Budapest Business Journal 21/19

PHARMA

SPECIAL REPORT:

OCT 04, 2013 – OCT 17, 2013

VOL. 21. NUMBER 13

BUDAPEST

BUSINESS JOURNAL HUF 1,250 | €5 | $6 | £3.5

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

INNOVATE FROM ATTITUDE

Photo: Péter Ákos / MarinArt

Israel is bringing the story of how it became a hub for startups to Hungary in the hope of spreading knowledge and also creating the footing for intensified business relations in the future. Israeli Ambassador to Budapest Ilan Mor talks about the initiative, his views on improving trade relations, and anti−Semitism in Hungary. 11

NEWS

Gov’t submits ‘risky’ 2014 budget The government’s 2014 budget bill sees the future in a much brighter light than the markets. While the government insists that nobody should expect pre−election freebies, the public is getting plenty of handouts. 11

SOCIALITE

TRENDS

Investors needed

4G: step by step Have you ever heard about 4G mobile internet service? (%) 12

Yes, and knows what it is Don't remember

Yes

6% 15%

45%

35%

Never

Having broken through, many designers are then faced with the difficulty of keeping their business afloat. The BBJ offers a set of guidelines and advice for designers in need of capital that was presented at Budapest Design Week.

29

WWW.BBJ.HU

Budapest Business Journal | Oct 04 – Oct 17

SUBSCRIPTIONS Call +36 1 398-0344, or email circulation@bbj.hu BUDAPEST BUSINESS JOURNAL 1 year HUF 27,500+VAT 6 months HUF 13,750+VAT 3 months HUF 6,875+VAT Newsletters HUNGARY A.M., ENERGY TODAY, REGIONAL TODAY 1 year HUF 179,000+VAT 6 months HUF 104,900+VAT 3 months HUF 58,900+VAT BOOK OF LISTS 2012-2013

HUF 19,120+VAT

DIGIBOL Subscription fee: HUF 49,900 + VAT

MANAGING EDITOR:

Patricia Fischer COPYEDITOR/PROOFREADER:

Robin Marshall EDITORIAL STAFF:

Krisztián Kummer, Gergő Rácz, Zsófia Végh, András Zsámboki LISTS: BBJ Research (research@bbj.hu) NEWS AND PRESS RELEASES: news@bbj.hu DESIGN:

Absolut Design Stúdió (production@bbj.hu) ART DIRECTOR:

Tamás Tárczy ADVERTISING:

Absolut Media Zrt (hirdetes@amedia.hu)

THE EDITOR SAYS

SWEPT UNDER THE RUG The government has completed drafting its fourth annual bud− get and, apparently, still hasn’t learned the lesson that no mat− ter how much it wants to cover up the issues, it will only be able to put out the immediate fires, if it doesn’t want to face problems that would entail fundamental changes.

While citizens may feel better in the future that the home− less existence has been outlawed, improving the aesthetics of the landscape, the state still relies on massive, distortive and destructive taxes to function while continuing to a spend 30% of the country’s GDP on welfare costs.

This practice fits in all too well with what we have seen so far, with policymaking practice referred to as unorthodox, unconven− tional or postmodern. The fundamental drive is to go where the money is, grab it, all the while somehow trying to convince the audience that all this won’t cost them a cent.

The budget doesn’t contain any structural changes, but it does lay out significant chunks of sectoral revenues to cover a massive wage increase for teachers, increased family tax benefits and even the rumored reduction of student loans in return for getting pregnant younger.

In an ideal world, salaries that ensure a living not only for individuals but also their families would be a given. Here, these benefits are handouts ahead of the elections that aren’t sus− tainable by the economy. If the weather is advantageous and global demand stays persistent, then agriculture and manufac−

turing could easily produce positive overall economic growth, but as we see, those are two fairly big ‘ifs’. The issues of wide− spread poverty and the effort to strangle the private sector with taxes instead of enabling it and incentivizing it to create jobs haven’t been solved, indeed haven’t even been addressed.

The only answer is that if it doesn’t work as a business, it’s bound to do better if it was bought by the state. The German energy group E.ON was unable to turn a profit on its Hungarian natural gas business, largely due to fixed subsidy schemes, but the new state−owner is confident this will quickly be turned around.

The main problems of the banking system are naturally stem− ming from the fact that there isn’t a proper state−run partic− ipant to play a boosting role and provide competition for its commercially owned peers, and not its inability to properly lend under market conditions.

In this case, what the Hungarian people can’t count on is the widely−scorned foreign owners pumping money into their local businesses should things turn bad, as they’re prone to do, as we’ve seen in the past years. Then, there’s only the taxpayer to receive the wakeup call and the notification that there is no such thing as a free lunch, no matter what anyone says.

As in any war, the Fidesz campaign for independence comes at a price and that figure is growing. We haven’t even begun to pay up.

SALES: sales@bbj.hu CEO:

Balázs Román PUBLISHER:

Tamás Botka CIRCULATION AND SUBSCRIPTIONS: circulation@bbj.hu PRINTING:

Absolut Print Kft

MEDIA REPRESENTATION: Absolut Media Zrt Address: Madách Trade Center 1075 Budapest, Madách Imre út 13-14., Building A, 8th floor Telephone +36 (1) 398-0344, Fax +36 (1) 398-0345, www.bbj.hu BBJ-PARTNERS

What We Stand For: The Budapest Business Journal aspires to be the most trusted newspaper in Hungary. We believe that managers should work on behalf of their shareholders. We believe that among the most important contributions a government can make to society is improving the business and investment climate so that its citizens may realize their full potential.

The Budapest Business Journal, HU ISSN 1216-7304, is published bi-weekly on Friday, registration No. 0109069462. It is distributed by HungaroPress. Reproduction or use without permission of editorial or graphic content in any manner is prohibited. ©2011 BUSINESS MEDIA SERVICES LLC with all rights reserved.

The Budapest Business Journal’s print run is audited by MATESZ, 1034 Budapest, Bécsi út 122-124, a member of IFABC.

BBJ.HU YOUR DAILY DOSE OF INFORMATION IN BBJ QUALITY

TRUST NO ONE The governing Fidesz party is mulling yet another change to the national constitution it created to cement its pet utility reduction scheme into the basic document. The reason? Those cursed socialists simply can’t be trusted not to reverse the reg− ulations and harm the Hungarian people, as they always do, should they come to power again at some point in the future.

This feeling of distrust and sometimes−related bone−head− edness is nothing new to Hungarian politics, nor is the coun− try’s culture unique in this respect. Just look at the United States with its advanced democracy.

Republicans are rejoicing for achieving a govern− ment shutdown in their drive to prevent President Obama’s healthcare plan, a scheme that has argu− ably been approved by the voters who reelected the President, has been passed as law and found constitutional by the Supreme Court.

Hungary’s own fledg− ling democracy in the 1990s was built and shaped based on the notion that whichever side you were on, you should always be wary of ‘those other people’.

This inherent lack of trust at the core of the Hungarian institutional system at the democratic conversion created an imperfect, if functioning, structure of checks and balances, and also a legislative con− cept that would require cooperation among elected officials.

The very idea of the cardinal law, legislation that requires two−thirds majority to pass or modify, came from an understanding that such support is unlikely, mean− ing such crucial issues could only be addressed through compromises, especially because a single political group

couldn’t be trusted with that kind of decision−making. The necessary cooperation between different political sides also meant that they shared the responsibility and could be held accountable by their voters.

But now we see the deplorable development that the inherent distrust in the constitutional system, created as a balancing safeguard, has been demoted into an everyday power trip tool.

The fact that Fidesz is planning to include the mandatory utility cost reduction in the constitution on the grounds that the social− ists are already plan− ning to act with the delib− erate intent of harming the population and serv− ing their foreign corpo− rate masters is downright frightening.

Overcoming polit− ical divides for the greater good, reach− ing across the aisles even if means a loss of face, happens way more often in Aaron Sorkin stories than in reality. This is espe− cially so in a situa− tion when the various political groups are so entrenched in their differences that they demonize each other, apparently actually believing what they are saying and not just playing for the cameras.

The campaign is already getting ugly with the right−wing’s election tampering at the Baja bi−elections and the tasteless left wing protest that symbolically decapitated Prime Minis− ter Viktor Orbán, to name the most recent examples. Unfortu− nately, it’ll only get more ugly, and it will always be someone else’s fault. But what did we expect? We all knew none of them could be trusted.

THE CAMPAIGN IS ALREADY GETTING UGLY. UNFORTUNATELY, IT’LL ONLY GET MORE UGLY, AND IT WILL ALWAYS BE SOMEONE ELSE’S FAULT

BBJ

1 News

NEWS IN BRIEF

Unions to propose 5.5% minimum wage raise 04 NEWS

MOL squabble weighing heavily on bilateral relations 07

macroscope

GOV’T SUBMITS ‘RISKY’ 2014 BUDGET

GERGŐ RÁCZ

Higher growth, a more favorable eco− nomic ambient and an increase of central revenues from domestic consumption will all contribute to financing the 2014 bud− get, one that brings even more benefits for the general public, said Economy Min− ister Mihály Varga.

The draft budget assumes an annual out− put growth of 2%, consumer price inflation at 2.4% and a budget deficit target of 2.9%.

The improvement in the overall perfor− mance of the economy – projected at 0.7% growth this year after recession in 2012 – has paved the way for the introduction of several crowd−pleasing measures. The core of the budget plan is the continued reduc− tion of household utility fees and preserv− ing the price reductions achieved thus far.

“Next year’s budget paves the way for making everyday living easier,” Varga told reports after ceremonially submitting the document to House speaker László Kövér.

The planned budget would expand tax benefits for families, allow a waiver on part of student loan debts for those having chil− dren at a younger age, a pension hike in line with the inflation rate and a significant amount, HUF 132 billion, to be spent on raising teachers’ salaries.

THE FINE LINE Varga earlier said that the government has no intention of drawing up a crowd−pleas− ing annual budget in the run−up to the 2014 general elections, especially since the economy is in no state to allow handouts that would improve overall sentiment and government approval ratings.

However, the extent of the new spend− ing items targeted at specific social groups seems to be closely linked to the increased deficit target, which is very close to the cut off mark of 3% of GDP. Earlier this year the European Commis− sion decided to end a decade−long exces−

STORY HIGHLIGHTS ■

Mihály Varga submits 2014 budget bill to parliament ■ Draft envisions improving economy, more benefits

sive deficit procedure against Hungary, being satisfied that the country could manage to keep the budget gap below the key 3% threshold sustainably and having accepted its provisional forecasts for the future. At the same time, it indicated that the situation could quickly change if gov− ernments resort to uncontrolled spending, as seen in the case of Malta, which spent only six months outside scrutiny before Commissioner Olli Rehn announced the procedure was to be reinitiated.

“In summary, we can already state at this point that next year’s budget is planned to be stretched. There is a serious risk that intervention will be needed later on,” Raif−

feisen analysts Levente Blahó and Ádám Keszeg said in comment.

Besides the deficit target, they also note that the forecasts serving as the basis of the budget are rather optimistic. Raiffeisen said that the growth projections in the draft are much better than its own expectations, foreshadowing the risk of tax revenue plans being exaggerated.

In contrast, Bank of America Merrill Lynch is highly optimistic regarding the outlook, much more so than the govern− ment itself. A September regional research note by analyst Raffaella Tenconi projected a growth of 2.6% for 2014.

“Households’ concerns are alleviating, particularly in Hungary. The unemploy− ment expectation index in Hungary has been falling since November 2012 and is only eight points away from the past three lows and 20 points away from the 2002 low.

This seems to indicate that although the private sector is not yet adding jobs, the

government schemes to reduce the risk of long−term unemployment seem to be work− ing,” Tenconi said.

Photo: Szilárd Koszticsák/MTI

The government has completed drafting the 2014 budget, one that is focused on the continued reduction of utility fees. While the economy minister vowed not to draft an “election year bill”, the numbers and the listed items show there will nonetheless be plenty of handouts.

PICKING UP THE TAB Tenconi’s favorable outlook is support− ive of the government’s own projection, namely that domestic consumption will be one of the key drivers of economic expansion next year by growing at 1.9%.

As such, the projection for VAT takings has increased to HUF 3 trillion in the draft from HUF 2.95 tln for 2013, while central earnings from excise taxes is projected to be largely similar to this year’s levels.

The most notable exception is tobacco, where revenues are expected to drop to HUF 336.6 billion from the HUF 348.2 bln target in 2013, in large part due to the state monopoly on cigarette sales introduced this summer that has already contributed to a notable drop in tobacco commerce, at least of the legal kind.

The recently concluded agreement on the extension of mobile frequency licenses alone will bring HUF 120 bln in to the treasury. Telecoms firms can expect to see their contributions increase in term of taxes, with the revenue projection from the telecommunication levy rising 29.55% from the 2013 target.

Despite the doubts about the feasibility of collecting all the money itemized in the budget, the government is seen putting off any necessary corrections.

“The election period makes this [any corrections] unlikely in the first half of the year, but this in turn increases the risk of a greater intervention later on,” Raiffeisen analysts said.

Following preliminary and detailed par− liamentary debate, the House is set to vote on the final version of the bill in December.

WE CAN ALREADY STATE AT THIS POINT THAT NEXT YEAR’S BUDGET IS PLANNED TO BE STRETCHED. THERE IS A SERIOUS RISK THAT INTERVENTION WILL BE NEEDED LATER ON

04 News

WWW.BBJ.HU

Budapest Business Journal | Oct 04 – Oct 17

NEWS FOR THESE PAGES IS TAKEN FROM THE BUDAPEST BUSINESS JOURNAL’S DAILY BRIEFING, HUNGARY A.M.

NEWS

IN BRIEF

Those who don’t work hard, don’t do everything for election victory, owe me 25 years Prime Minister Viktor Orbán to his Fidesz party, encouraging activity leading up to the 2014 elections and not letting go to waste the political achievements of the time since the democratic conversion and his time spent leading the party

Photo: Tamás Illyés / MTI

PRESIDENT APPOINTS MNB DEPUTY

ECONOMY DIVIDENDS MAKE FDI IN HUNGARY NEGATIVE IN Q2 There was a €709 mln outflow on for− eign direct investment in Hungary in the second quarter of 2013, making the first−half balance also slightly negative, the National Bank of Hungary balance of payment report shows. A large mi− nus on reinvested profit well exceeded the inflow in new direct investments and net loans granted by foreign parent companies to their Hungarian units in the period, the figures reveal. Reinvest− ed profit is as a rule negative in Q2 when businesses take a vote on dividends.

This often makes FDI on the whole neg− ative in the quarter. The last quarters with an outflow of FDI were Q2 and Q3 of 2011. In Q2 2012, lending by foreign owners to their Hungarian units more than outbalanced large profit repatria− tion. While FDI was negative in Q2, portfolio investments brought in net €1.078 bln. The inflow, ongoing now for the fourth quarter, was about €400 mln less than in the previous quarter. In Q2 2012, there was a €663 mln outflow on portfolio investments.

NET HOUSEHOLD SAVINGS RATIO UNCHANGED IN Q2 Net financial savings of Hungarian households reached HUF 383 bln in nominal terms, or 5.3% of the period’s GDP, in the second quarter, the Na− tional Bank of Hungary (MNB) said in a second reading of financial account data. The figures were revised slightly lower from HUF 392 bln or 5.5% of GDP in the first reading on August 21.

The Q2 savings ratio was unchanged from the previous quarter (also revised down from a preliminary 5.6%), but was up from the same period a year earlier.

In the four quarters ending in Q2 2013, Hungarian households saved a net HUF 1,576 bln, the downward revised figures show.

HUNGARY UNADJUSTED C/A SURPLUS REACHES €612 MLN IN Q2 Hungary’s unadjusted current−account surplus came to €612 mln in the sec− ond quarter, a first reading of data published by the National Bank of Hungary shows. The c/a surplus came to a seasonally adjusted €515 mln in Q2. Hungary’s net external financing capacity reached €1.493 bln in Q2, ac− cording to the unadjusted data. Adjust− ed for seasonal effects, the net external financing capacity came to €1.385 bln or 5.4% of GDP, about the same as in the previous quarter; the seasonally adjusted trade surplus reached €1,806 bln. The surplus of goods was €947 mln. The surplus of services came to €868 mln. Hungary’s net external fi− nancing capacity reached €1.493 bln in Q2, according to the unadjusted data.

In the income account, the seasonally adjusted deficit came to €1.559 bln.

MNB H1 LOSS REACHES HUF 41.6 BLN The National Bank of Hungary had a first−half loss of HUF 41.6 bln be− cause of policy measures affecting international reserves, developments concerning its sterilization instru− ments, forint and foreign exchange in− terest rates, and the forint’s exchange rate, the central bank said. The loss compared to profit of HUF 27.1 bln in the same period a year earlier. The MNB had total assets of HUF 10,895.7 bln on June 30, 2% more than at the end of 2012. The bank attributed the change to the weaker forint and higher international reserves.

Numbers in the news

3.6 % is the new record− low base rate after the Monetary Council lowered it by 20 base points on September 24.

1.6 % of GDP was the general government deficit in Q2, unchanged yr/yr, Central Statistics Office data shows.

President János Áder has appointed László Windisch as new deputy governor of the National Bank of Hungary at a ceremony in the presidential palace. Prime Minister Viktor Orbán nominated Windisch for the position. Speaking at a hearing before a parliamentary committee, the nominee said restoring public confidence in the financial intermediary system and ensuring strong consumer protection would be important tasks if he were appointed in the role in charge of microeconomic oversight and consumer protection in the area of finance.

The appointment of a third deputy governor at the MNB required the number of external rate−setters on the MNB’s Monetary Policy Council to be raised by one. Csaba Kandrács, the former head of the Hungarian State Treasury, was picked to become the new external member.

DOMESTIC UNIONS TO PROPOSE 5.5% MINIMUM WAGE RISE The Liga association of trade unions will propose a 5.5% increase of the gross minimum wage for unskilled and skilled workers next year at talks with the government and employers, chair− man István Gaskó said at a press con− ference. Liga will propose at the wage talks raising the minimum wage for skilled and unskilled workers to HUF 103,390 and HUF 120,270, respective− ly. Liga is proposing a 4.5% gross wage increase for all other workers. Gaskó said the association wanted to achieve a tangible real wage increase for work− ers after real wages started rising this year. The wage rises to be proposed by Liga are well over the 2.4% average an− nual inflation projected by the govern− ment for 2014.

BUDAPEST MUST REPAY AT LEAST HUF 7.5 BLN OF REC CENTER DEBT An appeals court has ruled that the local council of Budapest must repay at least HUF 7.5 bln of debt used to build a recreational and commercial center in a historical warehouse dis− trict on the banks of the Danube, daily Népszabadság said. The local council took over the center, dubbed ‘the whale’, from Porto Investments, a developer contracted to make the investment in a public−private part− nership. Porto Investments earlier took out a €28.4 mln loan (HUF 8.5 bln) from MKB Bank for the €30.8 mln project. The center was to have been inaugurated in the summer of 2010, but construction stopped just before it was completed. City offi− cials recently said the center would open in October.

