 423-4210 info@mpb.hu

Krisztián Kurtisz Thomas Dockal –

1134 Budapest, Róbert Károly körút 70-74.

(1) 238-6000 (1) 238-6060 info@uniqa.hu

6

www.generali.hu

www.allianz.hu

www.groupama.hu

www.aegon.hu

www.postabiztosito.hu

120,220 34,690

29,283

28,982

47,958

18,347

40,826

3,829

47,630

69,808

51,787

6,786

13,406

1,241

7

uNiQa biztosító zRt.

58,529 16,633

16,205

9,248

25,453

-93

6.72

– Uniqa International Beteiligungs- Verwaltungs GmbH (99.92), UNIQA International AG (0.08)

8

k&H biztosító zRt.

www.khdirektbiztositas.hu

33,937 12,763

7,658

12,768

20,426

1,809

4.58

– KBC Insurance N.V. (100)

Nik Vincke – –

1851 Budapest, Lechner Ödön fasor 9.

(1) 461-5200 (1) 461-5276 biztosito@kh.hu

9

uNioN vieNNa iNsuRaNCe GRoup biztosító zRt.

33,474 12,963

3.84

– Vienna Insurance Group Wiener Städtische Versicherung AG (100)

Gábor Lehel András Harnos Viktor Maják

1082 Budapest, Baross utca 1.

(1) 486-4200 (1) 486-4390 info@unionbiztosito.hu

10

siGNal biztosító zRt. www.signal.hu

21,553 5,588

2.47

– Signal IDUNA Allgemeine Versicherung AG (100)

Tamás Kálózdi Dénes Csata –

1123 Budapest, Alkotás utca 50.

(40) 405-405 (1) 458-4260 info@signal.hu

11

eRste vieNNa iNsuRaNCe GRoup biztosító zRt.

16,701 3,522

1.92

UNION Vienna Insurance Group Biztosító Zrt (5), Erste Bank Hungary Zrt (5) Vienna Insurance Group (90)

Zsolt Raveczky – Viktor Maják

1082 Budapest, Baross utca 1.

(1) 484-1700 (1) 484-1799 info@erstebiztosito.hu

12

CiG paNNóNia Életbiztosító NyRt.

14,642 2,754

1.68

Individuals (50.10), legal entities (45.50), other (4.40) –

Gabriella Kádár Miklós Barta –

1033 Budapest, Flórián tér 1.

(1) 244-5858 (1) 247-2021 info@cig.eu

13

vieNNa liFe biztosító zRt.

Anett Vadas-Földvári Beáta Pálinkás Csaba Bunghardt

1138Budapest, Váci út 135–139.

(1) 888-2888 (1) 413-5101 info@viennalife.hu

14

WábeReR HuNGáRia biztosító zRt.

15

GRaWe Életbiztosító zRt.

www.uniqa.hu

www.unionbiztosito.hu

www.erstebiztosito.hu

www.cigpannonia.hu

www.viennalife.hu

www.wabererbiztosito.hu

www.grawe.hu

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

14,348 3,267

14,054

Ÿ

10,314 2,189

5,290

9,266

8,380

7,776

5,980

4,082

–

–

11,270

13,348

8,380

7,776

322

502

623

722

8,403

593

8,996

193

1.65

– Vienna Insurance Group AG Wiener Versicherung Gruppe (100)

–

9,785

9,785

822

1.61

W-NEW Holding Kft. (58), VKH Vagyonkezelő Kft. (42) –

Bence Nyilasy – –

1211 Budapest, Szállító utca 4.

(1) 666-6200 (1) 666-6404 –

3,672

–

3,672

1,641

1.18

– Grazer Wechselseitige Versicherung AG (100)

Andras Hochmann – –

7632 Pécs, Kastély utca 2.

(1) 202-1211 (1) 355-5530 info@grawe.hu

This list was compiled from responses to questionnaires received by November 9, 2016 and publicly available data. Data is based on companies’ own data revelations. 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

Notes: (1) Data from the database of Hungarian Financial Supervisory Authority-National Bank of Hungary.

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4 Socialite BBJ

Exploring Jewish Budapest: part two

DAVID HOLZER

When I spoke to Péter Deutsch, Rabbi of the Bethlen tér Synagogue – originally built for the National Israelite Institute for the Deaf and Dumb in 1876 – he told me that, for him, it was all about being ADVERTISEMENT

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part of the Budapest Jewish community, and MAZSIHISZ, the Hungarian Federation of Jewish Communities.

