Budapest Business Journal 23/05 by Business Publishing Services Kft.

Report 3Special st is behind us

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wor Banking 2015: The

SPECIAL REPORT:

provisions Do you think the of in the Memorandum signed Understanding to will bring stability with the EBRD the market? received, was very well the A: I think it that followed by parent based on the actions units and their banks, both local actually welcomed this banks. All of them obviously they should. development and some improvement in on I think, based to cooperate and you the mood, willingness to the market, more commitment going forward. Still, can expect stability while these are very that, the I would caution they are only important changes, road. the of beginning the Do you expect continue government to of building its ownership banks? to trace a very difficult . A: Well, it is the state’s slate as of 2015’ motivation for ‘will have a clean real financial don’t think these Péter Felcsuti: Banks I bank purchases. justified by business be Clearly purchases could some revenue, and or profitability. moves considerations on the banks to generate can use to actually motivated are politically the these “There is pressure bank because a And the government. able to say “we is one product that now be an increase in the by obviously lending government is set out to assume there will what we had will have achieved do that. I would therefore albeit a modest one.” the government in do”, I do not think active banks, aggressive or in the lending portfolio of be particularly is a hole opening making more stake acquisitions one thing, their customers. There but if there industry. For The that, by now, probably in the retail business, is more banking not very good. A: I would assumeleft the worst behind up grow, that growth experiences are has recently started or is room to in the corporate banking the banks have to be an industry in Hungary most of the banks, to be of what it means Bank, CHRISTIAN KESZTHELYI them. In that sense,the banks, will have a likely rather than retail. to feel the bite of think of Széchenyi huge assume sector perhaps even all investor. Just been to make 2015. So I would better have of need as increase There the an slate clean Without the the MKB bank: Can we expect would be a much would 2014 believe that 2015? that the year 2015 the previous ones. Therefore, I FX provisions, year in lending in than so. Partly losses. be very cautious. year for banks have been a profitable A: Yes, I think at all−time government will has been banks whole a lending for banks? some as that corporate years, sector because Are Do you think in the last few ING and It is A: I think the banking the market, lows in Hungary 2008, and chiefly like UniCredit, out in the black. banks will leave able to avoid would have come local units to that the banking specifically since Commerzbank government’s by selling their owners, in important to remember homogeneous in FX loan conversions? due to the Hungarian or private longer the pain of the the banking business. government in ones? the industry industry is no the banking they intervention are changing, and we 2015? Any guesses as to which for them, as that, from 2010, as far as profitability, happening: GE It is very easy loans, with the Now things the positive impact A: As you see, things are two decades, was split into twoit comes to the larger A: have to note dealt in FX Bank after UniCredit also central bank’s lending facility, sold Budapest especially when half of those banks, never even before of UniCredit. a of the helps banks to Citibank entered the market to be exception exposure in FX loans, but banks: Roughly in a modest way, There banks have different them, continued have speaking, which, their lending portfolio. them. Indeed, these four or five of four or five of them did are leaving. minor one. Generally away increase banks to generate motivations, but still they for good profitable, while losses. So probably it very been able to keep the is pressure on the obviously lending One, GE, is leaving local bankinggiving up UniCredit has that continued to make just revenue, and speak about heavy losses use is to can some very Citibank, the bank a from the other, is a is a little bit misleading product that involved in during therefore while of its business in Hungary. This as a whole. big banks were the case of ING and is one do that. I would that this a part the banking industry In an increase in normal phenomenon, yet I believe it easy to actually the last year. that some there would be a problems , they had the road. I think in FX assume of banks, albeit Commerzbank Were there other is not the end of the never participated the lending portfolio leave the Hungarian because they that dragged on sector? find more banks could the modest one. future. They mightlonger mortgage lending. profitability of market in the need to retail market is no to “feel” the banks still 2015 looks that the Hungarianno more opportunities Can we expect A: Absolutely; taxes – I mean these Do you think bank−sector banks sufficient, or offers Hungarian economy the impact of continue paying better for corporate which are sometimes The though they or They to make money. tax cuts, even extraordinary taxes, than retail banks? I believe terribly lucrative So “unorthodox” taxes. 2016? currently not called sectoral or that are independent of business. couple of years, don’t begin untilThis is partly about is for banks to do A: In the next risk− will probably are basically taxes banks’ promising of banks; instead A: I think so. and long−term corporate banking than retail partly about the simple, medium− can dictate whether the actual profitabilityon the basis of the that psychology and So I expect more opportunities calculations very the lesson they need to increase revenue. the tax is calculated sheet total. So the see of parent reward pull out – unless they have a For one thing, sacred as in the attitudes banks apparently banks’ 2009 balance drag with banking. that nothing is some changes continue to be a Milan. You can strong commitment like Erste have learnt is taxes obviously or legal protection banks, in Vienna and but that seems to be of the banks. bank a institutions changes, are they as profitability far regard to the some favorable very robust or does, or they K&H, or UniCredit. In other words, against expect is concerned. to be happy here, like well protected in the these are not going Hungarian are not very When can the intervening dramatic. as a whole the government the banks and their very banking sector making between start dealings expect to

National According to the credit Bank of Hungary, this institutions in country had a combined HUF after−tax loss of but 446.5 bln in 2014, to this year is expected Felcsuti, be better. Péter a Hungarian economist the who was formerly unit head of the local and of Raiffeisen Bank Hungarian leader of the n, Banking Associatio Budapest the to spoke about Business Journal the current situation, for and future prospects banking in Hungary.

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VOL. 23. NUMBER 05

MARCH 13, 2015 – MARCH 26, 2015

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SPECIAL REPORT

BUSINESS

Banks in 2015: Nowhere to go but up

Sunday closings irk retail property firms

PwC’s survey of local CEOs finds optimism

We interview a banking expert who says the worst is over for the local industry. With FX headaches last year’s news, and tax cuts coming next year, we’re told to expect some stability for now. 13

Most larger shops, though few Budapest malls, will have to close Sundays as of March 15. It’s not just shoppers and store owners who are upset: Owners of retail property also question the new law. 9

While many of the 170 Hungarian CEOs interviewed said they don’t expect growth in Hungary, or the global economy, an overwhelming majority predicted that their own firms would prosper. 10

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Budapest Business Journal | March 13 – March 26, 2015

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3Special Banking 2015: The

SPECIAL REPORT:

BANKING

CHRISTIAN KESZTHELYI

SUBSCRIPTIONS

Report

worst is behind

provisions Do you think the of in the Memorandum signed Understanding to will bring stability with the EBRD the market? received, was very well the A: I think it that followed by parent based on the actions units and their banks, both local actually welcomed this banks. All of them obviously they should. development and some improvement in on I think, based to cooperate and you the mood, willingness to the market, more commitment going forward. Still, can expect stability while these are very that, the I would caution they are only important changes, road. beginning of the the Do you expect continue government to of building its ownership banks? to trace a very difficult . A: Well, it is the state’s slate as of 2015’ motivation for ‘will have a clean these real financial Péter Felcsuti: Banks I don’t think bank purchases. justified by business be Clearly purchases could some revenue, and or profitability. moves considerations on the banks to generate can use to actually motivated these are politically And because the “There is pressure a bank the government. able to say “we is one product that now be an increase in the by obviously lending government is set out to assume there will what we had will have achieved do that. I would therefore albeit a modest one.” the government in do”, I do not think active banks, aggressive or in the lending portfolio of be particularly is a hole opening making more stake acquisitions one thing, their customers. There but if there industry. For The that, by now, probably in the retail business, is more banking not very good. A: I would assumeleft the worst behind up grow, that growth experiences are has recently started or is room to in the corporate banking the banks have to be an industry in Hungary most of the banks, to be of what it means Bank, them. In that sense,the banks, will have a likely rather than retail. to feel the bite of think of Széchenyi huge assume sector perhaps even all investor. Just to make 2015. So I would There have been the an increase clean slate as of would be a much better Without the need the MKB bank: Can we expect would 2014 believe that 2015? that the year 2015 the previous ones. Therefore, I FX provisions, year in lending in than so. Partly losses. be very cautious. year for banks have been a profitable A: Yes, I think at all−time government will has been banks for banks? some as a whole because lending in the last few years, Are corporate banking sector Do you think that market, ING and It is A: I think the the lows in Hungary 2008, and chiefly like UniCredit, out in the black. banks will leave able to avoid would have come local units to that the banking specifically since Commerzbank government’s by selling their owners, in important to remember homogeneous in FX loan conversions? due to the Hungarian business. or private longer the pain of the in the banking ones? the government industry is no the banking industry they intervention are changing, and we 2015? Any guesses as to which for them, as that, from 2010, as far as profitability, happening: GE It is very easy loans, with the Now things the positive impact A: As you see, things are two decades, was split into twoit comes to the larger A: have to note dealt in FX Bank after UniCredit also central bank’s lending facility, sold Budapest especially when half of those banks, never even before of UniCredit. a of the helps banks to Citibank entered the market to be exception exposure in FX loans, but banks: Roughly in a modest way, There banks have different them, continued have speaking, which, their lending portfolio. them. Indeed, these four or five of four or five of them did are leaving. minor one. Generally away increase banks to generate motivations, but still they profitable, while losses. So probably it very been able to keep the is pressure on the banking for good obviously lending is leaving local UniCredit has that up continued to make to speak about from the very heavy losses during some revenue, and a bank can use One, GE, other, Citibank, is just giving that the is a is a little bit misleading involved in one product therefore while of its business in Hungary. This as a whole. big banks were the case of ING and is do that. I would that this a part the banking industry In an increase in normal phenomenon, yet I believe easy to actually the last year. that some there would be a they had it problems the road. I think in FX assume of banks, albeit Commerzbank, Were there other is not the end of the never participated the lending portfolio leave the Hungarian because they that dragged on sector? find more banks could the modest one. future. They mightlonger mortgage lending. profitability of market in the need to retail market is no to “feel” the banks still 2015 looks that the Hungarianno more opportunities Can we expect A: Absolutely; taxes – I mean these Do you think bank−sector banks sufficient, or offers Hungarian economy the impact of continue paying better for corporate which are sometimes The though they or They to make money. tax cuts, even extraordinary taxes, than retail banks? I believe terribly lucrative So “unorthodox” taxes. 2016? currently not called sectoral or that are independent of business. couple of years, don’t begin untilThis is partly about is for banks to do A: In the next risk− will probably are basically taxes banks’ promising of banks; instead A: I think so. and long−term corporate banking than retail partly about the simple, medium− can dictate whether the actual profitabilityon the basis of the that psychology and So I expect more opportunities calculations very the lesson they need to increase revenue. the tax is calculated sheet total. So the see of parent reward pull out – unless they have a For one thing, sacred as in the attitudes banks apparently banks’ 2009 balance drag with banking. that nothing is some changes continue to be a Milan. You can strong commitment like Erste have learnt is or legal protection taxes obviously in Vienna and but that seems to be of the banks. far as institutions other words, they banks, some favorable changes, or does, or they are a bank regard to the profitability In K&H, or UniCredit. against expect is concerned. to be very robust happy here, like well protected in the these are not going Hungarian are not very When can the intervening dramatic. as a whole the government the banks and their very banking sector making dealings between expect to start profits?

National According to the credit Bank of Hungary, this institutions in country had a combined HUF after−tax loss of but 446.5 bln in 2014, to this year is expected Felcsuti, be better. Péter a Hungarian economist the who was formerly unit head of the local and of Raiffeisen Bank leader of the Hungarian Banking Association, spoke to the Budapest about Business Journal the current situation, for and future prospects banking in Hungary.

VOL. 23. NUMBER 05

MARCH 13, 2015 – MARCH 26, 2015

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BUSINESS

Banks in 2015: Nowhere to go but up

Sunday closings irk retail property firms

PwC’s survey of local CEOs finds optimism

We interview a banking expert who says the worst is over for the local industry. With FX headaches last year’s news, and tax cuts coming next year, we’re told to expect some stability for now. 13

While many of the 170 Hungarian CEOs interviewed said they don’t expect growth in Hungary, or the global economy, an overwhelming majority predicted that their own firms would prosper. 10

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Corruption cases eroding faith It’s about time someone looked into Péter Juhász’s allegations. According to the fifth district councilman, his own local government has been giving away real estate at fabulous discounts to friends of the people in power for years now. He has outlined evidence of inappropriate and apparently illegal local government management, but the prosecutor’s office is not investigating his claims. In an effort to get some action, Juhász has organized demonstrations about the issue, including a general demonstration against several cases of apparent corruption on March 8. Still no one seems to be listening. As the accusations of corruption mount, and the government remains passive, it erodes faith in our leadership – and creates a lack of transparency that can scare away investment. In district five, Juhász’ investigation shows a consistent pattern of a small group of people, who are apparently closely connected to individuals in the local government, buying prime commercial properties at 30% of the market rate after as little as three months of tenancy. While long−term renters of council flats, or other district properties, are supposed to get such a discount, Juhász says he has already identified roughly 150 cases of suspicious discounts on commercial properties in the district. These include instances where a long−term tenant had to move out because their rent was tripled, and the new tenant who moved in afterwards was immediately offered a chance to buy the property at a discount. According to Juhász, almost all of these properties went to single bidders, and in almost all these cases, the same consulting company produced a very similar report justifying the sale. Juhász claims that, even though the fifth district has no need to sell its properties to raise cash, at least a couple thousand of such sales have taken place in a period of about eight years, and he says they are continuing. The councilman estimates that these sales have cost the district about HUF 10 billion. While he says that many sales took place when Antal Rogán, the current leader of the Fidesz parliamentary faction, was the mayor of the district, Juhász adds that it appears likely that corrupt sales practices also took place when

members of the Socialist Party were in charge of the district. And yet the prosecutor has declined to investigate either current or previous fifth district governments. The European Union is not so hesitant, as OLAF, the EU’s anti−fraud office, has been investigating alleged abuse of EU funds during the district’s “Heart of Budapest” renovation program, which was approved in 2007 and completed recently. The March 8 demonstration against corruption included complaints about a by−now familiar litany of similar cases including the following: • The details of the deals between the Hungarian government and the Russian firm Rosatom to update the Paks nuclear plant were recently declared classified for the next 30 years, even though critics have questioned the financial logic of many of those deals. • The prime minister’s son−in−law, whose lighting company Elios Innovatív Energetikai Zrt. (formerly E−OS Innovatív Zrt.) has reportedly received HUF 6 bln in government contracts since 2010, is being investigated after it was determined that it won four tenders valued at HUF 1.2 bln in an allegedly fraudulent manner. Most of the firm’s tenders involved providing lighting for municipalities, and they were paid in large part with EU money, which may be why this investigation is going ahead. Despite the investigation, it was announced on March 9 that Elios has just won another tender to modernize Mórahalom’s public lighting – and that the HUF 64 million project will be 85% funded with EU money. • The tax authority (NAV) has been accused by the American cooking oil company Bunge of allowing some firms to bribe their way out of paying value−added taxes. But NAV just investigated itself and declared itself honest, publishing a report on March 4 that says American firms and all others are treated equally and fairly. We could go on, but it just gets depressing. The point is, the blasé approach to corruption in these and a host of other cases is creating a situation where the government’s credibility is dubious, and investors are increasingly concerned about the transparency – and hence predictability – of the system.

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Crowds stand outside the National Museum in Budapest’s district eight for a national celebration in 1952, above, in a photo from Fortepan.hu. At left is a celebration of the March 15 National Holiday outside the Museum in 2011. The holiday celebrates the events that kicked off Hungary’s 1848 Revolution against Habsburg dominance.

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NEWS

RTL Klub TV replaces its CEO

NEWS

Buda−Cash scandal has fallout

macroscope

2015 off to a chaotic start

Speaking X of ﬁgures

Risk managers’ worst nightmares came true as currency fluctuations muddied the market, but experts say there is no cause for panic.

The Budapest Business Journal presents some of the most important macro data of the past fortnight.