POLITICS COURT TERMINATES CRIMINAL CASE AGAINST LÁZÁR The Budapest Municipal Court has ter− minated a criminal suit filed against Já− nos Lázár, the state secretary in charge of the Prime Minister’s Office, in the absence of any wrongdoing. OTP Bank chairman−CEO Sándor Csányi filed the suit in August, after Lázár called the banker the country’s “number one usurer.” Although Lázár’s words were in principle suitable to defame and hurt human dignity, the criticism of Csányi was within the boundaries of that ac− ceptable for a man of his public status, the Court said. Lázár made the com− ment about Csányi after the CEO made remarks concerning Lázár’s handling of the introduction of the state monop− oly on retail tobacco sales. Csányi said at the time that Lázár was one of “one or two” people in the government who had made comments critical of his per− son or the bank, adding that this was not any great source of agitation.

ANALYSTS SEE FIDESZ LEAD STEADY Analyst of the leading polling firms agreed that the governing Fidesz party has a strong lead in the opinion sur− veys and has a good outlook for the 2014 general elections. Newly released results all show the governing conser− vative side with a steady lead, some actually projecting a repeat of the 2010 results with Fidesz taking a two−thirds super majority in the revised election system. The analysts also agreed that the fractured left wing opposition has difficulties overcoming its tarnished reputation and that it can only rely on voters who are undecided or refuse to reveal their party affiliation.

WWW.BBJ.HU

News 05

Budapest Business Journal | Oct 04 – Oct 17

COMPANY NEWS

A consortium led by KÖZGÉP has won a tender to renovate a bridge near Budapest’s Keleti station with a bid of HUF 4 bln, the latest issue of the Public Procurement Gazette shows. The project was originally estimated to cost HUF 3.5 bln.

DELPHI AUTOMOTIVE INAUGURATES EXPANSION IN HUNGARY

Shares of Zwack Unicum, Hungary’s most popular spirits brand, will be moved from the ‘premium’ to ‘standard’ category on November 4, the Budapest Stock Exchange said.

The share failed to meet requirements for the ‘premium’ category for the second biannual review in a row.

From November 4, the first day of trade in the month of November, shares of printing company ÁNy Biztonsági Nyomda, property holding company Appeninn, insurer CIG Pannónia, drugmakers Egis and Richter, the banks FHB and OTP, telco Magyar Telekom, oil and gas company MOL, alternative energy company PannErgy and vehicle maker Rába will trade in the ‘premium’ category.

Péter Szijjártó, state secretary for foreign affairs and external economic relations with Balázs Sebestyén, managing director of Delphi Connections Systems Hungary

Magyar Telekom targets higher revenue and EBITDA in the mid−term, the company said in a summary to investors. MTel forecasts a compound annual growth rate for revenue of about 2% by 2017 compared with 2012. It expects group−level EBITDA to decline in 2014, by a compound annual rate of 6−8% compared to 2012.

National Instruments Hungary, the Hungarian unit of U.S. automated test−equipment and virtual−instrumentation software company National Instruments, has laid the cornerstone for a HUF 4 bln Science Park in the city of Debrecen. The unit received HUF 2 bln in support through the government’s New Széchenyi Plan for the 6,000sqm park.

CIB Bank has commissioned an international headhunting firm to find a suitable candidate for a new chief executive, business news portal Napi.hu reported. The portal’s sources say the change in management is scheduled for the end of the year, when a preferably Hungarian executive will take over from Fabrizio Centrone.

Zsigmond Járai has resigned from his position as chairman of the supervisory board of CIG Pannónia because of a conflict of interests, the company said. Járai, who is also supervisory board chairman of the National Bank of Hungary, resigned because he does not wish to hold a position at a company that is supervised by the central bank.

Electronic parts maker EPCOS, a member of the TDK group, is to spend more than HUF 3.3 bln to expand production capacity. The investment will create 37 new jobs at the company, which currently employs 1,700 people.

The city of Miskolc has awarded the local unit of Vodafone a HUF 130 mln grant for a HUF 450 mln expansion of its call center that will create 240 jobs.

The call center employs about 300 people at present.

Horizon Development has completed the structural renovation of the Eiffel Palace, a landmark building near Nyugati railway station. Once the €30 mln renovation is completed, the building will have 14,500sqm of office space.

Danish pump maker Grundfos has inaugurated a HUF 12 bln plant at its base in Székesfehérvár. The 16,000sqm plant is Grundfos’ second at the base and its fourth in Hungary. It will employ 300−350 by 2015.

Representatives of Hungary−based mineral water bottler Szentkirályi Ásványvíz is expecting a 17% year−on−year revenue increase for 2013; revenue was reported at HUF 6.9 bln for 2012.

Photo: Attila Kovács / MTI

ZWACK UNICUM LOSES SPOT IN BOURSE’S ‘PREMIUM’ CATEGORY

U.S. automotive industry supplier Delphi Automotive inaugurated a HUF 3.4 bln expansion at its plant in Tatabánya (northwest Hungary). Delphi Connection Systems Hungary will make connectors for airbags and for electric vehicle rechargers in the 8,000sqm production hall, said managing director Balázs Sebestyén. The unit won HUF 686 mln in European Union and state grant money for the investment, which will create 100 jobs. Headcount at the base is set to rise to 1,200 but could grow further to 1,400 by 2015. Delphi’s base in Tatabánya generated revenue of €68 mln last year. The company has invested HUF 66 bln in Hungary since coming to the country in 1991.

Hungary−based automotive parts producer Grana has announced an expansion of more than 30% in floor space to its base in Győr, and up to 20 new jobs are to be created. Grana reported revenue of more than HUF 5.5 bln in 2012 and employs about 100.

Agribusiness Döbröközi Mezőgazdasági is building a HUF 1 bln hog farm with capacity for 3,600 animals. A European Union grant is covering 40% of the cost of the investment.

Sólyom, a recently established holding company owned by three Hungarian private individuals, is in talks with the Győr−Pér airport, regional daily Kisalföld said.

Chocolate maker Happy Company is to develop its products and product range from HUF 230 mln, managing director József Kasza told MTI. The company has won a grant of HUF 90 mln from European Union and central sources.

Puten Invest has purchased poultry−processing plant Zalai Baromfifeldolgozó, which has been under liquidation since late spring, from liquidator TM−Line and will re−launch production at the plant this November.

The local council of Gyula has bought the assets of troubled sausage maker Gyulai Húskombinát for HUF 850 mln. The assets include the ‘Gyulai’ paprika and liver sausage brands.

Getronics Hungary, the Hungarian unit of Netherlands−based IT and communications company Getronics, has won Hungarian postal service Magyar Posta’s tender to deliver and place into operation POS−capable outdoor package−handling machines.

Austrian−owned Donauchem has inaugurated a HUF 2 bln plant that makes chemicals for water treatment at the base of Wanhua−BorsodChem in Kazincbarcika (northeast Hungary). The investment will create 20−25 jobs.

The Hungarian unit of German health and beauty retailer Rossmann expects to close this year with revenue of HUF 46.7 bln, up 7% from 2012. Last year, Rossmann’s revenue in Hungary climbed 4% to HUF 43.6 bln.

Intersnack Magyarorszag is investing €3−4 mln to expand capacity at its base in Győr (northwest Hungary) by 25−30%. The unit of Germany’s Intersnack will start test production at two new ovens at the beginning of next year. Headcount will rise from 260 at present to 310−320 as a result of the investment.

WWW.BBJ.HU

06 News

Budapest Business Journal | Oct 04 – Oct 17

NEWS FOR THIS SECTION IS TAKEN FROM THE BUDAPEST BUSINESS JOURNAL’S DAILY BRIEFING, ENERGY TODAY NEWSLETTER AT WWW.BBJ.HU/STORE/NEWSLETTER-PACKAGE

HUNGARY MULLS CEMENTING UTILITY PRICE CUTS IN CONSTITUTION Hungary’s governing Fidesz party, which is facing general elections next year, is seek− ing the legal means to cement its house− hold utility price cuts into the constitution.

Fidesz has established a working group to word a bill that would make legislation on turning utility companies into non−profit firms a cardinal law, Antal Rogán, head of the party’s parliamentary representatives, said on September 30. Fidesz will decide three weeks from now whether to include the legislation in the constitution, he added.

Prime Minister Viktor Orbán, reelected on September 28 by the Fidesz party as its pres− ident, said 2014 would be a year of fight to defend household utility price cuts and the scene of the fight will be the elections. Hun− gary cut household utility prices by 10% on January 1 and cut them again effective from November 1, bringing this year’s price cut to 20% in total by the end of the year. Utility firms are to suffer the loss of revenue due to the government−mandated price cuts.

EC ASKS HUNGARY TO ADOPT NATIONAL MEASURES ON ENERGY EFFICIENCY The European Commission has formally re− quested Hungary to ensure full compliance

with its obligations under European Union legislation on energy efficiency in buildings, state news agency MTI reported. The EC made the same request of Austria, Cyprus, Estonia, Lithuania, Luxembourg and the United Kingdom. The Commission asked the member states to transpose the directive into national law within two months and report back. If they fail to do so, the EC could decide to refer them to the Court of Justice. Under the directive, member states must establish and apply minimum energy performance re− quirements for buildings, ensure the certifi− cation of buildings’ energy performance and require the regular inspection of heating and air conditioning systems. In addition, the di− rective requires member states to ensure that from 2021 onwards all new buildings will be so−called nearly zero−energy buildings.

FAILED NABUCCO WEST PLAN STILL ON EU PRIORITY LIST The Nabucco West pipeline is still on a list of projects eligible for EU cash, implying the European Commission still believes it could be built, diplomats said. The Commission is expected next month to publish a final list of projects judged significant to more than one European Union member state and entitled to accelerated planning approval as well as consideration for money from the EU budget.

REGIONAL NEWS FOR THIS SECTION IS TAKEN FROM THE BUDAPEST BUSINESS JOURNAL’S DAILY BRIEFING, REGIONAL TODAY NEWSLETTER AT WWW.BBJ.HU/STORE/NEWSLETTER-PACKAGE

62% OF ROMANIAN PATIENTS PAY MEDICAL STAFF The level of informal payments in Romania’s healthcare system is rampant, with more pa− tients paying bribes in the public sector al− though such payments have also been made in private healthcare chains, a new survey commissioned by Aspen Institute Romania suggests, according to a report by news site Business Review. In order to get more atten− tion during treatment, 62% of the respondents admitted to making informal payments or giving gifts to medical staff. Most of the pay− ments (83%) were made in public sector insti− tutions, while the private sector had 7%. The survey by Exact Cercetare si Consultanta research firm – which was carried out online and had a sample of 1,154 respondents – says that 15% of the patients pay between RON 50 (€11) to RON 100 for better care, while 31% of them pay over RON 200.

MORE THAN HALF OF CROATS WON’T BE ABLE TO SAVE MONEY IN NEXT 12 MONTHS More than half of Croatian citizens won’t be able to save money in the upcoming 12 months, a survey by GfK agency has showed. According to the news site Tpor− tal, 53% of people in Croatia have told the survey they would not be able to save money, which is the lowest percentage

since 2008. Only 13% of people were able to say for sure they will save money in the next 12 months, according to the survey.

EU’S TOP COURT REJECTS LAWSUIT OVER VAT RULES FOR TRAVEL AGENTS The European Court of Justice has rejected a lawsuit filed by the European Commission against the Czech Republic and six other EU countries over their VAT rules for travel agents, the court said in a statement on Sep− tember 26. The Commission sued the EU member states over the fact that travel agents were placed in a separate VAT category, which applied not just to travelers but also to other clients. The Commission believed this represented a breach of an EU directive.

However, the court said the directive’s word− ing in various languages was too vague, and can therefore be applied to all clients.

CROATIA TO SEEK 3-YRS TO BRING BUDGET IN LINE WITH EU RULES Croatia will ask the EU for three years to bring its budget deficit below the bloc’s ceiling but will need longer than this to prune its public debt, Finance Minister Slavko Linic told Reuters. Croatia, which joined the European Union in July af− ter almost five years without economic growth, will have to go into the bloc’s Excessive Deficit Procedure (EDP), prob−

EU diplomats, speaking on condition of ano− nymity, said it included the Nabucco West scheme, led by OMV, as well as the Trans Atlantic Pipeline (TAP), which was selected to by the Shah Deniz gas consortium to carry gas to Europe, Reuters reported on Septem− ber 20. Energy Commissioner Guenther Oet− tinger told reporters South Stream did not meet the criteria for a priority project. He said South Stream does not give access to any new sources of energy and does not increase the competitiveness of the energy market in European Union.

MVM GROUP PRESIDENT-CEO CSABA BAJI AND MVM MAGYAR VILLAMOS MŰVEK CEO PÉTER HORVÁTH

MVM - E.ON DEAL SEALED The state−owned Hungarian energy group MVM has paid HUF 281 billion for the Hun− garian natural gas trade and storage busi− ness of German electric−utility company E.ON. MVM paid HUF 260 billion for the busi− ness and an additional HUF 21 billion for its cash stocks and tax refunds. MVM signed an agreement to purchase E.ON’s Hungarian gas business in March 2013. With the pur− chase, MVM acquired option to also buy the shares of Panrusgazpresently owned by E.ON Ruhrgas International. With the purchases closed, the majority owner of MVM, the Hun− garian government, will have a bigger influ− ence on prices in Hungary, CEO Péter Hor− váth told a press conference.

ably in early 2014. The EDP is the mecha− nism Brussels uses to keep pressure on European Union states to reduce their budget gap to below 3% of gross domes− tic product and public debt below 60% of GDP. “The usual time frame is one year, but we want to ask for more,” Linic said after the government adopted 2014−16 fiscal guidelines, which see this year’s general budget gap at 3.5% of GDP and widening to 5.5% in 2014.

ONE IN SEVEN CZECHS HAS PROBLEMS WITH LOAN REPAYMENT One in every seven Czechs who have tak− en out a loan have problems with repay− ment, and in Slovakia almost one−third of people owing money ask to postpone loan installments, according to data that lender Profi Credit has collected about its clients. The situation is similar in Bul− garia where one−quarter of people with a loan ask for the postponement of install− ments. In contrast, only 4% of debtors in Poland want to put off the repayment of their loans. Among the most frequent rea− sons why clients in Czech Republic start to have problems with loan repayment are unexpectedly high expenditures, job loss and a long illness. The main reason behind problems with loan repayment in Slovakia is illness (14%).

CORPORATE TAX RATE REMAINS AT 17% IN SLOVENIA The corporate income tax will stay at the current 17% according to amend− ments adopted by Slovenia’s Parliament on September 24 that reverse the pre− vious government’s decision to cut the rate to 15% by 2015. The corporate in− come tax rate dropped from 25% to 20%

Photo: László Beliczay / MTI

ENERGY

Alternative energy service provider PannErgy has received HUF 3 billion in funding for three geothermal projects in Hungary under the New Szechényi Plan. HUF 1 billion apiece will go to projects in downtown Miskolc/Miskolc University, Győr and at an unnamed company.

GERMAN UTILITIES SEEK END OF UNLIMITED CLEAN-ENERGY AID German Chancellor Angela Merkel’s new government must place a limit on aid to clean−energy developers and force them to sell power on the market to reduce costs, a utility lobby said. Developers of new proj− ects should sell electricity on the market and get a flexible ‘market premium’ on top of that, the BDEW, representing utilities including E.ON SE and RWE AG, said on September 28 in a statement. Under the existing rules, there’s no limit for the next 20 years, Hildegard Mueller, head of the BDEW, said. In a later step, the market pre− mium should be determined in auctions to reduce costs, BDEW added.

between 2006 and 2010. Amendments adopted last year brought it down to 17% in 2013, in an attempt by the pre− vious center−right government to make Slovenia a more attractive destination for foreign investors. The government also closed a loophole in a system that allows shareholders to claim tax de− ductions on interest on loans that they extend to companies in place of a full− fledged recapitalization. Existing lim− its on what is called ‘thin capitalization’ will be extended to associate compa− nies, which have so far been exempted.

The system of tax credits remains the same, with companies eligible for 100% deductions for investments in research and development, and 40% deductions for investments in fixed assets.

FITCH CUTS CROATIA CREDIT RATING TO JUNK Croatia had its credit rating cut to junk by Fitch Ratings, which cited deterioration in the newest European Union member’s fiscal out− look. Fitch lowered the country’s long−term foreign−currency debt assessment to ‘BB+’, one level below investment grade, from BBB− , and its local currency rating to BBB− from BBB, the rating agency said September 20 in a statement. The outlook on the ratings is stable. The move leaves Croatia on a par with Portugal and Hungary. “A structurally weak growth outlook has impaired the prospects for fiscal consolidation and the attainment of public debt sustainability,” Fitch said in its statement. The government of the Adriatic nation, which became the EU’s 28th member in July, is struggling to keep public finances in check after the economy shrank more than 10% since 2008, during which time foreign direct investment has plunged 80%.

WWW.BBJ.HU

News 07

Budapest Business Journal | Oct 04 – Oct 17

Croatian authorities’ determination to detain and question MOL president− CEO Zsolt Hernádi is rapidly escalating to a national− level dispute between the two countries.

GERGŐ RÁCZ

The Hungarian government has published a harshly worded response and decided on diplomatic countermeasures and threatened legal action in the case involving the requested detention of MOL boss Zsolt Hernádi.

Croatian authorities have filed both a local and an international arrest warrant for Hernádi in connection with allegations that he bribed former Croatian PM Ivo Sanader to secure a controlling minority stake in INA, the Balkan country’s energy group. Sanader was given a 10−year prison sentence over corruption charges in 2012, including accepting a €10 million bribe from Hernádi.

“In Croatia, alongside the continuous political campaign against MOL, the Croatian finance minister’s open threats against his country’s largest investor, as well as the procedures initiated by Croatian judicial institutions against certain members

of MOL’s management, also point to the fact that pressure is being exerted through extra−economic means. These methods are unacceptable within the European Union and Hungary cannot leave these steps unanswered,” the statement issued by the Prime Minister’s Office said.

The statement echoed MOL’s official stance in the matter, namely that the Croatian practice is against European Union law, since an investigation has already been conducted in Hungary in the same matter, but was dropped upon finding no evidence of wrongdoing.

“In the interest of the company and its employees MOL will defend itself by all legal means against the outrageous actions that have been taken against Hernádi and the company, which appear to be influenced by interests seeking to intimidate both the company and its chairman,” MOL said in a statement published on the website of the Budapest Stock Exchange.

The government also expressed outrage about how Croatia handles the case, especially provided that MOL is the country’s biggest investor.

“The Hungarian government deems unacceptable the practice according to which a strategic partner that makes significant investments is first chosen through a public tender, thus saving Croatia’s most important enterprise, INA, after which the same strategic partner is then intimidated

Photo: Zsolt Szigetváry/MTI

MOL SQUABBLE WEIGHING HEAVILY ON BILATERAL RELATIONS

using extra−economic means in an attempt to regain control of INA without a buy−out,” the Hungarian side said.

