Budapest Business Journal 2803

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

HUF 1,390 | €5 | $6 | £4

BUSINESS JOURNAL BUDAPEST

VOL. 28. NUMBER 3

FEBRUARY 14 – FEBRUARY 27, 2020

Photo by Marianna Sárközy

SPECIAL REPORT

Expat CEO Awards

SPECIAL REPORT

Inclusive, Authentic, Challenging and Ready to Change: The DNA of an Award-winning CEO We ask BlackRock’s Melanie Seymour to reflect on what winning the 2020 BBJ Expat CEO of the Year title means to her and her company. 18 BUSINESS

Mentoring Startups to Their Next Level

Seven Hungarian, one Barbadian and an Austrian startup have completed Design Terminal’s latest mentoring program. They showcased their progress on Demo Day, January 30. 14

SOCIALITE

Furmint February Fever at Home and Abroad Furmint February has become a favorite fixture on the Hungarian scene, with the centerpiece Budapest tasting backed up by sister events in the Hungarian cities of Miskolc and Debrecen, as well as in the Romanian city of Timișoara, and in London, in 2020.  23

Top Expat CEO Embraces her Inner Hungarian NEWS

Goal is Ambitious Anglo-Hungarian Relationship On February 1, Britain entered into a new relationship with the EU, albeit little changes on the ground for the transition period that lasts until the end of this year. But the U.K. Ambassador to Hungary sees real potential for a deepening of bilateral relations, he tells the BBJ in an exclusive interview.  7

SP

LR EC I A

EPOR

T

The sixth Expat CEO of the Year awards gala was held at the Corinthia Hotel Budapest on January 31, with BlackRock’s Melanie Seymour taking home the main title and Siemens Zrt. president-CEO Dale A. Martin receiving the HIPA Partnership award.15 BUSINESS

M&A Market Struggling to Attract Foreign Interest Zoltán Lengyel, partner of law firm Allen & Overy in Budapest, gave a presentation on global M&A trends to professionals on February 10.

Afterwards, we quizzed the Hungarian lawyer about the local and regional deal trends.  9

News

2|1 BBJ

www.bbj.hu

Budapest Business Journal | February 14 – February 27, 2020

THE EDITOR SAYS

EDITOR-IN-CHIEF: Robin Marshall EDITORIAL STAFF: Balázs Barabás, Zsófia Czifra,

Kester Eddy, Bence Gaál, Gergely Herpai, David Holzer, Christian Keszthelyi, Gary J. Morrell, Robert Smyth, Zsófia Végh.

LISTS: BBJ Research (research@bbj.hu) NEWS AND PRESS RELEASES:

Should be submitted in English to news@bbj.hu LAYOUT: Zsolt Pataki PUBLISHER: Business Publishing Services Kft. CEO: Tamás Botka ADVERTISING: AMS Services Kft. CEO: Balázs Román SALES: sales@bbj.hu

CIRCULATION AND SUBSCRIPTIONS: circulation@bbj.hu

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

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

The Budapest Business Journal, HU ISSN 1216-7304, is published bi-weekly on Friday, registration No. 0109069462. It is distributed by HungaroPress.

Reproduction or use without permission of editorial or graphic content in any manner is prohibited. ©2017 BUSINESS MEDIA SERVICES LLC with all rights reserved.

BBJ-PARTNERS

And so another BBJ Expat CEO of the Year awards gala is over; we have our first British winner (named on the very day the United Kingdom left the European Union, make of that what you will) and only our second female CEO in BlackRock’s very deserving Melanie Seymour.

As I wrote in the previous issue, we would have made history whoever the jury picked, as we have never had a Dutch or French title holder. And either of Romke Noordhuis (ExxonMobil) or Charles Wassen (Dana Hungary) would have been worthy winners themselves. I said on January 31 that there can only be one winner on the night, but our two runners up deserve plenty or recognition for their own outstanding contributions.

Congratulations, of course, are also due to the other person to walk away with a trophy that night, Dale A. Martin, the president-CEO of Siemens Zrt., who won the HIPA Partnership award from our official event partner, the Hungarian Investment Promotion Agency.

It is, perhaps, a sad little cliché to suggest everyone is a winner (and I dare say Romke and Charles will have a much more personal take on that), but I do believe that, at the very least, our expat CEO community is a winner from the evening.

We had more attendees than ever before (standing room only was a well-worn phrase from my days starting out in provincial journalism back in the late 1980s and we were slightly delayed at the start while some quick rearranging was undertaken). That proves, I think, the popularity and the relevance of the gala.

Hungary is a different place from when we launched the award six years ago; the beneficial impact that foreign direct investment and expat CEOs have on the economy is now well recognized, as British Ambassador Iain Lindsay alluded to in his speech. But there is still a sense that an event that serves the expat CEO community not only has its place, but is a necessary outlet.

Certainly, that was the impression I got from many of the conversations I had after the formal part of the evening had ended. The sight of the cheese plates disappearing down the Corinthia’s magnificent staircase as a hard core group of CEOs determined they would carry on the party in the lobby bar, even as work began to dismantle the staging and lighting up in the Grand Ballroom, only underlines that. Check out this issue for our gala coverage, interviews, and photos galore.

We are sorry about the host (me), but he is all we can get on short notice. What I will say is that it I have served this community in one way or another since I first came to Hungary in 1998, but most especially since I took over as editor-in-chief of the Budapest Business Journal in September 2016. It continues to be an honor to do so.

Congratulations to you all, you are all winners in your way (albeit not quite as much as Melanie was).

Robin Marshall Editor-in-chief

Photo: MTI/Márton Mónus

Photo: fortepan.hu/Uvaterv

VISIT US ONLINE: WWW.BBJ.HU

AND THE WINNER IS… OUR COMMUNITY

THEN & NOW

At right, a senior citizen studies photographs commemorating the World War II Siege of Budapest 75 years ago. The photographs are on display in the new underground carriages running on Metro line 2 (seen here at the Puskás Ferenc Stadion station). The black and white picture from the public Fortepan archive shows the construction works of line 2 at today’s Astoria station in 1963.

1

www.bbj.hu

Budapest Business Journal | February 14 – February 27, 2020

News///macroscope

Poor Year-end Industrial Production Catches Analysts by Surprise

deterioration might suggest a positive correction for the near future.

However, she called the 8.7% setback of the German industry a worrying sign.

Altogether, uncertainties in the industrial segment are still there aplenty, and might get even worse with the spreading of the coronavirus. Thus, industry’s contribution to the economic growth might be smaller this year than it was in 2019, Nyeste concluded.

The second estimate for December industrial production, which was published on the day this paper went to print, was basically unchanged. Detailed data shows that production decreased in all three sections of industry:

by

Hungary’s industrial production fell back in the last month of 2019, causing analysts to worry about its contribution to economic expansion last year. While there are clearly some positive sings for better performance in the future, only time will tell whether the setback is temporary.

Industrial Production in Hungary, 2001-2019 Producer Volume Index, year-on-year

While she also called it a negative surprise, Orsolya Nyeste of Erste Bank thinks the outlook is not definite for the next few months.

According to her, the fact that purchasing manager indices in the past months have not shown notable deterioration might suggest a positive correction for the near future.

ZSÓFIA CZIFRA

Industrial production fell a working-dayadjusted 3.7% year-on-year in December, contrasting with November’s 5.7% rise, according to a first estimate by the Hungarian Central Statistical Office (KSH).

Raw data came to 1.2% on a year-on-year basis, while working-day and seasonally adjusted data shows a 3.8% contraction from the previous month. As for the full year, industrial output grew by 5.4% in 2019, following a 3.5% increase in 2018.

The December figure came as shocking news for analysts. The last time Hungary saw such a poor performance was in

November

2012,

state news agency MTI quoted ING Bank head analyst Péter Virovácz as saying.

He described the latest data as a huge negative surprise, and said that it was unambiguously caused by automotive sector where the KSH registered a massive production set back in the last month of the year, adding that other sectors were unable to balance this out.

According to Virovácz, the fourth quarter performance of the Hungarian industry clearly indicates that the negative tendencies in the industrial performance of advanced economies have finally reached Hungary, therefore it is becoming less likely that the weaker performance is only a temporary phenomenon. The significant

1.4%

in manufacturing (representing a decisive weight of 94%), by 0.9% in the energy industry (electricity, gas, steam and air-conditioning supply) and by 4.8% in mining and quarrying (having little overall weight).

Source:

fall back in the order stock also points to this direction, he added.

The poor performance could also point to slower GDP growth in the fourth quarter, and, according to the analyst, the annual GDP growth thus might be closer to 4% than the 5% that had previously been expected.

The worse-than-expected performance of the Hungarian industry is not entirely surprising in light of the worsening external environment, especially the struggling German economy, said Gábor Regős, analyst at Századvég research institute.

Due to the high investment ratio, the Hungarian industry was able to perform outstandingly, however, next few months’ data will reveal whether the current slowdown is only temporary, or is here to stay, he said.

Regős also warned that it is not wise to draw conclusions from a single month’s data, especially when that month is December, as the last month of the year is traditionally the weakest of the 12.

Shocking Setback

Gergely Suppan, head analyst at Takarékbank described the setback as

“shocking”, and calculates with a 1.2% decrease in the industrial output in the fourth quarter from Q3. He also predicts that the annual increase in production was 2.8% in the Q4, slowing from 7.8% in the third quarter.

Thus, industry will significantly hold back the expansion of the Hungarian economy, he believes, predicting that Q4 GDP growth might have been closer to 4%, down from 5% in the third quarter.

Suppan, however, is more optimistic regarding the upcoming months, predicting a strengthening industrial performance. His optimism is partly based on the fact the first phase of the U.S.-China trade agreement has been signed and therefore the outlook for the German economy (and indeed for all Europe) has become better. However, the coronavirus threat might impact Hungary’s industrial performance, he added.

While she also called it a negative surprise, Orsolya Nyeste of Erste Bank thinks the outlook is not definite for the next few months. According to her, the fact that purchasing manager indices in the past months have not shown notable

There was a drop after a 14-month increase in the manufacture of transport equipment (representing the largest weight, as it accounts for 25% of manufacturing): in December the output was 10.4% lower than a year ago, the greatest fall among the sections. The volume of motor vehicles manufacturing declined by 19.5%, while the manufacture of parts and accessories for motor vehicles decreased by 0.7%.

Numbers to Watch in the Coming Weeks Much-awaited data arrives today (Friday, February 14): the KSH publishes the flash estimate of the fourth quarter GDP. Also on St. Valentine’s Day, Fitch and Standard & Poor’s will publish their reviews of Hungary’s sovereign debt; will there be any love in the air for the Hungarian figures?

On February 25, data from the construction sector will arrive, followed by the earnings statistics for the NovemberJanuary period. Fourth quarter investment data will be released on February 27, together with the second estimate of the Q4 GDP data.

4|1

News

www.bbj.hu

Budapest Business Journal | February 14 – February 27, 2020

Demand for Commercial Property Remains Strong, Says CBRE Favorable economic indicators for Hungary, such as the highest projected GDP growth for 2020-2021, is having a positive impact both on investment and the office, industrial and hotel development markets in Hungary, commented Lóránt Kibédi Varga, managing director of CBRE Hungary.

GARY J. MORRELL

Investment volume reached EUR 1.72 billion for 2019; 2020 should see at least similar levels, given the weight of capital that is looking to invest in Hungary, invited real estate professionals were told at CBRE’s annual Re-View market presentations at the Urban Betyár restaurant.

The CE-5 (Bratislava, Bucharest, Budapest, Prague and Warsaw) provide a significant yield on major Western European capitals, even though there is the possibility of further compression given

the strong demand and competition for product, in the view of Tim O’Sullivan, head of capital markets at CBRE Hungary.

In a big-ticket transaction in Budapest, the Hungarian OTP RE Fund acquired the Roosevelt office complex for a reported EUR 150 million at a yield of sub-5%.

Although office yields are estimated

at

The office market has about 570,000 sqm under construction, bring the new supply expectation to 265,00 sqm for the year. However, development delays are likely to cause some of this pipeline to shift back.