€691 mln

GABRIELLA LOVAS

Central bank versus the market OTP chief analyst Gergely Tardos pointed out that there is an ambiguity about the Hungarian currency because the MNB wants a weak forint, while the market seeks a stronger currency. At the end of last year, the forint rate was widely expected to return to a level of around 308−310 to the euro, in order for the government to be able to present a decreasing public

Trade surplus Hungary saw in January, with exports rising 3.7% to €6.841 bln and imports growing by 1%, to €6.15 bln, according to the KSH.

OTP Bank deputy CEO László Wolf .

“While OTP’s worst case scenario for such a move was that the exchange rate might fall to 1.15 EUR/CHF, the value of the euro tumbled to well under 1 franc at one point.” debt path. However, this did not happen, and gross debt at nominal value remained flat at 77.3% of GDP at the end of 2014 based on the MNB’s estimate of what GDP would be. Calculating with the higher GDP figure released by the Hungarian Statistics Office (KSH) in March, public debt dropped somewhat, to 76.9% of GDP last year. The macro story looks good with an 8% external balance surplus, decreasing external debt and more than enough foreign currency reserves, stressed Tardos. All this points toward a stronger currency. For many years, this was counterbalanced by massive capital outflow. However, in the wake of the financial crisis, households’ huge foreign currency debt started falling as consumption tumbled and savings and the repayment of foreign currency loans, which has been strongly backed by various market−friendly and not so market−friendly government measures, increased. Tardos noted that the forintization of FX loans reduces the monthly forint supply. In economic growth and inflation, convergence has slowly restarted in

OTP chief analyst Gergely Tardos. Central and Eastern Europe, said Tardos. In Hungary, too, growth is expected to be faster that in the eurozone, while in the short run, inflation will be around 0%.

Weak forint wanted It is clear that the MNB does not want a strong forint because export demand is currently weak due to the slow economic growth in Europe, said Tardos. Due to the low expected inflation in 2015, there is no need for a stronger rate. In addition, it is now important for the MNB to have a positive balance, which can be achieved by a gradually weakening currency. Tardos expects that the MNB will make the forint even less attractive by further base rate cuts following the recent introduction of the expanded “Funding for growth” scheme (NHP+). The market expects the forint to remain in a trading band between 310 and 315 this year, followed by a gradual strengthening in 2016. However, its volatility is expected to be high, especially around the upper and lower borders. Based on OTP’s technical analysis, it is hard to say which direction the forint will leave the trading band, but once it does, it will be a big movement. Tardos identified changes in inflation expectations and the opportunity costs of the government’s unorthodox economic policy as major risks. Hungary’s business environment is indecipherable for foreign investors. Although the investment rate has increased, this is primarily due to public investments. It remains to be seen whether there will be a rebound in private investments in the medium−term.

80% Market share achieved in the sales of Hungarian products at local grocery stores, up from 2010’s 75%, apparently due to campaigns that raised the profile and quality of locally−produced goods.

8.3%

Increase in number of conferences held in Hungary, reaching 2,557 last year as compared to 1,020 the previous year, according to data published by the state tourism agency.

3.4% Growth in Hungary’s GDP year−on−year in the fourth quarter of 2014, chiefly lifted by strong performances in the manufacturing, construction and agriculture sectors.

Source: KSH, MTI

Things started off quietly at the beginning of 2015. Then the ruble and the hryvnia collapsed. Oil prices also collapsed, and although that is at least partly good news, this volatility shakes the markets. In January, FX risk managers’ worst nightmare came true, when the Swiss central bank scrapped the euro cap. Meanwhile, Hungary has suffered no shortage of drama with the Buda−Cash affair. This is certainly a chaotic environment for risk managers but, according to experts, it can be described as frightening but manageable. Bankers sought to outline what to expect at a conference in early March on the “Consequences and potential solutions of the FX crisis”, organized by PwC Hungary. The move to scrap the euro cap by the Swiss National Bank (SNB) caught risk managers and treasury heads off guard. “While OTP’s worst case scenario for such a move was that the exchange rate might fall to 1.15 EUR/CHF, the value of the euro tumbled to well under 1 franc at one point,” said OTP Bank deputy CEO László Wolf. As for the rest of 2015, the main risks involve, for instance, the Greek situation and changes in commodity prices. The forint rate remains volatile and he sees a chance that it will return below 300 to the euro, although that won’t please the National Bank of Hungary (MNB). While the volatility in the markets is perhaps a little too much, there are also positive developments in the world economy, stressed Wolf. Employment is increasing in the United States and there are signs of growth in the eurozone and the EU. In Hungary, the budget deficit is below 3%, the economy is growing and inflation is low.

MACRO

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Budapest Business Journal | March 13 – March 26, 2015

Thousands march against corruption

NEWS IN BRIEF RTL Klub replaces CEO who feuded with government

Protesters gather at Budapest’s Erzsébet tér on March 8 for the beginning of a protest to call for action against corruption in the government. A crowd estimated at more than 2,000 marched through central Pest and heard several speakers outline various allegations of corruption, including charges that the district five government sold property cheaply to individuals with political connections, questions about the Paks nuclear power plant extension and complaints about state control of tobacco distribution. Péter Juhász, a council member of Budapest’s district five and member of opposition alliance party Együtt (Together) spearheaded the ‘Demonstration Against Government Corruption’.

Event Details Monday 23 March 2015, 5pm EuCham Conference Room Szabadság tér 7 (Bank Center) 1054 Budapest, Hungary

DESCRIPTION

CO-ORGANIZER

The forum aims to promote networking and the diffusion of ethical business practices. Participants will focus on the importance of compliance and integrity to achieve business success, whistleblowing issues and data protection.

SPEAKERS INCLUDE

INTEGRITY WINDOW Side event with 1-to-1 brief advisory comprising professionals, experts and enthusiasts in the field. It will provide attendees with an informal opportunity to share ideas, report confidentiality, whistleblowing issues and petty consultancy.

H.E. Mr Rastislav Káčer, Ambassador of Slovakia ̵, Deputy Head of Mr David Lewis̵ Mission, Embassy of Australia Mr Heinz Wiedner, ̵CEO, Raiffeisen Bank Dr. Zsuzsanna Lippai, ̵Legal & Compliance Manager, Mercedes-Benz Mr Nicholas Sarvari, ̵Managing partner, CNS Risk, President, Canadian Chamber of Commerce

PROGRAM 17:00 Registration / Opening of the Integrity Window 18:00 EuCham president welcome 18:05 Intervention of H.E Ambassador of Slovakia 18:15 Keynote speaker: CEO of Raiffeisen Bank 18:20 Presentation: Deputy Head of Mission, Embassy of Australia 18:30 Presentation: Legal & Compliance Manager, Mercedes-Benz 18.45 Panel Discussion 1: Data protection & Compliance 19:20 Panel Discussion 2: Whistleblowing issues 20:00 Networking session **Program subject to change without notice**

Sponsorship / Partnership Opportunities Contact Mr Henni Biskri ̵henni.biskri@eucham.eu Enquiries:̵̵+36 1 445 1055, ̵info@eucham.eu

Mr David Ondráčka̵,̵Director, Transparency International Czech Republic Mr Jimmy Helm, ̵Regional Head of Forensic Service, KPMG Dr. Bálint Bassola, ̵Attorney-at-law, Head of the Competition Law Practice Group, Jalsovszky Law Firm Mr István János Tóth, ̵Co-Founder and Director, Corruption Research Center Budapest, Researcher, ANTICORRP Mr Sandor Lederer, ̵Co-founder and CEO, K-Monitor Ms Maria Rusz, ̵Ethics and Compliance Manager, Shell Mr Márk Erdélyi̵, Compliance Officer, Telenor

eucham.eu 150310 ln

Andreas Rudas has been appointed interim CEO of TV station RTL Klub, owned by RTL Magyarország, effective immediately, RTL Group announced March 10. Rudas, who was regional vice president of the group responsible for Central Europe and Asia, replaces Dirk Gerkens (pictured), whose contract had reportedly come to the end of its term. There was speculation earlier this year that RTL Group might agree to replace Gerkens, who had been openly feuding with the government and airing critical news reports, if officials agreed to lower the advertising tax, which left RTL Klub alone in a punishingly high tax bracket. The government recently proposed a new, lower tax (see below), but both the company and government officials have denied any concessions by the TV station. The company will elect a new CEO at a later date, most probably a Hungarian, in order to “strengthen the relationship with Hungarian society”, RTL’s news program revealed yesterday. Under Gerkens’ leadership since 2001, RTL has become the leading TV channel in Hungary. The former CEO will reportedly continue to work for RTL in a senior executive position.

Moody’s: No upgrade on Hungary’s rating Moody’s Investors Service said on March 6 it has not upgraded its long-term public debt rating on Hungary, leaving it at Ba1 with a stable outlook, Hungarian news agency MTI reported. A number of analysts expected at least an improvement of the outlook to positive on recent Hungarian economic data. Credit rating upgrades are overdue for Hungary, said Morgan Stanley in a note earlier on March 6. But moves on Hungary are not expected before summer because the rating agencies want to see the total data breakdown of last year’s public debt trajectory, and the winding-up of the process to eliminate forex household debts from the system, experts warned at the end of last year after the publication of the rating agencies’ 2015 review schedule.

Simicska: Orbán was a communist informer Lajos Simicska, the media oligarch whose business success has been linked to his close affiliation with Hungary’s Prime Minister Viktor Orbán, said in an interview with Hungarian online portal mandiner. hu published March 8 that Orbán informed on him to the communist secret service

authorities when they served together as soldiers about 30 years ago. Simicska, who had a very public falling out with Orbán earlier this year, also said that he believes there still are copies of Orbán’s report to Hungary’s communist-era leadership in Moscow. The media oligarch speculated that Russia’s President Vladimir Putin could be threatening to use those reports against the prime minister. Asked for comment on Simicska’s remarks, the Prime Minister’s Office rejected the claims. The office sent mandiner.hu a letter Orbán had written in which the prime minister states that, when he was serving as a soldier, there had been attempts to make him report on his fellow soldiers, but he rejected those attempts. The Prime Minister’s Office also attached links of the relevant documents that are publicly available on the office’s website.

PM’s son-in-law’s company investigated by police Elios Innovatív Zrt., a company part-owned by Hungarian Prime Minister Viktor Orbán’s son-in-law, is currently under investigation by the Hungarian National Police (ORFK) for a series of tenders won by the company, news portal index.hu reported on March 2. István Tiborcz, the husband of Orbán’s eldest daughter, is a 50% stakeholder in Elios, which won four tenders valued at HUF 1.2 billion forints in an allegedly fraudulent manner. These tenders involved, for the most part, upgrading public lighting systems in various regions throughout Hungary. The ORFK investigation was launched on suspicion of misconduct in the public procurement tenders won by Elios.

MPs approve legislation making Paks deal confidential for 30 years Parliament voted on March 3 to classify some of the data contained in the contracts for the expansion on Hungary’s sole nuclear power plant in Paks for a period of 30 years, extended from the previously set 15 years. The legislation was passed with 130 voting in favor and 62 voting against. The issue has raised many concerns over the past few weeks sparking debates in Parliament. Cabinet Chief János Lázár said earlier it was “entirely the same” if the Paks deal is made confidential for 15 years or 30. “The whole debate is theoretical and pointless as there is no single nuclear contract in the world that would be public; if any of my opposition MPs finds one we can discuss it,” Lázár reiterated. According to the ruling Fidesz party, given that the Paks expansion serves energy security, keeping documents confidential serves Hungary’s national security.

Lázár puts ad tax at 5-10% Cabinet Chief János Lázár said he expects the modified advertising tax to reach 5-10%,

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News 05

Budapest Business Journal | March 13 – March 26, 2015

contrary to earlier press reports speculating that it would not exceed 3-5%, Hungarian commercial channel ATV reported on March 3. The current advertising tax is capped at 50% of advertising revenue, but only one firm, RTL Klub TV station, is in the highest tax bracket. According to ATV, the lawmakers have not yet decided whether to introduce a unified or progressive tax, however, Lázár said he prefers a progressive measure, as the “main aim of the Hungarian government is to protect small businesses”. Although the cabinet chief did not discuss the advertising tax at the committee meeting, he told ATV journalists afterwards that he thinks the “government will propose a tax rate between 5-10%”. He also noted that the highest advertising taxes in the European Union are currently capped at 5%, but added that the European Commission has asked Hungary to “find a reasonable measure” and should it be a progressive one, differences between brackets must be fair.

the door open for further rate cuts to avoid forint appreciation, according to Erste.

Transit difficulties

Larger families could be eligible for motorway vignette refunds As of April, families with three or more children could become eligible for refunds on motorway vignettes should the Hungarian government approve a decree drafted by the Human Resources Ministry, Hungarian daily Magyar Nemzet reported on March 6. According to the paper, if the law takes effect, large families would be refunded half of the price of weekly and monthly national vignettes, as well as half of the recently introduced annual county vignette, the paper said. The government is expected to discuss the draft at the end of March.

Number of conferences in Hungary up by 8% in 2014 The number of conferences held in Hungary grew by 8.3%, reaching 2,557, last year as compared to the previous year, with 1,020 international and 1,537 domestic conferences, Hungarian news agency MTI said on March 9, citing the newsletter of state tourism agency Magyar Turizmus. According to the agency, more than 414,000 people participated in the conferences. The international conferences had an average of 149 participants and the Hungarian conferences some 170 participants, the newsletter added. A total of 67.5% of the events were held Budapest, with 77% of the international conferences being held in the capital, the newsletter added.

Hungarian products reach 80% market share The sales of Hungarian products at local grocery stores have reached 80%, up from 2010’s 75%, chiefly due to campaigns that raised the profile and quality of locallyproduced goods, Hungary’s farming minister Sándor Fazekas said on March 10. The minister noted that food sector profits are on the rise, and the number of people working in farming and the food industry is growing continuously.

State-owned ‘green bank’ to start operations soon A “green bank” recently established by the Hungarian state to fund energy efficiency investments is expected to begin operations soon, Hungarian economic daily Napi Gazdaság reported on March 10. According to the paper, a recently published government resolution paved the way for the acquisition of a 49% stake in the bank, dubbed the National Energy Management Company (NEG), by the Hungarian Development Bank, although the Hungarian National Asset Management Company (MNV) will remain NEG’s majority owner. NEG began technical operations in January and aims to help Hungary achieve European Union commitments it has made to improve energy efficiency. An EU directive mandates that 3% of all public buildings must undergo energy efficiency improvements every year between 2014 and 2020, the paper noted.

Hungary software exports climb 50% Hungarian software exports have grown from an annual HUF 200 billion to HUF 300 bln in the past three years, the head of the ICT Association of Hungary told journalists on March 10. Growth was seen across the board, said Tamás Laufer, and the country’s ICT sector now accounts for 10-12% of GDP.

Fitch confirms MFB and Eximbank at BB+ Fitch Ratings affi rmed the long-term issuer default ratings (IDR) of the Hungarian Development Bank (MFB) and Hungarian Export Import Bank at “BB plus” with a stable outlook on March 6. Both banks’ IDRs are equalized with those of the Hungarian sovereign, which is also “BB plus” with a stable outlook, reﬂecting Fitch’s view of a moderate probability of state support for either bank, if required, Hungarian news agency MTI

Rate-setters wait for inflation report

Renovation work continues at the north-Buda transit hub of Széll Kálmán ter, where construction is currently preventing the Metro and trams from stopping. The work is due to be completed some time in 2016.

reported the ratings company as saying. Fitch believes that the government’s propensity to support MFB and Eximbank is strong, however, its ability to provide that support is moderate, as reﬂected in the sovereign ratings. MFB and Eximbank are 100% stateowned banks. Fitch’s view of support for both banks reﬂects their strategic policy role in supporting Hungarian exports and domestic economic growth, full state ownership and state guarantees for their obligations.

Banking Association launches financial awareness program in schools The Hungarian Banking Association on March 9 launched a school program to raise awareness regarding everyday financial matters, such as family budgets, MTI news agency reported. With the professional support of the Money Compass Foundation,

the association is bringing the program to nearly 90,000 pupils at 660 primary and secondary schools.