MOL holds a little less than 50% of INA’s shares. The state of Croatia owns about 45%. Perceived lack of investment in the company by MOL, and the state’s failure to take over INA’s loss−making gas business as stipulated in a shareholders agreement, have been sources of tension between the two stakeholders.

As a further response measure, the government said it will ask the management of MOL to review its portfolio and, if necessary, to take preparations to sell its shares in INA seeing the perceived illegitimacy of its partner’s approach.

“The Hungarian government will always raise its voice against such dubious practices that fall outside the framework of the rule of law, especially if they involve Hungarian enterprises,” the PM’s office said.

Besides the planned changes in ownership, the government is also drafting legislation on turning public utilities companies into non−profits. Parliament could pass the bill before the general elections in the spring, he said.

Orbán said the cabinet is looking for examples of countries that operated their utilities sectors in such a way. He added that deciding how to restructure the utili−

Photo: Szilárd Koszticsák/MTI

GERGŐ RÁCZ

ties sector requires collecting information from companies, which is no quick or easy task in a market economy.

The measures would fit in with the gov− ernment’s overall plans to reduce house− holds’ utility costs and then guarantee affordable service levels through a decree that would make utilities nonprofit and also directly, through owning major firms. The government cut household gas, electricity and district heating prices by 10% from Jan− uary 1 and will reduce prices again from November to save Hungarians a combined 20% on their bills.

Orbán said there is still some room for additional reductions since a survey of the market by the state’s utilities office showed the possibility of a 20%−30% reduction if profits were near or at zero.

After the first 10% cut in January, the gov− ernment saw there was “certainly” room for another 10% reduction, he said. The govern− ment could “decide how to go further” at the beginning of January, based on a review of data from utilities companies, he added.

The basis of the government effort, besides reducing household burdens that consume a huge chunk of average families’ income is the idea that utility prices are too

high in Hungary, mainly to assure the for− eign−owned providers inflated profits.

During the latest review of utilities ahead of the winter season, Orbán said the govern− ment would double the allocation for subsi− dized firewood to HUF 2 billion this year.

State−owned forestry companies deliver the firewood to local councils for distribution to low−earners under the program, which is in its third year.

Seeing the significant leap in customers’ costs from the transaction levy, the government is planning to make legal exemptions.

GERGŐ RÁCZ

GOV’T TARGETS UTILITIES FOR NATIONALIZATION The government is in talks on re−nationalizing six or seven big utilities companies that used to be state−owned but were then privatized, Prime Minister Viktor Orbán said during his regular public radio interview.

If public support continues, a community−owned public utilities system could operate in Hungary in one or two years, Orbán added.

TRANSACTION DUTY EXEMPTIONS

The Economy Ministry is proposing an exemption for bankcard purchases, National Economy Minister Mihály Varga said. The proposal was one of several tax measures intended to lighten the burden for households and reduce administration for businesses, he said.

Varga’s announcement follows shortly on the heels of the caucus leader for the governing Fidesz party, Antal Rogán announcing that the government would guarantee two monthly cash withdrawals, free of charge.

A refined version of the plan would entail that bank clients would have free access to their money up to a certain value limit, in this case the net average salary of HUF 150,000.

Reports said that Fidesz is trying to adapt the German legal practice where the law stipulates citizens the basic right to have access to their wages without having to pay any additional fees.

The government has been receiving criticism for the transaction levy from banks as well as economists who say that the institution is counterproductive to the state’s interests of forcing back the illegal economy. As they argue, the typical response will be withdrawing one’s entire salary at the start of the month and the larger presence of cash in everyday commerce will pave the way for more untraceable and untaxed transactions.

The Economy Ministry has already been forced to make revisions to the 2013 budget during the summer, seeing the response to the levy, especially from the business sector. The number of Hungarians who opted to open bank accounts abroad instead of paying was so great that Varga’s department had to seek alternative revenues.

BBJ

2Business insight

Israel ‘wants to do business’

11

Trends: Land prices plummet

12

TAX AUTHORITY UNDER THE SCOPE Just as it did a year and a half ago, PriceWaterhouseCoopers made a national survey in 2013 to find out how taxpayers evaluate the changes in the National Tax and Customs Administration (NAV) and its regulatory environment.

The purpose of the survey is to get an idea of taxpayers’ perceptions about the overall impact of organizational changes at the authority.

KRISZTIÁN KUMMER

“Following the evaluation of the survey responses of the participants, we can define where the critical points of the system are.

Based on real feedback, the National Tax and Customs Board can evaluate its activ− ities and have an opportunity to properly address the issues raised,” said János Kele− men, a partner in PwC Hungary.

If we would like to summarize the results in a brief phrase, the Hungarian Tax Authority performs its job better than one and a half years ago, according to the anon− ymous responses of the 400 participants.

On a scale of 0 to 100, the overall satisfac− tion level of NAV reached 51 points this year, a significant improvement from the last survey’s 44 points. But of course, the Devil is in the details.

FREQUENCY USING E-GOVERNMENT SITE

Daily Monthly

16%

Weekly Yearly

1%

53%

30%

STORY HIGHLIGHTS ■

Overall satisfaction with Hungarian tax authority’s work is increasing ■ Clients crave more electronic communicationelections

BETTER SERVICE WITH MANY ERRORS To start with the good news: 85% of respon− dents (both corporate and private) think that the tax authority meets the deadlines and 90% think that NAV informs properly on expected legal actions and sanctions.

Also, the tax assessors’ legal preparedness

is improved over the previous period. How− ever, the list of bad remarks is a bit longer.

Some criticized the practice that NAV pro− longs deadlines and said too lengthy pro− cedures interfere with the normal course of business. Due to organizational transfor− mations at the authority, one−third of the

THE HUNGARIAN TAX AUTHORITY PERFORMS ITS JOB BETTER THAN ONE AND A HALF YEARS AGO

WWW.BBJ.HU

2 Business

Budapest Business Journal | Oct 04 – Oct 17

responding large taxpayers have been trans− ferred from the Large Taxpayers Directorate to regional tax offices. According to respon− dents, NAV’s experience, organizational transformation in the field of customer ser− vice, speed of procedures and controls were not the subject of relevant changes. There have been, however, adjustment difficulties, primarily due to the different business prac− tices of offices and a lack of concern for large companies’ issues.

Participants in the survey were satisfied with the courtesy and auditing profession−

97%

Rate of respondents having e-government registration

TAXPAYERS SATISFACTION WITH THE WORK OF THE TAX AUTHORITIES

9

indicate that taxpayers consider it doubtful that their arguments on appeal would suc− ceed, so sometimes they do not ever tried a legal remedy. “On the other hand, some respondents claimed that they didn’t push for an appeal because the authority’s resolu− tion was fair or the amount of the fine was so small that any further action seemed to be a waste of money and time,” Kelemen said.

INFORMATION, ADMINISTRATION Some 89% of respondents visit NAV’s web− site before undertaking administrative

MAIN REASONS FOR CONTACING THE TAX AUTHORITY

60

Information Inspection Administrative procedures Enforcement

55

Requesting a tax certificate Requesting resolution Payment easing procedure Other

50 2007

45 40

2012

2013

0

17,5

35

52,5

70

SATISFACTION WITH ADMINISTRATION AT NAV’S CLIENT CONTACT CENTERS (1-10)

Speed

Preparednes

Helpfulness

5,8

6,05

86% Rate of those who never used e-goverment’s website for booking an appointment alism of assessors, but the lack of indus− try−specific knowledge still inhibits smooth administration. One−fifth of responses also

6,3

6,55

6,8

issues. However, information on complex or problematic new legislation appear on the website only four or five months after come into force, according to many complaints.

That said, electronic procedures have proved to be a real success story: figures show that administration via the e−government web− site or client contact centers is very popular, and the satisfaction level of these services is around 60−70%.

But taxpayers still aren’t satisfied: they want the number of electronic services expanded. And there are many areas where great improvements could be achieved, for example assessors or contact persons cannot be reached via e−mail, an upgrade 80% of the respondents would find very useful. “Many responses said that requests from tax office local and business tax filings could be han− dled electronically, but is currently available only via ordinary mail. It would also be very useful to shorten the deadline for case reso− lution and create the possibility to edit and modify tax filings via the client service cen− ters,” Kelemen added.

WWW.BBJ.HU

10 2Business

Budapest Business Journal | Oct 04 – Oct 17

EXPERT OPINION

CATCHING THE WINDS OF CHANGE Pé Péter SOMOGYI S CITIBANK CIT CE CENTRAL EUROPEAN CLUSTER, IN INVESTMENT HEAD

It had been in the air for a while, exceptional resilience of risky assets to political and fiscal uncertainties, dropping yields in the wake of Quantitative Easing programs, or falling gold prices; winds of change have started to blow on the global markets in the first half of the year.

S

o far these winds had been particularly generous to investors serenely riding on a sea of liquidity. However, any sailor knows that high tides do not last forever, and for those who had been tempted to put off the idea, the warning sent by U.S. Fed Chairman Ben Bernanke after the June Federal Open Monetary Committee meeting must have resonated as a harsh wake-up signal. Wind of change indeed; harsh, indeed.

NOTE: ALL ARTICLES MARKED E XPERT OPINIONS ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILIT Y

After the announcement of the likely agenda for the Fed’s Quantitative Easing tapering, global markets experienced a sharp turn and all trends – in equities, fixed income and currencies –suddenly reversed. Economic good news being interpreted as monetary bad news, equity prices dropped, erasing most of the gains recorded since the beginning of the year. Once again, the prospect of the end of a QE program sparked a market selloff, just as when the Fed terminated QE1 and QE2. At that time, Citi analysts claimed that the QE programs had failed to achieve their goals: unemployment was still too high, the housing market had not rebounded and credit had not been revived, which could only result in a market correction, dropping yields and renewing expectations for bolder actions.

Why would it be different this time, why wouldn’t asset allocators once again revise their strategy?

“It is becoming harder and harder for investors and capital allocators to resist the siren call of the equity market as the financial logic of buying equity is strong: sharp fall in systemic macro risk vs. year ago and sharp fall in political risk, especially in U.S.” Jonathan Stubbs, Europe Equity Strategist, Citi Research

I

t has often been repeated that with such large QE actions, central banks were evolving in a monetary “Terra Incognita”, learning as they act. A cornerstone of any learning process is to never repeat the same mistakes. In that respect, the set up of the current QE programs rectified a major weakness of the previous versions: the constraint of their scope.

Indeed, while QE1 and 2, based on a defined amount and a determined time frame, actually focused on bringing sufficient cash to the financial system, the current easing program is focusing on its objectives, which not only means bringing sufficient cash to the system but also doing it for long enough to build up the confidence required to make it work and eventually flow into the economic system. With that in mind, it is understandable that easy money “addicted” markets feel the pain of the future termination of the cash injections, but from a fundamental perspective, the sooner QE3 is stopped, the better.

Indeed, the sooner the housing market starts sustainably growing, the sooner the unemployment rate becomes supportive and the sooner

credit starts to drive investment and consumption, the better the prospects will be for longer term sustainable investment returns, and for equities in particular.

Another illustration of these winds of change is the rout observed in the so-called safe-haven investments. A market correction or a downturn characterized by a reversal of risk appetite is usually accompanied by an outperformance of assets considered to be safe by investors.

During the last five years, the prospect of QE ending meant a stronger dollar, a rally in Treasuries and a surge in gold prices. None of that this time, quite the contrary: the U.S. dollar declined, gold prices fell by another 13%, bringing the total retreat from its 2012 peak to more than 30%, and U.S. Treasury bonds erased 14 months of returns in just four weeks. Basically, the yield shock of May-June affected investors exposed to safe assets more profoundly than investors exposed to risky assets.

“The end of the ‘givens’ — USD ever falling, petroleum ever rising, global investor outflows from dollar denominated investments — is upon us and the Market in the Mirror will give way to new and fundamentally important trend reversals paving the way for new opportunities. It is time to look forward again”.

Steven Wieting, Chief Investment Strategist Citi Private Bank Citi analysts think that the current changes go beyond the short-term turn of the economic cycle in the United States, as what they observe is that major financial trends of the past decade are reversing. Important trends including the falling U.S. dollar, rising petroleum and commodity prices and global investor outflows from dollar-denominated investments are at an end.

The global bond rally has reached its apex.

Similarly, emerging markets can no longer be looked at as they were during the early 2000s, through the prism of commodities, infrastructure and cheap production costs.

What Citi analysts observe is that the growth dynamic in emerging markets, and China in particular, is shifting from a more commodity-intensive fixed asset investment and industrial production driven model to an increasingly household-based and service sector growth model. Citi analysts believe these new trends will provide opportunities that will differ from the recent past and will drive distinct and potentially profitable outcomes for investors who will be able to detach their views from the past decade’s direction.

Important Disclosure Citi analysts” refers to investment professionals within Citi Investment Research and Analysis, Citigroup Global Markets and voting members of the Global Investment Committee and Global Portfolio Committee of Citi Private Bank.

This document is based on information provided by Citigroup Investment Research and Analysis, Citigroup Global Markets, Citi Private Bank and Citigroup Alternative Investments. It is provided for your information only. It is not intended as an offer or solicitation for the purchase or sale of any security. Information in this document has been prepared without taking account of the objectives, financial situation or needs of any particular investor. Accordingly, investors should, before acting on the information, consider its appropriateness, having regard to their objectives, financial situation and needs. Any decision to purchase securities mentioned herein should be made based on a review of your particular circumstances with your financial adviser. Investments referred to in this document are not recommendations of Citibank or its affiliates.

Although information has been obtained from and is based upon sources that Citibank believes to be reliable, we do not guarantee its accuracy and it may be incomplete and condensed. All opinions, projections and estimates constitute the judgment of the author as of the date of publication and are subject to change without notice. Prices and availability of financial instruments also are subject to change without notice. Past performance is no guarantee of future results, real results may vary.

Subject to the nature and contents of the document, the investments described herein are subject to fluctuations in price and/or value and investors may get back less than originally invested. Certain high-volatility investments can be subject to sudden and large falls in value that could equal the amount invested. Certain investments contained in the document may have tax implications for private customers whereby levels and basis of taxation may be subject to change. Citibank does not provide tax advice and investors should seek advice from a tax adviser.

Investment products: (i) are not insured by the Federal Deposit Insurance Corporation; (ii) are not deposits or other obligations of any insured depository institution (including Citibank); and (iii) are subject to investment risks, including the possible loss of the principal amount invested.

FED KEEPS THE MONEY TAPS OPEN The U.S. Federal Reserve shocked markets when it decided to keep its stimulus campaign going uninterrupted amid expectations of the stream of money narrowing.

Hungarian markets are prone to keep riding the resulting favorable sentiment driving emerging assets.

GERGŐ RÁCZ

Defying all expectations, the U.S. Federal Reserve decided to make no changes to its ongoing stimulus program in September and opted to keep the campaign going. Market participants were convinced of the impeding limitations to the bond−buying scheme after chairman Ben Bernanke raised the notion of the Fed’s Open Market Committee scaling down the effort in May. “Taking into account the extent of fed− eral fiscal retrenchment, the Committee sees the improvement in economic activ− ity and labor market conditions since it began its asset purchase program a year ago as consistent with growing underly− ing strength in the broader economy,” the committee said. “However, the Commit− tee decided to await more evidence that progress will be sustained before adjust− ing the pace of its purchases,” it added in justification of the decision.

Markets appreciated the continuation of the Fed’s stimulus continuing, which is generally perceived as the key tool to keep− ing the U.S. economy – and accordingly the global economy – on a slow but steady track to recovery.

“The announcement sparked hectic reac− tions, boosting American indices to new highs and starting a drop in bond yields,” K&H Alapkezelő’s investment director Ist− ván Horváth said in a comment.

EMERGING BOOST The biggest beneficiaries of the continued favorable market sentiment are likely to be emerging markets. Horváth noted that immediately after the Fed announcement, the forint reached a two−month peak against the euro and bond yields also dropped.

“Hungarian bonds are still a worthwhile investment,” he said.

The National Bank of Hungary, which enacted its 11th consecutive rate cut in Sep− tember, is likely to get even more encourage− ment from the favorable international senti− ment and won’t see any obstacles to cutting the benchmark even further.

“The biggest moral of the pre−crisis period is that the central bank must fully exploit the ‘grace period’ on international markets, since the upcoming changes at the helm of the Federal Reserve and the possible changes to the Fed’s stimulus program could all affect the maneuvering space for Hungary’s mon−

FEDERAL RESERVE CHAIRMAN BEN BERNANKE

etary policy,” the Nézőpont political and eco− nomic think−tank said.

Considering that little more than a year ago the key rate was at 7%, the current 3.6% level is in itself testament to the commit− ment of the Monetary Policy Council’s drive to continue with cuts for as long as possible, and they now have ammunition to pursue further historic lows.

“Smaller−than−‘normal’ cut shows they [the MPC] remain somewhat risk−averse to upsetting the market, not taking the oppor− tunity of the Fed non−taper to make a larger move, and instead wanting to slip below the radar with continual, smaller cuts so they can get rates as low as possible,” Nomura analyst Peter Attard Montalto said.

He expects the rate to come down to 3% in the coming months as rate−setters continue with 20 basis point cuts.

START OF THE TAPER Market participants are still projecting that the Fed will narrow the scope of its stimulus program within the year, but there are various opinions about when exactly that may happen.

“In theory, the tapering could be announced in October, but December is more likely if it will happen this year at all,” Raiffeisen analysts said in a note.

Doubts in Hungary as well as in the United States are fueled by the fact that Fed chair− man Ben Bernanke’s mandate will expire at the end of 2013 and he would likely prefer his successor to have to deal with tapering one of the most successful ventures of the Fed’s recent history.

Analysts are largely convinced that Ber− nanke will be succeeded by Janet Yellen, who is currently a vice chair at the Fed and is seen as President Barack Obama’s first choice for the post.

“There doesn’t seem to be much doubt” that the Fed’s current vice chair will get the nod, Goldman economist Alec Phillips said in a note.

Yellen is seen as a less dovish professional than Bernanke and is expected to push incremental tapering should she become the new Fed boss.

WWW.BBJ.HU

2 Business

Budapest Business Journal | Oct 04 – Oct 17

11

ISRAEL ‘WANTS TO DO BUSINESS’

GERGŐ RÁCZ

Q

This year marks the first Israel−Hungary Innovation Day initiated by the Israeli Embassy in Budapest with the coop− eration of the Hungarian Ministry for National Economy and the National Innovation Office (NIH). What is this initiative, what are its goals?

A This is my initiative with the aim to bring the story of Israeli entrepreneurship to Hun− gary. Israel has become a start−up nation with thousands of new projects and we want to show like−minded Hungarians our suc− cesses and also how we did it. Hungary is in many ways similar to Israel, with a similar number of people living in the country and a wealth of intellectual capital. We would like to show that if we could do it, others could do it as well.

Q

What strategy do Israeli start− ups pursue? Do they aim abroad like their Hungarian counter− parts or do they have a stronger internal market to count on?

A Israeli startups are also largely oriented at foreign markets. However, they have venture capital and some government cam− paigns to rely on that allow them to develop and improve their products as much as possible. They too of course want to make money but they can do more to achieve the best results before seeking an exit.