From the scheduled delivery, 70% is already prelet according to CBRE.

5.25%,

such trophy assets are transacting at lower yields.

Prime yields are put at 5.25% for office, 5.5% for shopping center and high street retail, as well as hotel, with industrial at 7%.

“New product coming to market further into 2020 may once again put downward pressure on office and hotel yields,” O’Sullivan said.

No Vacancy

“Overall vacancy in the Budapest office market stands at 5.4%, and at 3.2% in the class ‘A’ sector. Low vacancy, high occupancy and possible rental increases

make this a landlord favorable market,” said Anikó Kovács, head of office advisory and transaction services.

Industrial vacancy has reached a new low of less than 2%, which effectively means that there is no vacancy for workable space in the market.

“The industrial market capacity will be helped by the opening of new storage facilities with 180,000 sqm,” commented Gábor Borbély, head of business development and research at CBRE Hungary.

“The meaningful growth of new office market is good news for office and logistic property tenants: if everything goes according to plan, inaugurations will reach decadelong heights this year. It is somewhat overshadowed by the high rate of prelease spaces, though it is still favorable for companies who would like to move this year or the next,” he said.

David Johnston, head of advisory and transactions, added, “A bottleneck could be in the industrial market, where occupiers are far more sensitive to a EUR 0.5-1 per sqm per month increase in rents.

Developers such as CTP are building speculatively, but this is a drop in the ocean compared to what is needed in the market. Rising construction costs are a challenge with regard to the labor shortage.”

Budapest’s hotel accommodation capacity had increased by 1,600 rooms over the past three years; the likelihood this year is to see 2,150 rooms added in

18

new hotels

in Budapest according to Laurent Lassier, head of hotel advisory. Most of these projects, however, are planned to deliver later in the year and therefore some deliveries could be moved to 2021.

There are 32 active hotel developments underway across the country with a total room capacity of 3,750 rooms by the end of 2022. However delivery dates are slipping back in the current tight labor market.

Occupancy in the Budapest hotel market has fallen slightly to 78%; however this is due to new market supply and the rates remain healthy.

Central Europe Continues to Attract Investors 2020 is forecast to be another very active year in the Central European investment markets, with further growth in activity only restricted by a limited provision of investment product to meet growing demand from international investors, and increasingly from CEE and domestic capital.

GARY J. MORRELL

Colliers International has recorded EUR 13.4 in investment volume for 2019 for the region (Bulgaria, the Czech Republic, Hungary, Poland, Romania and Slovakia), representing a slight fall on the previous year.

Poland was the leading market with 55% of this volume according to Kevin Turpin, regional director of research CEE at Colliers International.

Preliminary figures indicate that this was followed by the Czech Republic with 22.5%, Hungary at 13.5%, Romania with 6%, Slovakia with 3% and Bulgaria with 2%.

The big three funds (OTP RE Fund, Erste RE Fund, and Diófa RE Fund) are dominant in the Hungarian investment market, notably at the top end of the office, hotel and retail sectors. In addition to these established domestic funds an additional strata of closedend investment funds and private property companies have become increasingly active.

“One of the most interesting aspects of the CEE markets has been the growth of domestic capital, particularly in the Czech Republic and Hungary, with more than 50% and more than 70% of volumes coming from domestic capital sources, although more competition from foreign investors is expected for this year,” commented Mike Atwell, leading director of capital markets CEE at JLL. Colliers’ Turpin estimates that 68% of the 2019 investment in Hungary was undertaken by domestic capital and 35% in the Czech Republic. From the 2019 CEE total, Colliers has traced 28% of activity

from foreign investors, 25% from Western European investors and 15% from investors of Asian origin.

Office remains the sector of choice for investors. Colliers put the CEE 2019 sector split at 51% for office, 16% for retail, 14% for industrial, followed by 8% for the rapidly emerging hotel sector.

CEE Prime Office Yields Warsaw/Prague 4.25% Budapest 5.25% Bratislava 5.75% Bucharest 7% Source: JLL

News | 5

1

www.bbj.hu

Budapest Business Journal | February 14 – February 27, 2020

Europaproperty Celebrates CRE Awards Regional publisher and event organizer Europaproperty has celebrated its third CRE awards gala dinner at the InterContinental Budapest Hotel.

Future Projects

GARY J. MORRELL

“The CRE Awards aims to celebrate excellence in the commercial real estate sector, judged via a rigorous evidencebacked process on the success and market excellence of all nominees,” said Europaproperty.

Major winners included Wing, CPI Property Group, Redwood Holding, CTP Invest, Eston International, Immofinanz, CEETRUS and Horizon Development.

Wing was recognized by the jury for its ambitious investment activity, a highlight of which was its entry into Poland, with a

56%

acquisition

of Echo Investment. The Investment Deal of the Year also went to Wing for its acquisition of Infopark Buildings B, C and I in Budapest, and the company’s chairman & CEO, Noah Steinberg scooped the coveted Overall Professional of the Year award.

The developer and investor CPI Property Group also scooped up a couple of the main prizes, including Office Project of the Year for its recently opened Balance Hall, as well as Office Developer of the Year. Other project winners included Property Market, winning in the Residential Developer and Development categories for BudaPart Homes A and C.

Horizon Development won a Future Project award for the soon to be revitalized luxury residence Szervita Square Building in Budapest. Redwood Holding won the Future Hotel Project award for its Hard Rock Hotel Budapest development. The company was also recognized as Hotel Developer of the Year. The Hotel Project award went to the spectacular renovation of the Párisi Udvar Hotel Budapest by Párizs Property.

Retail Project of the Year went to Ceetrus for its niche development Le Garage 1.0, part of a bigger and more ambitious mixed-used project. CTP Invest won Industrial Project of the Year for CTPark Budapest West. The company also walked away with the Warehouse Developer of the Year award.

Consultancy Eston International collected Agency of the Year as well as Property Management Firm of the Year, and Cushman & Wakefield took the Project Management Firm of the Year award. The Professional Woman of the Year award went to HB Reavis’ Mariann Tóth.

Other company winners included New Work, which picked up Professional Service Provider of the Year. Dentons received Law Firm of the Year and Immofinaz won Retail Developer of the Year.

The 4th annual CRE Awards will be held on January 28, 2021.

1st District

2nD District 72 sqm – 3 rooms, keleti károly street

58 sqm – 3 rooms, Őzgida street

At the bottom of the Castle Hill, in one of the historical areas of Budapest, this baroque style villa house built in the 18th century has 380 sqm of lot and many make over possibilities.

Nice panorama over the Mechwart Park, this renovated, high floor, sunny and spacious apartment has separate rooms and it is situated within a building with elevator.

This luxury apartment has been renovated in 2019 in Italian style. This property is situated within an 8 apartment classical building, near embassies.

390.000.000 HuF

63.500.000 HuF

64.000.000 HuF

+36.70.365.0827

2nD District

• Retailer: Starbucks • Professional Service Provider: New Work Offices

• Investment Deal: Infopark Buildings B, C and I, Wing

• Law Firm: Dentons

• Residential Project: BudaPart Homes ‘A’ and ‘C’, Property Market

• Property Management Company: Eston International

• Hotel Project: Párisi Udvar Hotel Budapest, Párizs Property

• Project Management Company: Cushman & Wakefield

• Industrial Project: CTPark Budapest West, CTP Invest

• Agency: Eston International

• Retail Project: Le Garage 1.0, Ceetrus

• Residential Developer: Property Market • Warehouse Developer: CTP Invest • Hotel Developer: Redwood • Retail Developer: Immofinanz • Office Developer: CPI Property Group • Investor: Wing

+36.70.365.0827

2nD District

+36.70.376.4138

2nD District

164 sqm – 5 rooms, országút area

402 sqm – 9 rooms, kuruCles

279 sqm – 5 rooms, nyék

Beautiful panorama over the Buda Hills and Castle District, this high floor apartment has 2 private terraces (11 sqm, 14 sqm) and it is situated with a period building with elevator.

This beautiful, three-storey villa house has 980 sqm of lot, four bathrooms, balcony and garage. It is located in one of Kurucles area’s green and quiet side streets.

This four-storey detached house in good condition has 1050 sqm of lot, 2 big terraces and 2 garages. It is situated in a green and quiet area.

120.000.000 HuF

210.000.000 HuF

+36.70.365.0827

3rD District

+36.70.376.4138

3rD District

214.900.000 HuF

+36.70.376.4138

3rD District

52 sqm - 2 rooms, sun PalaCe

101 sqm – 3 rooms, római-Part

283 sqm – 6 rooms, táBorHegy

In one of the most beautiful subdivisions of Óbuda, this bright, spacious, high floor apartment benefits of a big terrace and a beautiful panorama over the Danube.

Beautiful panorama over the Danube, this very sunny and quiet apartment has living room with open kitchen, 2 separate bedrooms and 40 sqm of terrace.

Close to the EuroCenter shopping mall, this two-storey family house in good condition has nice panorama over the city, two terraces, 685 sqm of garden and a two-car garage.

60.900.000 HuF

85.900.000 HuF

173.900.000 HuF

+36.70.328.8501

5th District

Full List of CRE Awards Winners for 2019

2nD District

288 sqm – 5 rooms, Corvin square

+36.70.669.5350

+36.70.328.8501

5th District

5th District

183 sqm – 4 rooms, BajCsy-zsilinszky str.

140 sqm – 4 rooms, Balaton street

170 sqm – 3 rooms, st. istván CirCuit

This very bright, street facing corner apartment benefits of two bathrooms, two entrances and parking possibility in the courtyard.

This completely renovated, very bright, street facing, high floor, luxury apartment has 2 bathrooms and a 14 sqm of balcony with a view over the Danube.

This completely renovated, very bright, street facing, luxury smart home has 2 bathrooms and balcony. There is a 100 sqm apartment for sale next to it, the 2 apartments can be united.

380.000 eur

174.900.000 HuF

219.900.000 HuF

+36.70.414.7759

6th District

+36.70.414.7759

7th District

+36.70.414.7759

7th District

86 sqm – 3 rooms, szinyei merse street

72 sqm – 3 rooms, BetHlen gáBor str.

80 sqm – 2 rooms, demBinszky street

This spacious, street facing apartment in good condition has living room with open kitchen, 2 separate bedrooms, 2 bathrooms and a laundry room. It is located close to Andrássy Boulevard.

This completely renovated, bright, street facing apartment has 2 separate bedrooms, a living room, 2 bathrooms and a laundry room.

It is located close to the City Park.

This very bright, street facing apartment in good condition has separate rooms and spacious dining room. It is situated within a nice period building, a few minutes’ walk from the City Park.

52.900.000 HuF

49.900.000 HuF

49.900.000 HuF

+36.1.351.0446

+36.1.351.0446

+36.1.351.0446

• Office Project: Balance Hall, CPI Property Group • Future Project: Szervita Square Building, Horizon Development • Future Hotel Project: Hard Rock Hotel Budapest, Redwood • Professional Woman of the Year: Mariann Tóth, HB Reavis • Professional of the Year: Noah Steinberg, Wing

13th District

13th District

71 sqm – 3 rooms, visegrádi street

121 sqm – 4 rooms, Csanády street

104 sqm – 4 rooms, katona józseF street

This very bright, street facing, luxury apartment has spacious rooms and 2 bathrooms.

Due to the smart home system, everything can be controlled from a smartphone.

In the heart of the district, this well divided, street facing apartment, that needs renovation, has 4 bright, cosy rooms and private gas heating. Excellent investment opportunity.

In a quiet street, this renovated apartment has spacious rooms, private gas heating and a nice balcony. It is situated within a nice, period building.

67.900.000 HuF

69.900.000 HuF

76.900.000 HuF

+36.70.414.7759

+36.70.414.7759

13th District

+36.70.414.7759

gruPPo t.F.m. kFt. 1068 BudaPest, király u. 102. each agency independently owned and operated. • these offers are valid, till the apartments are sold. • these information do not constitute a contractual element.