Depreciating trend of forint against euro could resume The forint is unlikely to remain at its relatively strong current 301-306 levels against the euro for long, Erste Bank said in a note on March 9. Hungarian policy makers have indicated that they would not oppose a weaker forint to promote exporters’ competitiveness, and a stronger forint would not help Hungary reach its 3% inflation target, the note said. The National Bank of Hungary (MNB) has indicated it may recommence rate cutting by the end of March, and that it might restore the forint’s depreciating trend. The renewed easing cycle could last for several months and even when it ends, the central bank might leave

According to meeting minutes published March 11, the National Bank of Hungary’s rate-setting Monetary Council in late February again acknowledged that risks pointing in the direction of a lower base rate had increased, but agreed to decide on any possible rate change only after reviewing the central bank’s next Inflation Report. “Members agreed that risks pointing in the direction of looser monetary policy had increased over the short-term, however, they would consider the need for possible further easing of monetary conditions in view of the March Inflation Report projection, after a comprehensive assessment of the mediumterm outlook for inflation and for the real economy,” the minutes stated. The council is scheduled to discuss the final version of MNB’s fresh Inflation Report at a policy meeting on March 24. At the meeting in February, the rate-setters voted unanimously on a single proposal to keep the central bank’s key rate unchanged at 2.10%. After a rate-setting meeting last July, the Council said it had wound up an easing cycle started almost two years earlier.

Gas, electricity consumption grow Consumption of both natural gas and electricity rose in Hungary despite the milder winter, as compared to the previous one, by 1.5% and 3% respectively, partly due to government-initiated reduction of retail gas and electricity prices, daily Napi Gazdaság said on March 11, citing data from Hungary’s Energy and Utilities Regulatory Office (MEKH). The paper also noted that economic growth could also be a factor for the increase in consumption. In December 2014-February 2015, Hungarian consumers used 3.662 billion cubic meters of natural gas, 54,000 cubic meters more than the previous winter.

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Budapest Business Journal | March 13 – March 26, 2015

Brokerage’s failure has domino effect Alleged fraud at Buda−Cash brokerage appears to have exposed possible illegal activities at Quaestor, causing big losses for a select group of investors. But authorities seem to have contained any possible panic.

Károly Antali, former chairman of the supervisory boad of Buda-Cash during March 9 hearings in Parliament.

Depositors line up outside Quaestor, hoping to get some of their money.

BBJ STAFF

In the weeks following the closure of the Buda−Cash brokerage due to apparent fraud, two other brokerage houses fell: Quaestor, like Buda−Cash, one of Hungary’s larger independents, and Hungária Értékpapír, a smaller brokerage, were both apparently at least partial victims of the panic initiated by Buda− Cash Brókerház. Other victims include the credibility of Hungary’s financial institutions, and those holders of HUF 12.9 billion in deposits at the DRB Bank group whose accounts exceeded the limit insured by the National Deposit Insurance Fund. Losses from Quaestor’s uninsured assets total HUF 150 bln, according to MNB, and these consist of corporate bonds that authorities say were illegally issued by Quaestor. And then there is the state, which is paying out to those who are insured, including HUF 103 bln in compensation to approximately 73,000 clients of the DRB Bank group, and most likely more to people who incur losses from the brokerages. While fallout from the collapse of Buda− Cash continues, most market watchers expect that any possible panic has been contained. “Obviously scandals like this never help the market, and the trust of the customers and overall trust for the sector is shaken,” said Péter Felcsuti, an economist who was formerly head of the banking association and director of Raiffeisen Bank here. But Felcsuti, and other analysts, noted that it is a relatively small subsection of investors that was hurt, and they point out that the state’s efforts to reimburse investors is helping. Quaestor put itself under bankruptcy on March 9, to prevent a further run on its deposits, and later that day, the National Bank of Hungary (MNB) partially suspended the brokerage’s license and the Budapest Stock exchange revoked Quaestor’s trading rights. The central bank and financial market watchdog put an oversight commissioner in charge of Quaestor, allowing that commissioner to open positions in the interest of clients. Although Quaestor blamed Buda− Cash, one expert said that investment house apparently had troubles of its own. “The rush of investors to withdraw their money from Quaestor was a trigger, not the underlying cause of their bankruptcy,” said a financial analyst who declined to be named. “Quaestor allegedly issued

through its ownership, those banks and their depositors were impacted. It was apparently the activities of that bank group – and between these banks and the brokerage house – that alerted authorities. Central bank spokesman István Binder said on March 11 that MNB raided Buda− Cash brokerage after it noticed suspicious securities transactions at small banks that had ties to the brokerage’s owners.

The up side to the scandal

At the March 10 continuation of parliamentary hearings on Buda-Cash are, from left, Fidesz faction leader Antal Rogán, Hungarian National Bank vice president László Windisch and Economic Ministry State Secretary András Tállai.

“Quaestor allegedly issued more corporate bonds than was legally allowed. The amount of bonds that were not regulated by MNB, reportedly reached HUF 150 bln, which put Quaestor in the same league with MOL and OTP, two of the largest companies and bond issuers of Central and Eastern Europe.” more corporate bonds than was legally allowed. The amount of bonds that were not regulated by MNB, reportedly reached HUF 150 bln, which put Quaestor in the same league with MOL and OTP, two of the largest companies and bond issuers of Central and Eastern Europe,” the Budapest Business Journal source continued. “Quaestor reportedly sold the bonds to its clients and provided liquidity in its bonds by buying them back from its clients whenever they needed cash. This liquidity pool, however, apparently proved too small when a growing number of worried investors started to convert their bonds to cash, causing a liquidity problem for the Quaestor group.” The day before Quaestor declared bankruptcy, police raided the offices of Buda−Cash and arrested nine people, including “back office” workers who reportedly had access to the systems where the analytic data of transactions and client accounts are stored. This system serves as a database to produce reports required by the MNB in its role of financial services watchdog.

According to the analyst who spoke to the BBJ, “Buda−Cash marketed yield− guaranteed products and they also traded on their own books on both exchanges (regulated markets) and OTC markets, both being very risky practices. Buda− Cash was one of the most active in the Hungarian derivatives markets and trades executed on behalf of its clients with the clients’ consent and their own trades (on its own account) often might have mixed. Trades on the OTC market can be easily allocated before a trade confirmation is sent to the client, making it easy to falsify account statements.” “So losses due to market volatility (legal brokerage activity) triggered a series of events that led to bankruptcy, but it seems likely that illegal accounting and trading practices systematically practiced over years allegedly caused the potential of more than HUF 100 bln in losses to investors,” said the analyst. “This couldn’t have happened without board−level involvement.” Because Buda−Cash was linked closely with the DRB Bank group

According to the analyst interviewed, “There will be winners of the scandal,” including banks which provide brokerage services, which are already reporting some client migration. In addition, he said, other, more conservative assets are likely to grow in popularity, such as government bonds and even real estate investment. More importantly, the analyst said, regulation should be tightened. “Interbank market regulation has improved a lot, and the full implementation of the European Market Infrastructure Regulation (EMIR), a relatively new European derivative markets regulation, will further boost the reliability of trade settlements of banks. The OTC market is being more regulated in general,” he said. “More and more OTC transactions are settled through large international clearing houses like CLS. It makes clearing more expensive, but also more reliable. But regulations like EMIR and the Directive on markets in financial instruments (MiFID 2) are not enough to protect retail investors.” The MNB will propose legislation shortening the time between full checks of financial companies, tightening controls of auditors and requiring identification of clients in transactions involving clearing house KELER, deputy governor László Windisch told a parliamentary committee on March 10, according to Hungarian news agency MTI. “The idea that KELER will manage individual accounts for every client could help a lot,” the analyst said. Indeed, while the problems at the brokerage houses and the DRB Bank group have claimed some victims, many analysts say things could have been worse. And if the scandal brought about better regulation and better enforcement of the law before a serious problem arises, the Hungarian economy may be a winner in the end.

BBJ

2Business In the latest sign of the spread of dual education in Hungary, automaker Opel is hoping to increase the pool of engineers and other skilled workers at its plant. ZSÓFIA VÉGH

German automaker Opel’s American parent, General Motors has announced plans to invest €1.7 million to set up a regional financial and training center at its engine factory in Szentgotthárd in western Hungary. In opening the center, Opel, one of the four big carmakers present in Hungary,

is following multinational manufacturers such as Bosch and Audi, which seek to grow their own talent in Hungary. These companies are tapping the benefits of the dual educational system introduced to boost the number of skilled workers. Used most successfully in Germany, dual vocational training combines the theory learned in classroom with practical experience picked up at the workplace. “Beyond ensuring a supply of highly− skilled, qualified workers in the long run, we can train existing workers,” factory director Tamás Solt told the Budapest Business Journal via email. “The center also allows for product development and may help boost further investments,” he added. Opel will start vocational and practical training for engineer students this September, with the aim of having 62 vocational students next year and 30 engineering students by 2017. The National Economy Ministry has allocated HUF 154 mln in vocational training subsidies to help fund the

COMPANY NEWS

Auchan Magyarország sees HUF 326 bln revenue in 2014 French-owned Auchan Magyarország saw revenue of HUF 326 billion last year, an increase from the previous year’s HUF 324 bln, Auchan Magyarország said on March 9 in an earnings report. According to the report, EBITDA increased by 52%, to HUF 8.5 bln, however, the company booked a HUF 12.5 bln loss on its bottom line, with approximately HUF 11 bln of the loss being bigger than the planned writedown. The report added that customers at the company’s 19 stores and 16 gas stations rose by two million to 42 million. Capital expenditures of the Hungarian units reached HUF 4.8 bln, of which approximately half went toward opening ﬁve more petrol stations. CEO Dominique Ducoux said that the chain plans no layoffs this year, due to the Sunday closures taking effect as of March 15, and added that the company expects to be proﬁtable in 2015.

Eagle Ottawa signs contract on HUF 9 bln expansion American automobile interior maker Eagle Ottawa and Ferenc Szalay, mayor of Szolnok signed a contract on a HUF 9 billion expansion investment at the Hungarian base of the company in the city in central Hungary, Hungarian news agency MTI reported on

March 27. Eagle Ottawa announced two weeks earlier that it would double capacity and expand the product palette at the base over two years. The expansion is expected to create 500 additional jobs at full capacity. Eagle Ottawa Hungary had net income of HUF 5.8 bln on revenue of HUF 26.9 bln in its 2012/13-business year, MTI said citing public records. Most revenue came from exports.

Bosch launches HUF 2.2 bln investment at hand tool plant in Hungary German engineering giant Bosch launched a HUF 2.2 billion development at its hand tool plant in Miskolc in northeastern Hungary on March 4. Bosch’s local unit, Robert Bosch Power Tool, won a HUF 1 bln European Union grant for the investment.

3M opens innovation center in Budapest U.S.-based company 3M has opened an innovation center in Budapest, 3M Hungária said on March 4. The company added that the newly opened workshop and testing facility is one of nine such centers in Europe. Visitors to the center can learn more about six of the company’s best-known products in Hungary, the company added. Hungarian news agency MTI noted that 3M Hungária has a headcount of 83.

Photo: KKM/ Zsolt BURGER

Opel to open training center in Szentgotthárd

Foreign Minister Péter Szijjártó at the announcement of the development of the new training center. center. The company has pledged to use the facility for vocational training

and to keep the number of apprentices at a certain level for at least five years, the ministry writes on the government website Kormany.hu. Since it opened its factory in Szentgotthárd in 1992, Opel has reportedly invested a total of €1.5 billion in Hungary. By the end of 2014, 1,400 employees worked in the factory, and Opel says it is planning to hire 500 more this year. The aim of the carmaker, which has sold the most cars in Hungary in four consecutive years since 2011, is to produce nearly 580,000 engines this year, one million in 2016. Elsewhere in Hungary, General Motors said it is also planning to set up a business financial service center in Budapest, creating 40 jobs. The Budapest center, along with a twin in Poland, is to service all of GM’s European businesses. The company says it operates two other centers of a similar size: one in Asia, and the other in the United States.

Pikopack completes HUF 2.1 bln investment Suzuki launches production of Vitara in Hungary Packaging company Pikopack wound up a HUF 2.1 billion expansion at its Hungarian base in Füzesabony in northeastern Hungary, the company announced on March 4. The project was supported with a HUF 1 bln European Union and state grant, and is responsible for the creation of 20 new jobs. Hungarian news agency MTI noted that Pikopack, which produces food and aerosol cans, exports almost 40% of its output. In 2013, the company’s revenue exceeded HUF 8.5 bln, the news agency added.

Harman plans HUF 3.5 bln expansion in Hungary U.S.-based audio equipment producer Harman will expand its Hungarian unit in Pécs (southwestern Hungary) with a HUF 3.5 billion project, Hungary’s foreign ministry reported on March 5. The investment is expected to create 420 jobs, raising headcount at the company’s Hungarian unit to more than 2,000. The company will receive a HUF 750 million state subsidy for the investment, foreign minister Péter Szijjártó said. Harman supplies audio systems to carmakers such as Audi, BMW, Daimler, Porsche and Land Rover.

Michelin plans €40 mln expansion in Hungary French tire producer Michelin said on March 5 that it was planning to expand production at its Hungarian base in Nyíregyháza (in northeastern Hungary) with a €40 million project. The investment is expected to raise the plant’s daily output to 6,900 by the end of 2017 and raise headcount by 100. Michelin produces high-performance tires in Nyíregyháza.

Japanese car producer Suzuki has launched production of its new Vitara model at its Hungarian plant in Esztergom in northern Hungary, the company announced at the opening ceremony on March 5. “Suzuki places Magyar Suzuki as a signiﬁcant strategic hub, and will continuously expand its production,” Suzuki chief executive Osamu Suzuki said. Suzuki started preparations for Vitara production more than two years ago, spending approximately €160 million in the process, the CEO added. The carmaker established its unit in Hungary in 1991. Since then, Magyar Suzuki has turned out eight models, including the Swift and the Splash. Accumulated production reached 2.5 million units last year. ADVERTISEMENT

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08 2Business

Budapest Business Journal | March 13 – March 26, 2015

Staff credited for Corinthia’s latest honor The Corinthia Hotel Budapest is named Hungary’s five−star Hotel of the Year for 2014. BBJ STAFF

When the Cornithia Hotel Budapest brought home Hungary’s top prize of Hotel of the Year for 2014, Corinthia general manager Thomas M. Fischer put the victory down to people. “It’s a real team sport, and we had a great team behind it. There were so many people involved in the effort that that it was clearly a staff award,” said Fischer. He maintained that the secret to the success of his luxury hotel is its people, adding that the Corinthia’s management focuses on “internal customer service” – efforts aimed at keeping the staff engaged. As a result, he said, the staff “feel a sense of loyalty to the place”, and take pride in their work. The Hotel of the Year award recognizes the Corinthia as the best five−star in Hungary. There were two winners announced for the four−star category, Mamaison Hotel Andrássy, a modernist−style boutique hotel near City Park, and the Hotel Európa Fit, a wellness hotel in the spa town of Hévíz. The winner in the three−star category was

GM Thomas M. Fischer, left, and Hotel Manager Szabolcs Szabó say a happy staff is key. BO18, a unique and arty boutique hotel in Budapest’s district eight. The Hungarian Association of Hotels and Restaurants chose the award−winners in cooperation with the Hungarian National Tourist Office, on the basis of a strict selection process. Contestants had to fill out an application form, which was 30 pages long in the case of the Corinthia. Judges also weighed feedback from Tripadvisor, the hotel’s guestbook, and the results of visits by undercover inspectors. For Corinthia Hotel manager Szabolcs Szabó, winning the prize was a challenge, as well as “confirmation that we are on the right track” with efforts aimed at encouraging staff involvement.