Q

What are the main areas driving Israel’s start−ups that you believe Hungarians can learn from?

A I think it is essentially a form of attitude.

Israeli engineers, before they enter busi− ness, have to serve three years in the mil− itary, which is a greenhouse of ideas. The army teaches us never to take no for an answer, to always raise questions, always strive for a better solution and not to think of failures that come along the way as a tragedy. This is what made Israel a hub of start−ups, and if major technology firms want to recruit, they don’t have to go far because they all have a local presence.

Q

How did the Hungarian govern− ment respond to your proposal to orchestrate the event?

A Excellently! Professor Cséfalvay [Min− ister of State for Economic Strategy at the Ministry of National Economy] immedi− ately supported the idea. The ministry also

STORY HIGHLIGHTS ■

Israeli Embassy organizes 1st bilateral innovation day ■ Israel holds high hopes of expanding economic relations

Ilan Mor was appointed as Ambassador to Budapest in February 2011 and started his term in September of that year. Mor has served in a number of positions in the Israeli diplomatic service since joining in 1983, including diplomatic posting to Berlin, Beijing, and Los Angeles, along with advisory and managerial positions in the fields of foreign policy and the prevention of terrorism.

CV

acknowledged similarities between the two countries, namely that there is a large group of highly skilled young people and a lot of ideas around. We work with the National Innovation Office as well.

Q

You speak highly of Hungary but you know that there is a very vocal, far−right political faction in the country and the govern− ment itself has been accused of anti− Semitism. What is your view?

A I always say that Hungary isn’t an anti− Semitic country, but there is anti−Semi− tism in the country. We appreciate Prime Minister Viktor Orbán’s declaration regarding a zero−tolerance policy against anti−Semitism. We are also glad that the Hungarian government declared the year 2014 as a Holocaust Memorial Year. Now, we can only encourage the government to be active and to back up its words with deeds. Through constructive ongoing dia− logue we should work together in order to make people, especially the young gener− ation, understand the evil character that is anti−Semitism.

Q

What kind of deeds would you like to see?

A I’m certain that the government is fully aware of what should be done. Hun− gary is a member of the European Union, which has clear and strong principles and plans regarding fighting anti−Semitism, which it should apply on a daily basis. The majority of people in Hungary realize that the conspiracy theories about Israel trying to “buy out” and “occupy” the country are completely unfounded.

Q

Besides start−ups, where do you see Hungary and Israel improving their bilateral eco− nomic relations?

A I definitely see agriculture as the main

Photo: Péter Ákos / MarinArt

The Israeli Embassy is launching what it hopes will be the first in a series of events aimed at linking startups, intellectual and venture capital between the two countries. The Budapest Business Journal spoke with Israeli Ambassador to Budapest Ilan Mor about his expectations from the events, the outlook for bilateral economic relations, and anti− Semitism in Hungary.

I ALWAYS SAY THAT HUNGARY ISN’T AN ANTI-SEMITIC COUNTRY, BUT THERE IS ANTI-SEMITISM IN THE COUNTRY. point of expansion of our bilateral rela− tion. Although I’m no expert, I have learned that Hungary has good soil, a good amount of sunny days and is able to generate excellent agricultural produce.

Israel can offer some of the best agro− technologies and water management solu− tions available. In fact, I’d like to take this opportunity to call on all Hungarian investors looking into agriculture to make Israel their destination. If they need help, they can just call me. I’m confident that we can seal concrete deals in the near future.

Q

In the run−up to the Innova− tion Day, have you set any specific margins of success

that would leave you satisfied with the results?

A The fact that the event is happening is a success in itself. I see myself as a matchmaker and I’d be happy to start the creation of a network that both countries can benefit from. This is not a sprint; it’s a marathon. The event will host present− ers, investors from both countries as well as venture capital that will hopefully lead to actual deals now, or sometime in the future. We would like to share Israel’s suc− cess story with Hungary. We want to do business. Hungary is a friendly country to Israel, which is a good reason to work together as partners. If we do business together, it will be good for both of us.

12

WWW.BBJ.HU

2 Business

Budapest Business Journal | Oct 04 – Oct 17

4G: step by step

Crime does pay

Land prices plummet

People want fast internet on mobile devices, too

Number of unsuccessful police investigations on the rise

Land prices have fallen twice those of real estate since 2008

60%

OF THE WORLD’S POPULATION WILL HAVE ACCESS TO LTE SERVICES BY 2018

The spread of 4G mobile networks is expected to speed up as more affordable 4G−capable phones arrive in Hungary. But for that, people need to know and hear about 4G, and must evaluate its advantages over the well−known 3G system.

According to a fresh survey conducted by eNET among regular Internet users older than 18 years, almost four fifths (79.3%) of all respondents have heard about the 4G mobile Internet service. However, only one in three people (34.6%) claimed to know exactly what the term 4G means.

Naturally, selling LTE−enabled devices does not necessarily lead to a faster spread of 4G services, although it is an important precondition. Even in Western Europe, a more developed region where many LTE−capable devices are sold, few customers have subscribed to the service so far. One in three new mobile phones sold in Western Europe supports LTE, but the technology is just starting to spread amongst users. It should be noted, though, that 4G is not yet available from all Western service providers; and where it is available, coverage is mostly limited to large cities.

Experts project that the service will spread faster after the current breakthrough. According to Ericsson vice president Douglas Gilstrap, 60% of the world’s population will have access to LTE services by 2018, while the number of subscriptions will exceed one billion.

The expectations of mobile Internet users (who total 43.4% of those surveyed) are clear. Most (29.7%) use the service on their mobile phones; only 12.9% use mobile Internet on their computers (with a data card or mobile stick), and a mere 7.1% use their phones as modems.

WHAT IS 4G? Have you ever heard about 4G mobile internet service? (%)

274,000

INVESTIGATIONS CLOSED IN 2012 WITHOUT RESULT

The long trend of increasing criminal activity continued in Hungary last year, as evidenced by the newly published 2012 criminal statistics of the Prosecution Service. There was an annual leap of 13% in 2010 in the number of registered criminal acts, rising almost 1% in 2011 and by 4.6% in 2012, adding up to 472,000 crimes, the worst statistics since 1999.

Although Interior Minister Sándor Pintér said the main reason the numbers are higher is because of more effective police work uncovering a larger number of criminal acts, the figures still give grounds for concern.

The statistics show that while the number of perpetrators dropped in 2012, the number of cases that ended without identification and a conviction increased by 11.9% to 274,000 from 245,000 in 2011. This is the worst indicator since 1991, when 260,000 cases went cold.

In contrast, the most serious crimes saw an improvement, with registered murders or attempted murders coming to 221 opposed to 275 in 2011. There were also fewer cases of assault at 6,583, down from 6,791 in 2011 and 7,832 in 2010.

However, crimes targeted at wealth increased. There were 186,000 robberies, up 3,000 and 46,857 burglaries, an increase of 1,500 from 2011. The latter in particular gives grounds for concern, since after nearly a decade of constant declines, the number of break−ins has been on the rise continuously since 2009.

This is all the more troubling since the success rate of investigations dropped to a mere 14.1%, compared to the 25.4% recorded in 2002.

Statistically speaking, the safest area in Hungary is Vas County, which saw 2,945 crimes last year for every 100,000 residents. The most dangerous region is Fejér County with 7,738 crimes for the same sample of the population.

SUCCESS RATE OF BURGLARY INVESTIGATIONS (%)

Yes

Never 25

6% 15%

35%

Source: eNET online research

COUNTRYSIDE VS CAPITAL Average land price per plot

20

15

45%

While turnover on the land market moved parallel with the housing market as a whole, land prices have fallen twice those of real estate since 2008, according to analysis by OTP Mortgage Bank.

Slowing deterioration in the turnover and very low prices – that’s the Hungarian land market in brief.

While in 2008, 22,500 urban area land transactions were reported to the National Tax and Customs Administration, the number fell to 14,000 in 2010 and 13,000 last year.

One quarter of all the sales took place in the counties of Pest and Győr−Moson− Sopron – areas where the housing market is similarly active.

The only area where a positive shift in demand has been seen in the last four years is Somogy County, where newly built highways have increased the appeal of the communities on the southern shore of Lake Balaton.

The national average price decreased by 30% between 2008 and 2012, twice as much as the housing market was experiencing in the same period. A positive change of 10−15% in the price of land sold was seen in Csongrád and Győr−Moson−Sopron.

From county to county, the average selling price of urban land shows a difference of more than eight−fold. While outside the capital the average price per sqm of urban land is HUF 3,655, in Budapest it is HUF 29,000. In Pest County, the average is HUF 6,400/sqm, compared to HUF 766 in Nógrád.

The rural average land price per plot was HUF 3.78 mln in the last year and a half, while the Budapest average was HUF 32.1 mln.

The differences are shocking but indicates a good opportunity for possible buyers; land can be bought on very favorable terms in the more rural areas of Hungary.

Rural HUF 3.78 mln

30

Yes, and knows what it is Don't remember

30%

FALL IN AVERAGE LAND PRICE BETWEEN 2008 AND 2012

10 2000

2002

2004

Source: Prosecution Service

2006

2008

2010

2012

Budapest HUF 32.1 mln Source: OTP Bank

BBJ

3Special Report Tempting life science

14

Drug stocks in forefront of fall bourse season

PHARMA The rate may be slower, but Hungarian pharmaceutical companies are still able to increase their revenues, all the while pointing towards domestic regulatory issues as a hindrance. Fortunately for them, even if the domestic market is stalling, they can still look globally.

16

14

WWW.BBJ.HU

3

Budapest Business Journal | Oct 04 – Oct 17

TEMPTING LIFE SCIENCE The first two JEREMIE Funds’ running time has not even ended yet, and the EU is already launching a new venture capital fund.

JEREMIE 3 will provide a great opportunity for at least seven or eight innovative enterprises active in biotechnology.

STORY HIGHLIGHTS ■

No venture fund yet specialized in biotechnology ■ JEREMIE 3 expected to provide opportunity for innovative enterprises active in the field

revenues soared from €182,000 to more than €821,000. In 2012 VitroLife, a Swedish bio− technology corporation listed on the Stock− holm Stock Exchange, submitted an offer to buy the entire time−lapse microscope divi− sion of Cryo. “Their bid included Cryo’s management as well, which granted us the

Cryo operates in the biotechnology industry – primarily as a research company manufacturing, and selling assisted reproductive technologies and related services.

Cryo’s business is divided into two separate divisions: PrimoVision, which is a time-lapse microscope developed to monitor human embryos; and HHP, which is based on a unique hydrostatic pressure stress treatment used in assisted animal reproduction.

The PrimoVision microscope enables the monitoring of the developmental dynamics of fertilized eggs inseminated through an in vitro fertilization program. It thus supports doctors in making better decisions about which embryos to transfer and which ones offer the best chances for a successful pregnancy.

ANDRÁS ZSÁMBOKI

One of JEREMIE 1’s venture fund manag− ers, PortfoLion has already accomplished its first exit: 21 months after its invest− ment into a small medical startup, it has realized a 69% internal rate of return.

“Since JEREMIE 1 was launched (in 2009), the Hungarian venture capital sector has gone through a great amount of devel− opment,” Marcell Veidner, managing direc− tor of R&D investment consulting company Bionity told the Budapest Business Jour− nal. Although he says there is no venture fund yet specialized in biotechnology, three big fund managers from JEREMIE 1 have already gained ample experience of invest− ment in life sciences.

According to Veidner, their target com− panies have developed too. Their manage− ment has become more professional and more sensitive to the investment environ− ment. “Most companies suitable for us to invest into offer services to big pharma− ceutical companies which develop medi− cations,” Veidner said. For example, they offer to speed up the pre−clinical phase, or they promise to shorten the duration of in vitro, or even in vivo examinations. Clas− sical drug developers, however, are still lacking. “To my knowledge, at the moment there is only one company waiting for capi− tal investment that wishes to launch its own big molecule on the path of pre−clinical testing,” Veidner said. “We will know more only after the commencement of JEREMIE 3 in October, when the entire spectrum of biotech companies will appear on the scene.

The financial outcome of JEREMIE 1 so far looks rather promising,” he added.

THE PHYSIOLOGY OF SUCCESS: THE CRYO INVESTMENT PortfoLion, as a major Hungarian fund manager of the EU’s JEREMIE Holding Fund (JEREMIE 1), has purchased non− decisive stakes in 12 innovative Hungar− ian startups, a quarter of which are in the biotech sector. It is probably not by chance that Cryo, the first company ripe for exit/divestment, was among them.

In June 2010 PortfoLion’s board decided to invest in Cryo Management, a small startup engaged in human infertility treat− ment, also providing various related ser− vices concerning assisted reproductive technologies. PortfoLion, OTP’s Venture Capital Fund, raised HUF 220 million (almost €772,000) of capital, gaining a 35% ownership share in the target company.

“We strongly believed that Cryo had huge potential to expand internationally, which has always been an important criterion for the fund regarding investment decisions,” Péter Oszkó, CEO of PortfoLion explained.

“We also recognized that Cryo’s scientific

CRYO’S PROFILE

coming three years regarding develop− ment and sales. “According to this earn−out structure included in the share purchase agreement, we expect the final purchase price to be three−fold compared to the capi− tal that was invested in Cryo by the fund,” said Molnár. This amounts to an IRR (inter− nal rate of return) of 69% considering Portfo− Lion’s investment period of 21 months.

The purchase price that was agreed upon in the exit does not include the properties of the HHP hydrostatic pres− sure stress treatment division. As a result, PortfoLion has the opportunity to operate and develop this division by establish− ing a new company with new manage− ment, with additional capital investments if needed. “With this we hope to increase the return on our initial investment even further,” Molnár explained.

team was committed to bringing their proj− ect to a business success.”

PortfoLion’s team worked together with Cryo’s founders for almost two years. “Dur− ing this time, the company’s business prac− tices and organizational structure became more and more professional, and Cryo was consistently able to accomplish pre−deter− mined strategic goals,” András Molnár, dep− uty CEO of PortfoLion told the BBJ. From 2010 to 2011, the number of employees increased from the original 7 to 21, while

opportunity to perform a full exit,” recalls Molnár. VitroLife intends to keep Cryo’s operations, especially production and devel− opment, in Hungary, even after the transac− tion. “For a strategic investor, VitroLife has the potential to realize synergies together with Cryo,” explained Molnár. “Furthermore, it will also be able to support Cryo in achiev− ing extensive growth in the future.”

The purchase price of Cryo will be between €5 and €9 mln, depending on cer− tain milestones that have been set for the

THE MORAL OF THE STORY “The biggest problem with innovative com− panies in Hungary is that they do not have complete teams of managers,” Molnár told the BBJ. Management is basically made up of researchers, who are ignorant of the inter− national environment of investment. “They think that the value of their company is iden− tical with the invested scientific input, and not with its commercial potential,” Molnár said. Hungarian scientists still have a kind of ‘help us, but stay away’ attitude toward inves− tors. “Researchers in Hungary still have not realized that the investor is not a creditor but a partner who brings capital, business exper− tise, and personal connections into the com− pany,” he added. It is a peculiar problem that scientists in Hungary are difficult to con− vince about the importance of formal legal documentation that meets all medicines’ reg− ulation criteria.

WWW.BBJ.HU

GERGŐ RÁCZ

The Hungarian pharmaceutical sector has often been critical of the measures intro− duced by the government with the aim of revising the national system’s management and reducing its costs.

The Fidesz government’s overhaul of the healthcare system most prominently affected the domestic operation of pharma− ceutical firms through the introduction of the so−called “blind bidding” system, where products offered at the lowest price receive preferential treatment from the state.

Since in these cases price is the only fac− tor, producers object to the fact that inno− vative, high−quality products are left out of the mix completely, and also that they are often squeezed out by Asian competitors able to go lower on prices, while companies operating in Hungary are already as low as they could go.

Other areas of the healthcare industry have also noted that the current govern− ments’ policies aren’t exactly conducive to their operations. Starting from September, pharmacies have to operate under revised regulations requiring them to have a spec− ified, increased number of skilled profes− sional employees on the payroll in order, the state says, to increase both professionalism and safety of supply.

“A significant number of pharmacies will be unable to meet the requirements of the decree,” the association of chain pharma− cies HGySz said in a statement prior to the regulations’ launch. It warned that in some cases, entire towns might be left without a pharmacy as a result.

The overall healthcare system is still reeling from the lack of funding that has been the case seemingly forever, com− pounded by developing staff shortages as new graduates are increasingly looking to find employment – and belter salaries – abroad. Even so, the state will yet again spend a sum amounting to nearly 30% of the country’s gross domestic product on welfare expenditures next year.

STILL INVESTING Despite the complaints, drugmakers haven’t scaled back their domestic oper− ations significantly; in fact, they are con− tinuing to invest. The 2012 figure was HUF 80 billion, largely unchanged from 2011.

But while the production bases in Hun−

gary remain, pharma companies increas− ingly have to look at export markets to keep afloat. According to the national association of medicine manufacturers, MAGyOSz, the industry saw overall revenue growth of 4.21% in 2012 on the year, which pales com− pared to the 15.1% increase seen in 2011.

The shift towards foreign markets is quite apparent, seeing that out of the total HUF 996 bln collected by the sector, sales abroad accounted for HUF 821 bln and only HUF 175 bln came from the domestic market.

The low sales contrast with the fact that political think−tank Századvég found that four major drug producers, Richter, Teva, Sanofi, and Egis generate 3.7% of the coun− try’s Gross Value Added.

MIXED MESSAGES According to the newly submitted 2014 budget, drugmakers can expect an increase in their overall contributions to the central budget with the planned total rising to HUF 56 bln, up HUF 7 bln from 2013.

At the same time, the government is increasing the overall allocation for the healthcare system by 10.6% on the year to HUF 2.3 trillion from HUF 2.1 tln in 2012.

This amount is comprised of HUF 2.2 tln in budget funds and HUF 133 bln in European Union financing.

On the level of gestures, the govern− ment remains amicable to the industry, as signaled by the conclusion of so−called strategic cooperation agreements. Market leading firms Richter, Sanofi, and Teva are all on the growing list of companies that the government has distinguished as being strategically important for Hunga− ry’s economy.

“Teva Magyarország Zrt in many ways pursues the same economic policy that the Hungarian government has since 2010: constant development, job creation, while making products that are competitive on the international market leading to a 2012 export total of HUF 172 bln,” Economy Minister Mihály Varga, the signatory of the agreement, said in May. Richter Chief executive Eric Bogsch, who earlier openly criticized government mea− sures and warned of impending supply shortages in the healthcare system, also commended the terms of the strategic agree− ment. According to the deal, Richter will remain entitled to R&D incentives while the government promised to support the compa− ny’s goal of staying independent and pledged to hold on to the state’s 25%+1 share stake to fend off any potential hostile takeovers.

The government has also called a pub− lic procurement scheme to centrally man− age the supply of pharmaceutical products to healthcare institutions. As state secretary in charge of health issues Miklós Szócska said, this alone saves the national hospital system HUF 2.77 bln. The winning bidders, Hungaropharma Zrt, Euromedic Pharma Zrt, Teva Magyarország Zrt, Fresenius Kabi Hungary Kft, and Biotest Hunagária Kft say they are also satisfied with the system, and the related stream of deliveries.