6|1

News

WHO’S NEWS

www.bbj.hu

Budapest Business Journal | February 14 – February 27, 2020

Do you know someone on the move? /// Send information to news@bbj.hu

Lead Attorney Joins Baker McKenzie’s Employment Practice Nóra Óváry-Papp has become the new operative leader of the employment practice at Baker McKenzie’s Budapest office.

Nóra Óváry-Papp

At his last company, LeasePlan Hungária Zrt., he was named the best commercial director within the international company group in 2018.

Besides being a respected economist, Rónai-Horst is the president of the supervisory board of the Hungarian Electromobility Association, and an expert in the e-mobility market.

“The expansion of the management was a necessary and joyful step for us, as we are developing very dynamically, which is supported by the fact that numerous economic publications put our company at a high position on their lists of the most successful Hungarian businesses,” says Róbert Koleszár, co-owner of Mercarius Flottakezelő.

László Szűcs, the other co-owner, says, “Thanks to the recently assigned managing director, my co-owner colleague, Róbert Koleszár will have more opportunities to focus on the construction of our countrywide network of service, on business development, on creating new industries in business. With László Rónai-Horst our team has been strengthened with an outstanding expert, whose knowledge about the industry, attitude and professional knowledge are making him unique on the Hungarian labor market.”

During her career, spanning nearly two decades, Óváry-Papp has had extensive experience advising domestic and international companies.

Her experience includes advising on the establishment and termination of employment relationships, compensation, flexible employment and working time issues, executives and other high-level employment matters, transfer of business transactions and mass redundancies, as well as other special employment-related projects and employment-related data privacy.

“In addition to needing a thorough understanding of the law and a businessminded and pragmatic approach, I consider people skills vitally important in ensuring clients feel their employment issues are in safe hands,” Óváry-Papp says. “I am confident that due to my experience I will add further value to the superb László Rónai-Horst employment practice of Baker McKenzie, and I consider it an exciting challenge.” Ákos Fehérváry, head of the employment group at Baker McKenzie’s Rónai-Horst himself comments, Budapest office says, “Nóra brings “Working for the leading Hungarianunparalleled expertise to our office thanks owned fleet management company is an to the experience she has amassed during honor and a challenge at the same time. her career to date. Having her on board I have a very similar mindset to the two will further enhance the strength of the owners, and our visions of business also employment services we provide and meet, therefore I am happy to join the thereby we can support the operations and crew of Mercarius to work together for the aims of our clients at the highest levels.” success of the company.”

Managing Director at Mercarius Flottakezelő László Rónai-Horst has been appointed head of the Hungarian-owned fleet management company Mercarius Flottakezelő.

Rónai-Horst’s responsibilities include satisfying the needs of multinational corporate clients as well as the strengthening of the position of the company within its market segment.

During his career, Rónai-Horst has worked in numerous managing positions in the financial and commercial fields. He has a vast experience in various industries, he was CFO among others at Danone Baby Food and Business Lease and also worked for ExxonMobil, L’Oréal and Diageo.

of International Business. During her time with the company, she has held various local and international leadership positions. In addition to her role as country chair and the chairman of the board, she will continue to act as human resources manager for Central and Eastern Europe, Shell says.

Baker McKenzie Appoints Head of Privacy

Andrea Istenesné Solti She is a member of the board of the Hungarian Business Leaders Forum, where she is an active promoter of the Diversity Charter and the company female mentoring program.

In 2017 she has received the “Leading Women” award from the Business Council for Sustainable Development in Hungary.

Baker McKenzie’s Budapest office announced the appointment of Csaba Vári as the new head of its privacy department, expanding the range of services the company offers in the field of data protection and cybersecurity.

The expert has more than 20 years of extensive legal experience, gained at well-known international law firms.

For several years, he worked as a senior attorney at an intellectual property and information technology group, focusing particularly on data protection and network security issues.

Vári also helped a significant number of global and domestic clients to successfully adapt to the new EU regulations during the implementation of GDPR. He provided legal support for the introduction and implementation of necessary processes and systems.

He also provided training to employees and clients responsible for the day-today processing of personal data. In recent years, the expert has authored numerous professional publications.

Ford Hungary Picks Managing Director Ford announced the appointment of Attila Szabó as the managing director of Ford Hungary, replacing Viktor Szamosi who became operations director, responsible for Ford CEE European direct markets. Szabó is now responsible for the Czech market as well.

During his career at the company, he managed Ford’s Romanian subsidiary, and Ford’s European pricing center in Szentendre, where he headed one of the organization’s largest pricing teams, serving all European markets.

“I look forward to this new challenge and to finally reap the benefits of my experience over the years in the Hungarian market,” Szabó says.

“We are facing a challenging year, with our new communication campaign launched on December 26 called ‘Bring On Tomorrow’ showing what the future holds.

Shell Names Country Chair Shell Hungary, which represents Royal Dutch Shell on the Hungarian market, has announced the appointment of Andrea Istenesné Solti as its country chair, the highest country representative of the parent company in Hungary. She took up her role at the beginning of January 2020.

Her predecessor, Andrea Bujdosó, has decided to step down in order to focus on the growth agenda in her current business role as retail sales manager for Hungary and Slovenia. Bujdosó remains a member of the board of directors of Shell Hungary.

Solti joined Shell in 1993 after completing her study at the Corvinus University of Budapest at the Faculty

This campaign is a clear signal that we are living in exciting times and that Ford is ahead of a great transformation as well.

As part of this transformation, we will be introducing a brand new line of products in 2020, featuring 14 electric models.

Connecting people and their cars to the world around them will also be a key part.”

Attila Szabó

Csaba Vári In his new position as head of privacy, he will provide legal advice to his clients in the areas of data protection and cybersecurity, in topics such as GDPR, domestic privacy laws, and the latest regulations on e-commerce and cloud services.

He will also provide legal support to clients in conducting privacy impact assessments, dealing with data protection incidents and responding to inquiries about affected rights, while representing clients in supervisory and judicial proceedings, the press release says.

“With the arrival of Csaba, our office gets richer with unparalleled data protection consultancy expertise and experience gathered over two decades,” says Zoltán Hegymegi-Barakonyi, head of Baker McKenzie’s Budapest office.

“Thanks to his extensive professional knowledge, we can continue to provide our clients with outstanding services in the field of data protection and cybersecurity.”

1

www.bbj.hu

Budapest Business Journal | February 14 – February 27, 2020

Post Brexit, the Goal is an Ambitious Anglo-Hungarian Relationship On February 1, Britain entered into a new relationship with the European Union, albeit little changes on the ground for the transition period that lasts until the end of this year. But the U.K. Ambassador to Hungary sees real potential for a deepening of bilateral relations, he tells the Budapest Business Journal in an exclusive interview.

ROBIN MARSHALL

It may no longer be a direct part of the world’s largest trading block, but the United Kingdom does not intend to sit meekly on the side lines. “We are ambitious,” Lindsay says, and he believes the same can be said of the Hungarians.

“I am a great believer in this region, I always have been. I think we are potentially at a point of a happy meeting of mutual ambition on both sides. Hungary’s clearly still got loads of potential, Europe is still unbalanced,” the ambassador explains “That doesn’t just apply to Hungary, it applies to the Central European region generally, there really is a fantastic opportunity. This is the moment. It is in both sides’ interest to seize the moment [….] because time waits for no man, and the reality is many of our partners around the world are cueing up, in every manner of speaking, to say we want to do more with the U.K.” The ambassador says the Visegrad Four grouping, which sees Hungary coordinating alongside the Czech Republic, Poland and Slovakia, and which collectively is a bigger trade partner with Germany than France, will grow in significance.

“We have got coming up over the next two weeks the first V4-U.K. meetings for two years. I think it is really great that so quickly after we have left the European

News | 7

rules apply, the country has to make the situation work for itself.

“As Dominic Raab the foreign secretary said in his speech [….] failure, or striving for failure, is not an option here; we have to make a success of this. Having left the European Union, that is the only option.

The government’s vision of a global Britain is a very serious one. There’s a lot of energy out there. I guess the secret of it is harnessing the energy in an effective way. Enthusiasm is great, but it has to be directed towards real world outcomes,” Lindsay points out.

Citizens’ Rights

The last piece of this diplomatic jigsaw puzzle, and perhaps both the most important and easiest to solve, are the people. Having exited under the Withdrawal Agreement, the basic existing rights of U.K. citizens in the EU and EU citizens in Great Britain are guaranteed.

Some question marks do remain, and registration is required on both sides of the Channel, though the process is being made as smooth as possible. In Hungary, for example, the Wednesday of each week is given over to U.K. citizens for registration.

British Ambassador Iain Lindsay speaking on Brexit Day at the BBJ Expat CEO of the Year gala on January 31. Photo by Marianna Sárközy.

Union we have these V4 meetings between Europe ministers and between defense ministers, recognizing that the V4 will be important future partners.”

Still Here

One of those meetings will be in Prague (the Czech Republic currently holds the rotating presidency of the V4). Somewhat ironically, the other will be in Brussels, in the margins of the NATO defense ministers’ meeting.

“Which, of course, proves the point that we have left the European Union, but we have not tuned our backs on Europe: we are still the second largest economy in Europe, the fifth largest economy in the world, and we are still the largest European contributor to the defense and security of this continent,” Lindsay points out.

Issues such as defense, security and law enforcement will clearly be important aspects to any future EU-U.K. relationship.

The statement British Prime Minister Boris Johnson had laid before the U.K. Parliament in early February talks of a “pragmatic agreement to provide a framework for law enforcement and judicial cooperation in criminal matters”, albeit one in which the Court of Justice of the European Union does not hold jurisdiction over the British legal system.

One suspects, however, that these are easy pickings. It is so evidently in the interests of both parties to work together on security and policing, that a broad agreement should be possible relatively quickly. Guarantees over citizens’ rights would be a good example, the framework for which was agreed back in 2017. Where things will get more complicated will be over trade.

“Primarily we are looking for a friendly cooperation with the EU, largely centered around free trade. [….] Australia does not have a free trade agreement with the European Union, it has something much looser; neither, of course, does the United States. We would be prepared to look at that, but our preference, our goal, would be to go for something as good as the Canadian [free trade] agreement.”

Clear Intent

One thing Johnson has brought to the process is a clarity of intention. Where his predecessor, Theresa May, seemed hamstrung by her slender majority and a desire to balance the views of the Brexiteers and Remainers at the polar extremes of her party, Johnson has a thumping majority and an agreed proBrexit agenda. He has made it clear that the transition period will not be extended beyond this year, and while he would rather have an FTA, it is not at any cost; he is prepared to put up with some friction in trade if it means remaining economically and politically independent of the EU. For now, Lindsay says, Britain remains hopeful a way can be found to a Canada style FTA. “Twenty-six of the 27 member states of the European Union have got trade surpluses ranging from small to huge with the U.K., so in terms of the interest of ensuring that trade continues to flow, that people can continue to sell their goods into the U.K., frankly, it makes a lot of sense for trade to continue uninterrupted.” The goal will be “zero tariffs, zero quotas” he says Whatever deal Britain can agree, or even if no deal can be struck within the year and the default World Trade Organization

“Twenty-six of the 27 member states of the European Union have got trade surpluses ranging from small to huge with the UK, so in terms of the interest of ensuring that trade continues to flow, that people can continue to sell their goods into the U.K., frankly, it makes a lot of sense for trade to continue uninterrupted.”

There are an estimated 3.5 million EU citizens in the United Kingdom, of which 2.8 million have already registered, although the deadline for doing so is not until the end of June next year, provided you arrived in Britain no later than December 31, 2020. Of that 2.8 million, only six individuals have thus far been rejected, Lindsay says.

“For Hungarians in the U.K. we have no accurate data. We suspect the figure is 100,000 plus, 150,000 plus, but thus far 85,000 Hungarians have registered.”

Estimates for the number of Brits in Hungary are much smaller, and range up to 10,000, with very close to 5,000 registered thus far.

“A lot of the concerns we heard at town hall meetings were around what happens if there was [a] no deal [exit]. We get the strong sense that Brits here are generally content,” Lindsay says. “The town hall meetings we had helped to reassure a lot of people. The vast majority of the feedback we got from those was very positive.”