A large hotel With 440 rooms, the Corinthia, is Budapest’s largest five−star, says Szabó. The hotel first opened its doors as the Grand Hotel Royal back in 1896, hosting visitors to Budapest’s Millennium Exhibition, celebrating the 1,000th anniversary of the founding of the state. At the time it was Europe’s biggest hotel. The lobby is ornate and expansive, and the spa features a stunning, century−old swimming pool. “You can feel the history in the walls here,” says Szabó, who notes with a sense of irony that the Corinthia’s grand ballroom was the Red Star Cinema under communism. Yet Szabó is quick to point

out that the splendor of the Corinthia’s facilities is not enough by itself. “Without staff, you are nowhere, one of a dozen,” he says. “Without staff, you will fail.” He maintains this has been understood since 2003, when the hotel was reopened as a five−star by the Corinthia Group, a chain of luxury hotels based in Malta. “For the last 12 years, we’ve been investing in our people,” Szabó says. According to the manager, the efforts to keep the staff satisfied appear to encourage loyalty and staff dedication to their work. “I’m particularly happy that the line staff tries to think out of the box,” Szabó says. “They are creative and looking at what others do around the world.” For the coming year, the hotel is looking to make some improvements in its conference area, expanding the facilities with extra lounge services and new organizers’ offices. Also, according to Szabó, the refurbishment of all 440 rooms, which began in 2011, should be finished soon. Still, both the hotel manager and the general manager stressed that their most important investment is in their people. “The majority of the work for us is the internal drivers, employee satisfaction,” says Fischer. “We have an employee satisfaction score of 89% this year and 88% the year before, at least 10% better than the industry average,” says Fischer. “This staff could work anywhere, but they like it here.”

They hunt speed traps but obey the law to heeding the rules,” Borbély told Hungarian news portal Index.hu recently. This issue was also considered by the expert panel of Appra magyar! Hungary’s most prestigious app development contest launched by Hundreds of thousands of Hungarians the ICT Association of Hungary (IVSZ) have downloaded a nifty smartphone before it selected Traffi Hunter as app that alerts motorists if police speed the App of the Year 2014. Despite its traps have been stationed along their controversial application, experts found route. The app called Traffi Hunter was that being last year’s crowd favorite, a crowd favorite at Hungary’s biggest the mass of downloads (200,000 on app development contest in 2013, but Android, 100,000 on iOS and 40,000 last year it was chosen as the App of on Windows Phone) as well as over the Year by the expert panel assessing 20.000 daily users were evidence the entries. The developers say that they enough to warrant this year’s trophy. do not advocate breaking traffic rules IVSZ organized Appra magyar! as and that users of their app pay more part of the European Union’s Watify attention while driving. campaign, the aim of which is to support the emergence of enterprises Roland Borbély, the founder and chief based on digital technologies as developer of Traffi Hunter of course well as supporting the use of digital thought about speedsters abusing technology in other areas. the product, that’s why he contacted the National Accident Prevention Borbély also explained in his interview Committee (ORFK-OBB) operated with Index that notorious speeders by the Hungarian Police to seek their resort to more heavy-duty (and support and cooperation. sometimes even illegal) means to avoid speed detection, such as laser detectors “At first they were rather surprised but and even jammers. Traffi Hunter is aimed eventually we agreed that the users more at people who don’t want to get of Traffi Hunter pay more attention fined for accidental speeding.

contains a database where towing services can appear for a modest fee. In exchange, broken-down motorists can call them from within the app, or if they are looking for directions to a service center, the app can provide that as well.

This is reflected on the user interface of the smartphone app as well – upon startup, a splash screen is shown for a few seconds, advocating safe driving and offering various safety tips. The app is participating in the awareness campaign of ORFK-OBB, called “To see and be seen” (Látni és látszani) that adds an extra menu item to the interface where users can see where they can go to assess their vehicle’s headlights and even get an eye exam.

The enthusiastic team started their project as a hobby; every member worked on the app in their free time, after their day jobs, however, Roland Borbély is now a full-time devotee of Traffi Hunter and ever since they started seeing some income, he can also pay another full-time developer to polish the product. They are looking forward to boosting their numbers and thanks to their latest addition – the option for motorists to purchase highway passes as well as parking tickets via the app – they will soon be able to further increase their income.

Police speed trap databases are open The Appra magyar! contest was to the public so the developers of the organized under the patronage app had to think about monetizing of the National Council for their idea. A subscription model was Telecommunications and Informatics a no go, as it was recently introduced (NHIT), in association with Microsoft, by one of their competitors. They Core Venture, eNet, Telenor and opted for paid ads and that’s their Ustream. Media supporters were bread and butter even today. Besides HWSW and the BBJ, as well as traditional banner ads, the app Marquard Media.

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2 Business

Budapest Business Journal | March 13 – March 26, 2015

REAL ESTATE NEWS

Retail property firms against Sunday closings As they question the beneﬁts of the new law, retailers prepare for changes. Meanwhile, analysts warn this law, and other poorly researched, ad hoc legislation, will scare investors away. DAVID LAWRENCE

The new legislation stipulating the Sunday closing of retail units of more than 200 sqm, due to come into force on March 15, has been introduced by the Hungarian government without adequate consultation with the industry or a feasibility study of the potential benefits and losses, according to many retailers and shopping center owners and operators. This is also seen as a wider problem of ad hoc laws being introduced by the government without consultation with the relevant groups, creating perceived political uncertainty that is discouraging investment into Hungary according to many analysts. Sunday closing exemptions will include family businesses, retail outlets located in tourist areas and retail units located at hospitals and railway stations. Exactly who the beneficiaries of the new law will be remains to be seen. “It is difficult to know who will benefit: Employers, employees or consumers,” said John Verpeleti, Chairman of the Management Board – Eastern Europe Colliers International at the recent PortfolioRICS Property Valuation 2014 conference. “This is a major issue and the decision has been made without consultation with the industry. The legislation could hit turnover, rental income and VAT income for the state. These questions should have been raised before a decision was made.” Jane Petrie, Director of Asset Management and Head of CEE Retail at the German investor AEW, the owner of the MOM shopping center, which is said to be the subject of an investment deal, echoed those sentiments: “There has been no research or feasibility study with regard to the possible affects of Sunday closing,” she said.

Malls must choose The larger shopping center operators and owners are faced with a decision as to whether to open on Sundays when the new legislation comes into force. Both the MOM shopping center in Buda and the WestEnd City Center in Pest have signiﬁcant leisure elements with multiplexes, restaurants and coffee bars. Therefore it could be seen as expedient for the owners to open the centers on Sundays. However the 68,000 sqm Árkád shopping center (owed by Germany’s ECE) is

Budapest malls: Sunday plans after March 15 Allee

open

Arena Plaza

open

Árkád Budapest

talks continuing

Átrium Eurocenter

open

Campona

open

Corvin Plaza

open

Csepel Plaza

open

Duna Plaza

open

Europark

closed

Family Center

open

Hegyvidék Központ

open

Lurdy Ház

open

Mammut

open

MOM Park

open

Pólus Center

open

WestEnd City Center

open

Source: Hungarian Mall Association (www.mbsz.hu)

Association: Most malls to stay open Sundays Most shopping malls will stay open after the Sunday closing legislation takes effect on March 15, the Hungarian Mall Association said. While larger mall retailers, which have more than 200 sqm of floor space, will have to close, smaller shops, restaurants and cinemas can stay open. The association noted that similar legislation passed in Croatia was repealed within half a year and Slovenia abolished its law within a year. The association added that Austria is planning to introduce measures easing its Sunday closing law, as is France.

The WestEnd mall: The cinema and restaurants are reason to stay open on Sunday. dominated by retail, with limited restaurant provision, and the question therefore remains as to whether it would be economic for the owners to open the complex on Sundays. Sunday closing laws are in force in some parts of Europe and the argument could be made that people will just shop at other times and consumers still need to purchase essentials. According to Mike Edwards, Head of Capital Markets at Cushman & Wakeﬁeld Hungary, 15-20% of trade is concluded at shopping centers in Budapest on Sundays and it retailers estimate that 50% of this would be transferred to other days. Further, the reduced operational and staff costs of operating over six days could reduce the impact of any prospective loss in turnover on Sundays, according to another argument.

“It is difficult to know who will benefit: Employers, employees, or consumers. This is a major issue and the decision has been made without consultation with the industry.” Whether the historic areas of the city such as Váci utca and Andrássy út will beneﬁt from the new law remains to be seen, as these tend to attract tourists and highend shoppers rather than consumers who, for example, travel to Budapest over the weekend to visit a shopping center. In the wider context, concerns have been expressed by professionals from all real estate sectors over the number of changes in the law brought in by the government that are discouraging badly needed inward investment into

Hungary. With economic concerns causing uncertainty among developers, pipeline retail projects have still not gone ahead and there are no projects under construction. The next shopping center deliveries will not be until at least 2017, given the necessary lead in development period. The next scheduled delivery is the 44,000 sqm Etele City Center by Futureal. The development project is planned to become a business and leisure hub that will include retail and service elements. Work on the retail component is due to start in the second half of 2015. The only other Budapest pipeline project is the 37,000 sqm Mundo shopping center in the Zugló district of Pest by the Polish developer, Echo Investment. The two projects have already received exemptions from the restrictions on retail center development introduced by the government. What effect the Sunday closing law will have on these projects and other potential developments remains to be seen.

2 Business

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Budapest Business Journal | March 13 – March 26, 2015

PwC’s survey of Hungarian CEOs finds some optimism In its annual gauge of the mood of company leaders, the leading consultant found reasons to be cheerful. On these pages we give a summary of what PwC learned from interviewing local CEOs. BBJ STAFF

They may not be so sure about the direction of the world economy, or growth in their own country, but CEOs in Hungary express increasing confidence about the growth of the companies that they run. In PwC’s fourth annual survey of CEOs in Hungary, the percentage of respondents who anticipate global growth in the coming year dropped from 64% last year to 46% this year. And the percentage of those who expect economic growth in Hungary decreased from 55% to 51%. Nonetheless the percentage of CEOs who thought their own firms would grow increased from 72% to 82%. In all, 170 Hungarian CEOs were interviewed by PwC, between October and December for this annual survey of the sentiment of company leaders in seven key Hungarian industries: automotive, pharmaceutical and health, energy, retail and consumer industries, financial services, telecommunications and media, and manufacturing. PwC has been conducting its global version of the survey for nearly 20 years, and this year some 1,322 CEOs worldwide were questioned. Some of the more interesting results of the survey are presented on these pages, showing comparisons of the answers of Hungarian CEOs with the answers of CEOs surveyed worldwide.

“After finishing the interviews we can state that last year’s conclusions shouldn’t be withdrawn. Hungarian CEOs found their own ways; instead of waiting for outside help they are turning to new markets and customers with confidence.” –Nick Kós (CEO, PwC Hungary)

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Budapest Business Journal | March 13 – March 26, 2015

2 Business

“We experienced, surprisingly, that Hungarian CEOs use digital technology mainly to optimize existing processes and don’t take advantage of the given opportunities for innovation. However, in order to respond to the constantly changing business environment, they need to apply digital technologies and reevaluate the messages and channels while reaching out to customers. An example from our sector: We think the need for ‘real-time audit’ is close, which means that a company would be able to follow the different phases of auditing in real time. Preparing for this is a challenging task, but we believe we can create new and real value for our customers implementing this method.” –Nick Kós (CEO, PwC Hungary)

In order to enhance a company’s flexibility and to be able to project sudden changes, tightening partnership ties can be a possible way to choose. Cooperating with clients, suppliers, R&D, or even competitors, a company can achieve widespread market presence, and can gain new clients, innovation capacity and technological development with smaller investments. There are many surprising and prosperous partnership connections in our scope: We cooperate with the organizers of Tedx Danubia, a group comprizing Google, universities and chambers. If we examine other examples, I would mention the joint mobile network development of Telenor and Magyar Telekom – or a non-business related positive case, when two ‘classics’ work together for the sake of success, like Hungarian Olympic swimmer László Cseh and American Olympic swimmer Ryan Lochte. –Ádám Osztovits (Service Line Leader, Advisory, PwC Hungary)

SOURCE: All information on these pages is from PwC’s Hungarian CEO Survey 2015.

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2 Business

Budapest Business Journal | March 13 – March 26, 2015

Car makers see clear road ahead The automotive sector in Hungary is thriving, with production driving up GDP, a record number of employed workers, and growing investment. But more trained professionals and better prepared SMEs will be needed to sustain long− term success. LEVENTE HÖRÖMPÖLI-TÓTH

Plenty of champagne must have been popped lately in the board rooms of companies active in the automotive segment in Hungary. With the 2014 production value up by 18.1% from the previous year, growth figures have surpassed every expectation, and the future looks just as bright. The cheery mood was accordingly abundant at a conference hosted by the Hungarian Investment Promotion Agency (HIPA) and attended by the automotive industry’s biggest firms, suppliers and professional organizations. HIPA itself is heavily involved in development, as it provides SMEs with training to help them become automotive industry suppliers and connects them with manufacturers via an online supply−demand data base. Partly due to the engagement of evermore SMEs, the entire automotive industry now employs some 132,000 people, a 15% hike from 2013. The year 2014 alone witnessed the addition of 3,500 new jobs. “Global competition is becoming fierce, though, which requires action in three areas: Skilled labor, the supply chain and energy costs. More dual training and R&D and providing the lowest energy cost level in Europe for companies are the way to go,” Péter Szijjártó, Minister for Foreign Trade and Policy told delegates.

Ekkehard Phillip of Mercedes in Hungary and Tamás Solt of Opel in Hungary head a discussion during the March 10 conference. Interviewed at the conference, Phillip noted the benefits of a strong automotive sector. ‘One thing is clear: when the automotive industry is developing well, the economy and society are benefiting in many areas from this momentum,’ he said. ‘We are proud to have worked our way up among the country’s top businesses very quickly, a success only possible thanks to our entire team in Kecskemét.’

Some concerns, but optimism for now Some fear, however, that growth is driven by automotive dynamism to an extent that may turn out to be unhealthy for the economy. “In Slovakia, it was the same story and that’s when the crisis hit. The entire economic output went down with it,” Dénes Klujber, president of the Association of Hungarian Automotive Component Manufacturers told the Budapest Business Journal. “But I see no reason to be worried. Instead we should be happy that finally growth got going. Even if at some point a slow−down is to come, by then other sectors may gain enough strength to provide ammo to stay the upward course.” Overall key market players share that optimism. As was noted by Gerd Walker of Audi Hungária Kft., both its sales and investment were very much up. The number of cars produced shot up from

Number of workers employed in the automotive industry in Hungary

some 42,000 to 135,000 within a single year, necessitating a third shift from last September. In order to keep the pace dictated by clients, the Audi staff grew by almost one−tenth hitting the 11,000 mark. “Not only our employees benefit, however; so does the whole region,” Walker said, noting that Audi is the largest investor in the country. Suzuki is prepared to speed up as well. “We are exporting to 85 countries right now and in the next three years this number should go up to 100,” vice president Dr. László Urbán said. Ekkehard Philipp, CFO of Mercedes−Benz Manufacturing Hungary Kft., reported yet more good news. “Our success has a lot to do with the fortunate mixture of Hungarian creativity and German preciseness,” he said. As a result, 300,000+ cars have been made in Kecskemét since the opening of the factory there, including the Class CLA that is produced exclusively from the Hungarian plant. The model’s sales are seen as critical for expansion on the NAFTA market.