“Here in Budapest,” Deutsch says, “we have everything for our everyday life.

There are many synagogues, Maccabi sports teams, kosher restaurants, a mikveh ritual bath, Jewish schools,

Photo: Peter Zsolnai/ www.peterzsolnaiphotographycom

Signing off the first of this two-part series on Jewish Budapest, I wrote “In part two, I’ll take a look at modern Jewish life in Budapest. I’ll attempt to find out what means to be Jewish and Hungarian in the city today. This will also involve introducing you to some Jewish restaurants, bars and cafes which are rather more off the beaten track.” It turns out that being Jewish and Hungarian in Budapest today can mean a number of different things.

Inside Fröhlich Kóser Cukrászda on Dob utca. universities and old age homes. We also have a kosher social kitchen and these are becoming a big thing in Europe. It’s all about being part of the community, not taking advantage of it.” Maccabi, by the way, is a Jewish organization whose mission is to “Promote Jewish identity through sport”.

For writer and musician Bob Cohen, it’s a little more complicated. “There are actually a number of competing identities,” he says, “which can be religious – Neolog or Modern Orthodox, Orthodox itself or Hasidic, for instance – social and political. And, out of the Hungarian Jewish population of around 100,000 only 25-50,000 identify as Jews. Also, don’t forget that being Hungarian is extremely important for Jewish people here too. Many Jews describe themselves as ‘Hungarians of the Mosaic Faith’. This can manifest itself in interesting ways. The kosher butcher I go to offers bacon substitutes made using goose because Hungarians must have their smoked meats. Most Hungarian Jews wouldn’t dream of not celebrating Christmas.”

Budapest-born entrepreneur Pál Temesvári, suggests that the Budapest Jewish identity “is a secular one. Jews are over-represented in Budapest’s intellectual scene and that’s been the case for ages. And as Budapest Jews are traditionally not that religious, they often marry out of the faith, so there are a tremendous amount of mixed families carrying with them the intellectual heritage of our ancestors. If you walk around Budapest, you see traces of this healthy level of coexistence in the city’s architecture. Nowhere else in Europe is the Jewish presence represented so visibly. Personally, I’m defined by the liberal standards of my family. If I had to describe the Budapest Jewish identity, I would just call it the cradle of liberal intellectualism in Budapest.”

“Here in Budapest we have everything for our everyday life. There are many synagogues, Maccabi sports teams, kosher restaurants, a mikveh ritual bath, Jewish schools, universities and old age homes. We also have a kosher social kitchen and these are becoming a big thing in Europe. It’s all about being part of the community, not taking advantage of it.”

I asked Cohen, who lives in the seventh district, what he thought about the concept of what’s been called the “Jewish hipster revival” of old Budapest.

“I wouldn’t say this is particularly Jewish,” he says. “It’s simply that this is a traditional Jewish neighborhood and, back in 2008, some of the first ruin pubs were opened by young Jewish people, who had good connections in the area. They were often people who’d gone to Israel in the 1990s and got some business sense. The Seventh is really about commercialized drinking.”

The 2008 financial crisis hit at the time of a boom in construction in Budapest. After the money run out, half-built structures were left empty and the first ruin pubs sprung up.

Apparently, inspiration came from the pop up bars of Tel Aviv.

Temesvári is one of the generation that feels close ties to Israel. “I was born in

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Photos: Peter Zsolnai/ www.peterzsolnaiphotographycom

Budapest Business Journal | November 11 – November 24, 2016

Mazel Tov cafe & cultural space at Akácfa utca.

Budapest and lived here until I was 17. I then moved to Israel, spent some time in Berlin and came back in 2005. I consider myself Israeli just as much as Hungarian.

I came back because I love Pest and love to live here.”

There’s nothing new there, of course: Theodor Herzl, one of the fathers of modern Zionism, was born in Budapest in 1860.

A new spirit, a proud tradition Today the seventh district is a fascinating mix of old and new Jewish culture.

According to some commentators, the

Israeli influence, brought back by people like Temesvári, has led to a sense that it’s all about acknowledging the past while creating a new Jewish spirit of Budapest.