Having built up a stronger bond between the embassy and the British community, Lindsay says the intention is to continue that interaction. “We will have further town hall meetings, the next one in the next few months,” he promises.

8|1

News

www.bbj.hu

Budapest Business Journal | February 14 – February 27, 2020

Loan Applications Jumped 48% Last Year Hungarians applied for more than HUF 780 billion more in loans by the end of December 2019 than a year earlier, according to mfor.hu. The amount of consumer, housing and other loans taken out by households by the end of December 2019 exceeded the value of 2018 by 48%. This is mainly due to the launch of the baby loan, but the popularity of personal loans and home loans has added to the result, financial consultancy bank360 reported. HUF 100 bln more in personal loans was borrowed than in 2018, increasing the loan portfolio to HUF 883 bln, which is 12.42% of the total loan portfolio. Mortgage lending also increased from HUF 850.35 bln to HUF 909.87 bln compared to the previous year. Taking into account repayments, mortgage loans increased to HUF 3.6 trillion, an increase of 9% compared to the previous year.

Mortgage loans make up 51.28% of the total loan portfolio, mfor.hu wrote.

Photo by Hananeko_Studio/Shutterstock.com

News///in brief 70% of Hungarians see no Improvement in Healthcare Between 2015 and 2018, the Cabinet Office of the Prime Minister conducted numerous polls to probe the mood of citizens, which news portal Alfahír accessed via a public information request.

According to the portal’s article, healthcare stands out as an area where most people think the government has done little or nothing. Some 45% of those polled said the Orbán government had done nothing to improve health in 10 years, and 37% said it had done little to help. Some 70% of respondents considered it false that the healthcare situation had improved.

Only 14.7% thought in September that the government had done a lot for healthcare since 2010. When asked about the biggest challenge in the country, healthcare came first. Some 29% of those surveyed put it first, while poverty and economic problems came second, illegal immigration was third, and education was fourth, Alfahír reported.

HUF 12 mln Collected From Late Night Flight Fine A few months ago, fines were imposed on companies that fly over the capital at night. Already HUF 12 million has been raised, which will be used for noise insulation for disturbed residents, writes Világgazdaság. Since October last year, Budapest Airport has been charging a “deep sleep” fine for airlines flying over the capital between midnight and 5 a.m. So far, 15 airlines have been charged, making a total of EUR 35,000 (HUF 12 mln) collected over four

1/4 of Gov’t Securities Held by Households

Merkel Praises Hungarian Economy

HUF 100 bln Agriculture Loan Package Targets SMEs

According to the latest data of the National Bank of Hungary (MNB), the stock of government securities held by households increased by HUF 2.3 trillion last year, while the total stock of outstanding amounts increased slightly, by HUF 1.7 tln, says uzletem.hu. In the previous year, financial corporations reduced their government securities portfolio by HUF 511 billion and non-financial corporations by HUF 52 bln. In addition to the population, the portfolio held by foreign investors increased by another HUF 122 bln, while their portfolio was reduced by HUF 287 bln in December.

Hungarian Government Securities Plus has clearly boosted retail government bond investments, which is reflected by the fact that households signed up for HUF 678 bln in June and HUF 362 bln in July, uzletem.hu says.

Germany and Hungary are on the same road and their economies are very closely linked, German Chancellor Angela Merkel said yesterday in Berlin before meeting with Prime Minister Viktor Orbán, according to state news agency MTI. Merkel emphasized that, apart from European summits, she most recently met with Viktor Orbán at a celebration on the 30th anniversary of the opening of the border in Sopron in August 2019, which illustrates the common path the two countries have taken since the fall of the Berlin Wall. Economic cooperation is also extremely close, and not only with Hungary, but with the Visegrád Group as a whole, the German Chancellor added in a press release with the Hungarian Prime Minister. She emphasized that the development of the Hungarian economy is “very, very positive”, which is also attributable to the EU.

The Hungarian Developmental Bank Zrt. (MFB) has announced three new loan programs for Hungarian small- and medium-sized enterprises, according to the company’s CEO Levente SiposTompa, writes magro.hu. Sipos-Tompa said that the three loan products amount to HUF 205 billion, which MFB will provide from its own resources.

According to the bank’s market analysis, domestic micro-, small- and mediumsized enterprises are in short supply, but still represent a significant proportion of the market, and therefore these are the targets of the three credit products. MFB Director-General Balázs Garamvölgyi has announced that he has raised the HUF 100 billion refinancing program of MFB to HUF 200 bln, launched a HUF 5 bln MFB regional financial enterprise refinancing program, and a HUF 100 bln agricultural loan program, which is

months, according to the Ministry of Innovation and Technology (ITM).

The statistics show that the airlines concerned carried out a total of 176 operations. The fined companies were not named. ITM also reported that airlines paid the entire amount and in no case was the fine contested. The airport operator has pledged to use all of the proceeds to cover its latest noise insulation program. In 2020, another 1,500 households will be offered window insulation, vg.hu adds.

available for three rural development applications, magro.hu adds.

CIB Expects ‘Significant’ Growth This Year CIB Fund Manager expects significant economic growth and stock market returns in 2020, said Tibor Komm, CEO of the company at a press conference yesterday, writes gazdasagportal.hu.

Komm believes that by taking risks, the domestic stock market can continue to yield real returns well above inflation in 2020, but only by one-digit this year compared to last year. Egon Hajdu, chief investment officer at CIB Fund Management, emphasized that the outlook for the global economy has remained broadly unchanged in recent weeks, but that the spread of the coronavirus has somewhat dampened expectations.

According to Hajdu, the U.S. Federal Reserve could continue its loose monetary policy this year, gazdasagportal.hu adds.

ADVERTISEMENT

&

Research Development

in Hungary

2019

WHAT CONSTITUTES R&D? • GOVERNMENT SUPPORT: HUNGARIAN INVESTMENT PROMOTION AGENCY, NATIONAL INNOVATION OFFICE • WHY CHOOSE HUNGARY? • REGIONAL COMPARISONS • THE LABOR CRISIS • R&D SUCCESS STORIES

For subscription please contact: Business Publishing Services Kft. +36/1 398-0344; circulation@bbj.hu

2

www.bbj.hu

Budapest Business Journal | February 14 – February 27, 2020

Business

trust authority follows the same principles and practice as the European authority.

They are definitely active, and definitely not easy-going when you ask for approval.

You really need good advisers when you want an approval from the antitrust authority, somebody who really understands the market, and can prove to the regulator that when you buy that company it will not distort the market and badly effect customers.

I once worked on a transaction where somebody else who did the filing completely screwed up. They brought up things which they shouldn’t have, and pushed the whole process into a direction [from where] we had to sort of dig it out and save the deal by re-writing the whole filing. So, it’s very important how you approach the regulatory restrictions.

Hungarian M&A Market Struggling to Attract Foreign Interest

Zoltán Lengyel, partner of law firm Allen & Overy in Budapest, gave a presentation on global M&A trends to professionals on February 10. The Budapest Business Journal quizzed the Hungarian lawyer afterwards about the local and regional deal trends.

KESTER EDDY

BBJ: In your presentation on global trends, the number of M&A deals were declining in 2019, but within that, some areas were doing well; you mentioned exceptions, like green energy. Does Hungary and CEE mirror these trends, or is it too small?

Zoltán Lengyel: Yes, the Hungarian market is too small. Yes, I was referring to the global phenomenon, where the private equity investors were really keen to get the assets, for example in green energy, healthcare and data-rich companies. I think it’s a question of numbers, because the number of potential targets in this country, you just can’t compare [to U.S. and global deals].

BBJ: The M&A business here, in your experience, is it mostly domestic or cross-border?

ZL: It’s a combination. Obviously, we do domestic in a sense. For instance, we acted for Aon [the U.S. insurance and professional services provider], they sold their building society type business to Erste, both of them international companies. In the deal, there is an involvement of headquarters’ representatives, but everything is happening here, between the buyer and seller, both local.

The other element is when we are part of a team of [say] German-Polish-English lawyers, when we are advising a client which has a company with assets in the U.K., Germany and Hungary, and we provide the input as far as Hungary is concerned.

BBJ: Vodafone Group’s CEE deal [acquisition of Liberty Global’s German, Czech, Hungarian and Romanian cable assets], for example?

Zoltán Lengyel ZL: We were not involved in the Vodafone deal, but that kind, yes, exactly. Or the Telenor [sale of regional assets in 2018] to the Czech PPF. We acted on the financing in that transaction, but it’s a multi-jurisdictional transaction requiring Hungarian and English lawyers. So this is a combination.

BBJ: What’s the trend, is it more domestic or more trans-border?

ZL: It’s subjective I know, but I would really love to see more cross-border deals.

BBJ: Because they carry a bigger fee?

ZL: It’s not just that. It’s the activity, the excitement of the relevance of the Hungarian market. I’ve seen a decline in how interesting Hungary is for foreign investors. Last year I saw a greater interest, especially from Asia, but generally, from Western Europe, it’s very limited.

BBJ: Because of what?

ZL: I don’t know. Other than the automotive manufacturers, probably Hungary is just like [any other] part of Europe, and not an exciting or exotic market, and when they look at foreign investment, they are looking for something which is really different.

And, as you see, the job market is not that interesting anymore, because there is a shortage of labor. And it’s not a new phenomenon, but what I’ve seen in the last several years is just a declining interest in Hungary.

BBJ: In your presentation of global trends, you mentioned regulatory uncertainty holding back deals, especially in sectors like green energy and healthcare. How much does that apply to Hungary and CEE? ZL: Exactly: [both are] very much subject to government regulations in order to operate profitably. For green

energy, you need government support like mandatory off-take arrangements.

BBJ: And of course, you invest for the long-term?

ZL: Yes. In the past, not only in Hungary, but in the Czech Republic and other countries, people really burned their fingers because of changing legislation in solar energy, wind parks and so on.

And healthcare is subject to government intervention in Hungary.

BBJ: Another global observation was that deals are taking longer because of regulatory barriers. Is it similar in Central Europe, or is it not so marked?

ZL: When you talk about anti-trust, I think it’s pretty much global. Anti-trust is very much driven by EU law, so the local anti-

BBJ: A number of Hungarian companies are talking about expanding in the region. How do you see this?

ZL: Logic dictates that if they generate more cash, and many Hungarian companies are doing really well, then what do you do with your money? [If] you can’t expand more in Hungary then, obviously, you will try your muscles somewhere else, where you see opportunities.

For many years it has been just OTP, Mol, sometimes Richter, Magyar Telekom expanding, but, a big part of the Hungarian economy just didn’t move. They had representative offices perhaps, but not operating businesses. I think this will change.

BBJ: Which sectors do you see taking part?

ZL: For example, real estate. Whoever is big enough. There are specialist construction companies that could do business outside Hungary as well.

BBJ: Looking at the CEE deal table compiled by Thomson Reuters, Allen & Overy scored fewer deals last year than in 2018, but 2019’s were worth about 50% more in average value. How significant is this? Were your A&O teams lucky, is it likely to be a one-off, or a trend?

Are you only taking on higher-value transactions?

ZL: In our business model we, of course, have to focus on the larger deals and, yes, the average deal size we worked on increased in 2019. However, CEE is not a very deep market for high value acquisitions, so you cannot conclude that this is a trend.

C&SEE Legal Advisor ranking FY 2019 • C&SEE Target nation: Albania, Bosnia and Herzegovina, Bulgaria, Czech Republic, Croatia, Montenegro, Macedonia, Poland, Serbia, Romania, Slovak Republic, Hungary, Slovenia.

• Announced in 2019

Number of Deals

Value (USD mln)

Havel & Partners sro 38

Dentons 4,165

Dentons 37

Allen & Overy 4,080

CMS 31

Clifford Chance 3,112

DLA Piper LLP 27 Schoenherr Attorney's at Law 24 Clifford Chance 22

Havel & Partners sro 2,789

Allen & Overy 21 White & Case LLP 19 Linklaters 14 Baker Mckenzie 14

White & Case LLP 2,444 Linklaters 1,954 CMS 895 Schoenherr 584 Attorney's at Law Baker Mckenzie 523 DLA Piper LLP

Ranking Value inc.