Seeking to encourage skilled labor 140000

105000

70000

Source: KSH

35000

2008

2009

2010

2011

2012

2013

2014

It was a widely shared notion that R&D efforts need to be promoted. Complaints were expressed that obtaining funds for this purpose has become extremely bureaucratic. “Last time it took us one and a half years to get the paperwork done,” Tamás Solt, CEO of Opel Szentgotthárd Kft. recalled. Such obstacles, however, do not seem to bother Robert Bosch Kft. “Eighteen patents per day are filed by Bosch worldwide, many of them by our Hungarian engineers. More specifically, we strive to make Hungary a major hub for developing driver assistance

solutions that would ultimately lead to the introduction of the driverless car,” CEO Javier González Pareja noted. The lack of suitably skilled labor was lamented continuously, though. The widespread introduction of dual training should address the issue. Mercedes has set up a role−model cooperation in Kecskemét whereby not only engineers, but also craftsmen are trained. Opel is opening a new facility this September, while Audi has established its own faculty at Széchenyi University of Győr. Bosch has dual training programs running in Miskolc and Hatvan, and hunts talent in informal competitions. Hungary’s main disadvantage clearly lies in low productivity, and several factors are problematic at the micro level, too. Whereas giants like Audi and Mercedes invested EUR 7.4 billion and EUR 1 bln in the country in 2014, respectively, ordinary domestic SMEs badly lack capital. “Up to 20% of our total yearly production is stuck in outstanding debt in the form of delayed payment by customers which is a huge burden,” Béla Majoros, owner of Csaba Metál Zrt. said, and reminded that it is no cake walk to become a supplier. “Apart from absolute orderliness at your premises, professionals with language skills are a must. So is a lab where all the necessary tests can be carried out to verify quality at all times,” he added. Yet the ultimate game changer seems to be identifying with the required working culture. A management campus soon to be set up by Audi in Győr, where CEOs can master the competences to turn their firm into a direct supplier, may help in this regard. At the end of the day, everybody needs to do his or her homework to make success happen.

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3Special Report Banking 2015: The worst is behind us According to the National Bank of Hungary, credit institutions in this country had a combined after−tax loss of HUF 446.5 bln in 2014, but this year is expected to be better. Péter Felcsuti, a Hungarian economist who was formerly the head of the local unit of Raiffeisen Bank and leader of the Hungarian Banking Association, spoke to the Budapest Business Journal about the current situation, and future prospects for banking in Hungary. CHRISTIAN KESZTHELYI

Without the need to make FX provisions, would 2014 have been a profitable year for banks? A: I think the banking sector as a whole would have come out in the black. It is important to remember that the banking industry is no longer homogeneous in that, from 2010, the banking industry was split into two as far as profitability, especially when it comes to the larger banks: Roughly half of those banks, four or five of them, continued to be profitable, while four or five of them continued to make losses. So probably it is a little bit misleading to speak about the banking industry as a whole.

Were there other problems that dragged on the profitability of the sector? A: Absolutely; the banks still need to continue paying taxes – I mean these extraordinary taxes, which are sometimes called sectoral or “unorthodox” taxes. They are basically taxes that are independent of the actual profitability of banks; instead the tax is calculated on the basis of the banks’ 2009 balance sheet total. So the taxes obviously continue to be a drag with regard to the profitability of the banks.

When can the Hungarian banking sector as a whole expect to start making

profits?

Do you think the provisions in the Memorandum of Understanding signed with the EBRD will bring stability to the market? A: I think it was very well received, based on the actions that followed by the banks, both local units and their parent banks. All of them actually welcomed this development and obviously they should. I think, based on some improvement in the mood, willingness to cooperate and more commitment to the market, you can expect stability going forward. Still, I would caution that, while these are very important changes, they are only the beginning of the road.

Péter Felcsuti: Banks ‘will have a clean slate as of 2015’.

“There is pressure on the banks to generate some revenue, and obviously lending is one product that a bank can use to actually do that. I would therefore assume there will be an increase in the lending portfolio of banks, albeit a modest one.” A: I would assume that, by now, probably the banks have left the worst behind them. In that sense, most of the banks, or perhaps even all of the banks, will have a clean slate as of 2015. So I would assume that the year 2015 would be a much better year for banks than the previous ones.

Are corporate banks like UniCredit, ING and Commerzbank able to avoid the pain of the FX loan conversions?

A: It is very easy for them, as they never dealt in FX loans, with the exception of UniCredit. UniCredit did have exposure in FX loans, but a very minor one. Generally speaking, UniCredit has been able to keep away from the very heavy losses that the big banks were involved in during the last year. In the case of ING and Commerzbank, they had it easy because they never participated in FX retail mortgage lending.

Do you think 2015 looks better for corporate banks than retail banks? A: In the next couple of years, I believe that corporate banking will probably see more opportunities than retail banking. For one thing, the lesson they have learnt is that nothing is sacred as far as institutions or legal protection is concerned. In other words, they are not very well protected against the government intervening in the dealings between the banks and their

customers. There is a hole opening up in the retail business, but if there is room to grow, that growth is more likely to be in the corporate banking sector rather than retail.

Can we expect an increase in lending in 2015? A: Yes, I think so. Partly because lending has been at all−time lows in Hungary in the last few years, specifically since 2008, and chiefly due to the Hungarian government’s intervention in the banking business. Now things are changing, and we also have to note the positive impact of the central bank’s lending facility, which, in a modest way, helps banks to increase their lending portfolio. There is pressure on the banks to generate some revenue, and obviously lending is one product that a bank can use to actually do that. I would therefore assume there would be an increase in the lending portfolio of banks, albeit a modest one.

Can we expect to “feel” the impact of bank−sector tax cuts, even though they don’t begin until 2016? A: I think so. This is partly about psychology and partly about the banks’ need to increase revenue. So I expect some changes in the attitudes of parent banks, in Vienna and Milan. You can expect some favorable changes, but these are not going to be very robust or very dramatic.

Do you expect the government to continue building its ownership of

banks? A: Well, it is very difficult to trace a real financial motivation for the state’s bank purchases. I don’t think these purchases could be justified by business considerations or profitability. Clearly these are politically motivated moves by the government. And because the government is now able to say “we have achieved what we had set out to do”, I do not think the government will be particularly aggressive or active in making more stake acquisitions in the banking industry. For one thing, their experiences are not very good. The industry in Hungary has recently started to feel the bite of what it means to be an investor. Just think of Széchenyi Bank, the MKB bank: There have been huge losses. Therefore, I believe that the government will be very cautious.

Do you think that some banks will leave the market, by selling their local units to the government or private owners, in 2015? Any guesses as to which ones? A: As you see, things are happening: GE sold Budapest Bank after two decades, Citibank entered the market even before them. Indeed, these banks have different motivations, but still they are leaving. One, GE, is leaving local banking for good while the other, Citibank, is just giving up a part of its business in Hungary. This is a normal phenomenon, yet I believe that this is not the end of the road. I think that some more banks could leave the Hungarian market in the future. They might find that the Hungarian market is no longer sufficient, or offers no more opportunities to make money. The Hungarian economy is currently not terribly lucrative or promising for banks to do business. So simple, medium− and long−term risk− reward calculations can dictate whether banks pull out – unless they have a very strong commitment like Erste apparently does, or they are a bank that seems to be happy here, like K&H, or UniCredit.

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Budapest Business Journal | March 13 – March 26, 2015

EXPERT OPINION

Will Hungary substantially amend its secured transaction regime again? The Secretary of Justice, realizing that the business sector requires changes to, among others, the secured transaction regime of the new Civil Code, set up a committee that will operate in the first semester of this year.

Gergely Szalóki Head of Banking & Finance SCHOENHERR HETÉNYI ATTORNEYS AT LAW

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he new Hungarian Civil Code entered into force less than a year ago, on 15 March 2014, and provided for brand new concepts regarding secured transactions. In particular the regulation of in rem security interests has been substantially changed, which generated discussion among professionals and gave rise to severe criticism. The committee of the Ministry of Justice is pledged with the task to scrutinize the criticisms and suggestions of the legal professionals and the business sector and based on that, assess whether the revision of the Civil Code, and its secured transaction regime, is necessary or not. Should the decision of the committee be positive, the draft legislation is envisaged to be prepared by the end of this year. But what new rules received such severe criticism? The critics aimed partly at technical solutions and partly at the conceptual level. It seems a pure technicality that it is not possible to pledge the shares of a limited partnership (betéti társaság), because the rules of the commercial register does not allow the registration of such a pledge, although it is theoretically possible to create a pledge over such shares under the Civil Code. To solve this regulatory deadlock situation the rules of the commercial register should be reconsidered. Again it is a technical issue that the most welcome new concept of the Civil Code, the security trustee, is rendered useless in certain cases. The appointment of the security trustee (i.e. the mere fact that the pledgees appointed a security trustee among themselves) must be registered with the relevant registry (with which the pledge itself must be registered) pursuant to the rules of the Civil Code. Nevertheless, the rules of certain registries (e.g. the commercial register) do not allow registering the pledgee in such capacity. This renders the appointment of the security trustee ineffective in respect of that particular security interest. Again the specific rules regulating the relevant registries must be reconsidered. More of a conceptual issue, and it would require the revision of the Civil Code itself, is the regulation of the transfer of contractual positions. The Civil Code stipulates that in case the lender transfers the credit facility agreement to a third party lender, the security providers must consent to such a transfer, even though

the borrower remains unchanged. Failing to obtain such consent results in losing the security interest. The criticism here is that such consent is superfluous if the borrower side of the facility agreement remains intact. This unnecessary consent requirement put on the lenders makes the sale of loan portfolios or single loans very burdensome, if not impossible. Moreover, syndicated loan structures are also exposed to this rule, since each change among the members of the syndicate would require the consent of the security providers. It is urged by critics that the rules should be restricted to situations when the transfer of contractual position is carried out on the borrower side. Critics from both the commercial and the banking sector claim that certain rules of the receivables pledge may severely harm the business of the debtors of such receivables. The Civil Code sets forth that any amendment to the contractual relationship (from which the pledged receivables stem) made between the security provider and the debtor of the receivables is ineffective from the lenders perspective; provided, that the debtor was duly notified of the pledge. From the debtor’s perspective, who is not participating in the credit arrangement but only notified thereof, this means that the debtor is expected to make payment under the receivables pursuant to the original terms when the lender enforces the pledge even if later amendments between the debtor and the security provider were reasonable or even necessary to avoid e.g. the insolvency or illiquidity of the debtor, and even if the lender would have consented to such amendments. Even the banking sector agrees that the imperative nature of this lender friendly regulation should be relaxed by providing the opportunity for the lenders to consent to such reasonable amendments to the receivables. The Ministry of Justice has entered into discussions with the legal professionals and the banking sector in order to detect the anomalies of the secured transaction regime and other regulations of the Civil Code that needs to be and may be cured during the revision of the Civil Code. We trust that the efforts of the business sector and the work of the Ministry of Justice will result in a more reasonable regulation of the Hungarian secured transactions as well as any other regulation that is relevant to the business sector.

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Digital banking is more direct A conference in Budapest looks at the rapid changes in the way people access their bank accounts. CHRISTIAN KESZTHELYI

With the fast development of today’s technology, e−banking, also known as direct banking, has not only become an option but, with demand ever growing, a must. The term direct banking means that a client can arrange money matters at their bank, without showing up at a branch, but using an electronic device that is connected to the internet. In order to address the related issues, present the progress in the field and discuss the future, the Central European Business Center Conferences organized

People do not want to line up in their banks and wait until they are called to arrange money matters, they want to do it instantly, preferably using their smartphones. the “E−banking summit 2015” in Budapest on March 5 to establish ground for professionals to share experiences. As any consumer knows, the way we pay is changing quickly. Cash first started to be replaced by bankcards towards the end of the 1960s in London, and almost half a century later there now seems to be a tendency to move on from bankcards to mobile phones, or more precisely smartphones. “People do not want to line up in their banks and wait until they are called to arrange money matters, they want to do it instantly, preferably using their smartphones,” Tibor Berkes, Head of Financial Services at Telenor, told the conference. “As we see the future, banking services will change rapidly, moving towards smartphones.” Client needs and demands are constantly changing and the wide− spread use of smartphone applications obviously boosts direct banking, according to Berkes, who believes that in order to provide top−notch e−banking services for clients, an inevitable prerequisite is a good, fast and reliable mobile internet. “The foundation of direct banking lies in mobile internet and smartphones,” Berkes adds. Zoltán Hivekovics of Hewlett Packard Hungary pointed out that more than 1.75 billion smartphones are being used in the world, running more than 80 billion applications. “There is a corporate

Zoltán Hivekovics: ‘A corporate mobile revolution’. mobile revolution taking place at this moment,” Hivekovics said. He added that the schedule for the development of an application is not only speeding up, which means there are closer deadlines, but there are more development phases on the agenda than ever.

Simplicity and security A key factor that needs to be kept in mind is that “users expect simplicity”, Berkes argues. Beyond that, another important factor to note is that users need to trust in the security of the system, therefore great emphasis needs to be placed on the matter. Tamás Zsemlye, also of Hewlett Packard, noted that 84% of malicious attacks are aimed at smartphones, exploiting loopholes in applications. In order to address emerging security issues, the company is developing HP Fortify Static Code Analyzer, which helps verify that software in use is trustworthy, reduces costs, increases productivity and implements secure coding best practices. It scans the source code and identifies root causes of software security vulnerability in order to help close gaps in the program’s security. Financial fraud is a serious risk in the banking industry, with damaging consequences. According to Kaspersky Lab, such dangers are becoming more complex year−on−year, and as cyber attacks are complicated by nature, they need to be addressed via a comprehensive and multi−layered approach. Kaspersky Fraud Prevention focuses both on user protection and server side and management protection, in order to defend against attacks. Technological innovations have indeed created a fast−paced race for services and companies, and apparently one can only maintain market presence if one has the ability to adjust to the fast− moving circumstances of the market and has both willingness and capability to change and improve. In the not so distant future, you may not need a wallet anymore, just your smartphone to store all your personal data and money, which on the one hand is rather comfortable, however, on the other hand it also carries many risks.

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Budapest Business Journal | March 13 – March 26, 2015

Local real estate funds increasingly active Hungarian property funds are taking up the slack left by larger institutional funds. DAVID LAWRENCE

An increasing number of funds investing Hungarian money are now active in the property investment market, providing something of a cushion from the fluctuations in international investor sentiment. These local funds are in effect buying stock that in better times was purchased by the Austrian, German and UK institutional funds. While local investors are strong, they are not able to compete with cross−border institutional funds for the big transactions. However, local funds are active alongside international funds in Central and Eastern Europe, especially in the thriving Polish and Czech investment markets. The investment markets in these countries have expanded to regional cities outside the capital and to value−add products. “In 2014 Hungary witnessed its highest transaction volume since 2007 with a total volume of just over €580 million, out of which income producing assets represented around €450 mln,” reports Jones Lang LaSalle (JLL). “Investor appetite has gained momentum for Hungarian assets due

Hungarian buyers dominated the local property investment market in 2014, with a market share of 37% – an all time high. to improving market conditions and the attractive prices compared to Poland or the Czech Republic.” Despite positive parameters for Hungary, JLL research reflects the gulf that exists between the country and its neighbors. The company noted €3.2 billion in business for Poland, €2 bln for the Czech Republic, €1.3 bln for Romania and €610 mln for Slovakia. According to CBRE, Hungarian buyers dominated the Hungarian property investment market in 2014, with an overall market share of 37%, marking an all time high. The EU−15 reportedly made up 31% of the Hungarian property market, but buyers from the Middle East (16%) and the United States (12%) are beginning to challenge their dominance. The Hungarian open−ended property fund Torony Real Estate Investment Fund, managed by Diófa Fund Management, a member of the FHB Group, has purchased the 17,800 sqm Green House office center from Skanska Property Hungary. The fund, which concentrates on such prime products as well as value−add properties, also

Eiffel Square: Sale will send a message to international buyers. acquired the first generation Óbuda Gate office center in Óbuda.

Three big local investors “The Hungarian funds Diófa, Erste and MNB were responsible for 80% of office investment activity in 2014,” says Mike Edwards, Head of Capital Markets at Cushman & Wakefield Hungary. “Moving forward, the Eiffel Square and AEW portfolio sales will send a message to international buyers. In general European investors have too much to spend.” The Erste Open−end Real Estate Investment Fund acquired the 11,000 sqm north wing of Futureal’s recently completed Vision Towers office center. The complex, located in the Váci út business corridor, was delivered in August and preleased to KPMG for its Hungarian headquarters. In another local deal, the centrally located

landmark Eiffel Palace, built by Hungarian firm Horizon Development, was purchased by the National Bank of Hungary (MNB) for a reported €45 mln. A number of big ticket office and industrial transactions are expected in early 2015, with investment volume is forecast to be around €700−800 mln for the year. With regard to further deals, the portfolio owned by the German investor AEW Europe (the 27,000 sqm MOM Park with 30,000 sqm of retail and 20,000 of office space, the 27,000 WestEnd Business Center and the 13,000 sqm MKE office center) is reported to be under due diligence. In addition the sale of the 23,000 sqm Eiffel Square office and retail center, owned by Convergence and Europa Capital, could complete in the near future. Both these purchases are expected to be completed by international funds.