Rabbi Deutsch, whose synagogue is also in the seventh district, shares this vision. When I asked him what his favorite thing to do in Budapest was, he said “Sport. I think it brings young people and the different religions together, which is important. I hope that in future we’ll have the World Maccabiah Games, the Jewish sporting event, here.”

My first exposure to Budapest was wandering around that same district.

I was fascinated by the way in which

surviving outposts of traditional Jewish culture sit alongside restaurants and bars serving what you might call “Jewveau” or “Jewsion” cuisine.

One of the first meals I ever ate in Budapest was at Yiddishe Mamma Mia in Gozsdu udvar Passage ‘D’ that runs between Király utca and Dob utca. I had some kind of pasta, chicken liver dish that was delicious, even if it felt like fat was being injected directly into my veins.

A short walk from Yiddishe Mamma Mia is Fröhlich Kóser Cukrászda on Dob utca, where everything is kosher, made without milk or eggs. Fröhlich’s is a particular favorite of Bob Cohen.

Waxing lyrical about Fröhlich’s on his blog, Cohen writes: “Every now and then the baker, an elderly gent, emerges from the back room, covered head to toe in flour, to kibbitz a bit with the patrons until he is shooed back into the kitchen by his wife. Not everybody comes because Fröhlich Cukrászda is kosher.

Most come because Fröhlich is the social hub of the neighborhood. And also the home of the world’s best flodni.”

Now that I’m a mission to find the best flodni in Budapest, my next stop will have to be Fröhlich’s. Incidentally, ‘fröhlich’ means happy in Yiddish. I’m sure I will be.

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Wine rally fun around Lake Balaton

The 21st Hungarian Wine Route Rally this year took competitors around the Lake Balaton wine region; Badacsony, Balatonboglár, Upper Balaton, Balatonfüred-Csopak, NagySomlói and Zala. In addition to the large wineries, smaller operations were also visited in a bid to popularize Hungarian tourism, the wine regions, winemakers and safe transport.

Since 1996, the last weekend of August has been marked by the Hungarian Wine Route Rally, taking competitors to visit some of the most beautiful landscapes and most interesting wine cellars in the country. Each destination has its own mood, where the drivers, safely parked up for the day, have the opportunity not only to taste, but also to learn about local habits, to go around the estates and cellar systems, and talk with Hungary’s top winemakers.

Road safety plays a major role in the competition; thus far no accidents have occurred, and the route is always under by police control. In addition to speed

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controls, drivers are often subject to Chamber of Agricultural (NAK) and breath tests as well. From the beginning, chairman of the Zala County chamber of the philosophy has always been to NAK was the female host of the rally. create a friendly, carefree mood among the racers. It’s a great time to build new The three-day event was not just about business relationships and friendships, the love of wine; there were also funny far away from the noise of the city but in skill tasks, and authentic lunches and the natural beauty of some hidden region. dinners with live music, and many surprise prizes. László Fekete, Mihály This year’s official early morning start Polyóka, Róbert Tóth won the overall title, began, for the second time, in Kincsem in a repeat of last year.

Park on August 28. Dr. Sándor Fazekas, minister of agriculture and one of Registration for the 22nd Wine Route Ralle the patrons of the rally, as well as Dr. has already started; those who want to be Miklós Dukai, deputy state secretary part of this exciting adventure of a lifetime, of the Ministry of Interior, greeted the rather than just read about it, should enter participants at the starting gate. Katalin their team at the event website (www.

Süle, spokesperson for the National borokutja.hu) as soon as possible.

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Budapest Business Journal | November 11 – November 24, 2016

Hungarian wine breaking out b

There are some excellent wines being made by ethnic Hungarian vintners in the countries surrounding Hungary.

ROB SMYTH

The “Hungarian winemakers beyond the borders” tasting held November 4 at the Pesti Vigadó revealed many exciting wines made by ethnic Hungarians in those areas that were part of Hungary before the Treaty of Trianon relocated them, for want of a better way of describing it. However, far from turning into alcohol fueled nationalist fest, it was a buzzing event that revealed some seriously innovative winemaking and which was also attended by excited Romanian wine journalists and bloggers, and one of the winemakers was from a German background. “Wine should unite people and wipe out differences,” said Romanian wine journalist Dan Coclia, who was brought up mixing with a diverse blend of Romanians, Hungarians, Serbs,

Bulgarians, Germans and Roma in his native Timisoara.