Net Debt of Target (USD mln)

352 Source: Refinitiv (Thomson Reuters)

10 | 2

Business

www.bbj.hu

Budapest Business Journal | February 14 – February 27, 2020

Sources of Financing for SMEs in the Visegrád Countries Proportion of SMEs That Consider Access to Finance a Major Concern

Access to finance is a high-stakes issue when it comes to the development of smalland medium-sized enterprises, as Les Nemethy and El Mehdi Hosni explore. Large corporations typically have much better access to capital, whereas in many countries it is the SMEs that generate more jobs and create more local wealth.

18%

HU

16%

CZ

PL

SK

EU28 average

14% 12% 10% 8% 6% 4% 2% 0% Source: European Central Bank: Access to Finance of Enterprises (SAFE) survey 2019

This article will look at financing methods and trends for SME’s (companies that have less than 250 employees and EUR 50

mln turnover, according to the European Commission) over the past few years, typically utilized in the Visegrád Four countries, also known as the V4, a regional group of Central European countries comprised of Czech Republic, Hungary, Poland and Slovakia, which are members of NATO and EU. The following chart indicates that it is only a minority of companies that consider access to finance to be

Uses of Financing in SMEs in V4 Countries in 2019 Fixed Investments Working Capital New Products / Services Hiring / Training SK

PL

CZ

HU

Refinancing Other 0%

The Corporate Finance Column

10%

20%

30%

40%

50%

Source: European Central Bank: Access to Finance of Enterprises (SAFE) survey 2019

a problem, and that recently access to finance is becoming less of an issue.

While it was one of the top challenges for SMEs at the beginning of the decade, by 2019 access to finance was a secondary concern. Availability of skilled staff and managers, finding customers and reducing costs were greater problem areas.

Better SME access to finance is a direct result of the improvement in economic conditions since 2013, and lower interest rates throughout the European Union.

Credit lines (including bank overdrafts and credit overdrafts) and leasing were the most used sources of financing during the past few years; they provide flexibility and target precise financing needs. Bank loans (e.g. where repayment terms are fixed) are slightly less frequently used by SMEs, being less flexible than credit lines.

Grants have a surprisingly large usage

by SMEs in the V4, with Hungarian SMEs having a substantial lead. This is because the Hungarian government has decided to channel a large share of its EU structural funds towards SMEs. It is perhaps surprising that equity financing accounts for such a tiny share of SME financing throughout the V4, whereas it represents on average 11% of SME financing across the whole of the EU. Equity financing is a relatively new financing method in Central Europe

(beginning only in the 1990s) and is typically concentrated in few countries (e.g.

Poland or Hungary) and attractive sectors (such as healthcare and information technology) where attractive returns on investment are attainable.

According to the SAFE survey 2019, trade credits are a substantial source of SME financing in Poland.

Factoring still has a perception of being a financing method used only in distress situations or as a last resort. As this perception diminishes in the V4, factoring is likely to catch up to the EU average: it is much more widely used by SMEs in Western Europe. It is also used by larger companies (generally with 250 or more employees) in Central Europe involved in export activities.

SMEs in the V4 generally resort to fixed investments and working capital when it comes to financing.

SMEs in Central Europe use very little equity financing. One might speculate about the reasons for this.

Perhaps the heavy use of grant funding is a substitute for equity. Or perhaps the relatively low interest rates and availability of debt diminishes the need for equity, (although this would not explain why there is so much more equity used elsewhere in Europe).

V4 SMEs are perhaps missing an opportunity here: buoyant financial markets are the most opportune time to create an equity reserve, so that companies may avail themselves of excellent opportunities that present themselves during recession or depression, or just to provide a buffer to help survive a downturn.

Les Nemethy is CEO of EuroPhoenix (www.europhoenix. com), a Central European corporate finance firm, author of Business Exit Planning (www.businessexitplanningbook. com) and a former president of the American Chamber of Commerce in Hungary.

ADVERTISEMENT

Your essential Guide to Investing in Hungary including articles looking at the benefits available, case studies, EU funding, and commercial property investment.

AVAILABLE TO ORDER NOW Order: Business Publishing Services Kft. +36/1 398-0344; circulation@bbj.hu

2

www.bbj.hu

Budapest Business Journal | February 14 – February 27, 2020

A Smart Solution to Store Bikes

“As a last step, we will sell our company to the highest bidder within the next five years. From that exit share, I’d like to start new ventures, because I have many more ideas and I love being a CEO. This is what I do best.“

GAÁL BENCE

BBJ: What set’s BLock apart from its competitors in the field of bicycle storage?

SzSz: Since this is a brand new market, we don’t really have any direct competitors in Europe. But for those in the United States, we provide more secure hardware-based three-point locking, a faster return on investment, additional services for users,

S TA R T U P S P O T L I G H T Next we travelled to Edinburgh, Scotland to the international finals, where we were placed in the “Top six Most Promising” in the Urban Transitions category. Coming back, once again, we won the first Startup Campus x BME x Hiventures competition and got our first investment.

We were also accepted into EIT’s Accelerator program, where we got an EUR 10,000 grant and KPMG’s special award for the best startup.

BLock is a Hungarian startup looking to innovate by bringing smart bike racks to the market, popularizing urban cycling and eradicating bike theft in the process. The Budapest Business Journal talks with CEO Szabolcs Szilágyi about the companyʼs history and goals.

BBJ: How did the core idea of BLock come about?

SzSz: I got a blue bicycle from my grandparents for my 12th birthday. I loved it to the point of using it almost every day.

But one day it got stolen and I never got it back. It was a trauma for me and on that day I swore to eradicate bicycle theft from the face of the Earth. Now, 13 years later, I have my own company providing automated eBike rental services for hotels, and safe, secure, and effortless urban parking and charging for bicycles and scooters.

Business | 11

Szabolcs Szilágyi (left) and Attila Szilágyi. Photo by Adrien Köő. and our BLOCK 3P Smart Racks are also cheaper (if you look at life cycle cost).

BBJ: How many people make up your team?

SzSz: AviBike Ltd., the legal owner of the BLOCK brand, was founded by me and my friend Márk, who’s also an engineer. Then we got an investment and brought one of our mentors on board. In 2020 we would like to expand our team and hire new talents. Salesmen, marketing managers and a permanent software developer.

BBJ: What successes has BLock achieved so far?

SzSz: A lot, actually. It seems like we uncovered a real pain point with our idea because everyone seemed to like it and our journey was paved with success from the start.

Right at our first competition we won a special award and went on a fully paid trip to Israel, to the DLD Tel Aviv expo, to showcase our initial idea. A few days after coming home, we won the regional EIT Climate-KIC Launchpad startup competition.

And last but not least, we won probably the most prestigious startup mentoring program in the CEE region: Design Terminal. We were selected as the crowd favorite on the DemoDay, thus bringing home the main prize, a fully paid trip to Belgium, to the hottest startup event.

BBJ: What are your plans for the future?

SzSz: We have a pretty straightforward notion: Get our customers and clients’ attention, sell them our services through long-term beneficial partnerships, realize an ever-increasing revenue, enhance our portfolio with more Smart City and hospitality services, innovate, grow and put it on repeat.

As a last step, we will sell our company to the highest bidder within the next five years.

From that exit share, I’d like to start new ventures, because I have many more ideas and I love being a CEO. This is what I do best.

ADVERTISEMENT

How YOU can benefit from the

BOOK OF LISTS Print & Online

• Sales Prospecting • Business Research • Competitve Landscape • Track companies that matter to you • B2B Transactions • Job Search

For subscription please contact: +36/1 398-0344; circulation@bbj.hu

12 | 2

Business

www.bbj.hu

Budapest Business Journal | February 14 – February 27, 2020

Hungary Plans Massive Investment in Solar Generation

KESTER EDDY

Hungary’s latest combined energy and climate change plan targets a reduction in greenhouse gas (GHG) emissions of 40% compared to 1990 levels, and a minimum 21% share of renewable energy sources in gross energy consumption by 2030, Minister of State for Energy Affairs and Climate Policy Péter Kaderják, told a press briefing in late January.

To achieve these ambitious goals will require an estimated HUF 18 trillion (EUR 55 bln) investment in energy-efficient hardware ranging from smart metering and electric vehicles and from more efficient utilities to improved building insulation.

One major plank of the program involves the installation of some 6,000 MW of photovoltaic capacity, almost six times the current installed solar capacity in the country.

Comparison of EU and Hungarian targets for 2030 Dimensions of Energy Union

Indicators

Decarbonisation

Reduction of GHG emission (%) compared to 1990

Energy efficiency

Long seen as something of a laggard in terms of “green energy” developments, Hungary has announced plans to meet European Union climate change targets with a twophase plan which envisages a spend of EUR 55 billion in investments by 2030, and up to EUR 152 bln by 2050, with solar energy one of the principal areas of expansion.



GHG intensity ofGDP



Reduction of GHG emission in the non-ETS sector (%) compared to 2005

Share of RES in gross final energy consumption

Final energy consumption

EU targets for 2030

Hungarian targets for 2030

Recent Hungarian situation (2017)

min. -40%

min. -40%

-31.9 %

continuous decrease

1,98 t CO 2e/million HUF

min. -10%

min. -7%

-9.3%

min. 32%

min. 21%

13.33%

Indicative 32.5% reduction

max. 785 PJ The source of any extra consumption can be only RES between 2030 and 2040

775 PJ

Source: Ministry for Innovation and Technology

The HUF 18 tln gross investment figure includes HUF 4 tln for the new Paks 2 nuclear facility, for which preparations are already underway.

The second phase of the plan, designed to meet European Union energy neutrality targets set for 2020, is expected to

involve

HUF 50 tln

in investment – amounting to 2- 2.5% of GDP per annum. However, details are thin on the ground, and still being formulated.

Along with meeting climate change targets, Hungary aims to achieve a complex variety of goals, not least the question of the country’s energy independence.

Import-dependent

“Hungary is a highly import-dependent country, especially in hydrocarbons, that is natural gas and oil. Our import dependence is [currently] between 80-90%.

Also, in electricity, the current net import ratio is well beyond 30%, it was 32% in the last few years, which is a little bit too high.

It’s a concern,” Kaderják said.

With the full and timely implementation of the plan, “we hope our import dependence might be reduced from the present more than 80%

down to

70%

by 2030,” he added.

Naturally, the government is also determined to keep the costs to consumers to a minimum, nor over-tax the economy.

Indeed, the plan is expected to stimulate both innovation and the economy.

“We have tried to create a strategy that [facilitates] traditional strategy objectives like secure energy services, along with climate de-carbonization, but in such a way that we do not undermine economic development; rather, we are trying to use this whole change to foster economic development,” Kaderják argued.

However, he added that the effort to restrict utility bills also implies an increased legal requirement on utilities to cut costs.

“We really looked for the lowest, but still economically viable prices for consumers.

Lack of Wind Power Costing Hungarians, Greenpeace Argues Anyone driving along the M1 towards Austria could be impressed by the many wind turbines quietly whirling away in the adjacent fields.

Yet, Hungary has invested little in wind, and the last time the authorities issued a license for new capacity was 2006, with the last turbine installed in 2010. From that time, capacity in Hungary has been frozen at 330 MW. “Since then, a wind tender launched by the last Socialist government was withdrawn [after Fidesz took power]

in 2010,” András Perger, climate and energy campaigner for Greenpeace Hungary, told the Budapest Business Journal, adding: “Despite promises, it has never been re-launched.”

This is all the more puzzling since the renewable energy plan in 2012 estimated that some 750 MW of wind capacity could be connected to the grid without any stability problems, the environmentalist said.

Stranger still, amendments to legislation in 2016 introduced a “de facto ban” on new wind capacity,

and no logical reason has ever been given for this.

“As a matter of a fact, there is a potential for wind in Hungary, much beyond the 750 MW given by the action plan,” Perger insists. “REKK [the Regional Energy Research Center] examined this in 2016, and concluded that Hungary is losing money with the ban on wind.”

And, if the economic argument was not so strong at the time, “what can be stated for sure is that prices must have gone down since,” he said.