Property owners work hard to go green Viktória Magyar and Miklós Szebenyi, the co-heads of property management of JLL have been involved in numerous sustainability projects in the last few years. They agree that environmental consciousness is linked into all activities related to real estate. The property management (PM) team of 18 professionals with more than ten years property market experience manages a real estate portfolio of 250,000 sqm including “A” grade office buildings, retail outlets, shopping centers and logistic properties. The team is proud of the success of one of its represented office buildings in obtaining the BREEAM Excellent In-Use certification with the highest score in CEE. According to its corporate philosophy and the re-shaping market trends, JLL puts greater emphasis on sustainable building management and thus became the member of the Hungarian Green Building Council in 2015.

Viktória Magyar and Miklós Szebenyi, the joint heads of property management of JLL.

sustainable,” said Szebenyi. “The most significant energy consumers are the building engineering equipment, thus modernization of these is obviously a primary task. The first step is setting up a modern and flexible building management system (BMS). Even though changing the lighting can be visually dramatic and it is worth considering its modernization because of the quick return rate, it is responsible for only a minor part of energy consumption,” he explained. “When we take over the management of a property, we take a snapshot of “There are a number of specific solutions the equipment and its operation and and innovations making real estate prepare a detailed list of proposed

changes, prioritized by the financial return. Technology has improved a lot in the last few years, hence heating, cooling, and lighting system are always at the top of the list of upgrading tasks. Depending on the age of the building, a 10-30% reduction on energy consumption is realistic. There are also several methods to decrease water consumption with minimal development costs.” Repositioning and restructuring the properties may lead to significant results. It is important to obtain green certification for tenant marketing, although the main target is to decrease service charges substantially through reducing the use of utilities and promoting selective waste management to the maximum. The property owners support efforts to minimize environmental pollution in order to meet their own corporate as well as EU requirements. Nevertheless, it is the key to reach cost savings that improve the competitiveness of the asset.

“During the building re-structuring process a few key aspects and requirements should be taken into consideration,” said Magyar. “A fine balance inevitably has to be struck between the level of comfort and the maintenance requirements of the new system. Obviously, more attention will require more work input, the majority of which can be fulfilled by a modern BMS, but the extra effort should be reflected in the results. A large proportion of new developments can be carried out in the course of regular maintenance, while the rest requires special permission of the building owner.” Today a large number of corporate occupiers require a work place in a sustainable environment in a certified green property. There is a rising trend towards environmental consciousness in selecting and maintaining workplaces, and tenants prefer high quality, modern, sustainable, and green properties.

JLL is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual fee revenue of $4.7 billion and gross revenue of $5.4 bln, JLL has more than 230 corporate offices, operating in 80 countries, and has a global workforce of approximately 58,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 316 million sqm, and completed $118 bln in sales, acquisitions and finance transactions in 2014.

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EXPERT OPINION

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Budapest Business Journal | March 13 – March 26, 2015

Raiffeisen bullish on Hungarian property In this exclusive interview with the Budapest Business Journal, Ákos Csobádi, who oversees property investment as head of the Project Finance and Syndications Department at Raiffeisen Bank in Hungary, discusses the real estate investment activities of his bank and assesses the property market in general.

quite a low base, and the activities in the real estate market are still below the pre− crisis level and also below that of some neighboring countries in the region.

OTP reportedly forecast 95,000 property transactions would be made in Hungary in 2014, up from 88,000 in 2013 and 86,000 the previous year. What’s your prediction for 2015? In your view, what would be an ideal volume for the market? A: In my view, a slight increase is realistic in a market driven by the factors I mentioned before. I would separate residential transactions from commercial. Measuring residential property sales is rather about the number of transactions, while measurements of commercial sales focus on the total volume. As I see it, a 5−10% increase in residential transactions is realistic, but it can be even more if we take into consideration that several properties will become more affordable due to decreasing mortgage liabilities as described in the Settlement Act. In the case of commercial transactions, we can expect this year to be at least similar to last year.

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Raiffeisen has decided to keep up its business activities in Hungary. What are the long−term plans of the bank? A: The bank aims to remain one of the largest universal banks here in Hungary, with a strong focus on the corporate sector, private and premium banking segments. In commercial real estate financing, we have a strong Project Finance and Syndications Department, which undertakes notable deals in the market. We are the largest commercial bank partner of Eximbank and regularly team up for syndicated deals with them. A prominent recent example was our cooperation on financing for Hankook Tire, to help pay for that company’s recently announced expansion of its production capacity in Hungary.

“The target is to return to positive profit after taxnumbers in 2016, a goal that is supported by the positive macroeconomic situation in Hungary and also the recently announced reduction in the banking tax.”

Raiffeisen Real Estate Fund has a well−diversified portfolio. What are the elements of a profitable property portfolio? A: The portfolio includes offices, bank branches, retail and industrial real estate. We focus on cash−flow generating properties.

What percentage of the property fund’s capital is invested in buying and selling, leasing and building properties?

Q Ákos Csobádi: His deparment ‘undertakes notable deals’. A: In the last couple of years, the fund has not been active in buying new properties, but some sales were completed. Currently there is no new development in the fund, so our leasing activities are focusing on our current real estate portfolio – including keeping good tenants and refilling properties with tenants.

What was the latest major investment of the Raiffeisen Real Estate Fund? A: It was the so−called Parkway Office Building – the MÁV headquarters – developed before the financial crisis. It’s an office building close to the new Ferencváros Stadium and it is mainly leased by MÁV [Hungarian State Railways].

What criteria does the fund consider before buying a property? A: The investment objective is to set up an income−generating portfolio that is well diversified. This is always the fund’s goal.

The real estate market has been lifeless for several years. Do you think the market is improving in Hungary? A: We think there is a positive trend in the real estate market. We experienced that last year, and we expect this trend will continue this year too. Both in the residential and commercial real estate market, we see a chance that 2015 will be at least as good as the year before.

“We think there is a positive trend in the real estate market. We experienced that last year, and we expect this trend will continue this year too. Both in the residential and commercial real estate market, we see a chance that 2015 will be at least as good as the year before.”

What factors have boosted the property market? A: I think the main factors include some issues connected to the banking industry. For example, there is more accessible funding, thanks to the lower interest rates in the market – due to both the base rates (BUBOR and the EURIBOR) and margins. Meanwhile, the subsidized program of the Hungarian National Bank’s “Funding for Growth” scheme is a further factor increasing development activity on the real estate market. Moreover, we now see a better macroeconomic outlook and environment in the country, and that is also important for investors. I think these are the main factors, but it should be also noted that we have

There is also more financial pain for the banking sector itself. Policy makers have imposed several taxes and legislative changes on lenders in Hungary. How did these changes impact Raiffeisen’s banking and real estate business? A: We are proud that we have arranged new financing for several real estate transactions and developments recently, so that, in the past three years, we have contracted more than €100 million in loans, including large−scale office developments like Futureal’s Vision Towers, or HB Reavis’s Váci Corner Offices. But the changes in legislation have meant that Raiffeisen has to focus solely on the most promising business opportunities – those that offer stable cash−flow generation, a strong sponsor background, etc. We also face stricter banking regulation, meaning higher equity requirements for real estate loans. Nonetheless, it can be noted that Raiffeisen was among the few banks that were active in the commercial real estate financing market before the crisis and have remained active until now.

What steps have been required from the parent enterprise to maintain the Hungarian subsidiary? A: RBI, one of the largest banking groups in the region, has supported the Hungarian Raiffeisen Bank with equity injections during the past few years, to provide enough room for new lending opportunities. The situation was caused by the crisis, the banking tax and legislative changes regarding the banking industry, including the Settlement Act and fair banking regulation. The target is to return to positive profit after tax−numbers in 2016, a goal that is supported by the positive macroeconomic situation in Hungary and also the recently announced reduction in the banking tax.

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Although the loss was expected, Q4 turned out to have a positive result.

EXPERT OPINION

Licensing intra-group financing activity?

BBJ STAFF

While it booked a loss for 2014 as a whole, OTP Bank’s consolidated fourth−quarter after−tax profit rose sharply to HUF 10.9 billion from the same period a year earlier, albeit from a low base, Hungarian news agency MTI reported citing an earnings report published on March 6. Upon publishing the report, OTP Bank CEO Sándor Csányi said the bank will keep its promise to pay dividends despite a reported consolidated after−tax loss of HUF 102.3 bln for the full year. The bank expects to pay a HUF 146−per−share dividend on 2014 earnings. According to the report, diluted earnings per share in Q4 came to HUF 41, while net interest income fell 2% to HUF 155.8 bln. Net revenue from commissions and fees edged down 1% to HUF 44.5 bln. Operating costs also fell 1% to HUF 106.5 bln. Risk costs narrowed to HUF 77.3 bln from HUF 91.6 bln in the base period. MTI said that OTP’s Hungarian businesses generated after−tax profit of HUF 35.9 bln in Q4, while its foreign subsidiaries racked up a loss of HUF 25.6 bln, mainly due to a HUF 21.1 bln loss in Ukraine. The report said that OTP’s after−tax loss of HUF 102.3 bln for the full year followed an after−tax profit of HUF 64.1 bln. Compensation OTP must pay retail borrowers under borrowers relief legislation weighed on the bottom line. The legislation requires lenders to pay refunds for using exchange rate margins when calculating repayments on FX loans as well as for making unilateral changes to loan contracts. OTP reportedly booked a HUF 193.4 bln loss against the regulatory changes affecting retail contracts for the full year. The amount was reduced from an initial HUF 216.6 bln booked in Q2, after lawmakers approved the legislation. OTP’s earnings were also hit by risk costs related to its exposure to the Ukraine crisis. It booked a HUF 9 bln

Csaba Ember Senior Associate GIDE LOYRETTE NOUELD’ORNANO IRODA

OTP Bank CEO Sándor Csányi. cost due to exposure in Crimea from the second quarter and a HUF 28.9 bln cost from exposure in Donetsk and Luhansk from the third quarter, the report stated. Excluding the impact of the borrowers relief legislation as well as other one−off effects, OTP calculated that its earnings would have reached HUF 118 bln last year, it added. Data suggests that full−year net interest income slipped 3% to HUF 636.2 bln but net revenue from commissions and fees rose 2% to HUF 169.6 bln, while operating costs declined 1% to HUF 411.5 bln. Total risk costs rose 1% to HUF 274.7 bln. In accordance with the report’s figures OTP’s balance sheet shows the quality of its loan portfolio improved as the ratio of non−performing loans to gross client loans fell to 19.3% from 19.8% between the end of 2013 and the end of last year. OTP reportedly noted that loans in Russia accounted for 8.7% of NPLs and loans in Ukraine for 5.5%. The bank had total assets of HUF 10.9711 trillion on December 31, 2014, up 6% from 12 months earlier. Net assets fell 16% to HUF 1.2642 tln during the period. Gross client loans fell 7% to HUF 6.9933 tln. Retail loans were down 4% at HUF 4.7253 tln. Corporate loans fell 12% to HUF 1.9762 tln. Client deposits rose 12% to HUF 7.6735 tln. OTP also noted that the group had liquid reserves of close to the equivalent of €7 bln at the end of 2014.

Orbán: Banks should agree to lend more if tax is cut BBJ STAFF

The Hungarian government hopes to sign agreements with banks under which they would increase lending in exchange for a reduction in the bank levy, Prime Minister Viktor Orbán said on March 6. Hungary’s bank levy is to be reduced starting in 2016 under a memorandum of understanding (MoU) signed by the

government and the European Bank of Reconstruction and Development (EBRD) on February 9. The MoU did not contain any conditions for the reduction but it did specify the new lower rates for 2016 and 2017 and set June 19 as a deadline to submit the necessary legal amendments to parliament. While analysts have said the tax cut promises to increase lending, Orbán apparently wants banks to put that promise in writing.

Large group of companies often finance operational and capital expenditures of their Hungarian affiliates not only through intercompany loans but by way of purchasing debt. Recent regulatory changes in Hungary may force such large entities to reconsider their intragroup financing activity which affects their Hungarian affiliate since some of these activities may require the license of the Hungarian regulator.

ntra-group financing arrangements have long been used as means of centralizing a group’s cash and currency, as a preferred way of funding certain transactions within the group. Intra-group financing relates mainly to loans and guarantees, but also to foreign exchange swaps, and similar financial transactions such as purchasing debt. The methods of one group member providing funds to other members are very diverse and can be based on direct agreements or cash-pooling arrangements, to name but two.

It is slightly more than a year ago now that a new Banking Act entered into force, in 1 January 2014, replacing the previous one. The current Banking Act introduced some new regulations that may heavily influence the intra-group financing activity of large corporates. Under the previous banking act, intra-group financing activity could be carried out without asking for a licence of the National Bank of Hungary. The reason for this is that, under the old Banking Act, both the purchasing of debt and intragroup financing activity was included in the definition of loan granting activity, and it was expressly stated that intragroup financing can be pursued without a licence from the National Bank of Hungary. The current Banking Act has changed the definition of granting loans, and debt purchasing no longer falls within

this financial service. Currently, debt purchasing is regulated as a stand-alone financial service that may be performed if the National Bank of Hungary grants its respective licence. Although, intra-group financing activity is still not subject to a licence from the National Bank of Hungary, it covers only granting loans and excludes debt purchasing. This means that those groups who have a Hungarian member should reconsider the activity of their intra-group financing entities and how to satisfy the financing needs of such Hungarian group members, since under the current Banking Act the purchasing of debts in Hungary may require a license from the National Bank of Hungary. If this is the case, such activity can only be performed in Hungary by a regulated financial institution holding the required licence. Such a financial institution may be established in Hungary, but it requires a rather time consuming licensing procedure by the National Bank of Hungary. However, no licence from the National Bank of Hungary is required for the provision of financial services (such as debt purchasing) provided in Hungary by credit institutions or certain financial enterprises registered in another member state of the European Economic Area, carried out as a cross-border activity. In practice, this means that if there is a financing entity within the group that is registered in another EEA member state as a credit institution or financial enterprise (and in the latter case it also meets some other criteria set out in the Banking Act), then it may purchase debt within the group without requiring a licence in Hungary. However, questions may be raised as to whether purchasing the debt of a Hungarian member company by a foreign group financing entity would qualify as a transaction performed outside of Hungary. If this would be the case, the transaction would fall out of the scope of the Banking Act, and such licensing issues would not be applicable either. This question can always be answered by taking into consideration all the circumstances and conditions of a certain transaction, but on the basis of the respective guidelines of the National Bank of Hungary it is rather unlikely that the regulator would draw the same conclusion.

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OTP to pay dividends despite loss for 2014

Budapest Business Journal | March 13 – March 26, 2015

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4 Socialite Museum of Fine Arts gets new look Budapest’s Museum of Fine Arts recently closed for renovation, and is not due to reopen until 2018. The Budapest Business Journal spoke with László Baán, the museum’s director general and the government commissioner in charge of developing the new Museum Quarter, about the work being done, and the results we can expect. ANDRÁS ZSÁMBOKI

The ordinary museum visitor might wonder why the Museum of Fine Arts of Budapest has to be renovated again. The façade is beautiful and the inner areas look neat. It is even more surprising that the museum has to be closed. At previous refurbishments, business went on as usual. A: Connoisseur visitors are not surprised at all. The museum is more then 100 years old; technically speaking, the building is rather decrepit. In the past few decades the building has only been partially reconstructed; in 2005−2006, for example, only the museum’s façade was renewed. The area currently planned for reconstruction is the biggest since the change of regime in 1990.