EXPERT OPINION

NEW OBLIGATIONS IMPOSED ON PHARMACEUTICAL COMPANIES: THE BEST WAY TO ENSURE SAFE MEDICINE SUPPLY? A recent amendment to the Medicines Act imposed new obligations on marketing authorization holders to ensure the safe supply of medicines in Hungary. In parallel, the power of the Hungarian medicine agency (GYEMSZI-OGYI) to investigate potential breaches has also been significantly increased.

Réka BerekmériVarró

M

SENIOR ASSOCIATE Gide Loyrette Nouel − d’Ornano Iroda

arketing authorization holders (MAHs) have been required to notify GYEMSZI-OGYI if they do not wish to further distribute their products in Hungary or if they cannot ensure the continued supply of their products, which may be detrimental to patients’ health or quality of life (product shortage). The amended Medicines Act, which entered into force on July 6, 2013, imposes new obligations on pharmaceutical companies in addition to the abovementioned notification obligation.

GENERAL SUPPLY OBLIGATION The amended Medicines Act imposes a general obligation on MAHs to supply wholesalers with their products if the wholesaler claims that the medicinal product ordered is needed to satisfy local patient demand. Wholesalers purchasing products under this provision may only sell the products to Hungarian healthcare service providers (including pharmacies) and cannot export them through wholesale trade. Additionally, wholesalers are required to keep records of the medicinal products purchased under this provision.

It is obvious that the above provision restricts one of the key elements of the freedom to contract principle (i.e. the freedom of persons to enter into contracts), as it obliges MAHs to enter into contracts with distributors simply on the basis of the distributor’s claim that it needs the product to satisfy local demand in Hungary. However, it is important to note that the freedom to contract principle can be overruled by law, and legislation may make it compulsory for certain persons to conclude a contract.

What happens if the MAH refuses to supply the product to a distributor? Besides the potential administrative proceeding for failure to comply with the general supply obligation, according to the Civil Code, if the parties who are obliged to enter into a contractual relationship on the basis of legislation do not comply with their obligation, the court may establish the contractual relationship and determine the contractual terms, except if a party can prove that it is unable to perform the contract. This exception may be applicable to the MAH under certain circumstances; however, the burden of proof shall lie with the MAH that it was unable to perform.

As well as the restrictions, the practical application of the above supply obligation raises several questions. To date, no guidelines have been issued that would help with the interpretation and application of the new obligation.

SPECIFIC SUPPLY OBLIGATION According to the amended Medicines Act, the MAH must supply wholesalers with a sufficient amount of certain medicinal products containing active ingredients that are to be specified by a separate ministerial decree. The minimum level of stock that wholesalers must possess collectively shall also be determined in a separate ministerial decree. Such a decree has not been adopted to date.

EXPORT BAN According to the amended Medicines Act, GYEMSZI-OGYI may – based on a notification –prohibit the export of a particular medicinal product for as long as there is a risk to safe supply in Hungary. This prohibition shall last no longer than one year.

Is the above provision compatible with the EU principle of the free movement of goods? On the basis of the reasoning of the amended Medicines Act, GYEMSZI-OGYI will assess on a case-by-case basis whether the export ban is needed to ensure the safe supply of medicinal products in Hungary (i.e. the ban does not apply automatically and there should be a public health objective to prohibit the export), which suggests that the new provision qualifies as a proportionate restriction to the free movement principle.

However, the new provision’s compatibility with the free movement of goods principle can only be assessed on the basis of its practical application, which is yet to come.

At the moment, it is hard to predict whether the new provisions will indeed make medicine supply safer. However, MAHs should be aware of the new legislative framework and adapt their operation and distribution scheme to take it into account accordingly. It is important to highlight that the amended Medicines Act authorizes GYEMSZI-OGYI to conduct dawn raids in any regulatory inspection, including the investigation of pharmaceutical companies’ compliance with the new obligations detailed above. In case GYEMSZI-OGYI establishes any infringement, it may impose a fine of up to HUF 500 million on the MAH.

www.gide.com

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

PHARMAS FOCUSED ABROAD Drugmakers and the healthcare industry in general continue to complain about the unwavering pressure placed on them by central measures to reshape the sector, with no change in sight.

But, thanks to the nature of the industry, at least pharmaceutical firms still have their foreign markets to count on.

15

3

Budapest Business Journal | Oct 04 – Oct 17

16

WWW.BBJ.HU

3

Budapest Business Journal | Oct 04 – Oct 17

DRUG STOCKS IN FOREFRONT OF FALL BOURSE SEASON Hungarian drugmakers have been the story lately on the Budapest Stock Exchange, showing that there is a strong appeal to investors from Hungary’s pharma papers.

Egis has received a bid for a buyout, while Richter is looking to reaffirm its somewhat tarnished reputation as a blue chip company.

GERGŐ RÁCZ

France’s Servier, the majority owner of listed pharmaceutical company Egis, has announced that it is planning to acquire the free float shares of the company cur− rently traded on the Budapest Stock

Exchange and consequently delist the company. The management of Servier, which currently controls 50.91% of the 3.9 million Egis shares, has offered HUF 107 billion or HUF 28,000 per share for the outstanding stock.

“Egis is the only listed company within the Servier Group, but has no need to use the equity capital market for financ− ing, therefore we believe being listed on the Budapest Stock Exchange makes little financial sense for Egis,” Jacques Servier, president of the eponymous group said.

The owners aren’t leaving anything up to chance and have offered shareholders a hefty premium on their assets. The HUF 28,000 per share is 33% higher than the closing price at the time the bid was announced and amounts to delivering 60% total shareholders’ returns over the preceding 12 months. Servier noted that the BUX index return was negative 3% over the same period.

The share price shot out to hover lit− tle below the mark determined by Servier

Arts et Techniques du Progrés (Servier) Free float

NOTE: ALL ARTICLES MARKED E XPERT OPINIONS ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RE SPONSIBILIT Y

EXPERT OPINION

IDIOSYNCRASIES OF LIFE SCIENCES TRANSLATIONS MIKLÓS BÁN ceo espell translation and localization

Pharmaceutical manufacturers, medical and healthcare equipment suppliers, biotechnology companies and providers of healthcare information systems face intense competition in a strictly regulated environment. Just as doctors and pharmacists train for a minimum of 5 years and learn approximately 15,000 new words, translation suppliers need to bring together expert teams with up‐to‐ date knowledge of applicable standards, norms and regulations, as well as medical, scientific and technical concepts and terminology.

T

ranslation of brochures, Summaries of Product Characteristics (SPCs), Patient Information and Informed Consent (PIIC) documents, reports, Study Contact Cards (SCCs), discharge summaries, protocol synopses, medical devices, instructions for using medical products and clinical trial agreements all require highly specialized knowledge.

For the end result to meet high standards, not only translators and linguists, but also project managers and team leaders need to acquire a profound understanding of the processes.

Different content types require different subject matter expertise and prioritization, and the most suitable configuration of translation, edit-

ing and terminology work has to be decided on a project-to-project basis.

REGULATORY MATTERS As mentioned, regulatory compliance of the curriculum is essential. The defining criteria for marketing authorization differ by locale, the regulatory environment is in constant transition, and the authorization of medical products is a complex and time-consuming process. As a result, template forms in effect have often already been altered or replaced by the time the translation work starts. Using templates, such as Product Information Templates (PITs) or Quality Review of Documents (QRD), is a regulatory requirement, and Patient Information Leaflets (PILs) as well as Summaries of Product Characteristics (SPCs) need to be standardized and conform to the template structure.

In the European Union, the European Medicines Agency (EMA) is the primary body tasked with coordinating the scientific evaluation of the safety, efficacy and quality of medicinal products.

There are three avenues to product authorization, namely the centralized procedure, the mutual recognition procedure, national procedure and the decentralized procedure. A detailed description of these is available on the EMA website.

LINGUISTIC QUALITY It is not surprising that strict adherence to the medical, legal and sometimes technical terminology is a minimum requirement. If there are different words for the same thing, language service providers must consult with the target groups who may prefer one or the other. Yet more often there are no ambiguities as to the vocabulary that should be used. To ensure that the correct termi-

nology is used, language service providers often use termbases, which, combined with integrated quality assurance methods, raise a flag if deviation is suspected. Such technologies can sift through the translated text in real-time; however, they are only tools that cannot replace extensive human expertise.

The established medical lingo can also vary considerably in terms of expressions used. German and Hungarian, for example, use imagery that may not be trivial to render correctly. Collocations are never preferential in any language, for example in English, one places a suture, submits an application, gives consent, takes blood and applies a plaster.

Another aspect of linguistic quality comes into play during the authoring process. While content writers frown upon and often shy away from using Controlled English (CE), for understandable reasons, standardization of texts that need to be precise, unambiguous and clear results in source material that lends itself better to localization and regulatory adaptation.

BACKTRANSLATIONS Relying on backtranslations in the Life Sciences industry is common practice as a means of evaluating the quality and conformity of translated materials, but the process is not without risks. For example, if a Clinical Research Organization (CRO) has a reliable translation partner which it trusts to do sensitive work, then it needs to find an even better partner to perform the backtranslation – and that requires time, assessment and of course additional funds. In most cases, backtranslation can only be performed internally for a number of languages,

and outsourcing such work is prone to the same issues as the translation itself.

REVISION CONTROL AND VALIDATION There are many software systems available that are suitable for use with regard to regulated activities. By far the most widely used is Microsoft Word, which became the de facto standard because regulatory bodies, such as the EMA, only accept submissions in this format. Yet language service providers use far more sophisticated technologies for secure online validation and versioning, and it is worth opting for the latter in order to streamline the process if automated conversion is available.

OTHER SERVICES Conducting clinical trials and other activities in foreign locales is far from trivial. Trustworthy regional providers may be able to offer auxiliary services that they can manage more efficiently.

Apart from translation, they may be able to assist in insourcing negotiation (or take part in the process), selecting, assessing and approving third party translators or managing validation centrally.

Life Sciences translation has one thing in common with other complex domains: scheduling time for preparatory work and defining scopes above the project level always pays off by accelerating the timeline and ensuring quality never drops.

www.espell.com

WWW.BBJ.HU

17

3

Budapest Business Journal | Oct 04 – Oct 17

EXPERT OPINION

FLEXIBILITY THE KEY TO ATTRACTING LIFE SCIENCES TALENT

P Péter SITTE S Se Section Manager, Life Sciences Hays Hungary H

W MNV Zrt. Aberdeen Asset Management Plc. Skagen Kon-Tiki Verdipapirfond Free float

at levels around HUF 27,450. Raiffeisen analysts expect that the prices will fluc− tuate only a little and keep within the cur− rent range until October, when the Egis assembly is set to decide on the offer.

They note that interest for Egis stock remains high, with daily turnover four times higher than the monthly average.

NOTHING LEFT TO CHANCE Servier claimed there was no specific motiva− tion for choosing this moment – after 18 years of joint history – to bid farewell to the bourse, apart from having the necessary funds readily available. The timing as well as the generos− ity of the offer has led analyst and sharehold− ers to speculate whether the owners are aware of impending developments that could drive Egis prices even higher. Servier this year dou− bled the dividends paid after profits, whereas it had been offering a 12% margin for years before that.

Egis has ventures on the table, such as operations in Russia and South Korea, that could significantly boost the value of the company in the near future. Share− holders thinking that these or other endeavors could boost prices may decide to become holdouts with the hopes of sweetening the deal even more.

The market regulator PSzÁF approved the bid on September 30 as one of its final decisions as an independent authority, having been merged in to the National Bank of Hungary effective October 1.

ALTERNATIVE MEDICINE Besides Egis shareholders preparing to pocket the cash, the biggest beneficiary from the delisting is likely to be Richter, a fellow listed pharma firm.

The company is in need for some sup− port, after it had to take serious action

since its liquidity and the traded volumes of its shares sank to such lows – in line with the general muted demand on Hun− garian equities – that it was removed from the MSCI Hungary index, meaning that several funds that use the index as a refer− ence point are no longer trading in Rich− ter shares.

Since for a period during the summer there seemed a good chance that Magyar Telekom would also suffer a similar fate, it would have entailed the Hungary stock exchange falling off the map, since MSCI principles require at least three blue chips to meet certain criteria, and the second exclusion would have left only two.

Eventually, however, Magyar Telekom wasn’t removed and Richter’s latest fig− ures and outlook also make it a strong contender to be returned to the index.

This is aided by a decision to reduce the nominal value of its shares in a one to ten split to boost liquidity and turnover.

“Gedeon Richter will return to MSCI Hungary unless liquidity deteriorates again,” Ilya Piterskiy, equity strategy ana− lyst at VTB Capital said.

Richter will benefit from the impending Egis exit as it would be left as the only listed drugmaker in Budapest, and there− fore the only choice for investment funds that insist on having pharmaceutical stocks in their portfolios because of their defensive nature.

The Budapest Stock Exchange in gen− eral has undergone changes during this year and introduced a new categoriza− tion system for its issuers. Even more importantly, the introduction of the new Xetra trading system is scheduled to go ahead in December, all designed to give a much−needed boost to overall trade volumes.

ith the legislative changes and increased tax burden that have occurred during the last couple of years in the pharmaceutical industry, companies in the field have been forced to rethink their strategies and roll out structural changes.

In pharmaceutical organizations, a large number of staff are typically involved in marketing and drug promotion activities, which is the area that has been most affected by increased registration taxes (known as ‘rep fees’). Most organizations have therefore had to consolidate their sales and marketing teams, either by combining regions or product lines.

The result of this is that the number of available professionals has drastically increased, which has kept salary levels constant in the commercial sector of the pharma industry.

However, the excess supply of medical sales professionals has slowed as most experts have either managed to secure employment in alternative roles within the sector or reverted back to the healthcare field. The competition for talent has now started to intensify once again, with companies willing to offer higher remuneration to acquire the best candidates for their key positions.

While salaries in medical and regulatory affairs have largely stayed at 2012 levels, the non-financial part of rewards packages for regulatory affairs and quality assurance, such as company cars, can make a significant difference as to the attractiveness of the remuneration offered. Professionals, particularly in non-field positions, increasingly value flexible hours and homeworking, which, along with other non-monetary benefits, are becoming ever more important in attracting top talent.

CLINICAL RESEARCH EDGES AHEAD While there are limited opportunities in the commercial area of the pharmaceutical sector, Hungary is still an attractive location for clinical research, which continues to be a strong growth area. The medical device sector and other technical areas such as medical and regulatory affairs as well as quality assurance follow this. There are currently 60% more ongoing clinical trials in Hungary than in neighboring Romania, despite the latter having a population twice the

size. Nevertheless, the dramatic increase in salaries that we witnessed in the past years slowed down in 2012 due to an excess supply of qualified candidates.

The only marginal salary increases in clinical research in Eastern Europe are also a result of the transition period of some clinical outsourcing global agreements between pharmaceuticals and clinical research organizations (CROs) ending during 2012. These have balanced out supply and demand with employers having the luxury of choosing from a larger pool of candidates, which has helped keep average salary levels flat in 2013.

However, salary levels in this area have remained competitive in the region and are still increasing, albeit at a slower pace, in contrast with salaries for pharmaceutical commercial operations positions, which have plateaued or even slightly decreased due to a higher unemployment rate in this area.

MEDICAL DEVICE CAPITALIZES ON FLEXIBILITY The organizational structure of medical device companies is different to pharmaceutical companies, and the functional verticals are often covered regionally, which means more regional career advancement opportunities open up for professionals.

This segment is also more open to cross-industrial career moves, showing readiness to consider professionals with pharmaceutical or consumer goods backgrounds. Contrast this with the pharma sector, which in most cases, rigorously insists on hiring candidates from within that particular segment, and also struggles with succession planning in some specialism areas. Medical device companies tend to be traditionally more flexible in terms of taking on fresh graduates for junior roles.

While medical device salaries have also stayed constant at 2012 levels overall, professionals working with high value products, such as imaging diagnostics, are rewarded with higher remuneration packages than those working in the consumables and disposables sector.

To find out more about how Hays Hungary can help your organization with its recruitment needs in life sciences and other sectors, call +36 1 501 2400 to talk to one of our expert consultants or visit hays.hu.

hays.hu

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

With a growing trend for organisational restructuring and a shift from a candidate to job-led market in some technical areas of the Life Sciences market, 2013 has been a challenging year – and 2014 looks to be no different. Péter Sitte, Section Manager, Hays Life Sciences, Hungary, gives a breakdown of the key factors that influence recruitment in the sector.