In this regard, I’d like to emphasize that energy efficiency improvements are one of the best means to do this, and for this reason the government has agreed to introduce a so-called energy efficiency obligation scheme, which will put the energy-saving obligations on the major energy suppliers in the country.”

Limited Wind

But while Hungary envisages a massive increase in solar energy capacity, in sharp contrast to regional trends, it ignores any further expansion of its wind generating capacity, which is currently limited, according to Greenpeace, at a mere 330 MW [see box].

According to Kaderják, the answer is that Hungary is best suited for solar generation, so it is better to focus resources on photovoltaic plants, a somewhat incongruous response considering the plan also declares the diversification of supply to be a primary aim.

He is also keen to stress that Hungary has already achieved much in terms of environmental reform, particularly in reducing greenhouse gas emissions, which were

cut by

32%

between 1990 and 2017.

This compares to an average of just 23% by the EU-28 countries in the same period, he notes.

“Within the community we have member states that could not reduce even a tonne, not a percentage, but even a tonne of GHG emissions in the last 30 years,” he said, pointing to Austria, Spain, Portugal and Ireland as examples.

“Compared to those countries, and to many others, we think that [Hungary’s] performance is not bad. We have the ninth best performance, together with Denmark, in reducing levels compared to 1990,” he said.

2

www.bbj.hu

Budapest Business Journal | February 14 – February 27, 2020

Neckermann Hungary to be Independent Following the bankruptcy of the Thomas Cook Group and the reorganization decided upon by the new owner, the Neckermann Magyarország Group of NUR Kft. and NUR TRAVEL Kft. will continue to operate as an independent Hungarian private company group, Neckermann Magyarország Group has announced, according to novekedes. hu. The group has been through a very difficult and stressful period, which began on September 23 last year when Thomas Cook was declared bankrupt and the collapse of parent company, Neckermann of Austria and its owner, Neckermann of Germany, was also announced. “Amongst almost the entire Thomas Cook Group, we can say that we have survived the bankruptcy, and have been able to stay on track and have avoided closing our offices,” novekedes.hu quotes the Hungarian business as saying.

Richter Revenue up 23%, Expands R&D

UAE Investor Opening Office in Budapest Al Habtoor Group (AHG), a leading player in the Gulf, is opening a regional office in Budapest to look for new business and investment opportunities, according to portfolio.hu. The company is known primarily for its investments in the hospitality industry, but it also has significant interests in the real estate market, the digitizing car industry, education and vehicle leasing. The company has just reported that it plans for a significant expansion, building on what it sees as stable and high growth, especially in the Central and Eastern European markets; the first round of that expansion is the creation of its operation in Budapest, portfolio.hu says.

Photo by IMG Stock Studio/Shutterstock.com.

In 2019, Richter Gideon Nyrt. earned record revenues by increasing the share of new, innovative products in place of their traditional products, says mfor.hu.

The firm is also preparing for another substantial increase in R&D spending

next year. On the background of the main figures presented on February 7, CEO Gábor Orbán said that Richter’s consolidated revenue increased to more than HUF 500 billion, of which the pharmaceutical business generated more than HUF 400 bln. Consolidated revenue increased by 23.3% and pharmaceuticals production by 11.7%. According to Orbán, Richter’s profits will be less affected by the sales of traditional medicines like Cavinton, as the company invests enormous resources in modernizing and renewing its product portfolio.

Budapest Bank Looking to ‘Springboard’ Women in Finance Budapest Bank created the “Springboard, Budapest Bank: For Women in Finance” program 10 years ago to support women in gaining entrepreneurial skills, connect with them, and help them start and grow their businesses. As part of the program, a 12-day competency development training will be launched this spring, along with a Business Model Canvas course and a new digital competency training course, writes penzcentrum.hu. One of the most important elements of the Springboard Program is the 12-day Competency Development Training, which enables participants to acquire business, marketing, management, fundraising and

taxation skills and develop their self-awareness, communication, and presentation skills. Training for women entrepreneurs or women who want to become entrepreneurs is conducted in groups of 20 for six weeks, two days a week for a total of 90 hours. Applications are open until February 16. Another important element of the Springboard Program is the one-day Business Model Canvas workshop, which is based on a worldwide business planning methodology. The workshop will give attendees a clear idea of their business, its causal relationships, and strategic errors. Registration is open until February 23, penzcentrum.hu says.

INSIDE VIEW

Short-term Postings, Business Trips and Training: Even More Complicated Administration Judit Jancsa-Pék Senior advisor, Partner LeitnerLeitner

Posting is not only a case of an employee working on a specific project abroad, but also when attending few-days long business meeting, conferences, training, negotiating business transactions, conducting sales or marketing activities, auditing clients, even exploring business opportunities.

In the case of such short visits, the same administrative duties are necessary and failure to do so may result in severe penalties.

Under the Community Regulation currently in force, a worker may be insured in one state only, generally in that state where he physically carries out his work. Several factors influence where, how and at what level the contributions are to be paid.

One of these is whether the worker is employed or self-employed abroad, posted as an expatriate to work abroad, or works in more than one country at the same time in parallel, or potentially commutes daily or weekly between two countries. To determine the nature of working abroad, all the relevant criteria should be examined, which is just how the supervisory authority will assess the situation as a whole.

However, postings are subject to special rules, as the employee may remain insured in the county of sender if the conditions are fulfilled. Such simplification for posting applies when an employer established in the territory of one EU member state sends a worker to the territory of another member state in order to work there on his behalf. The expected duration of work should not exceed 24 months.

If a worker is considered to be a posted worker on the basis of the above, he or she will not be subject to the obligation to pay contributions in the foreign country by virtue of a special certificate (A1).

As the current EU Regulation does not distinguish between short-term jobs or visits and long-term postings, similar rules apply. So such short visits are actually the equivalent of a posting of less than 24 months. Therefore, it is strongly recommended to obtain an A1 certificate before starting a business trip to avoid any legal consequences.

If lacking the necessary documents, the employee will automatically be obliged to pay contributions in the host state; thus the failure to obtain the documents may result in severe tax, social security consequences and even fines, the extent of which will depend on the domestic law of the member state concerned. Moreover, in our experience, this includes cases where the employer sends the worker to different member states on a daily basis, which requires separate A1 forms per destination.

Nevertheless, in the meantime the European Commission has launched a review of the EU Coordination Regulation. The amendments aim to settle these practical problems in a reassuring and clear manner, so the concept of business travel would be included specifically in the EU rules.

This would include temporary activities related to the employer’s business interests such as referred above.

Although the European Parliament’s draft legislative resolution has already been finalized following the approval of the European Council, no final agreement has yet been reached between the three institutions so that the content of the report may yet be amended, but the good news is that simplification is imminent!

LeitnerLeitner has comprehensive knowledge of the legal and tax environment of countries in the region.

With the help of our experts you can get high quality advice and practical help on taxation and administrative aspects of posting and expatriation of your colleagues.

And now we are offering readers a special opportunity. Be our guest at our free workshop on March 17 to learn more about administration, taxation and social security issues for postings and employing expats, with a focus on actual and new legislation. For more information and registration, email budapest.office@leitnerleitner.com.

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

Company ///news

Business | 13

14 | 2

Business

www.bbj.hu

Budapest Business Journal | February 14 – February 27, 2020

Mentoring Startups to Their Next Level Seven Hungarian, one Barbadian and an Austrian startup completed Design Terminal’s latest mentoring program in fall 2019. The teams showcased their progress to an expert jury and the general public (and the Budapest Business Journal) on Demo Day, on January 30.

ZSÓFIA VÉGH

Since its inception, both the Mentoring Program and the organization have gone through significant changes. From an institution supporting design and fashion – and thus, designers – Design Terminal is now focusing on startups with social impact or with a mission.

The relevance of this program as well as their weight varies, as the list of those being mentored in the fall semester shows. From an LED bicycle lane indicator bracelet which makes cyclists move visible (by Useeme) to an IT solution that can predict the effect of different drugs on cells and thus accelerate drug development (by Cytocast), the scale is wide.

When it came to selecting the teams, the organizers placed more emphasis on the personality of the founders and the team behind the idea or the actual product.

“This way, should their original ideas fail, the founders will still acquire entrepreneurial skills they can make a very good use of when working on their next, and hopefully even more successful, startups,” says Anikó Ivanics, head of the mentoring program.

The above approach makes sense as an idea or even a prototype is easier to modify than one’s character. This also fits today’s

hiring trends that place more emphasis on soft skills and adaptability than expertise.

Regionally, Design Terminal is also more restrictive as it is focusing more on the Visegrád Region and those countries where it has already successfully mentored startups, such as Austria, Denmark and Sweden. It believes the participation of foreign teams adds huge value to the startup community.

“Young entrepreneurs from Hungary tend to have this habit of thinking small (and little of themselves and their capabilities).

They need to be encouraged to grow out of that, so they dare to dream big and build an enterprise,” Ivanics says.

Inspiration

“They tend to be harder on themselves when it comes to success or failures.

What we would like to achieve is that this community inspire them to get better and they stop comparing themselves to others who may be ahead of them. Instead, they should look for ways to use that gap as a source of inspiration rather than a limitation,” she adds.

“Entrepreneurs from different countries will take a different approach to a problem, and this what teams can learn from one another.” The key to success is diversity, be it skills, expertise or age, as it will introduce a new mindset into startups lives, Ivanics says.

The program helps the startups get more foreign exposure on the markets they would

like to enter. What is crucial during the program, according to Ivanics, is that teams learn to embrace their strengths, what members of the team they can rely on, how they can co-operate under pressure and what their short- and long-term goals are.

Goal-setting was, indeed, an enhanced part of the program, according to the winning group, BLock. A startup from Hungary on a mission to eradicate bike theft and popularize cycling, BLock’s bicycle locks makes parking comfortable and safe for urban cyclists. It has participated in a number of startup/ mentoring/accelerator programs so far, so has a good basis for comparison.

“We were given so much attention that we never had in any other program before,” says Szabolcs Szilágyi, founder and CEO of BLock.

During a weekly check-in on Fridays, the teams had to present to their peers and mentors how successful they had been at fulfilling the goals set a week before.

“This way we were forced to reflect on the previous period in a good sense and take pride in even the smaller achievements,” Szilágyi says. “The expectations were high; as a result, we could progress a lot,” he adds. (For more on BLock, see our regular Startup Spotlight feature on page 11.)

Marketability

Although it is the teams’ abilities and skills that get sharpened the most, the products and their marketability also go

through a lot of phases. From a solution originally tailored for professional athletes, Skain, an Austrian startup turned to a general public and gyms.

Its solution, Trackbar, allows one to track their strength training, alongside many other features from cardio to rest.

It can track work done on a machine or even with free weights and is able to analyze not only the number of repetitions, but also the quality of those reps (for example, the range of movement).

The data can be analyzed by (online) coaches, who can thus keep in constant touch with their clients and make sure they don’t lose motivation.

“It costs a lot [of money] for gyms to get people to the gym. And, if they drop out, it costs a lot for them to reduce those fluctuations,” says Stefan Schade, CEO and co-founder at Skain. The enterprise will start pilots in April, partnering with gyms’ software providers to add their solution to existing software.

Securing investment for later stages is not part of the program, though Design Terminal helps startups in other ways, from drawing up a financial plan to connecting with potential investors. The mentoring program also intends to tie those who have already gone through the program with the current crop, so they listen to the experience of former alumni.

This is also how they stay in contact once the program is over.

3

www.bbj.hu

Budapest Business Journal | February 14 – February 27, 2020

Special Report Expat CEO Awards

The sixth edition of the Budapest Business Journal’s Expat CEO of the Year awards was held at a gala dinner on January 31 at Corinthia Hotel Budapest, with BlackRock’s Melanie Seymour taking home the main title and Siemens Zrt. president-CEO Dale A. Martin receiving the HIPA Partnership award.

BENCE GAÁL

The exclusive, invitation-only, blacktie gala dinner brought together the most important members of Hungary’s expat business community, as well as key players from the investment, political and diplomatic sectors such as Hungarian Investment Promotion Agency CEO Róbert Ésik and several ambassadors and diplomats.