“There’s no need to refer to Hungarian wine from other regions differently [than wine made within the present borders],” Géza Balla, the president of the Hungarian Winemakers Beyond the Borders Association (Határon Túli Magyar Borászok Egyesületének) and one of its founding members, told the Budapest Business Journal, referring to the notion that the wine made by Magyars in those parts of former Hungary should also be able to be called Hungarian wine.

However, like true lovers of terroir, they are not seeking to make their wines in a uniform international style but rather to express the individual character of the place of growth, soil types, mesoclimates, grape varieties aromas and flavors. “This is our biggest opportunity, and the best way to utilize tradition,” said Balla, whose own winery is in the Ménes wine region (Minis in Romanian).

A new spirit, a proud tradition However, ever the pragmatist, Balla is not one to shun Romania and the Romanian market, on which he is a

significant player, and indeed, how could he? “I’m Romanian when I want to be,” he once quipped on a visit to his cellar which is close to the city of Arad.

Balla, whose wines are widely available in Hungary, describes 2016 as a wonderful vintage. His new releases of Sauvignon Blanc, Rosé Cuvée (a blend of Fetească Neagră or Fekete Leányka in Hungarian, with Pinot Noir) and Fetească Regală (Királyleányka) were all vibrant and fruity, with the latter possessing an attractive floral character typical of this somewhat underrated variety that is also present in Hungary.

Balla is best known for his Kadarka, as is his region. His Kadarka is always a crowd pleaser, but I’m personally much more excited by his Fetească Neagră, an ancient variety believed to be of Moldovan origin. While he has only been making single varietal wine from this variety – widely considered Romania’s best red wine grape – for a few years, Balla’s has become one of the finest in all Romania. This grape often lacks a bit of structure on its own, but it appears to suit the soils of Ménes, which contain prized granite, diorite and argillite, and Balla’s 2014 was taught

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“My hometown, Pest”

An evening of theatre with Béla Fesztbaum, based on the writings of Ferenc Molnár Premiere

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We are familiar of the author of brilliant comedies or The Boys of Paul Street, but do not really know the passionate, sensitive publicist who held a mirror to its beloved Budapest in the background of his worldfamous theatre plays, next to a coffee house table, in his unique toned articles.

His sharp vision, and fierce sense of humor characterize these writings. Molnár is interested in everything, whether it is the corrupt public life, the forever surviving common men of Pest, the theatre at the mercy of political storms or an elegant pig slaughtering feast in Lipótváros district...

Our audience will view a one-man theatre show that evokes both the “theatre” and the “coffeehouse” author, his unfamiliar

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feature, through his text originally not intended for the theatre. The evening will be accompanied by a musical trio, with music composed by Béla Fesztbaum himself.

Premiere: November 30, 2016 Further performances: 6, 18 December Rózsavölgyi Salon Arts & Café 1052 Budapest, Szervita tér 5. • Tel.: +36 1 486 33 38 • Ticket Information: +36 30 463 88 22 • szalon@rozsavolgyi.hu • www.szalon.rozsavolgyi.hu • facebook. com/rozsavolgyiszalon

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Budapest Business Journal | November 11 – November 24, 2016

23

t beyond the borders

The cellar at the Nachbil winery near Satu Mare. and focused, striking a great balance between red and black fruit, acidity and tannins with an exciting graphite note.

Also from present day Romania, the Nachbil winery, near Satu Mare, previously dazzled me with its

Királyleányka, as well as Syrah, and the winery is heading in a natural wine, minimal intervention direction.

The wines are made by Edgar Brutler, who also makes wine for Austria’s renowned Leo Hillinger winery from

the Neusiedlersee in Burgenland. “It’s really not that hard to go organic where we are, the climate is pretty favorable,” said Brutler, adding that Nachbil is set to become certified organic from next year.

Brutler was born in Romania, but moved to Germany with his family at the age of four. His father Johann, who once told me he learnt German at home, Romanian at school and Hungarian in the street, returned from Germany to set up Nachbil in 1999. Grünspitz was a grape I admit I’d never heard of and Nachbil had so little of this local grape that it was necessary to clone existing vines to form new ones to have enough to bring out a single varietal offering.

Accordingly, the 2015 is made from a mix of old vines (60-100 years old) and young vines that were cloned from the older vines. It is fairly aromatic, citrusy and fresh with lime peel and grapefruit notes.