18

WWW.BBJ.HU

3

Budapest Business Journal | Oct 04 – Oct 17

Pharmaceutical manufacturers

3

ZZZ VDQRĂ€ KX

TEVA GYĂ“GYSZERGYĂ R ZRT

326,702

212,962

188,438

www.teva.hu

4

EGIS PHARMACEUTICALS PUBLIC LIMITED COMPANY[1]

Âť

Âť

Âť

YEAR ESTABLISHED NO. OF FULL-TIME EMPLOYEES ON SEPT. 1, 2013

2

SANOFI

www.richter.hu

OWNERSHIP (%) HUNGARIAN NONHUNGARIAN

TOP LOCAL EXECUTIVE CFO MARKETING DIRECTOR

ADDRESS PHONE FAX EMAIL

–

1923 10,982

MNV Zrt (25), Investors (13) Investors (62)

Erik Bogsch – –

1103 Budapest, *\|PUĹƒL ~W ² (1) 431-4000 (1) 260-6650 posta@richter.hu

Âť

6DQRĂ€ $YHQWLV Europe, France

1996 283

CHINOIN Gyógyszer Ês VegyÊszeti TermÊkek Gyåra Zrt (100) –

Christophe Gourlet – –

1045 Budapest, Tó utca 1–5.

(1) 505-0055 (1) 505-0060 –

Âť

TEVA Pharmaceutical Industries Inc, Israel

Betadin, Lidocain, Reparon, Halixol, Jovital, Cralex

Âť

Egis GyĂłgyszergyĂĄr Nyrt, Hungary

1991

Âť

Âť

Bayer AG, Leverkusen

NO. OF PRODUTS IN HUNGARY

1

RICHTER GEDEON NYRT

NET REVENUE FROM PHARMACEUTICAL PRODUCTION IN HUNGARY (HUF MLN) IN 2012

COMPANY WEBSITE

TOTAL NET REVENUE (HUF MLN) IN 2012

RANK

Ranked by total net revenue in 2012

MAJOR THERAPEUTIC AREAS

MOST POPULAR DRUGS WITHOUT PRESCRIPTION

Âť

Allergies, cardiovascular disease, sclerosis multiplex, painkillers

Kalmopyrin, Panangin, Daedalon, Dipankrin

Âť

Diabetes, oncology and rare diseases, vaccines, generic products

$OJRĂ H[ $OOHUJUD Bila-git, No-Spa, 1RUPDĂ RUH 5KLQDWLRO Rubophen

Âť

Cold, stomach and intestinal diseases, internal medicine, allergy, ophthalmology, urology, hemorrhoids, memoria increase, vitamins

Revalid, Eurovit

132,825

Âť

531

Central nervous system disorders, cardiovascular diseases, respiratory diseases

42,390

Âť

Âť

Âť

Âť

ADHD, painkiller, psoriasis, DXWLVP IXQJDO LQIHFWLRQV UHĂ X[ bipolar disorders, myeloma, schizophrenia, anemia

Âť

Âť

Cardiovascular disease, cancer, ophthalmology, organ transplantation, central nervous system disorders, musculoskeletal diseases, respiratory diseases

Mebudain, Otrivin, NeoCtiran, Fenistil, Lamisil, Voltaren, Nicotinell, Venoruton

MAJOR EXPORT MARKETS

PARENT COMPANY NAME AND HQ

Âť

1992 2,513

BAYER HUNGĂ RIA KFT www.bayerhungaria.hu

6

JANSSEN-CILAG KFT

7

NOVARTIS HUNGĂ RIA KFT

www.janssen-cilag.hu

42,222

37,420

www.novartis.hu

8

9

ROCHE HUNGARY KFT www.roche.hu

PFIZER PHARMACEUTICALS TRADE KFT

32,131

32,088

Âť

Âť

Âť

Istvån Hodåsz Låszló Marosffy –

1106 Budapest, .HUHV]W~UL ~W ² (1) 803-5555 (1) 803-5511 mailbox@egis.hu

Âť Âť

Âť Âť

Gerhard Waltl Krisztina Kårpåti –

1123 Budapest, AlkotĂĄs utca 50.

(1) 487-4100 (1) 212-1574 info.bayhun@bayer–ag.de

Âť

Johnson & Johnson International Financial Services Company, Ireland

2004 86

– Johnson & Johnson International Financial Services Co (100)

Andreas Woitossek – –

2045 TĂśrĂśkbĂĄlint, TĂł park (1) 884-2858 (1) 884-2939 janssenhu@its.jnj.com

Âť

Novartis International AG, Switzerland

1991 188

– Novartis International AG (31), Novartis Pharma AG (69)

Bernhard Ecker, Daniella Vukovich – –

1114 Budapest, %DUWyN %pOD ~W ² (1) 457-6500 (1) 457-6600 infoph.hungary@novartis.com

Âť

F. Hoffman La Roche Ltd, Switzerland

1996 149

– Roche Finanz AG (100)

PÊter NÊmeth Istvån NÊmeth –

2040 BudaĂśrs, Edison utca 1.

(23) 446-800 (23) 446-860 info@roche.hu

3Ă€]HU ,QF 86$

1991 148

– 3À]HU Luxembourg SARL (100)

Gabriela Bodea – –

1123 Budapest, AlkotĂĄs utca 53.

(1) 488-3700 (1) 488-3717 LQIR#SĂ€]HU KX

1993 213

– 6HWÀUVW /WG

Alison Farquhar, Istvån Kiråly, Krisztiån Makkai – –

1124 Budapest, CsĂśrsz utca 43.

(1) 225-5300 (1) 225-5302 info.hungary@gsk.com

– Merck International GmbH (100)

Tibor Meisel – –

1117 Budapest, Október huszonharmadika utca 6–10.

(1) 463–8100 (1) 463-8174 merck@merck.hu

– Abbott Investments Luxembourg Sarl (100)

Lórånt Mårton Pance – –

1095 Budapest, Lechner Ă–dĂśn fasor 7.

(1) 465-2100 (1) 465-2199 info@abbott.hu

Âť

Âť

Âť

Âť

Âť

Smoking, COPD, glaucoma, prostatic hypertrophy, cancer, cardiovascular diseases, metabolic diseases, migraines, candida, anxiety

Âť

Vaccinations, infections, treatment of central nervous system and respiratory diseases

Flexagil, Nasivin

Âť

Merck AG, Germany

1991 114

Âť

Âť

Abbott Laboratories, 86$

1996

ZZZ SĂ€]HU KX

10

11

GLAXOSMITHKLINE KFT www.gsk.hu

MERCK KFT www.merck.hu

20,132

Âť

16,218

Âť

Âť

Cancer and neurodegenerative diseases, infertility, endocrine and metabolic disorders, cardiovascular diseases

16,080

Âť

Âť

IBS, chronic pancreatitis, dyslipidemia, coronary artery disease, high blood pressure, heart rate, dizziness, depression

ABBOTT LABORATORIES 12 HUNGARY KFT www.abbott.hu

Âť

Âť

Coldrex, Panadol

4042 Debrecen, 3DOODJL ~W (52) 515-100 – –

Institution, individuals (49.09) ATP (Servier) (50.91)

www.egis.hu

5

TEVA Magyarorszåg Zrt Låszló Szabó (99.28) – TEVA – Pharmaceuticals Europe B.V (0.28), Other (0.44)

Âť

Âť

6HWĂ€UVW /WG England

Âť

WWW.BBJ.HU

ASTRAZENECA KFT

15

LILLY HUNGĂ RIA KFT

www.astrazeneca.hu

www.lilly.hu

AMGEN GYĂ“GYSZER16 KERESKEDELMI KFT

MAJOR THERAPEUTIC AREAS

YEAR ESTABLISHED NO. OF FULL-TIME EMPLOYEES ON SEPT. 1, 2013

14

www.ceva.com

NO. OF PRODUTS IN HUNGARY

CEVA-PHYLAXIA ZRT

NET REVENUE FROM PHARMACEUTICAL PRODUCTION IN HUNGARY (HUF MLN) IN 2012

13

TOTAL NET REVENUE (HUF MLN) IN 2012

RANK

COMPANY WEBSITE

OWNERSHIP (%) HUNGARIAN NONHUNGARIAN

13,579

Âť

Âť

Veterinary products

Âť

France, Romania, Slovakia, Poland

Ceva Sante Animale, France

1991 417

– Ceva Sante Animale (100)

Thierry Le Flohic – –

1107 Budapest, SzĂĄllĂĄs utca 5.

(1) 262-9505 (1) 260-3889 ceva-phylaxia@ceva.com

13,234

Âť

Âť

Âť

Âť

Âť

Astra Zeneca Continent B.V, Holland

1994 130

– AstraZeneca Continent B.V (100)

Jennifer Winter – –

1113 Budapest, %RFVNDL ~W ² (1) 883-6500 (1) 883-3336 –

Âť

Central nervous system diseases, diabetes, osteoporosis, cancer, cardiovascular diseases,

Âť

Eli Lilly and &RPSDQ\ 86$

1991 72

– Eli Lilly Nederland B.V (100)

Szinisa Gyuricsin – –

1075 Budapest, Madåch Imre utca 13–14.

(1) 328–5100 (1) 328–5101 web_hungary@lilly.com

– AMGEN Worldwide Holdings B.V (96.70), AMGEN Europe GmbH (3.30)

Christopher Ian McKinlay – –

1054 Budapest, SzabadsĂĄg tĂŠr 7.

(1) 354-4700 (1) 354-4701 info@amgen.hu

12,415

9,926

www.amgen.co.hu

Âť

Âť

Âť

18

HUMAN BIOPLAZMA KFT www.humanked.com

XELLIA KFT 19

BRISTOL–MYERS 20 SQUIBB KFT

Âť

Âť

$0*(1 ,QF 86$

8NUDLQH Romania, Russia, Slovakia, Belarus

BĂŠres GyĂłgyszergyĂĄr Zrt

1989 310

Âť Âť

Ferenc Major Miklós Nagy –

1037 Budapest, Mikoviny utca 2–4.

(1) 430-5500 (1) 250-7251 info@beres.hu

Italy, Latvia, Germany, Romania

Kedrion SpA, Italy

2007 174

– Kedrion SpA (100)

PÊter Kinczel – –

*|G|OOĹƒ TĂĄncsics M. utca 80.

(23) 532-200 – –

Âť

Xellia Pharmaceuticals, Denmark

1992 149

– Xellia Pharmaceuticals ApS (100)

Attila Mile – –

1107 Budapest, SzĂĄllĂĄs utca 3.

(1) 260-4130 (1) 262-4059 info.hu@xellia.com

– BMS Holdings Sarl (99.90), Bristol-Myers Squibb Latin American Nominees L.L.C (0.10)

'H]VĹƒ 0iUWKD Vilem Zvonicek –

1024 Budapest, /|YĹƒKi] XWFD (1) 301-9700 (1) 301-9701 mg_pri_info_hungary@ bms.com

Âť

Âť

+HPRSKLOLD LPPXQH GHĂ€FLHQF\ diseases, infectious diseases research and cure

–

Âť

Âť

Âť

Âť

6,057

Âť

Âť

Alzheimer's disease, diabetes, cancer, obesity, arteriosclerosis/thrombosis, hepatitis, HIV/AIDS, rheumatoid disease, organ rejection

5,200

5,200

234

Anesthesiology, intensive therapy, surgery, internal medicine, nephrology, hepatology

Laevolac, Kabi Glutamine

Âť

Fresenius Kabi AG, Germany

Âť

Âť

–

1993 112

Individuals (100) –

Balåzs Antal BÊla Tettamanti –

1044 Budapest, 0HJ\HUL ~W (1) 233-0661 (1) 233-0661 –

–

Fluart S.R.L, Romania

1991 68

– (100)

'H]VĹƒ 1DJ\ – –

3LOLVERURVMHQĹƒ )Ĺƒ XWFD (20) 419-7030 (26) 536-051 info@omninvest.hu

Âť

Boehringer Ingelheim RCV GmbH & Co. KG, Austria

– Boehringer Ingelheim International GmbH (100)

Andreas Barner – –

1095 Budapest, Lechner Ă–dĂśn fasor 6.

(1) 299-8900 (1) 299-8901 info@ bud.boehringer-ingelheim.com

1,945

Âť

Âť

Allergies, sleep disorders, depression, painkillers, feantipyretic, cold, thyroid disease, cardiovascular disease, prostatic hypertrophy, tuberculosis, vitamins

1,569

Âť

Âť

,QĂ XHQ]D YDFFLQH

–

Âť

Cardiology, pulmonology, neurology, diabetology, veterinary medicines

Buscopan, Dulcolax, Mucoangin, Pharmaton, Venastat

OMNINVEST KFT

BOEHRINGER INGELHEIM RCV GMBH & NR CO KG BRANCH OFFICE

ADDRESS PHONE FAX EMAIL

Âť

6,979

Âť

TOP LOCAL EXECUTIVE CFO MARKETING DIRECTOR

2003 38

Immune strengthening, vitamins

www.expharma.hu

23 www.omninvest.eu www.omninvest.hu

Âť

60

FRESENIUS KABI

EXTRACTUMPHARMA GYÓGYSZERGYà RTÓ, 22 FORGALMAZÓ ÉS SZAKTANà CSADÓ ZRT

PARENT COMPANY NAME AND HQ

Âť

www.bms.hu

21 HUNGARY KFT www.fresenius-kabi.hu

MAJOR EXPORT MARKETS

7,515

6,751

www.xellia.com

MOST POPULAR DRUGS WITHOUT PRESCRIPTION

BĂŠres Csepp Extra, Actival product group, C-vitamins, 3RUFHUĹƒ )257( 6]HPHUĹƒ )257( MagnĂŠzium+B6, ProBio6, CalciviD, Trinell Pro

BÉRES 17 PHARMACEUTICALS ZRT www.beres.hu

19

3

Budapest Business Journal | Oct 04 – Oct 17

Âť

Âť

www.boehringer-ingelheim.hu

Âť

BMS Holdings Sarl, France

2001

1991 40

– Fresenius Kabi Austria GmbH (98), Fresenius Kabi AG (2)

Éva Judit Tajthy Tímea Nagypål –

1025 Budapest, 6]pSY|OJ\L ~W (1) 250-8371 (1) 250-8372 info@fresenius-kabi.hu

Âť

2008

Âť

NOTES: (1) Data of business year October 1, 2011-September 30, 2012.

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

This list was compiled from responses to questionnaires received by September 30, 2013 and publicly available data. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time.

While every effort is made to ensure accuracy and thoroughness, omissions and typographical errors may occur. Additions or corrections to the list should be sent on letterhead to the research department, Budapest Business Journal, %XGDSHVW 0DGiFK ,PUH ~W ² RU ID[HG WR 7KH UHVHDUFK GHSDUWPHQW FDQ EH FRQWDFWHG DW UHVHDUFK#EEM KX

20

3

WWW.BBJ.HU

Promotion

Budapest Business Journal | Oct 04 – Oct 17

AGAINST ALL ODDS There is one car manufacturer that has not only managed to overcome the difficulties the industry has experienced, but due to a global reorganization of its activities and launching a global model portfolio, has been achieving soaring results since the peak of the crisis.

T

he Hungarian automotive industry, like the global industry itself, saw a serious decline in 2009 as a result of the economic crisis. While, however, the recovery was relatively quick in other parts of the world – in the United States, South America and Asia – in Europe, and particularly in Central and Eastern Europe, it has been a much slower process. Though the situation is far from ideal in the States, after a huge drop in 2008 the industry is close to reaching the 16 million units’ level of that year once again in 2013.

China, in the meantime, has been booming, not only overtaking the USA and Europe, but reaching record heights (with close to 21 million units expected this year), securing its position as the world’s number one

more mature markets of Western Europe), the countries have lacked the economical potential of their Western counterparts.

In Hungary, the situation was further complicated by the high proportion of vehicles purchased on long maturity foreign exchange loans (that have turned out to be significantly unfavorable for the debtors), thus few were surprised when the market dropped. The extent of that decline, however, was shocking even for the experts: from close to 177,000 units in 2008 the industry fell to 72,000 units in 2009, the low point being 55,000 units in 2010, with the market expected to have bounced back to 76,000 units this year.

There is one car manufacturer, however, which – though it was facing significant difficulties in 2006 – has not only managed

instead of capacity. This company, which this year celebrates the 150th anniversary of the birth of its founder, and the 100th anniversary of putting the world on wheels with the beginning of mass production of its famous Model T – designed by the Hungarian engineer, József Galamb –, is called the Ford Motor Company.

The company has returned to its basic foundations from 110 years ago: it was doing something different to the others, as at that time the automobile was the privilege of the rich, while Henry Ford dreamed of becoming a mass manufacturer, providing mobility for the everyday people. Today, Ford has sold off its premium brands (with the exception of Lincoln in the USA), which had included Aston Martin, Jaguar, Land Rover and Volvo, and even terminated its sub-premium brand, Mercury; the company is redefining itself as a high-end mass-manufacturer, focused on its core Ford brand, making technologies and services formerly offered only by premium manufacturers (and sometimes not even by them) available to everybody, investing to an unprecedented extent in technology, research and future developments.

Has it paid off? It is enough to say that, besides being one of the few solidly profitable car manufacturers since the crisis, constantly growing its market share, increasing sales in all of its business regions, and introducing more than 10 brand-new vehicles in the last two years just in Europe, with still more to come, Ford

THE COMPANY IS AWARE, THOUGH, THAT WHILE KEEPING ITS LEAD IN THE FLEET MARKET IS ESSENTIAL, THE REAL GROWTH WILL COME FROM THE RETAIL MARKET, ONCE IT RECOVERS IN HUNGARY automotive market, with further continuous growth potential (reaching 25 million units as soon as by mid-decade, but at the latest by 2020 according to some more moderate forecasts). Other markets have shown steady growth too, such as India, Brazil, and Russia, soon to become Europe’s largest automotive market. In Europe itself though, the market has been in continuous decline since 2008, despite the scrappage programs introduced in numerous countries, with this year expected to be the turning point at 13.5 million units.

The situation after the crisis was particularly severe in the Eastern European countries where, though being growing markets (thus in theory having much greater growth potential than the

to overcome these, but due to a global reorganization of its activities, and the launch of a global model portfolio, has been achieving soaring results just at the peak of the crisis, securing record profits quarter after quarter (reaching its 16th consecutive quarter of profitability in Q2 2013, with the next one on the doorstep in Q3), becoming the only U.S. manufacturer to avoid government bailout.

This manufacturer was not only bold enough to make the necessary production capacity restructuring and reduction to match demand, it even increased investments in developments and accelerated the introduction of new models and revolutionary technologies, when most competitors were slowing investments

has collected an unheard-of number of professional acknowledgements in the last two years, not to talk about the numerous sales records achieved by its models.

Professional journalists seem to be won over by Ford’s products and technologies, of which the recent international prizes collected by the company provide a clear proof: seven Euro NCAP Advanced prizes have been picked up by various Ford models for their active safety systems and revolutionary technologies, the Ford Ranger has been chosen International Pickup of the Year 2013, the Ford Transit Custom has been chosen International Van of the Year 2013, the Ford Transit Connect is International Van of the Year 2014 (with Ford being the only manufacturer ever

receiving the title in two consecutive years), the company’s 1-liter EcoBoost engine has won the International Engine of the Year title in 2012 and 2013, and the Ford B-Max received the AUTOBEST 2013 award, just to mention a few of the more prestigious awards secured by the company.

In the meantime, in 2011 and 2012 Ford was the only manufacturer to have three models among the ten most popular cars in the world, a feat likely to be repeated this year, with the Focus being the most popular car in the world, the Fiesta being the most popular subcompact, and the F-series being the most popular pickup for the last two years.

The company’s global successes are echoed regionally as well: Fiesta, Europe’s second most popular car, is the clear leader

WWW.BBJ.HU

3

Budapest Business Journal | Oct 04 – Oct 17

Promotion 21

www.ford.hu

of its segment in the continent, as are the Fiesta ST, Focus ST and B-Max. And what of the local picture? Just as was the case globally, in Hungary Ford really began to soar just at the peak of the crisis, achieving market leader position in the Hungarian passenger car and commercial vehicle market in 2008 and holding it ever since (it has actually lost it only for a few months in the last five years, but regained it just as quickly). Ford has traditionally been very strong in the Hungarian fleet market, which proved to be vital for keeping and further strengthening its market position when the retail market began its long nose-dive in 2009, and still is: in the first eight months of 2013, 73.9% of the market was fleet sales.

Another great advantage for Ford is its traditionally strong commercial vehicle portfolio (currently under complete renewal, the first new models being the International Pickup of the Year awardwinning Ranger and the International Van of the Year winning Transit Custom and Transit Connect, with the new Transit Courier and all-new Transit coming early next year); commercial vehicle sales have been less affected by the crisis. Between January and August 2013, Ford has been the market leader in the Hungarian passenger car and commercial vehicle markets, selling a total of 4,837 vehicles (69% passenger cars, 31% commercial) achieving a market share of 10.6%, and leading by 624 units – more than a month’s sales – from its nearest competitor.

The company is aware, though, that while keeping its lead in the fleet market is essential, the real growth will come from the retail market, once it recovers in Hungary. It is confident, however, that its continuous investments, and the wave of new models and technologies, will give it an advantage and help it grow faster when the recovery comes, which doesn’t seem to be unfounded, given the shower of professional prizes, and the success among retail customers achieved by its models.