The gala was held for the sixth year in-a-row, and now represents one of the most important events of the year for expat company heads in the country.

This year’s gala featured the highest number of attendees in the history of the event at close

to

200

people. Upon arrival, guests had the opportunity to have their photos taken at the reception point. After making their way up the Corinthia’s grand staircase, they were greeted by alcoholic and nonalcoholic drinks, as well as two luxury cars exhibited by Mercedes, one of the main sponsors of the gala.

Once assembled, the evening’s host, Budapest Business Journal editor-in-

Photo by Marianna Sárközy

Seymour 1st U.K. Winner of Expat CEO of the Year

Star lineup: The jury, nominees, winners and hosts. chief Robin Marshall, invited the crowd into the hotel’s richly decorated Grand Ballroom, where they found their way to tables in front of the stage.

After ceremoniously opening the gala, Marshall invited the CEO of the gala’s official event partner, the Hungarian Investment Promotion Agency, Róbert Ésik, to the stage.

HIPA’s Breakthrough

“It’s really flattering to be here again, and I am also proud that we are continuing the tradition of being of being the co-organizer of this prestigious event. We have closed another very busy and also very successful year in terms of economic development and investment promotion, which actually led to a record high foreign direct investment of EUR 5.35 billion,” Ésik told the audience.

“The foreign investment in this country makes a huge contribution to Hungary.

Now, this is a fantastic way to recognize your contribution.

I congratulate all the nominees here this evening.”

He added that there were three aspects of HIPA’s performance last year that he wanted to highlight in particular. The first was that the agency had made a breakthrough in terms of Asian investments, with 2019 being the first year where most

BBJ Expat CEO of the Year Award The Budapest Business Journal founded the Expat CEO of the Year award with the aim of recognizing the efforts of expat CEOs in Hungary that benefit both the country and their companies.

“The BBJ is Hungary’s only English-language economic bi-weekly, and has always played an important role in providing information for expat CEOs

working and living in Hungary. That is why we decided to found an award to recognize their efforts annually,” explains Balázs Román, the CEO of the newspaper.

Roll of Honor • 2020 Melanie Seymour, head of Blackrock Budapest from 20172019, and now head of Global Client Services

FDI was brought into the country from the region, rather than the traditional powerhouses of German or American investors.

Secondly, Hungary had strengthened both its regional and European position in electric mobility,

with

60%

of investment value going into the area. Ésik also said that the year was a success in terms of bringing high value-added services into the country, with HIPA managing 14 projects in the business services sector.

After the speech, Marshall took the stage once again and thanked the sponsors of the evening: MercedesContinued on page 16 ► ► ►

• 2019 Taira-Julia Lammi, country managing director, ABB Hungary Kft. • 2018 Marc de Bastos Eckstein CEO, Thyssenkrupp Components Technology Hungary Kft. • 2017 Jörg Bauer, president of GE Hungary Kft. (now owner of Tungsram Group) • 2016 Jost Ernst Lammers, then CEO of Budapest Airport Zrt. (now CEO of Munich Airport) • 2015 Javier González Pareja, then CEO of Bosch Magyarország

Special Report

www.bbj.hu

Photo by Marianna Sárközy

Budapest Business Journal | February 14 – February 27, 2020

Photo by Marianna Sárközy

16 | 3

Charles Wassen (left), of Dana Hungary, with BBJ editor Robin Marshall.

Easiest Speech

Continued from page 15 ► ► ► Benz Hungária Kft., PwC Hungary, Vodafone, and Penny Market Kft. Before introducing the United Kingdom’s Ambassador to Hungary Iain Lindsay, the editor, a British national and, like Lindsay a member of the Most Excellent Order of the British Empire, said a few words about Brexit; the gala was held on the day the United Kingdom officially left the European Union.

“I have seen our next speaker at a range of press conferences and town hall meetings forced to say things – through no fault of his own, just the very peculiar and particular set of circumstances that we have found ourselves in – such as ‘We don’t really know yet,’ or ‘We can’t say yet,’ or ‘That is yet to be decided’ and variations on these themes,” Marshall said.

“Well, tonight something definitive does happen, and tonight he has something very definite to say,” the editor-in-chief said before calling Lindsay to the stage.

The ambassador took the stage, jokingly noting that his speech will be easier than the number of interviews he had been doing since the morning of the gala regarding Brexit.

“The foreign investment in this country makes a huge contribution to Hungary,” Lindsay noted, adding that expat CEOs contribute significantly to the wellbeing of Hungary. He also praised the gala itself, noting that “Now, this is a fantastic way to recognize your contribution. I congratulate all the nominees here this evening,” he said.

“In a few hours’ time, the United Kingdom will leave the European Union, after

47

years

a member of the European Union, so from midnight, we will have a very solid different relationship, a different partnership with the European Union. We are leaving the European Union, we are

Romke Noordhuis, of ExxonMobil Hungary, recieves his runner up certificate. not leaving Europe,” he explained. “We no less European than any Norwegians, Swiss, Serbs, or Russians who may be in the room.”

He assured guests that the United Kingdom will be forging a new partnership with the EU, one built on cooperation and friendship. Still, the ambassador said that his country will now act as “sovereign equals”, as “decisions will be made in Britain rather than Brussels, Strasbourg, or Luxembourg”.

Lindsay also said that Britain is in favor of free trade, committed to NATO, and that foreign nationals will still be welcome in U.K. cities such as London. He said the rights of Hungarian citizens living in the United Kingdom are guaranteed, and they have no reason to be afraid, as he explained in both English and Hungarian.

Interactive Game

After the ambassador’s speech, Marshall invited the room to play an interactive game based on Swedish scientist Hans Rosling’s findings about how the way one feels influences how an

ADVERTISEMENT

HUF 5,990

Top Expat CEOs In Hungary 2019-2020 A behind-the-scenes look at some of the most influential expat CEOs in the Hungarian economy, their leadership philosophies and business successes.

“I am honored that HIPA chose a company with a long history of investing in Hungary, for more than the last 130 years. […] After World War II, Siemens was the first company to start a massive joint-venture here, and actually behind the Iron Curtain, first of all in 1974.” individual thinks about the state of the world. Participants had to answer nine questions online with the help of their smartphones regarding the socio-economic state of Hungary and the world, such as vaccination rates.

While some answers were on the pessimistic, the CEOs easily outperformed the world’s correct answer average of 25%. The game was organized with the help of PwC. After the game, Ésik returned to the stage to present the HIPA Partnership award, which goes to the person who has done most to promote investments in Hungary in partnership with the agency.

This year, the recognition was given to Siemens Zrt. president & CEO, and German-Hungarian Chamber of Industry and Commerce board member Dale A. Martin. He had also previously served as the president of the chamber for the maximum of three terms.

“I am honored that HIPA chose a company with a long history of investing in Hungary, for more than the last 130 years,” Martin said, highlighting some of the key projects Siemens took part in, such as the first Budapest tram line

in

1887,

For subscription please contact: Business Publishing Services Kft. on +36/1 398-0344 or email circulation@bbj.hu

and metro line M1 in 1896. “After World War II, Siemens was the first company to start a massive joint-venture here, and actually behind the Iron Curtain, first of all in 1974.”

“The connection between Hungary and Siemens, however, goes back even further

3

www.bbj.hu

Special Report | 17 Photo by Marianna Sárközy

Budapest Business Journal | February 14 – February 27, 2020

than one would assume,” Martin recalled, explaining how Hungary played a key role in the history of Siemens even before it was founded in the 19th century.

Tokaj to the Rescue

In the geography section of a Prussian Military Academy entry examination, company founder Werner von Siemens was the only soldier of his group to correctly recall the name of the Hungarian wine region of Tokaj, earning him the praise of his superior and a place among the students who were admitted. That gave him an excellent education, which he would put to business use in later years.

After the main course was served, it was time for the night’s major event: the Expat CEO of the Year award. Before introducing the current nominees, the night’s host recalled the previous winners of the award, and called attention to an emerging pattern of success among them.

“The award was won for the first time in 2015 by Javier González Pareja, then CEO of Bosch Magyarország, who has since been promoted and is now president of Bosch in Spain and Portugal;

in

2016

HIPA CEO Róbert Ésik (left) with winners Melanie Seymour and Dal A. Martin. to be promoted or buy a company, but he hasn’t stopped building factories up and down the country. Last year it was our first woman winner, Taira-Julia Lammi, country managing director of ABB.” Marshall then revealed the shortlisted nominees for the award: Romke Noordhuis, managing director of ExxonMobil Hungary; Melanie Seymour, head of Blackrock Budapest from 20172019, and now head of Global Client Services; and Charles Wassen, general

manager and country lead of Dana Hungary. The audience got to learn the nominees a bit deeper via a screening of short introduction videos about each one of them.

The Winner Is…

Photo by Zsuzsa Darab

the winner was Jost Lammers of Budapest Airport. Last year he was promoted and now runs Munich Airport, the second busiest airport in Germany, one of the busiest airports in Europe. Do you begin to see a theme emerging?” Marshall asked the audience.

“In 2017 it was Jörg Bauer, then President of GE Hungary. Since then, he has left GE, bought Tungsram from it, relaunched the brand, reimagined the company and was named Figyelő’s Man of the Year for 2019.

In 2018 it was Marc de Bastos Eckstein, of Thyssenkrupp. Now, Mark hasn’t had time

Amanda Nelson, CEO of Vodafone, one of the sponsors of the evening, tries out the VR googles at her company stand.

The Expert Jury The professional expertise of the independent jury members strengthens the quality and reputation of the award. It includes leaders of bilateral chambers and international business development organizations with outstanding experience both in international and domestic economic life, complemented by the prize winner of the previous year and the CEO of the Budapest Business Journal.

The jury responsible for deciding the 2020 winner was: • Írisz Lippai-Nagy, CEO of the American Chamber of Commerce in Hungary • Dale A. Martin, former president of the German-Hungarian Chamber of Industry and Commerce, and President and CEO of Siemens Hungary • Róbert Ésik, CEO of the Hungarian Investment Promotion Agency • Balázs Román, CEO of the BBJ • Taira-Julia Lammi, country managing director, ABB Hungary

The editor-in-chief then yielded the floor to last year’s winner Taira-Julia Lammi to reveal the name of this year’s winner. In a nod to her acceptance speech last year, Lammi noted that this year once again felt like the Oscars, except for the fact that she was the one holding the envelope this time.

A few seconds later, she read out the name of the winner, Melanie Seymour, who received a hug from her son and made her way to the stage to waves of applause.

“It’s not lost on me or BlackRock, that in my new role somehow, miraculously, I have the biggest team in Budapest. It’s not my fault,” the winner said jokingly after receiving the award. “When I came I made a couple of bold statements… one was ‘I’m not going to be an expat, I’m going to be Hungarian, I’m going to learn Hungarian, get Hungarian friends, and I’m really going to embed myself into this country’.”

She also told the audience her thoughts when she first arrived in Hungary. “I was walking past the Parliament and I said: I need to make an impact, I am not here to just build BlackRock, I’ve got to do

Jury members are charged with nominating expat CEOs for the award based on the following criteria: • Innovative skills; • Successes on domestic and international markets; • Being a prominent and committed representative of his or her mother country in Hungary; • Impact on Hungary’s economic life; • Must have lived in Hungary for at least two years; • The financial results of the company represented by the CEO must be positive.

HIPA Partnership Award Over the years the Hungarian Investment Promotion Agency’s Partnership Award has been presented to: Dale A. Martin, president and CEO of Siemens Hungary (2020); Kannan Prabhakar, chief of projects at Apollo Tyres Hungary Kft. (2019); Frank Müller, head of the regional office of VW Group Eastern Europe (2018); Ekkehard Günter Philipp, CFO of Mercedes-Benz Manufacturing Hungary (2017); Naoyuki Takeuchi, CEO of Magyar Suzuki Zrt. (2016); and Kersten Bachmann, CEO of Takata Safety Systems Hungary Kft. (2015).

something different. I have really got to do something for Hungary.”