Brutler readily admits that there is sometimes a waft of old, damp cellar in some of Nachbil’s wines and if you’ve been to the cellar that’s no surprise.

The white blend Grand fi (Grandpa) 2015 had some of that dank cellar

note on the nose but was clean on the palate. However, the winemaking has moved out of the original cellar to a more modern setting. A sample of the 2016 Grand fi, which was made without adding sulfur, was totally clean and also revealed the new winemaking direction: an orange wine that was made with up to four weeks’ skin contact and was kept on the lees to soften the tannins. It will be bottled cloudy. This full-bodied and intense wine has distinctive ginger and orange peel notes, and serious length.

The Hungarian Winemakers Beyond the Borders Association was established in 2011 with Frigyes Bott (Muzsla) and Tamás Kasnyik (Kürt) from present day Slovakia, Oszkár Maurer from Szerémség in Serbia, and István Rozsman and Lajos Cuk from Lendva is Slovenia. It has expanded since. More on some of the others next time.

The Bortársaság (Wine Society) wine shop, with bricks and mortar shops across Budapest and in the countryside, as well as an online store, currently offers three Balla wines: Feketeleányka 2014 and Kadarka 2014, both at HUF 2,650, and Rosé Cuvée 2015 Ménes at HUF 1,950.

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Steak lovers can be certain that their beloved piece of sizzling meat is in the right hands if it is prepared in Pampas: after all, the lady in charge has cooked 120 tons of them in the past nine years. Add exceptional Argentinean beef quality and affordable prices, and there is no need to search for another venue in town.

As the weather is turning chillier by the day, logic suggests that steaks are bound to crawl higher up the preference list of restaurant goers. Budapest residents and visitors are lucky to have a beef temple in town, where premium quality meat has been worshiped for 11 years now. In fact, Pampas was the first classic steakhouse in the Hungarian capital and it has been voted by independent visitor reviews among the top 10 restaurants here for the second year in a row.

“Our aim was to set a benchmark, but we knew that our success was dependent on the product,” owner Ferenc Budai,

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Jr. says. So while he was doing an apprenticeship in the United States, he was eager to find the secret of what makes an excellent steak. “To my great surprise the sole magic was inherent in the quality of the meat, so that is the core factor our entire business concept has been built on from day one of our operations,” he notes.

Maintaining the highest level of quality meat has been ensured by the fact that it has been supplied by the same Argentinean supplier practically since the initial opening. The crown jewel of the menu is the Japanese kobe steak.

Although it generates just 1% of all sales, it is still highly popular with those who can afford and appreciate it. “One of its peculiarities is that itʼs fattier than other meat types, which can be divisive at times since many people simply are

not that much into fatty stuff. But we are talking about an excellent product, which is rarely available fresh in Europe, so it offers an extraordinary culinary experience,” Budai says.

Customers are largely from abroad and the repeat customer base is relatively small. But that doesnʼt mean there arenʼt a bunch of tourists out there who make a pilgrimage to Pampas whenever they happen to be in town. Local businesses have also discovered the place for the purposes of corporate events.

As the owner points out, the idea is to provide unprecedented quality and value for money, which assures a constant guest flow. Those interested in raising their experience to the next level would be foolish not to sign up for a wine dinner, a signature event where

guests are assisted by Argentinean wine experts at selecting the most ideal grape-based match to their steak. Since nearly 300 different, predominantly foreign types of wine are on stock, this can be a demanding task. Luckily, even if Latin American help is not at hand, the staff is just as qualified to guide you through the wines.

If you are ready to make your reservation, consider sister facility La Pampa. Should you end up by accident at the place where you did not book, just relax. Your steak experience will make you leave praising reviews all over social media regardless.

Pampas 1053 Budapest, Vámház krt. 6. + 36 1 411 1750 www.steak.hu

2016. 11. 09. 21:09

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

1ST DISTRICT

3RD DISTRICT

5TH DISTRICT

10TH DISTRICT

13TH DISTRICT

15TH DISTRICT

87 SQM – 3 ROOMS, KOSCIUSZKÓ TÁDÉ STREET

51 SQM – 2 ROOMS, HÍMZŐ STREET

78 SQM – 2 ROOMS, APÁCZAI CSERE JÁNOS STR.

54 SQM – 3 ROOMS, FÜZÉR STREET

42 SQM – 2 ROOMS, JANICSÁR STREET

65 SQM – 3 ROOMS, KERTVÁROS

Close to the Buda Castle, in a renovated, Bauhaus style building with nice common garden, this spacious apartment that needs renovation benefits of separate rooms.