What is the secret then, if there is any? Well, some might call it a secret, some would simply say strategic planning, namely the One Ford strategy, introduced by Alan Mulally, Ford’s CEO since 2006, an outsider who came from the aviation industry with a vision for restructuring the company,

and introducing a global model strategy, to benefit from the global assets of the company. The four pillars of the strategy have been: Aggressively restructure to operate profitably at the current demand and changing model mix; Accelerate the development of new products that customers want and value; Finance the plan and improve the balance sheet; Work together effectively as one team, leveraging Ford’s global assets.

Well, it is definitely an exciting journey that the company has been undertaking, and it will be interesting to witness it ‘Go Further’ in achieving its ‘One Team, One Plan, One Goal, One Ford’ target.

22

Focus: Wealth management

WWW.BBJ.HU

Budapest Business Journal | Oct 04 – Oct 17

PRIVATE BANKING ASSETS KEEP GROWING Private banking service providers had an exceptionally good first half year between January and June. According to a periodical survey by the portfolio.hu website, assets under management grew by HUF 184 billion (or 7.7%) to HUF 2,574 bln, a rate rarely seen; in the whole of 2012 the sector grew by the same amount.

KRISZTIÁN KUMMER

While overall wealth growth was impressive among private banking asset managers, individual numbers shows great differences. Citibank’s managed wealth grew by 9% over 12 months, while CIB Bank registered only a 3% wealth increase among its clientele, due to the practice that many private clients

STORY HIGHLIGHTS ■

Private banking assets had a very good H1 in 2013 ■ Investors turn towards tax free longterm investments

will plow substantial fortunes back into their businesses to provide the neces− sary resources for daily operations.

WELCOME BACK RISKY INVESTMENTS During the recent period, investors met lower yield potential than they had been used to, and had to make decide whether to undertake a higher risk to earn higher yields. By now, the tendency is clear, as many clients have moved from safer invest− ments in search of higher returns. The role of active mutual funds investing in corpo− rate bonds and riskier instruments is clearly appreciated and customers are looking for them constantly. That said, demand for gov− ernment securities also witnessed a signifi− cant increase, partly due to yield premiums in certain maturities and partly due to the 6% healthcare contribution (hcc) introduced

ADVERTISEMENT

on investment returns, which government bonds are exempted from.

LONG-TERM INVESTMENTS The new tax has once again turned inves− tors’ interest towards the so−called long− term investment account, where taxes could legitimately be avoided, and not just the above−mentioned hcc, but also the 16% personal income tax. Of course, long−term investments need a strategy to determine the amount of money that we would like to invest for at least five years.

“The new burden on interest incomes increases the popularity of longer term investments and savings,” said Sándor Szabó, private banking director of K&H. “In addition to the direct benefits, provid− ers can keep clients for many years this way, as moving a long−term investment account is quite difficult.”

SAVING THE SAVINGS The tax burden on investment income has grown significantly in recent years, but Hungarian private bank− ing service providers are cautious when it comes to foreign investments.

Budapest Bank informed all clients of the possible effects of the hcc intro− duction, but didn’t advise them to open accounts in foreign countries directly, and neither does K&H. Citi followed a similar line, but its clients can “take advantage of the services of Citi International Personal Bank through the Citigold Select Center in Budapest,” explained Péter Somo− gyi, head of retail investment prod− ucts. “This includes opening a for− eign account in London and gaining access to a wide variety of instru− ments all around the world.”

WWW.BBJ.HU

Promotion 23

Budapest Business Journal | Oct 04 – Oct 17

GEORGIA OPENING TO EUROPE country interpretation and implementation), as we have invested heavily in compliance, transparency and accountability procedures.

Moreover, we are a very conservative bank, operating in probably one of the least globalized economies in the world, which allows us to grow at a minimum with local GDP growth trends. New regulations will only make us more vigilant and more accommodating to the changing business environment and help us avoid making mistakes. Having said the above, I think Hungary is in need of comprehensive banking sector reform, which would allow the banks to increase lending, and finance economic growth.

It has been a full year since Bank of Georgia opened its representative office in Budapest.

The bank’s Representative in Eastern Europe, Irakli Rekhviashvili, explains the company’s goals and expectations for the future.

Q: TELL US A LITTLE ABOUT BANK OF GEORGIA. A: Over the past few years, Bank of Georgia has been lucky enough to benefit from the strong economic growth in the Caucasus region. As the largest bank in Georgia by assets, loans, and client deposits, we were able to grow steadily with our share price increasing 68% since premium listing on the London Stock Exchange. In 2012, year-to-year revenue was up 21.9%, profit was up 32.3%, total assets under management reached $3.5 billion, and the loan book grew by 18.2%. High standards of transparency and governance, as well as a strong total capital ratio, allowed us to be the only Georgian company with credit ratings from all three global rating agencies – S&P, Moody’s, and Fitch Ratings – and stable outlooks. It is indeed a rare success story in the banking industry, but we were able to benefit from strong liberal reforms, a stable business environment and a credible fiscal and monetary framework.

The most fascinating part of this story is that, going forward, the outlook is even more optimistic: peaceful transition of power, bipartisan support of constitutional changes from a balanced parliament and improving ties with the Russian Federation.

Q: IT HAS BEEN A YEAR SINCE BANK OF GEORGIA OPENED ITS HUNGARIAN

SUBSIDIARY. WHAT ARE YOUR EXPERIENCES? A: Bank of Georgia has a representative office in Budapest with a limited mandate to promote our wealth and asset management, as well as investment advisory services in all EU member states. Positioning Bank of Georgia as a financial gateway to the Caucasus and delivering investment opportunities to European clients is in line with our strategic vision. Our time deposits, certificates of deposits and promissory notes offer very high yet secure returns to our clients and finance economic growth in the region.

From our Georgia HQ we are also offering direct private banking services to European clients and Visa Infinity Card and American Express Centurion Card services, which allows our clients to access deposits in up to 14 currencies under one bank card.

Q: WHAT IS THE TARGET OF BANK OF GEORGIA’S BUDAPEST OFFICE? A: We established a representative office in Hungary because we believe in the growth potential of the Hungarian economy, but we have not yet entered into a business transaction, and continue to provide private banking services to our European clients from Georgia. As a next step, we are interested to invest in express payment business development in Hungary, and have

ADVERTISEMENT

Bank of Georgia

is the leading bank in Georgia, with more than a third of the market share based on total assets, total loans, total deposits and total shareholders’ equity. The bank offers a broad range retail banking, corporate banking, wealth management, brokerage and insurance services to its clients. Bank of Georgia’s UK incorporated holding company Bank of Georgia Holdings PLC is listed on the main market of the London Stock Exchange (BGEO:LN) and is FTSE 250 company. Bank of Georgia remains to be the only Georgian entity to be rated by all three global rating agencies: ‘BB-/B’ from Standard & Poor’s, ‘B1/NP’ (FC) & ‘Ba3/NP’ (LC) from Moody’s and ‘BB-/B’ from Fitch Ratings. In 1H 2013 Bank of Georgia reported a record half-year profit of GEL 95.1 million (US$ 57.6 million) or record earnings per share of GEL 2.70 (US$ 1.64 per share).

Bank of Georgia’s Investment Management business with representative offices in Tel Aviv, London and Budapest, currently serves over 1,445 clients from more than 60 countries. Client funds attracted by Investment Management have grown at a CAGR of 55.1% over the last four year period to GEL 624.2 million as of 30 June 2013.

13. Investment Management ensures individual approach and exclusivity in offering deposit products and private banking nking services to its clients. In addition, Investment Management ment provides services through a wide range of investment opportunities and specifically designed investment products.

even submitted a bid to install an automated transport fare collection system for Budapest Transport company, integrating it into our BOG installed contactless card and cash express payment infrastructure.

If our involvement in the express payment business is successful, we will look further to build a retail and corporate banking business in the country.

Hungary’s government is widely criticized for the high level of sectoral taxes on the finance industry and the unpredictability of its policymaking. How does this affect you and what are your observations about the regulatory environment in Hungary?

As a representative office we are not conducting business transactions in Hungary.

If you are referring to the banking sector, then I think the regulations are affecting banks throughout the European continent and in the United States. Hungary is not an exception. New EU regulation on prudential requirements for credit institutions and investment firms may become a game changer, but we feel moderately comfortable with the rules (pending their country-by-

Q: WHERE DO YOU SEE THE MAIN POINTS OF EXPANSION IN HUNGARY, PROVIDED THAT RETAIL CLIENTS’ PURCHASING POWER IS MUTED AND LENDING IS LOW IN THE CORPORATE SECTOR WITH OVERALL ECONOMIC STAGNATION PROJECTED FOR 2013, AND A REBOUND PROJECTED ONLY NEXT YEAR? A: I think Hungary is oversold, which basically means that the price of the underlying assets (be it real estate, or local businesses) has fallen sharply, and to a level below that where its true market value resides. This is generally interpreted as a sign that the price of the asset is becoming undervalued and may represent a buying opportunity for investors. So I would say Hungary is far from being unattractive for investors. I do think problems lie in the Hungarian corporate sector’s ability to raise financing, the red tape, and the complicated taxation system. In my opinion, better and more efficient administration, fewer (rather than lower) taxes, a properly motivated and incentivized work force, and restored investor confidence is the way to go forward. It’s easy to say and much harder to deliver, but Hungary is not a very large country and it does have the necessary intellectual resources and the entrepreneurship culture to pull it off.

24

WWW.BBJ.HU

Focus: Wealth management

Budapest Business Journal | Oct 04 – Oct 17

Commercial banks

[1]*

1

OTP BANK NYRT

2

ERSTE BANK HUNGARY ZRT

www.otpbank.hu

6,471

77,830

1,036,484

382

9

PRIVATE BANKING SERVICE LIMIT (MLN HUF)

PRIVATE BANKING

NO. OF BANK BRANCHES IN HUNGARY IN SEPT. 2013

EQUITY (HUF MLN)

PRE-TAX PROFIT IN 2012 (HUF MLN)

COMPANY WEBSITE

TOTAL ASSETS IN 2012 (HUF BLN)

RANK

Ranked by total assets in 2012

4

K&H BANK ZRT www.kh.hu

MKB BANK ZRT www.mkb.hu

5

CIB BANK ZRT

6

RAIFFEISEN BANK ZRT

7

UNICREDIT BANK HUNGARY ZRT

www.cib.hu

www.raiffeisen.hu

Âť

Fabrizio Centrone

1027 Budapest, Medve utca 4–14.

(1) 423-1000 (1) 489-6500 cib@cib.hu

2,392

– Raiffeisen-RBHU Holding GmbH (100)

Heinz Wiedner

1054 Budapest, AkadĂŠmia utca 6.

(40) 484 -848, (1) 484-8484 (40) 484-4444 info@raiffeisen.hu

MihĂĄly Patai

1054 Budapest, SzabadsĂĄg tĂŠr 5-6.

(1) 301-1271 (1) 353-4959 info@unicreditgroup.hu

GyĂśrgy Zolnai

1138 Budapest, VĂĄci Ăşt 193.

(1) 450-6000 (1) 450-6001 info@budapestbank.hu

219

9

100

Dedicated contact person, unique and exclusive products, discount card

2,119

–60,935

110,269

125

9

50

9

BUDAPEST BANK NYRT www.budapestbank.hu

CITIBANK EUROPE PLC. MAGYARORSZĂ GI FIĂ“KTELEPE

Âť

Âť

Âť

70

Target return property management, investment advice, art banking, newsletters, Platina credit card, tax advice, internet brokering, exclusive professional and entertainment events

880

– UniCredit Bank Austria AG (100)

3,365

– GE Capital International Financing Corp.

(100)

Âť

– Citibank Holdings Ireland Ltd. (100)00

Ahmed Aftab

1051 Budapest, SzabadsĂĄg tĂŠr 7.

(1) 374-5000 (1) 374-5100 citibankmagyarorszag@citi.com

Axel Hummel

1088 Budapest, RĂĄkĂłczi Ăşt 7.

(1) 328-6666 (1) 328-6660 volksbank@volksbank.hu

SoltĂŠsz GĂĄbor *HUJĹƒ

1082 Budapest, hOOĹƒL ~W (40) 344-344 (1) 329-0992 fhb@fhb.hu

1,687

37,098

169,804

129

9

100

Investment advice, development of Global Investment Strategy

908

13,592

121,459

103

9

25

Investment advice, treasury services, participation in professional events, exclusive relations with the Budapest $ODSNH]HOĹƒ SURIHVVLRQDOV

www.unicredit.hu

8

1095 Budapest, Lechner Ă–dĂśn fasor 9.

(1) 328-9000 (1) 328-9696 bank@kh.hu

– Intesa Sanpaolo Holding International S.A. (67.70), Intesa Sanpaolo S.p.A. (32.30)

182,674

9

Hendrik Scheerlinck

PĂĄl SimĂĄk

41,053

104

1138 Budapest, 1pSI UGĹƒ XWFD ² (40) 555-444 (1) 373-2499 uszolg@erste.hu

Âť

2,470

175,556

Jelasity RadovĂĄn

1056 Budapest, VĂĄci utca 38.

(1) 327-8600 (1) 327-8700 telebankar@mkb.hu

50

–127,922

1051 Budapest, NĂĄdor utca 16.

(1) 473-5000 (1) 473-5955 informacio@otpbank.hu

– Bayerische Landesbank (98.56), Other (0.05), P.S.K. Beteiligungsverwaltung GmbH (1.39)

9

2,157

SĂĄndor CsĂĄnyi

– KBC Bank N.V (100)

135

9

Âť

Individuals and companies (22.10), Hungarian State (5), Own shares (1.30), Employees (1.80) Individuals and companies (63), Others (6.80)

980

160,416

83

ADDRESSN PHONE FAX EMAIL

2,200

–11,063

118,999

TOP LOCAL EXECUTIVE

– EGB Ceps Holding GmbH (100)

2,761

–88,122

OWNERSHIP (%) HUNGARIAN NON-HUNGARIAN

Âť

Target return strategy discretionary portfolio management, custom-tailored solutions, organizing professional and entertaining events, consulting

2,308

NO. OF PRIVATE BANKING TENANTS

20

www.erste.hu

3

PRIVATE BANKING SERVICES

Âť

Âť

745

13,189

6,993

23

9

550

–18,490

19,155

52

9

Âť

Âť

Âť

– Sberbank Europe AG (98.93)Tßrkiye Halk Bankasi (1.07)

433

–3,805

31,293

–

9

20

Âť

Âť

FHB Jelzålogbank Nyrt. (100) –

Levente SzabĂł

1122 Budapest, PethĂŠnyi kĂśz 10.

(1) 202-3777 (1) 356-2649 info@tbank.hu

IstvĂĄn SalgĂł

1068 Budapest, DĂłzsa GyĂśrgy Ăşt 84B (1) 268-0140, (1) 235-8700 (1) 268-0159, (1) 269-6447 ing@ing.hu

www.citibank.hu

MAGYARORSZĂ GI 10 VOLKSBANK ZRT www.volksbank.hu

11

FHB KERESKEDELMI BANK ZRT www.fhb.hu

MAGYAR TAKARÉKSZÖVETKEZETI 12 BANK ZRT

390

695

15,473

–

9

20

Âť

Âť

Savings cooperatives (49), Hungarian State (51) –

356

10,157

43,645

1

–

–

Âť

–

– ING Bank N.V. (100)

Âť

– Commerzbank Auslandsbanken Holding AG (100)

AndrĂĄs Kozma

1054 Budapest, SzĂŠchenyi rakpart 8.

(1) 374-8100 (1) 269-4574 info.budapest@commerzbank. com

Laurent Poiron

1051 Budapest, SzÊchenyi Istvån tÊr 7–8.

(1) 374-6300 (1) 269-3967 info.hu@bnpparibas.com

Irakli Rekhviashvili

1054 Budapest, SzabadsĂĄg tĂŠr 7.

(1) 30-510-0945 – rekhvias@bog.ge

www.takarekbank.hu

13

ING BANK N.V. MAGYARORSZĂ GI FIĂ“KTELEPE www.ing.hu

COMMERZBANK ZRT 14 www.commerzbank.hu

15

BNP PARIBAS MAGYARORSZĂ GI FIĂ“KTELEPE

25

Âť

270

1,550

24,941

4

9

210

-6,754

12,043

1

9

Âť

Âť

Âť

–– BNP Paribas S.A (100)

9

100,000 euro

Dedicated Private Banker for managing, telephone and email banking, no fees on account management, private banking services, or monthly maintenance, no fees on Cash Withdrawal worldwide

1,200

– JSC Bank of Georgia (100)

www.bnpparibas.hu

JSC BANK OF GEORGIA MAGYARORSZà GI NR BANKKÉPVISELETE

–

–

–

–

www.bankofgeorgia.ge NOTES: (1) From the database of the Hungarian Financial Supervisory Authority. *With private banking services.

BBJ

5 Socialite PEOPLE ON THE MOVE

BOOK REVIEW

LÁSZLÓ RADVÁNYI

Jack Canfield, Mark Victor Hansen: The power of focus Bubi pedaling onto the home straight

30

PwC Hungary / director

26-27

WHOSE DESIGN IS IT, ANYWAY?

➜ PAGes 28-29

26

WWW.BBJ.HU

5 Socialite

Budapest Business Journal | Oct 04 – Oct 17

BUBI PEDALING ONTO THE HOME STRAIGHT At the end of the summer, the Budapest Center for Public Transportation (BKK) signed a contract with T−Systems Hungary to install and operating a public bike sharing system in Budapest, which is due to start in April 2014. Setting it up has cost HUF 900 million, of which the EU has provided 85%, with the remaining 15% paid by the city of Budapest.

ANDRÁS ZSÁMBOKI

The public tender was announced in February 2014, although almost all the background material necessary for the project – namely the feasibility study, the estimation of costs for the techni− cal equipment and logistics software ADVERTISEMENT

– was ready in 2010. “The reason for the tender’s present announcement is that the current seven−year budgetary term of the EU is drawing to a close, so the sums of EU funding have to be drawn soon,” an official familiar with the tender, but who wished to remain anonymous, told the Budapest Busi− ness Journal.

Rumors, however, suggest that there have been constant negotia− tions in the past three years between Budapest City Hall and district− level municipal politicians, as well as national transportation author− ities, raising support for the Bubi bike−sharing project. “It is not true that the plan was only waiting for someone to press ‘the green but− ton’,” Dávid Vitézy, the head of BKK insisted. “Until 2012, the approval of the individual districts had largely not been obtained, and their approval was indispensable for us to let the spaces designated as bicycle sta− tions,” he explained.

Deputy Mayor István György, in his

WWW.BBJ.HU

5 Socialite

Budapest Business Journal | Oct 04 – Oct 17

bitter struggle BKK has been fighting for national funding has been so far largely in vain, and the present effort to win central funding for the Buda− pest bike rental service is likely to fail as well,” an expert remarked to the BBJ, implying that the source of financing remains unclear in the text of the bill, not to mention the fact that the national government is sim− ply unwilling to finance the Budapest

system of mass transportation. In Par− liament, the planned bike rental sys− tem provoked the toughest criticism from the extreme right. “It is highly questionable whether it is worth start− ing up a system in which the installa− tion costs of each bike will amount to HUF 2 million,” said György Szilágyi, a Jobbik backbencher.