Thanks to the Liget Budapest Project, it is now possible to renovate a hall in the museum that has been closed to the public since World War II. The Romanesque Hall is an imposing area occupying more than 900 sqm. Its name refers to the style of its interior. It resembles a Romanesque basilica with three naves. The damaged parts have been only partially repaired since World War II. Until now, this hall has been used as the warehouse of the museum. As part of the reconstruction, certain sections of the building’s bad roofing are also going to be repaired. The outdated mechanical, electrical, and plumbing networks are going to be replaced with much more modern ones. Air conditioning will also be installed; that will serve not only the comfort of the visitors, but it is also essential in terms of protecting the exhibited works of art. We are creating new exhibition and storage areas. As the construction is rather extensive, it is not possible for us to keep the museum open while the work is on going.

There are further secret areas apart from the Romanesque Hall. The Michelangelo Hall is also going to come out of a long period of being hidden from public view (it is currently used as office space), and one of the museum’s inner gardens will again be accessible to the public as well. Are the future functions of these areas already known? A: The Romanesque Hall has been greatly underused during its time as a storage facility. Its walls are decorated by beautiful frescos; it is a shame these are hidden from the public. The old Hungarian lapidarium of the Hungarian National Gallery will be placed here, along with replicas of two famous carved Romanesque gates, one from Freiburg and the other one from Gyulafehérvár. The smaller Michelangelo Hall will be used for chamber exhibitions.

László Baán.

What will happen to the underground exhibition space? A: As a result of the reconstruction, a new exhibition, storage and community space will be created there. Now there are two smaller exhibition areas, these and the area between them will be combined into one large exhibition area. This will be 1,200 sqm in size, and much more modern than the one we currently have. Still underground, but at a new location, a cloakroom and a restaurant will be created.

What kind of permanent exhibitions will be organized in the renewed museum, and in what sense will they be different from the ones you have now? A: When the Museum of Fine Arts was founded more than 100 years ago, it was designed as a national art institution that would collect both international and Hungarian art. In the communist period, however, following the Soviet model, the

international collection was separated from domestic works of art. Hungarian artists’ works were removed from the walls of our museums in two steps, first in 1957 and later in 1975. A new institution, namely the Hungarian National Gallery, was created for the exhibition and storage of Hungarian art. Due to that arrangement, the chance to show Hungarian art in an international context was lost. The new National Gallery, planned for Városliget as part of the new Museum Quarter, will make the synthesis possible again. Hungarian and international pieces of art will finally be shown together as it is done in most Western European collections. In the Museum of Fine Arts, works from antiquity and the so−called Old Masters will be shown. Late 18th century art will also be exhibited there. In the new National Gallery, art created between 1800−1950 will be shown to the public with, of course, Hungarian and international works of art together.

How much will the reconstruction cost? A: The total cost of the reconstruction will be HUF 8.5 billion, almost half of which will be spent on renovating the Romanesque Hall.

Where will the money come from? How certain are the financial resources? A: The Liget Budapest Project has a HUF 150 bln budget and the expenses of the reconstruction are separated for us. The deadline for the Liget Budapest Project is March 15, 2018. That includes the building of the new museums, the reconstruction of current ones, and landscaping. The completion of the project is regulated by several governmental decrees, and even a law was passed in order to secure the necessary conditions. As the government has done thus far, it will cover expenses at the required pace in the future as well.

RIPPL-RÓNAI AND MAILLOL – The Story of a Friendship 17 December 2014 – 6 April 2015 József Rippl-Rónai had at least as great an impact on modern Hungarian art as Aristide Maillol had on modern European sculpture. The friendship between these two influential artists, and the artistic documents of their relationship, are the focus of an exhibition which opened at the Hungarian National Gallery in December 2014. Presenting close to two hundred works, this exhibition also features the art of painter friends who were members of the avante-garde artists group known as Les Nabis (Pierre Bonnard, Maurice Denis, James PitcairnKnowles, and Édouard Vuillard) and the Parisian environment, through works held by the Museum of Fine Arts and the Rippl-Rónai Museum. József Rippl-Rónai met Aristide Maillol in Paris around the year 1890. The two young artists formed a lifelong friendship, and supported each other in their artistic endeavours. This exhibition commemorates the friendship of these two extraordinary artists, and attempts to highlight the influence they exerted on each other. The exhibition includes one of Rippl-Rónai’s masterpieces, his portrait of Maillol from 1899. This painting, kindly loaned to us by the Musée d’Orsay in Paris, was last seen by the Budapest public almost 80 years ago. There are also sketches, carpets and small sculptures by Aristide Maillol – a total of almost forty works. Prints and drawings by Maillol and other members of the Nabis, loaned by the Museum of Fine Arts Budapest, are also on show at the exhibition.

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4 Socialite

Budapest Business Journal | March 13 – March 26, 2015

Small firm navigates Magyar The Budapest Business Journal met with co−founder of Proton Cinema, Viktoria Petrányi, to speak about the challenges of navigating the world of film production in Hungary and the dedication required to stay on course. ANIKO FENYVESI

Kornél Mundruczó and Viktoria Petrányi launched Proton Cinema in 2004, initially to develop and produce their own films. The pair met while attending the University of Theater and Film Arts in Budapest. Petrányi was studying to become a creative producer, while Mundruczó was honing his skills as a writer, director and actor. They began working on each other’s projects from the early

stages of their studies and formed a strong professional bond through a shared vision to tell compelling and relevant stories. Petrányi explains how her role as creative producer has helped her develop a diverse skill set, but it’s her good sense of strategic leadership that helped her through the process. “You enter at the earliest stage of a project, with a sense of how the content in question could be relevant for society, for the audience, and the market. You set all the strategic rules for it, not only financial but also what kind of market you are targeting, what message you want to deliver, what the artist’s requirements are, how the artist feels about the project and how it is relevant to their career,” she explains. The process is very complex, from the first inklings of an idea all the way to production and distribution. It is here that her abilities as a strategic leader are really put to the test. Since the founding of the company, Proton’s focus has been on creative content production, including supporting the work of local filmmakers, but to achieve this they needed to come up with a business strategy. “Generating a profit in the Hungarian market – or even with a Hungarian film on the international market – is quite challenging,” Petrányi says. This is how the idea to create a production services arm, Proton On−demand,

Viktoria Petrányi.

Kornél Mundruczó.

came to be. “I was hoping to find a sustainable model and this came through production services and also, funnily enough, through our theater department,” Petrányi explains.

“When the previous fund was closed and the new one opened, we were all very concerned that it would be too political, it would be centralized and it would reclaim many of the rights that producers and auteurs should have,” says Petrányi. She has, however, seen the fund evolve through first−hand experience. “During the last two years, some interesting things came to light: That the fund is not political, in other words it’s independent in terms of content and it has a professional and strong structure... and indeed there are still important issues to improve, which are

State funding is key State funding has also played a vital role in their road to success. Despite much of the criticism leveled at the Hungarian National Film Fund headed by the rather controversial figure of the Hungarian−born Hollywood producer Andy Vajna, Proton has found a way to navigate the system.

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Spring Festival: Classical music and more This year the much acclaimed Budapest Spring Festival will celebrate its 31st anniversary with a host of exciting events running from April 10 to April 26. Festival director Teodóra Bán spoke with the Budapest Business Journal about the concept behind one of the country’s most important music festivals and also shared some of her recommendations from the program. Guard. One of Verdi’s most popular J. A. Hasse: Siroe, King of Persia and spectacular operas, Aida is set Vígszínház, April 18, 7pm in the time of the pharaohs, just as This semi-staged performance of Ethiopia is being conquered by Egypt. German composer Hasse’s rarely heard baroque opera arrives to Budapest Gershwin Piano Quartet following performances in Weimar. The Vigadó, April 13, 7:30pm opera was written in 1733 and has been Four pianists at four concert modernized for contemporary audiences pianos improvise the songs and through the concept of countertenor popular orchestral works of the Max Emanuel Cencic, who also sings legendary pianist and composer the leading role. The opera also stars as well as pieces from Gershwin’s Russian soprano Julia Lezhneva and is renowned contemporaries including conducted by George Petrou. Rachmaninoff, Prokofiev, Tchaikovsky and Bernstein. The quartet was The Attraction of the Eternal One This is Bán’s second year at the helm of founded by Swiss pianist André Bálna Budapest, April 18, 8pm the Spring Festival and she’s excited museums, the Palace of Arts, the Desponds in 1996 and their concerts World-renowned sitar player Nishat Khan about the diversity of programs and Music Academy and the Opera have been described by the Swiss accompanied by the Saint Ephraim the new direction the festival has taken House, the choice can be bewildering, and Austrian press as marvelous Men’s Choir, presents a musical dialogue over the past few years. “Many genres Bán admits. The following are her discoveries, while praising the between Islam and Christianity at one of will be represented, classical music of recommendations for those interested consistency of the sound, and the the city’s most exciting contemporary course being the top attraction, but in exploring the wide array of musical virtuosity of the performances. venues. The evening’s program contains we will also be presenting world music programs: both ancient and contemporary and crossover genres in order to reach Fragile compositions selected in cooperation younger audiences and also to widen Verdi: Aida Bálna Budapest, April 15, 8pm with artistic director Tamás Bubnó. the palette of the festival,” she says. Guest performance by M Studio and Erkel Színház, April 10, 6pm János Mohácsi makes his operatic Sfântu Gheorghe of Transylvania Tickets for the more popular events With over 250 performances at as debut with a new production of Aida feature an engaging amalgamation of are selling fast so be sure to book many as 200 venues around the featuring Italian star tenor Fabio Sartori modern dance, physical theatre, art, soon. For more information visit city from galleries to small studios, in the role of Radames, Captain of the literature and music. www.btf.hu. Teodóra Bán is the director of the Budapest Festival and Tourism Center, the unified body, which manages all of the city’s festivals including the Budapest Spring Festival, the Budapest Summer Festival, CAFe Budapest Contemporary Arts Festival and the Winter Festival. “The idea was to divide the city into the four cultural seasons, spring, summer, fall and winter. Every season has its key events, cultural attractions, and the next in line is the Spring festival,” Bán explains.

4 Socialite

film world Disgruntled dogs take to the streets in “White God” mostly about competency, revenue share and rights,” she admits. By her estimation, the Hungarian fund is one of the richest in the region. While some filmmakers would disagree, and have been very vocal in their criticism of selections made by the fund, Petrányi’s concerns lie more in its competency, rights issues and bureaucratic requirements. “It is still more restrictive than European cultural funds in general but it’s a professional system and you can communicate with them,” she says. “You can always say no to a contract. I cannot be forced into

anything I do not sign,” she adds. It’s more the unpredictability of the economic and political systems in Hungary that could potentially be an issue for Hungarian production companies. “There is a danger for producers in relying only on the national funding system because if you are not urged to go outside of your country and find your partners internationally, to work in co−productions, then your presence in the market is at risk,” she explains. Beyond the financial stability offered through co−production partners, there is also the added advantage of being exposed

to a wider cultural perspective rather than being locked exclusively into the Hungarian market, which can be a mean beast, even in the best of times. Hungarian films have become synonymous with bleak and slow−paced narrative structures but as Petrányi explains, it’s what critical international audiences have come to expect from the nation’s auteurs. “It’s a reflection of the society and it’s pretty bleak here,” Petrányi adds. Hungarian audiences on the other hand are a tough draw. Not only do they not want to face their own predicament, but they are also heavily lured by U.S. imports which have a much larger market share here than in other European countries. “We really have to fight for our audience, which is good because we really have to work for it,” she says. Despite unfavorable market conditions, Petrányi and her team have been able to weather the storm of the financial crisis and finished a very successful year with a number of prestigious awards to their credit. With a keen awareness of her needs and the environment in which she works, Petrányi has found a way to rationalize a process that at many times may seems completely irrational; the industry in which she works is after all one of the most unforgiving. “What’s important about running a business is that I ask the same questions all the time, such as ‘Why?’ or ‘What for?’ or ‘Why on earth would somebody want to work in the film business?’ As long as I can still answer these questions and still find my answers relevant, I will keep going,” she says.

A selection from the back catalogue of films produced by Proton White God (2014, director Kornél Mundruczó) Thirteen-year-old Lili fights to protect her dog Hagen. She is devastated when her father eventually sets Hagen free on the streets. Still innocently believing love can conquer any difficulty, Lili sets out to find her dog and save him. Land of Storms (2014, director Ádám Császi) The search for our true selves takes us to unknown territories – far away from everything we believed in. Three boys in their teens search for their sexual identity. It’s a story of a sensual but fatal love triangle in the Hungarian Puszta. Johanna (2005, director Kornél Mundruczó) A young drug addict, Johanna, falls into a deep coma after an accident. Doctors miraculously save her from death’s doorstep. Touched by grace, Johanna cures patients by offering her body. The head doctor is frustrated by her continued rejection of him and allies himself with the outraged hospital authorities. They wage war against her but the grateful patients join forces to protect her.

PROMOTION

Watch That Screen! How to protect your eyes from computer screens Are you spending hours looking at a computer screen? Chances are that you will need reading glasses by the time you are 40. Staring at the screen for hours on end, day in day out, your eyes are forced to lock the focus to that short distance between you and your screen. It is not without repercussions: you get tired and irritable. The often arid, airconditioned office environment and flickering neon lights only make it worse. As a result, chronic eye dryness is increasingly affecting 10-30% of the population in Hungary. Dry air is a contributing factor but computer screens are truly the main culprit in eye dryness. Normally you would blink 22 times a minute. When reading a book or newspaper, your blink

rate is down to a modest 10. Watching the screen, you barely blink 7-8 times a minute, leaving your eyes high and dry, as blinking is crucial in maintaining the fine mucous layer that covers and protects your eyeballs. Blinking – or rather not blinking – aside, your eyes actually struggle to make sense of the computer screen. While printed letters are solid and contiguous, even the smoothest font on your screen is made up of coloured dots with less contrast, which makes them ever so nebulous. Your brain is working hard to decode the information, and so do your eyes, constantly adjusting the fine

focus back and forth, trying to sharpen the slightly fuzzy image. It is an unfair workload for the delicate ciliary muscles inside your eyes. Rolling your eyes? Gymnastics! Hard as it is when concentrating on your work, try to remind yourself not to forget to blink! It is a simple trick that does miracles to avoid eye fatigue. Failing that you might want to regularly apply lubricant eye drops, commonly called artificial tears, while at work. Refresh your vision and prevent stiffness and fatigue by taking a short break and rolling your eyes around every half hour,

Good to Know • The screen is normally further away from your eyes than the standard reading distance, therefore you need lower diopter glasses for computer work than your prescription reading glasses. Even if you can do without reading glasses as yet, it is advisable to wear a pair of 0 diopter antiglare glasses. • Contact lenses make your eyes prone to drying in the first place so you need extra care when working on a computer. • Ideally position your screen right in front of you at 50-70 cm from your eyes, depending on the screen size. The center of the screen should be 10-20 cm below your eyeline to facilitate a relaxed, slightly downward stare. • It is best to have an even, diffuse ambient light in the room, slightly dimmer than your computer screen, with complementary local lights such as a desklamp illuminating the work surface or keyboard. Avoid direct, bare light sources and glare. • Diffuse natural light from sideways is always the best ambient light for your work environment.

exercising your extraocular muscles. Dr. Ágnes Farkas, ophthalmologist at Dr. Rose Private Hospital, stresses that the fine ciliary muscles inside your eyeball that do the focusing also need regular exercise. “Doing rapid shifts of focus repeatedly should be your daily routine,” she suggests. “Look closely at your fingernails, then look up into the distance through the window for example. You also need to nourish your eyes. Blood circulation readily improves with a cold eyewash.” So simple, so effective. Having problems with your eyesight recently? Book a consultation with our ophthalmologist online or call us on +36 1 377 67 37 for an appointment.