In a well maintained building with elevator, this well divided, street facing apartment in good condition benefits of bright kitchen. Good connection to public transport.

In the very heart of the city, this spacious apartment in good condition has private gas heating and it is situated in a beautiful, renovated period building.

In a new built building, this very well divided, bright apartment has living room with open kitchen, 2 separate bedrooms, private garden and parking space in the closed courtyard.

This completely renovated, street facing, high floor apartment has private gas heating, balcony and it is situated in a building with elevator. Good connection to public transport.

In a new built terraced house, this renovated, duplex apartment has fully fitted kitchen, private gas heating, 25 sqm of private garden and parking space.

37.500.000 HUF

15.900.000 HUF

56.900.000 HUF

21.900.000 HUF

19.500.000 HUF

27.900.000 HUF

+36.1.201.0403

2ND DISTRICT

+36.1.379.0506

3RD DISTRICT

+36.1.287.6745

5TH DISTRICT

+36.1.780.8276

10TH DISTRICT

+36.70.701.2348

13TH DISTRICT

+36.70.398.8754

15TH DISTRICT

62 SQM – 3 ROOMS, FAZEKAS STREET

51 SQM – 3 ROOMS, ÚJMEGYERI SQUARE

103 + 24 SQM – 5 ROOMS, FALK MIKSA STREET

57 SQM – 3 ROOMS, TARALIGET SUBDIVISION

40 SQM – 2 ROOMS, KEREKES STREET

95 SQM – 4 ROOMS, RÁKOSPALOTA

This very well divided, high floor apartment that needs renovation has separate rooms, balcony and it is situated within a building with elevator.

Beautiful panorama from the balcony, this high floor apartment that needs renovation is situated within a building in good condition with elevator.

This new built semi-detached house built on 150 sqm of lot, has living room with open kitchen, 3 separate bedrooms, terrace, balcony and garage.

15.990.000 HUF

In a new built subdivision with well kept common garden, this apartment benefits of living room with fully fitted open kitchen, 2 separate bedrooms, terrace and air conditioning system.

In a new building with elevator, this street facing apartment benefits of living room with fully fitted open kitchen, separate bedroom and balcony.

34.900.000 HUF

A few minutes from the Danube, this very spacious apartment in good condition is situated within a renovated period building. A separate 24 sqm of basement room belongs to it.

63.900.000 HUF

29.700.000 HUF

21.490.000 HUF

29.900.000 HUF

+36.1.201.0403

2ND DISTRICT

+36.1.379.0506

3RD DISTRICT

+36.1.287.6745

6TH DISTRICT

+36.1.780.8276

11TH DISTRICT

+36.70.701.2348

14TH DISTRICT

+36.70.398.8754

DUNAKESZI

101 SQM – 3 ROOMS, ÁRPÁD FEJEDELEM STR.

44 SQM – 2 ROOMS, DÉVAI BÍRÓ MÁTYÁS SQUARE

50 SQM – 2 ROOMS, EÖTVÖS STREET

66 SQM – 2 ROOMS, BUDAFOKI STREET

40 SQM – 2 ROOMS, STEFÁNIA STREET

180 SQM – 6 ROOMS, DUNAKESZI

Beautiful panorama over the Danube from the balcony, this very spacious and bright apartment in good condition is situated within a building with nice facade and elevator.

This completely renovated part of a house that has separate rooms, terrace, nice garden with brick barbecue, is located in a quiet side street.

This apartment is in perfect shape within a nicely renovated period building, meters away from Oktogon Square. Ideal for investment.

23.900.000 HUF

In a beautiful villa house, this completely renovated, street facing apartment has living room with fully fitted open kitchen and separate bedroom. It is located close to the City Park.

This new built, very spacious, two storey family house built on 329 sqm of lot, has two separate entrances and parking space on the courtyard.

19.990.000 HUF

This street facing, high floor apartment in good condition has balcony and private gas heating.

It is situated within a well maintained building with elevator.