Photo: BKK

capacity as a Member of Parliament, proposed an amendment to the Public Transportation Act last year, accord− ing to which public bikes would also be regarded as a means of public loco− motion. Experts interviewed by the BBJ unanimously explained this mod− ification as an attempt by the city of Budapest to channel funds from the national budget into the operation of the municipal bike rental system. “The

ADVERTISEMENT

A BIKE, ANYONE? According to the announcement of the tender, Bubi is required to make it possible for its users to have access to and operate the bikes without external help, and users should be able to park the bikes at whichever station they wish. There must be at least 75 park− ing stations, the locations of which BKK has already designated. The 15 sq km territory covered by the rental service includes Margaret Island, the entire quay of the Danube on the Buda side including the Déli Railway Sta− tion, and the Central Business District all the way down to Keleti Railway Sta− tion. The bike stations must be estab− lished 300 to 500 meters from each other. At the first stage, more than 1,000 bicycles should be put into oper− ation. Their wheels must all be punc− ture−proof, the bikes must have closed brake systems, and the lights must be able to stay switched on even when the cyclist does not use the pedals. The bikes should be equipped with anti− theft devices, too.

According to a preliminar y feasi− bility study, the first half an hour of

27

bike rental would be free, but then the fee would rise sharply. A one− year bike pass, the issuing of which would be tied to previous registra− tion, would cost HUF 5,000, while for one−time renting one would have to deposit HUF 30,000. At this point, the infrastructure necessar y for mobile phone payment as well as payment with credit and debit cards still has to be installed.

DEVIL IN THE DETAILS Some 15 companies bought the ten− der brochure this spring, but only four made bids. Of those, only two met the evaluation requirements: one came from a consortium led by Eurobus− Invest, the other from a consortium led by T−Systems Hungary. The ten− der was won by T−Systems with a HUF 900 mln bid. Next Bike GmbH, a mem− ber of the consortium, will deliver the logistics software supporting the T−Systems scheme. Next Bike will not, however, participate in operating the rental bike system after 2014; T−Sys− tems and Csepel Bike Manufactur− ing Co., another member of the con− sortium, will perform this task jointly until 2019 for HUF 240 mln per year.

The group led by Eurobus made a HUF 940 mln bid for the creation of the system, with a HUF 340 mln per year charge for operation. Projected over five years, this adds up to a HUF 500 mln difference, which makes BKK’s final choice of T−Systems quite understandable.

28

WWW.BBJ.HU

5 Socialite

Budapest Business Journal | Oct 04 – Oct 17

WHOSE DESIGN IS IT, ANYWAY? Can objects created by a computer or nature qualify as design?

of wooden frames and magnets and hung above the plastic. The created shapes are materialized

selection is rather timely.

Design, just as many fields, has been shaped by other dis−

ZSÓFIA VÉGH

On the screen of an Ipad attached to the wall, visitors are watching amazed the manufac− turing process of a black can− dle holder on display in front of them. With its sharp−edged needles, the exhibit looks like some coral but it may well be melted wax which then hard− ened. In fact, the object is made from the combination of metal and plastic.

The designer of the Gravity Candle Holder Jolan van der Wiel applied basic rules of phys− ics and a magnet to shape his objects. Being intrigued by nat− ural forces “that are all around us and create shapes”, he inves− tigated materials until he came across some experiments in fluid plastic that contained metal par− ticles. Combined with the right type of plastic, metal parts don’t escape, which they usually do if they meet a magnetic field. The designer constructed a machine ADVERTISEMENT

magnetic fields. Pure physics assisted by man.

Crossovers, the main theme of this year’s Budapest Design week, is about boundaries crossed in design. The topic

ciplines. Designers have been lending ideas from architec− ture to biology while giving technology an enhanced role in the process. What has been shaped the most is undoubt−

edly designers’ mind. Under− graduates in design colleges are no longer are ruled by the main material they chose to work with. Instead, they work together and economy or social studies students to pro− vide an object for a problem.

Biosciences and design is an unusual combination for jew− elry. Biomedical engineers, designers and clinicians col− laborated with British designer Tobby Kerridge who combined metal, glass and bone tissue to produce engagement rings.

Bone tissue was cultured in a laboratory, using cells donated by the couples during wisdom tooth extractions. This pairing will probably not become main− stream, it is more of an experi− ment − just like many more of the Crossovers exhibiton.

CAD VS CRAFT Computer−aided design has been around for while. Recently it has seeped into every seg− ment of design. For the new generation of designers, using the tools of the digital era is second nature. Those already on the market for ten years have

no choice but follow. The use of digital aids is also a practical question. If a designer wishes to make ends meet with their pro− duce, they need to embark on something that can be mass− produced but still unique.

The project L’Artisan Electron− ique combines pottery with new digital media. Clay is shaped by a 3D printer and not by hand.

There is no traditional pot− tery wheel yet the resemblance between the artisanal and the computerized method is evident.

Strangely, it is the hands that shape spotless objects, the ones produced by L’Artisan Electron− ique are not impeccable.

But that’s the beauty of it.

In a designing process in which technology is ever more involved, the products of hands often result more perfect. Tech− nology does give tools that allow many to design but is hardly enough. Were a physi− cian to find out about the char− acteristics of the plastic−metal combo used in the Gravity Candle holder, he/she would not have started to craft objects of it. It takes a designer’s mind to do that.

5 Socialite

WWW.BBJ.HU

Budapest Business Journal | Oct 04 – Oct 17

29

INVESTORS WANTED Designers wishing to create need capital. But are they aware of the consequences that come with capital investment?

ZSÓFIA VÉGH

Securing capital to run your business is the ultimate challenge for most designers in Hun− gary and across the globe right now. Hav− ing broken through, many designers are then faced with the difficulty in keeping their busi− ness afloat. Finding and meeting demand are equally hard. First they need customers then, if they are lucky enough to have them, they need to meet growing demand. Manufactur− ing costs are high unless they can produce enough to keep it down. Involving technol− ogy is one answer but, due to the high prices involved, it is out of reach for most.

No wonder investors are warmly wel− comed. Yet the price of involving venture capital is also high. What enterprises stand a chance of attracting investment and what consequences designers should factor in should they be successful was the topic of a half−day lecture at the Budapest Design Week on October 1. In cooperation with the Hungarian Venture Capital and Private Equity Association (HVCA), the business directors of Hungarian design brands and some lawyers told designers what to expect.

Design is a fairly new area for venture capi− talists (IT and biosciences have long been the favorite), so designers should not expect busi− ness people to have any knowledge in what they do. That is why they need to present a solid business plan detailing what they plan to benefit from the process. Investment cycles usually run from four to six years at most, and designers should not be surprised if investors look at the end result instantly. They will want a 25% share at least, and are unlikely to sup− port any business unless they can take a mini− mum of 30−40% profits. Those in need of cash immediately may not find investors the best avenue as money is usually provided after six or eight months.

Investors are little interested in making grand ideas come to life, so entering into an agreement requires a certain business mind.

The designer of Laokoon, Zsuzsanna Szen− tirmai−Joly, who has just returned from Lon− don Fashion Week with a gold medal, found this the hardest part. The creator of moving fabric Szentirmai−Joly said from the moment she agreed upon the terms of investment, every decision she made has come with con− sequences and responsibilities.

But it can also make a huge difference.

Since PortfoLion, a venture capital firm, invested in Nanushka, a fashion apparel brand, figures have multiplied. “Earlier, a sea− son’s collection consisted of 1,000 garments.

Since then, we make 10,000,” said business

DESIGNERS SHOULD NOT EXPECT BUSINESS PEOPLE TO HAVE ANY KNOWLEDGE IN WHAT THEY DO director Györgyi Kocsi. The plan is to make up to 20,000. From roughly 20 countries, the brand has now expanded into more than 30.

Nanushka was the only Hungarian designer brand present in so many countries, one of the reasons why it received the funding.

If managed well, turnover is also likely to increase. The maker of designer concrete goods such as tiles, coverings and furniture, Ivanka has seen a more than 200% increase in turnover from 2011 to 2012. The owner− designers, Katalin and András Ivánka, could build their own concrete factory near Buda− pest and meet heightened demand. (Ivanka was a winner of a tender with a Marcel Wan− ders Hotel, outperforming many international

contenders. “There were examples when cli− ents (a 5−star hotel) had to wait a month for the goods to be shipped,” Katalin Ivánka recalled. Today, shipping to any corner of the world is no longer an issue.”

Beyond demand, and good market poten− tial, the reason why investors opted for these designers was their business mind. The fact that they recognize demand and adjust their design accordingly is a guarantee for inves− tors. Creativity needs to be there as well too.

Once a project/collection is done and they have a break, designers begin to think about the next step. “You always need to be one step ahead,” Szentirmai−Joly noted, or you risk losing market quickly.

ADVERTISEMENT

SZAMOS GOURMET HÁZ MARKS 2ND ANNIVERSARY

T

he newest and most impressive jewel of the Szamos family, the Szamos Gourmet Ház, located in the heart of Budapest on Vörösmarty tér, celebrates the second anniversary of its opening this November.

The café, operating in the former stock exchange palace, is not only a traditional confectionery in an exceptional setting, but also a café with bistro cuisine, and a chocolate manufacturing workshop.

The selection of Szamos Gourmet Ház is much more colorful than that of an average confectionery: it also offers, besides cakes and bonbons, breakfast and lunch. The menu intentionally has a Hungarian tone, but with a touch of lighter – French and Italian – notes. They aim to address both Hungarian and foreign guests. The colorful breakfast offer and the daily lunch menu is not only for those working in the neighborhood: cooking is done at the weekends too.

Szamos follows in the footsteps of a traditional confectionery, creating recipes and tarts from the age of Dual Monarchy.

It does so manually, with traditional tools and without using any additives. Apart from the classic selection, it offers healthconscious products such as low calorie, light French desserts and sweets.

In the bonbon-manufacturing workshop, separated by a glass wall from the shop, chocolate masters make classic and modern creations. Szamos offers them in more than 40 flavors, ranging from traditional truffles to fruity specialties and ganache.

Szamos also operates its own chocolate-making courses in the building. The

The café, with an area of more than 200 square meters, is a popular location for events, receptions, conferences and press conferences.

Szamos Csokoládé Iskola provides the opportunity of making bonbons, tarts, macaroons or candies. There are beginner and advanced courses, held both in

Hungarian and English. Several companies choose the course as a unusual form of team building, and bachelorette parties are also held here.

1052 Budapest, Váci út 1.

Phone: +36 30 570 5973 www.szamosmarcipan.hu www.csokoladeiskola.hu www.facebook.com/SzamosGourmetHaz

30

WWW.BBJ.HU

5 Socialite

Budapest Business Journal | Oct 04 – Oct 17

BOOK REVIEW

THE POWER OF FOCUS Target the only thing that’s holding you back: focus.

The number one problem that stops people getting what they want is a lack of focus. More than 600,000 people across the globe have addressed this issue with the help of ‘The Power of Focus’, a book that shares the focusing strategies used by the world’s most successful men and women. Now, a decade after its original publication, authors Jack Canfield, Mark Victor Hansen and Les Hewitt have reconvened to cre− ate a revised 10th anniversary edi− tion of this influential bestseller.

‘The Power of Focus’ guides the reader through 11 chapters with the aim of eliminating all the things that are holding us back.

The authors begin by helping us identify our bad habits and giv− ing us a strategy to replace these with healthier, more productive ones. They also discuss the mer− its of a range of task management solutions, including the popular ‘4−D’ method (Drop It, Delegate It, Defer It, Do It). In these early stages of the book they encourage

readers to identify their strengths in order to concentrate on the things they do best.

Once those key areas are cov− ered, we turn to goals. Most of us know that goal setting is cru− cial, but it can seem daunting, and many people avoid it. ‘The Power of Focus’ breaks down goal setting into manageable parts, describ− ing the ten things that every goal should have, and then helps us create a personal ‘master plan’ so that we can achieve our goals within a realistic time frame.

A balance between work and home life is not overlooked; in fact, the authors emphasize how impor− tant this is with a chapter dedi− cated to the ‘b−Alert’ system of cre− ating balance. They also highlight the importance of building and maintaining relationships, pro− viding techniques for identifying patterns in both positive and neg− ative relationships, and suggest− ing strategies for choosing a men− tor and establishing a ‘mastermind alliance’ – a group of like−minded people who can encourage each other and discuss their progress.

‘The Power of Focus’ covers many other areas, showing us how to eliminate fears and worries, how to ask for what we want, and how to overcome the tendency to pro− crastinate. Every chapter ends with ‘action steps’ that make it easy to implement the concepts that have been discussed.

With the rise of mobile Internet access, constant emails and other modern stresses, many people find it more difficult to concentrate than ever before. This revised edition addresses these new issues, helping us to keep our minds clear of dis− tractions. At the core of this book is the message that we are in charge off our lives, and that there is no room for wishful thinking: only action.

THE POWER OF FOCUS

by Jack Canfield, Mark Victor Hansen and Les Hewitt Published by Vermilion, an imprint of Ebury Press ISBN 9780091948221 Available to order through www.hungaropress.hu

RESTAURANT REVIEW

SPINOZA – HERITAGE IN GOOD HANDS St Martin’s day is coming, when Hungarians traditionally eat goose, and drink new wines. It is something like Beaujolais season in France, but the emphasis here is on the meat, and not the grape. As we really like goose, and haven’t had it for a while now, we decided to check out where we might find the crispiest bird in Budapest.

ADVERTISEMENT

Spinoza is located in the Jewish district in Dob utca, right across from the popu− lar Gozsdu Udvar. It is a restaurant, café, and even a theater, and it looks like a vivid and jolly place even from the outside. We went there on a Tuesday night, when other places are usually quiet. Yet in Spinoza all the tables were taken by people chatting happily in almost all the languages of the world, speedy waiters carried huge plates, and live piano music made the atmosphere even more welcoming.

The menu is a mix of Hungarian, Jewish and Israeli cuisine. We decided to go for one traditional and one Israeli line up. We started with an antipasti plate with grilled zucchini, eggplant and bell peppers with feta cheese and olives; and a plate of some smoky baked eggplant with tahini (sesame paste), pine nuts and fresh baguette. Already these two cold plates had made the visit worth it. We could not figure out the secret of the chef, but these vegetables were just perfect.

Then we had clear soup with matzo balls, vegetables and goose meat. The portion was huge, the soup rich and tasty; the matzo balls had a lot of ginger in them, just the way I like it.

Then we had lamb kebab with Israeli salad and fried potatoes and tahini, and roasted goose leg with mashed onion−potatoes and steamed red cabbage. The kebab was nice, but a bit less spicy than I expected. But not the goose! This goose leg was maybe the best I have ever had in my whole life! My grandma was a ‘master chef’ in baking goose, and I myself have an idea of how to prepare one.

I have tried it in dozens of restaurants, and unfortunately it is often dry or chewy, tasteless or the skin is not crispy enough. But this one was crispy on the outside, the meat melted like butter in our mouths, and it was light and deli− cious. In one word: it was amazing.

Our waiter, who was kind, prepared and funny, made our evening even more pleas− ant. He suggested some great wines for the meals; we tried Bolyki Indian Summer and Pastor Kadarka (a Hungarian red) from the Szekszard region.

After finishing our dinner by sharing a flodni, a Jewish cake made from layers of wal− nuts, poppy seeds, apples and plum jam, we sat there for a while watching the old pianist, and enjoyed listening to the great music. RATATOUILLE

SPINOZA

1074 Budapest, Dob u. 15.

Tel/Fax: (1) 413 7488 spinozahaz.hu

5 Socialite

WWW.BBJ.HU

Budapest Business Journal | Oct 04 – Oct 17

WHO'S NEWS

Name PÉTER SERE Current company/position PWC HUNGARY / DIRECTOR

Sere has been appointed director of the advisory group for businesses in the technology, information, communications and entertainment sectors at PwC Hungary. He joined the company in 2007, but prior to that led the Information and Communication Technology and e-Economy Department at the Hungarian Ministry of Economy and Transport.

He also had leadership roles at the Hungarian Ministry of Informatics and Telecommunication, and at Invitel Rt Hungary..

Do you know someone on the move?

31

Supported by

Send information to research@bbj.hu

Name LÁSZLÓ RADVÁNYI Current company/ position PWC HUNGARY / DIRECTOR

Radványi will become PwC’s assurance group director. He joined PwC Hungary in 2003, and is a qualified auditor, and a member of the ACCA. He takes an active part in the business and sports life of the city of Győr, where he has also led several projects for the local industrial and public sectors. In addition to his professional activities, he spares time to support charity programs, and is currently one of the leaders of PwC Hungary’s Corporate Social Responsibility Group.

Name GÁBOR ERDŐS Current company/ position DELOITTE LEGAL / DIRECTOR

Erdős has joined the Hungarian team of the Deloitte Legal law office network. He has gained experience with several international law firms in the past decade. Among others, he worked with Martonyi, Kajtár Baker and McKenzie Law Office. Before joining Deloitte Legal, he was with Faludi Wolf Theiss Law Office. In his new post, Erdős will take part in business development and in developing the firm’s junior colleagues.

He graduated from the ELTE University in 2000 and got his MBA at the University of Manchester.

UPCOMING EVENTS

OCT 07

OCT 14

OCT 17

OCT 21

AMCHAM COMMUNICATIONS SCHOOL WITH ZOLTÁN HANGA, SPOKESMAN OF THE BUDAPEST ZOO AND ATTILA FODOR, COMMUNICATIONS DIRECTOR OF CBA LOCATION AmCham Conference Room,

CANADIAN THANKSGIVING FEAST LOCATION Hemingway restaurant,

OPEN MEETING WITH GÉRARD LEGRIS, HEAD OF UNIT TRANSPARENCY, EUROPEAN COMMISSION LOCATION Raiffeisen Bank Zrt,

AMCHAM COMMUNICATIONS SCHOOL WITH GYÖRGY BARCZA, LEADING ANALYST, SZÁZADVÉG GAZDASÁGKUTATÓ ZRT AND ZOLTÁN TÖRÖK, LEADING ANALYST, RAIFFEISEN BANK LOCATION AmCham Conference Room,

1051 Budapest, Szent István tér 11, 6th floor TIME 6:30-8 PM FEE AmCham members in good standing, HUF 38,100/person; non-members HUF 57,150/person. (The participation fee covers the entire fall 2013 series consisting of five events plus one ‘bonus’ event.)

CONTACT www.amcham.hu ADVERTISEMENT

1113 Budapest, Kosztolányi Dezső tér 2 TIME 6 PM FEE HUF 6,300 + VAT REGISTRATION info@bcch.hu

1054 Budapest, Akadémia u. 6 TIME 3-5 PM FEE The event is only open to members.

There is no participation fee.

CONTACT www.amcham.hu

1051 Budapest, Szent István tér 11, 6th floor TIME 6:30-8 PM FEE AmCham members in good standing, HUF 38,100/person; nonmembers, HUF 57,150/person (The participation fee covers the entire fall 2013 series consisting of five events plus one ‘bonus’ event.)

CONTACT www.amcham.hu