TEL: (+36) 1 377-6737 WEB: www.drrose.hu ADDRESS: Széchenyi square 7/8, 1051 Budapest

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Budapest Business Journal | March 13 – March 26, 2015

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4 Socialite

Budapest Business Journal | March 13 – March 26, 2015

VinCE wine days continue to sparkle The sixth annual gathering of Central Europe’s wine world drew 6,000 visitors for classes, forums and some fine sipping. ROB SMYTH

The sixth VinCE Budapest held March 6−8 at the Corinthia Hotel Budapest showed what a hotly anticipated event it has become on the wine tasting calendar, continuing to pull in people from way beyond Budapest. VinCE Budapest 2015 served up an orgy for the olfactory senses and attracted in some 6,000 visitors over the three days, with tickets sold out in advance. It was a sprawling mix of masterclasses taking place simultaneously on a plethora of local and international wine themes, delivered by internationally renowned winemakers and experts. On the fringes, some 160 exhibitors also showed their wares. “The world’s most beautiful breakfast” masterclass held at 9:30 AM on the Sunday (and final) morning of the three− day enological extravaganza helped raise participants’ by now tired palates from their slumber via a shower of traditionally made sparkling wines from around Europe. Certain Hungarian sparklers showed well in the mix that also took in very good sparkling wines from Kent in England (from the Gusbourne winery), Augusti Torello Mata’s organic Cava from Catalunya, and many others from France and Italy. Hungary’s Törley Pinot Noir rosé Brut Nature got proceedings underway with a characteristic light, crispy and very refreshing number that was all about the fresh and candied red fruit, especially strawberry. To preserve and accentuate its zippiness it had received no dosage after disgorging i.e. no sugar added after the yeast was removed (it is the regular procedure with traditional method sparkling wines to add sugar as part of the liqueur d’expédition when topping). However, the Törley wasn’t raspingly dry either, as zero

dosage sparkling wines can be, thanks to the succulence of the fruit. Kreinbacher Prestige Brut from Somló had the unenviable task of following the second sparkling wine – the marvelous Louis Roederer Brut Premier NV Champagne – and struck a quite exquisite balance between freshness and richness. While not quite as elegant as its champenoise counterpart, Kreinbacher’s Brut certainly gave it its best shot and stood shoulder to shoulder with the French giant, exuding the kind of vibrancy that is seriously hard to imitate beyond Champagne itself. However, it still had those quince and pear notes typical of the Furmint grape from which it is 100% made, which give it a local touch. Indeed, one of the highlights of 2014 was

Above, vintners receive recognition at VinCE. At left is Paul Bara Brut Réserve. champagne house Paul Bara, with technology such as the Coquard presses and the yeast also coming from Champagne. In fact, Paul Bara Brut Réserve was next up at the VinCE breakfast tasting, (the wine is now being imported into Hungary by Kreinbacher). Family−owned Bara makes champagne from its own grapes, which is quite rare in Champagne (Roederer buys in around a third of the grapes for its aforementioned champagne), and comes from the Pinot Noir epicenter of Bouzy in the Montagne de Reims. Bara is not only distinctive for the high proportion of Pinot Noir it works with, but also for not putting the wine through malolactic fermentation. By forgoing the process that converts harsh malic

“While not quite as elegant as its champenoise counterpart, Kreinbacher’s Brut certainly gave it its best shot and stood shoulder to shoulder with the French giant, exuding the kind of vibrancy that is seriously hard to imitate beyond Champagne itself.” the launch of Kreinbacher’s Future Classic quartet of traditional method sparkling wines, of which the Prestige Brut is the flag bearer. While so many sparkling wines seek to impersonate champagne, few get anywhere close but these wines at least conjure up the champagne experience with Furmint providing that über crispy, structure−building acidity you expect from Champagne, for a very reasonable price starting at HUF 3,200 and ending at HUF 4,300. They are made with the help of consultant Christian Forget, who is the cellar master of ultra premium

acid into soft, milkier lactic acid, the wines retain a sharper, edgier character than is the norm. Interestingly, malolactic fermentation is usually applied to the Kreinbacher sparklers. Paul Bara Brut Réserve is 80% Pinot Noir and 20% Chardonnay, and has a great balance between power and elegance with the high acidity taking some of the aggressive edge off the bubbles. For more pronounced yeasty autolysis, which comes from the prolonged mingling of the developing wine and the less, but still with the trademark fresh bite, check out the Paul Bara Special Club or 2002

vintage bottlings. I found the Paul Bara Bouzy Brut Grand Rosé Grand Cru more exciting than the usual rosé champagne (which can be a bit on the one dimensional side) with very nicely defined and punchy red fruit. It is made from a blend of 76% Pinot Noir and 19% Chardonnay, using the direct press and saignée (bleeding off) methods, along with 5% of Bouzy Rouge (red wine). Forget is married to Chantale Bara, who has been running the house that was founded in 1833 since the retirement of her father Paul. Ruinart showed an outstanding rosé non− vintage champagne at the bubbly breakfast tasting, which was a blend of Pinot Noir and Chardonnay, 18% of which was fermented in oak. It has plentiful tropical fruit such as mango and guava alongside the more typical red fruit, and even the team at this ancient champagne house doesn’t know where this tropical note comes from. Outside the tasting, Sauska’s Tokaj Pezsgő Extra Brut Rosé, a blend of Furmint, Hárslevelű, Chardonnay and Pinot Noir, which was aged on the lees for nine months, dazzled with its energy and pristinely pure fruit. Maybe I like rosé sparkling wine after all. The Pinot Noir element was added as red wine. It comes from the Padi hegy vineyard, from where an exciting single varietal red wine is also to be released. Incidentally, sales of all champagne (i.e. the sparkling wine made by the traditional method of wine aged on the lees in the bottle in the region of the same name) in Hungary in 2013 totaled 50,657 bottles, a more than 8,000 bottle increase on 2012. Sales still have some way to go to reach the pre−crisis peak of more than 60,000 in 2008, which slumped to just 28,413 bottles a year later.

WINE GALLERY FOR BEGINNERS AND EXPERTS

DISCOVER THE BEST OF HUNGARIAN WINE CULTURE IN ONE PLACE • taste before you buy • bachelor/ bachelorette party • individual tastings (no reservation needed) • guest visit • Christmas party • company apero • gift card • birthdays Suggested for:

1052 Budapest, párizsi utca 4., •Tel.: +36 -1-235-0230 • www.cultivini.com

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4 Socialite

Budapest Business Journal | March 13 – March 26, 2015

Michelin Star awarded to 4th Budapest restaurant

Tanti is the latest restaurant in the capital to receive the prestigious recognition, sharing that rank with Costes, Onyx and Borkonyha. ADVERTISEMENT

ANIKO FENYVESI

István Pesti runs the kitchen of this relatively unassuming restaurant, located on the ground floor of a high− end shopping mall in District XII. The 46−year−old chef cut his chops at the rather exotic Babel restaurant prior to its closing, and later moved on to Baldaszti’s before disappearing into relative obscurity, only to reemerge at this Buda restaurant.

The award is remarkable in that Tanti has only been open for a little over six months. Yet, somehow, it caught the eye, or rather the palate of a discerning Michelin reviewer. The carefully selected and concise menu, many of its ingredients imported, offers up a mix of exotic and local flavors with a handful of fish or seafood options and local specialties such as mangalica pork and cabbage stew, as well as creative desserts, all beautifully

presented. On weekends, the restaurant tends to be more family−centric with a menu reflecting the more streamlined choices of such clientele. In the Michelin’s rating system, a single star represents “a very good restaurant in its category”, and is based on an anonymous review to assess the quality, mastery of technique, and character and consistency of the food. The interior and quality of service do not factor in the reviewer’s decision.

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

1ST DISTRICT

3RD DISTRICT

6TH DISTRICT

10TH DISTRICT

12TH DISTRICT

15TH DISTRICT

141 SQM – 4 ROOMS + HALL, ATTILA STREET

100 SQM – 3 ROOMS, INNER ÓBUDA

69 SQM – 2 ROOMS, BAJNOK STREET

130 SQM – 5 ROOMS, VÁLTÓ STREET

63 SQM – 2 ROOMS, EDVI ILLÉS STREET

161 SQM – 3 ROOMS + HALL, RÁKOSPALOTA

Nice view to the Tabán Park, this very spacious and sunny apartment in good condition has separate rooms, fully ﬁtted kitchen and balcony.

This very spacious family house has 287 sqm of lot, big terrace and it is located in a quiet street, in a green area.

This street facing, spacious apartment in good condition has private gas heating and it is situated in a renovated period building with elevator.

32.900.000 HUF

61.500.000 HUF

18.900.000 HUF

This three storey family house has 828 sqm of lot, 2 living rooms with nice ﬁreplace, fully ﬁtted kitchen, 2 bathrooms, terrace, balcony and garage.

Beautiful view over the forest, this completely renovated, quiet, top ﬂoor apartment has 21 sqm of terrace and open kitchen. Parking space possibility for 4.000.000 HUF.

This bright family house in good condition built on 985 sqm of lot, has fully ﬁtted kitchen, terrace, alarm system, sprinkler system in the garden and garage.

35.900.000 HUF

30.000.000 HUF

45.900.000 HUF

+36.1.201.0403

+36.1.430.1403

+36.70.322.3697

4TH DISTRICT 55 SQM – 2 ROOMS, BRÓDY IMRE STREET

94 SQM – 4 ROOMS, IZABELLA STREET

79 SQM – 2 ROOMS + HALL, BERCSÉNYI STR.

72 SQM – 3 ROOMS, ROKOLYA STREET

122 SQM – 4 ROOMS, SASHALOM

In a new built condominium with elevator, this sunny apartment has view on the around garden from the terrace. Parking lot in the common garage.

This very well divided, garden facing apartment that needs renovation has separate rooms, private gas heating and balcony and it is situated in a well maintained building.

This apartment is in good shape, needs only some redecoration work, has a private gas heating and balcony. It is situated within a nice period building.

This completely renovated, very sunny, street facing apartment has 2 balconies, private gas heating and it is situated in a modern style building with elevator.

This bright and quiet apartment has separate rooms, private gas heating, balcony and garage and it is situated in a small condominium in good condition.

This spacious, well divided, two storey family house built on 406 sqm of lot and has 2 bathrooms, 13 sqm of terrace, garage, is located in a quiet side street.

24.900.000 HUF

11.500.000 HUF

23.900.000 HUF

29.900.000 HUF

22.900.000 HUF

27.900.000 HUF

+36.70.3156.087

4TH DISTRICT 80 SQM – 3 ROOMS, SZÉCHENYI SQUARE

84 SQM – 3 ROOMS, DOHÁNY STREET

63 SQM – 3 ROOMS, MANDARIN SUBDIVISION

102 SQM – 4 ROOMS, ST. ISTVÁN PARK

113 SQM – 4 ROOMS, RÁKOSSZENTMIHÁLY

Nice panorama over the hills and the garden, this renovated, sunny apartment has private gas heating and it is situated in a renovated building with playground in the well kept common garden.

In a new built building, this very sunny, duplex apartment has private gas heating and balcony and it is located close to the border of the 13th district.

Historical Jewish area, only a few steps from the Main Synagogue. This completely renovated apartment beneﬁts of a fully ﬁtted new kitchen, 2 bathrooms. Ideal for investment.

In a new built building with elevator and nice garden, this garden facing apartment has separate rooms, open kitchen, air conditioning system and terrace.

Nice panorama over the Danube, this completely renovated, very spacious and sunny, high ﬂoor apartment with balcony, is situated in a renovated period building with elevator.

In a quiet side street, this well divided family house in good condition has 1080 sqm of lot, separate rooms, 53 sqm of terrace and garage.

25.600.000 HUF

22.900.000 HUF

31.900.000 HUF

33.500.000 HUF

77.900.000 HUF

2ND DISTRICT

5TH DISTRICT

+36.70.3156.087

8TH DISTRICT

+36.1.784.0707

11TH DISTRICT

13TH DISTRICT

+36.70.337.2499

2ND DISTRICT

+36.1.782.7275

11TH DISTRICT

+36.70.414.7759

16TH DISTRICT

58 SQM – 2 ROOMS, RÓKUSHEGYI SCALE

+36.1.336.1706

7TH DISTRICT

+36.1.784.0707

13TH DISTRICT

+36.70.398.8754

2ND DISTRICT

+36.1.782.7275

11TH DISTRICT

+36.1.789.2846

39 SQM – 2 ROOMS, HŰVÖSVÖLGYI STREET

+36.1.376.6080

6TH DISTRICT

+36.70.268.5017

+36.70.414.7759

16TH DISTRICT

31.900.000 HUF

15TH DISTRICT

+36.70.337.2499

SOLYMÁR

82 SQM – 2 ROOMS + HALL, ÜRÖMI STREET

54 SQM – 2 ROOMS, HAVAS STREET

109 SQM – 3 ROOMS, JÓZSEF CIRCUIT

180 SQM – 5 ROOMS, MAJOR STREET

125 SQM – 4 ROOMS, RÁKOSPALOTA

325 SQM – 4 ROOMS, KATONA JÓZSEF STREET

In a Bauhaus style building, this very bright, well divided, street and garden facing apartment has spacious dining room, private gas heating and balcony.

In the city centre, close to the Danube, in a quiet street, this street facing apartment in good condition has private gas heating and it is situated in a nice period building.

This very spacious, bright, street facing apartment has private gas heating and it is situated in a very well maintained building with elevator.

This three storey semi-detached house in good condition has 356 sqm of lot, 4 bathrooms, balcony, loggia and garage and it is located in a quiet garden suburb area.

This sunny family house has 430 sqm of lot, open kitchen, 2 bathrooms, terrace and underﬂoor heating and it is located in a quiet street.

This new built, two storey family house has 3 bedrooms, 1 living room, indoor swimming pool and a garage and it is located in a very quiet village, in Pest county.

27.900.000 HUF

31.900.000 HUF

+36.1.336.1706

2ND DISTRICT

+36.70.222.5063

5TH DISTRICT

26.900.000 HUF

+36.70.414.7126

8TH DISTRICT

47.500.000 HUF

+36.1.720.2433

11TH DISTRICT

63 SQM – 2 ROOMS, BAJVÍVÓ STREET

138 SQM – 4 ROOMS + HALL, ST. ISTVÁN CIRCUIT

114 SQM – 2 ROOMS + HALL, SZENTKIRÁLYI STR.

242 SQM – 6 ROOMS, BUDAFOK

This completely renovated, quiet and very bright apartment has private gas heating and balcony and it is located close to the Mammut shopping mall.

Beautiful panorama over the Danube, this very spacious apartment has separate rooms, 2 bathrooms and 2 separate entrances and it is situated in an eclectic style period building.

Adjacent to the National Museum, this completely renovated, spacious, high ﬂoor apartment has separate rooms, 2 balconies and it is situated in a period building with elevator.

This two storey family house built in 2002 has 720 sqm of lot, terrace, balcony and 2 garages. Good connection with public transport.

29.900.000 HUF

75.900.000 HUF

29.900.000 HUF

+36.1.201.0403

3RD DISTRICT

+36.70.222.5063

6TH DISTRICT

+36.70.414.7126

10TH DISTRICT

79.000.000 HUF

+36.1.720.2433

54 SQM – 2 ROOMS, SZÍV STREET

99 SQM – 4 ROOMS, NOSZLOPY STREET

70 SQM – 2 ROOMS, MÁRVÁNY STREET

This spacious, high ﬂoor, park facing apartment in good condition has separate rooms, very bright kitchen and terrace.

In a new building, quiet apartment with open kitchen in the living room and ample bedroom. It is located close to the Andrássy Boulevard. Parking space possibility for 1.500.000 HUF.

This two storey family house in good condition has 170 sqm of lot, separate rooms, two bathrooms, terrace, balcony and garage and it is located in a quiet area.

In a renovated building, this very sunny and spacious, completely renovated, street facing apartment has bright kitchen and it is located close to the MOM Park shopping mall.

18.500.000 HUF

28.900.000 HUF

25.000.000 HUF

+36.1.430.1403

+36.70.322.3697

+36.70.268.5017

+36.70.398.8754

89.000.000 HUF

+36.1.376.6080

The Moment when you think of a home that suits you Are you searching for apartment?

12TH DISTRICT

85 SQM – 3 ROOMS, ORBÁN BALÁZS STREET

20.500.000 HUF

33.000.000 HUF

+36.1.789.2846

www.tecnocasa.hu CONTACT US: INFO@TECNOCASA.HU

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