27.900.000 HUF

25.900.000HUF

59.900.000 HUF

+36.1.336.1706

2ND DISTRICT

+36.1.430.1403

3RD DISTRICT

+36.70.3156.087

6TH DISTRICT

+36.1.720.2433

11TH DISTRICT

+36.1.612.5475

36.900.000 HUF

14TH DISTRICT

+36.70.399.0399

DUNAKESZI

118 SQM – 4 ROOMS, KELEMEN LÁSZLÓ STR.

86 SQM – 3 ROOMS, KECSKE LANE

71 SQM – 3 ROOMS, SZÍV STREET

74 SQM – 2 ROOMS, BARTÓK BÉLA STREET

88 SQM – 2 ROOMS, ABONYI STREET

90 SQM – 3 ROOMS, DUNAKESZI

In a renovated Bauhaus style building with elevator, this very bright, garden facing apartment has private gas heating, balcony and parking space in the courtyard.

Close to the Roman Amphitheatre, this completely renovated, very quiet and well divided, street facing apartment benefits of private gas heating, it is situated within a building with elevator.

In a new building with elevator, this very bright, high floor apartment has living room with fully fitted open kitchen, 2 separate bedrooms, balcony and private gas heating.

This completely renovated, street facing apartment has private gas heating, air conditioning system and it is situated within a building in good condition.

Next to the City Park, in a quiet street, this very spacious, sunny, high floor apartment is situated within a nice period building.

Close to the Danube, this very sunny, new built family house has 398 sqm of well kept garden with a well and an outbuilding.

79.900.000 HUF

44.900.000 HUF

39.500.000 HUF

33.900.000 HUF

27.900.000 Ft

37.000.000 HUF

+36.1.376.6080

2ND DISTRICT

+36.1.430.1403

4TH DISTRICT

+36.1.351.0446

6TH DISTRICT

+36.1.720.2433

60 SQM – 2 ROOMS, GYERTYALÁNG STREET

74 SQM – 2 ROOMS, LÁZÁR STREET

66 SQM – 4 ROOMS, KAKUKK STREET

Nice panorama over the Buda Hills, this apartment benefits of 2 entrances, 2 kitchens, 2 bathrooms, 3 terraces and a garage. It is situated within a villa house with well kept common garden.

In a new building, this sunny, street and garden facing apartment has separate rooms, private gas heating and it is located in the garden suburb area of the district.

This apartment is in very good condition within a period building, perfectly positioned in a quiet street, between the Opera House and Basilica.

87.000.000 HUF

19.990.000 HUF

This street facing, bright, well divided apartment has separate rooms and it is situated within a building with nice common garden, in a quiet and green area.

2ND DISTRICT

+36.1.782.7275

4TH DISTRICT

44.900.000 HUF

+36.70.3156.087

7TH DISTRICT

38.900.000 HUF

12TH DISTRICT

105 SQM – 4 ROOMS, LŐWY IZSÁK STREET

107 SQM – 4 ROOMS, BETHLEN GÁBOR STR.

80 SQM – 4 ROOMS, KEMPELEN FARKAS STR.

Breathtaking panorama over the Buda Hills, this three storey semi-detached house has living room with open kitchen, 2 bathrooms, 2 balconies, 50 sqm of terrace, garage and parking lot.

This quiet, park facing, high floor, mansard apartment in good condition has private gas heating and parking space in the closed courtyard. It is situated within a building with elevator.

This property consists of 2 separate apartments with 2 separate entrances. Both apartments have kitchen and bathroom and one of them has a balcony. It is situated in a period building with elevator.

In a building with very nice common garden, this garden facing, sunny, duplex apartment has separate rooms, balcony and parking space.

105.000.000 HUF

28.000.000 HUF

39.990.000 HUF

+36.1.782.7275

+36.1.351.0446

44.700.000 HUF

WELCOME

+36.1.789.2846

175 SQM – 6 SZOBA, SZÉHER ÚT

+36.1.376.6080

+36.70.399.0399

12TH DISTRICT

120 SQM – 4 ROOMS, HERMAN OTTÓ STREET

+36.1.336.1706

+36.1.612.5475

+36.1.789.2846

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EACH AGENCY INDEPENDENTLY OWNED AND OPERATED. • THESE OFFERS ARE VALID, TILL THE APARTMENTS ARE SOLD. • THESE INFORMATION DO NOT CONSTITUTE A CONTRACTUAL ELEMENT.

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