At the end of her speech, she also thanked her family for supporting her when she moved to Hungary, calling it “a big compromise” for them. Seymour is the first U.K. national to win the Top Expat CEO of the Year title. The two runners-up for the Top Expat CEO award were also given certificates recognizing their outstanding performance.

After thanking the event’s partners once again and congratulating the winner, Marshall closed the program in his traditional fashion, with the words of the late great Irish comedian Dave Allen: “Thank you, good night, and may your God go with you.”

The night did not end with the conclusion of the award ceremony, however.

The guests had the opportunity to network besides a glass of bubbly at the champagne bar, sponsored by Penny Market, or a plate of dessert at Corinthia’s Valetta Bar. Just how good a time guests had is underlined by the rumors that the socializing carried on long into the night, and somehow a cheese plate or two from the dessert bar found its way down to the lobby bar where the party went on until 3 a.m.

18 | 3

Special Report

www.bbj.hu

Budapest Business Journal | February 14 – February 27, 2020

We asked BlackRock’s Melanie Seymour, the 2020 BBJ Expat CEO of the Year, to reflect on what winning the award means to her and her company.

ROBIN MARSHALL

BBJ: Congratulations on winning the Expat CEO of the Year award. What does it mean for you?

Melanie Seymour: Thank you so much, and congratulations to the BBJ for another incredible event. It is a great honor to be recognized in this way for doing something I have thoroughly enjoyed and where I have been able to live my personal passion and purpose. When I took on this role, I was at a point in my career where I was driven by giving back as much as achieving more personally. The platform this role gave me enabled me to ensure I took full advantage of the opportunities to do both.

This award is not just about me, though.

We chose Hungary primarily because of the talent and this is a validation of that decision. The incredible team I have built around me have enabled the success for BlackRock in Budapest. This award is also a recognition of our place in the business environment. In a relatively short space of time we have been able to develop a brand and be regarded alongside the most impactful employers in Hungary.

BBJ: What would you say characterizes your leadership philosophy?

MS: The two words that characterize my leadership are “inclusive” and “authentic”.

I have been passionate about inclusion and diversity for many years and have always known inclusion is the harder of the two. In Budapest we had a deliberate strategy from day one to hire diversity of thought and behavior, with a high percentage of our employees not having any financial services experience. We also knew that this required us to build an inclusive environment where those diverse thoughts were listened too and acted upon. My first demonstration of this was the design of our office, where we have no individual offices (including me) and have different types of work spaces for different working preferences.

Authenticity is the other area that I believe is key for leaders. I strive to be real and show my vulnerabilities alongside my strengths. I have had a less than conventional career with many ups and downs and have always shared this with my teams to demonstrate that there isn’t a “normal” route to the top

Photo by Marianna Sárközy

Inclusive, Authentic, Challenging and Ready to Change: The DNA of an Award-winning CEO grow beyond BlackRock, beyond London and beyond one industry. I am always humbled when I meet Hungarians who have been able to bring their families back together in the country they love because the opportunities for a career are growing here. I also like to believe that some of my refusal to accept the status quo and desire to always challenge and transform has rubbed off on other leaders in Hungary. I am definitely seeing more desire to change within the business community than when I first arrived.

BBJ: You now have a global role, but your team in Hungary means you will still visit regularly. What do you think are the greatest challenges and opportunities facing the country?

MS: I think the talent pool is both the greatest challenge as well as the greatest opportunity. As I said earlier, the talent was a key factor in our decision to build in Hungary. I like to call what we saw an “intellectual curiosity”, the ability to look beyond the norm for solutions and not be afraid to challenge the status quo. This is a natural behavior for many Hungarians and the key is harnessing that talent and providing an environment where it is recognized and rewarded.

The challenge is how do we create this environment both in education as well as in business. Lack of talent is always sighted as a challenge across businesses and a question for companies looking to invest or expand. I do not fully agree with this, as I do believe that with the right changes in education and different types Melanie Seymour, winner of the 2020 BBJ Expat CEO of the Year Award. of career opportunities being offered, the talent pool willing to work in Hungary is deeper than is thought. Hungary is at and anyone has the chance to achieve BBJ: When you came to Hungary, the right stage of maturity to develop a anything. Choosing to sit in the teams you said you wanted not just to take business environment that is more aligned and move regularly gives everyone the up a job, but to have an impact on the with the new demographics and the desires opportunity to see me as a person and country. Are you happy with what and requirements of the next generation. get to experience that I have many of the you have achieved? same struggles as they do.

BBJ: What is next for BlackRock in Hungary?

BBJ: You are a woman with a family, and MS: We are now moving into our next bringing BlackRock to Hungary in 2017 “This award is not just about phase of maturity, where it is more about required not insignificant sacrifices from stabilization and delivering impact than pure me, though. We chose you. Do you see yourself as a role model growth. In practice this means we will be to other women? having an even stronger focus on developing Hungary primarily because MS: Indeed, it was a hard decision that did long-term career paths for our people with of the talent and this is a require the support of my husband and deeper connectivity and collaboration across children, as it impacted their lives just as the whole of BlackRock. We have always validation of that decision. much as mine. I try hard to be a role model been an integrated part of the operating The incredible team I have to other women by demonstrating that model rather than a service center and as having a family and a career is possible, the employees become more experienced built around me have although it does require compromises and the impact they have increases. Our plan enabled the success for sacrifices. I describe it as juggling where has always been to have a strong local you have 57 balls to juggle at any one time leadership team and I look forward to having BlackRock in Budapest.” and you therefore have to make conscious a Hungarian CEO of Budapest in the future. decisions to put some balls down or else you will drop them all. Those decisions will BBJ: Is there anything else you would sometimes be home, sometimes be work MS: As an over achieving perfectionist, the like to add? and most often will be yourself. answer is obviously no! Seriously, though, MS: Whilst I have handed over my Consciously making the decision and I am very proud of what I have been able responsibilities for BlackRock Budapest, being honest about it to those it impacts to achieve and the impact that BlackRock I will always have Hungary in my heart helps take away some of the guilt we are has been able to have. I came here with and be a little bit Hungarian. I am keen all great at putting on ourselves. This a vision to build something different for to ensure that I remain connected to the advice is valid for men and women who BlackRock and for Hungary and every time friends I have made and continue to be have anything outside of work they are I walk around our office I am proud of what involved with Hungary in whatever ways I responsible for, not just for parents. the team are delivering and the impact can. My personal vision is for Hungary to A true role model is honest and open they are having. be the place that people choose to study, to about this and doesn’t reinvent their My biggest legacy will be the “Return work and to live and I hope I can remain a journey once they reach the summit. to Hungary” initiative and watching it part of that ambition.

It’s more than electric.

It’s a Mercedes.

For over 133 years we have written automotive history.

Now we begin the next chapter – with the new Mercedes-Benz EQC. Find out more: www.mercedes-benz.hu/eqc

EQC 400 4MATIC: Combined electric energy consumption, kWh/100 km: 25,0 – 22,3; CO2 emissions: 0 g/km.* Reach: 374 – 417 km.

The picture is an illustration. For more information, please visit our website. *Electric energy consumption and range have been determined by WLTP CO2 regulation §2. no. 3 (2017/1153).

Special Report Photos by Marianna Sárközy, unless marked otherwise.

Photo by Zsuzsa Darab

Epat CEO Gala 2020

www.bbj.hu

Budapest Business Journal | February 14 – February 27, 2020

Photo by Zsuzsa Darab

20 | 3

3

www.bbj.hu

Photo by Zsuzsa Darab

Budapest Business Journal | February 14 – February 27, 2020

Special Report | 21

4

www.bbj.hu

Budapest Business Journal | February 14 – February 27, 2020

Socialite Trupa Trupa and the Hidden Treasures of Szeged It so happens that fate took me to Szeged. I’m not complaining, but I did feel at first that the city was a bit of a backwater. Now I know that, beneath its sleepy façade, there’s plenty to discover here.

DAVID HOLZER

A week or so ago, I was startled to discover that Polish band Trupa Trupa was playing at the Grand Café in Szeged, a venue I had no idea existed. Never having heard Trupa Trupa, what piqued my interest were salutations to their music from rock gods Iggy Pop and and energetic record.” Only one of Henry Rollins. several superlative-draped reviews.

After a little more digging online, I Atmospheric discovered Trupa Trupa had received In the days leading up to the interview, positive reviews from journalists at big I listened to Trupa Trupa music. It’s name publications. Pitchfork, for example, certainly atmospheric; spacey, with described their most recent album “Of the hypnotic repetition that recalls early Sun” as “a potent fusion of post-hardcore and shoegaze.” I’m not quite sure what they psychedelic Pink Floyd as well as postpunk bands like Joy Division. Kwiatkowski meant but it sounds good. favors a minimalist approach to lyrics, How had a Polish band playing in repeating phrases like “Never forget” or Szeged managed to get themselves heard “No-one and no-one and nowhere to go.” by such colossi of the music industry?

His singing often sounds perfectly English.

Curious to find out, I exchanged emails The band often uses a lovely melody as with Gregzorgz Kwiatkowski (lead singer, a Trojan horse to smuggle in disturbing guitarist and a published poet) and sentiments. “Here and Then” revolves arranged to interview him when the band around the simple phrase “Here you’ve got played at Grand Café. (insert family member) and then you see Apart from Kwiatkowski, the band their grave” which, given Kwiatkowski’s is Wojtek Juchniewicz (vocals, guitar), stated fascination with the Holocaust, is Rafał Wojczal (keyboard, guitar), pretty unnerving. and Tomek Pawluczuk (drums). They If you do visit Szeged and decide to formed in Gdańsk and are aged between spend the night, you should definitely 30 and 40. Although they were later check out the Grand Café. It’s a long, lowto tell me that the band’s name can ceilinged bar that runs above a section mean anything one likes, Trupa Trupa of the recently restored Belvárosi Mozi translates roughly into English as (Downtown Cinema) on Deák Ferenc utca “a troupe of corpses.” in the center of the city. The clientele It was with 2017’s “Jolly New Songs” shoots for a bohemian look in a way I album that things really took off can’t help but think of as particularly internationally. It was one of Newsweek’s Hungarian: berets, round glasses and “11 Great Overlooked Albums from 2017.” plenty of trips outside to smoke.

“Of the Sun”, the latest album, was Kwiatkowski too wears thick-lensed released on perpetually hip label Sub round glasses and takes his smoking Pop, for whom Nirvana recorded in the seriously. When our interview was over, early days. Music obsessives’ bible Mojo we stood outside the Grand Café and magazine described this as a “gripping

Trupa Trupa. Photo by Rafał Wojczal. chatted about our lives. Unlike most of the musicians I’ve interviewed, he came across as genuinely interested in me.

But there’s also something genuinely and satisfyingly odd about Kwiatkowski.

He told me that he always wears the same clothes. As his outfit included a pair of skinny black jeans accessorized with gold tassels around the pockets and across the rear, I found this hard to believe. Until I later read another journalist’s description of spending time with Kwiatkowski, who described the same gold tassels.

This writer, Amos Barshad, wrote that Kwiatkowski arrived at his strange Beatles meets early Justin Bieber bowl cut as the result of telling his barber he wants to “look like a f*****g stupid kid.”

Wry Humor

This kind of sums up Trupa Trupa’s wry humor and smartly self-deprecatory approach to their music and trajectory through the industry so far. Everything is presented as a sort of accident.

(Mind you, don’t all bands do this?

It’s far cooler than admitting to a Machiavellian game plan.)

So, when I asked about the comparison to early Pink Floyd, Kwiatkowski explained that a journalist writing for the Los Angeles Times has said that, on their album “Headache”, he sounded like Syd Barrett of the Floyd. “Then,” Kwiatkowski said, “I listened to Syd Barrett.”

The band stresses their difference from the rest of modern music. Kwiatkowski

calls them people “who, in some natural, intuitive way shouldn’t play together. We’re a strange kind of mistake on this rock and roll planet. But we’ll be successful spiritually as long as we do everything in this broken rock and roll spirit.”

He then comes up with a beautiful soundbite. “We’re really stupid, f****d up Don Quixotes, from the A to the Z. As long as we’re Don Quixotes, it’ll be a cool story.”

So, who’s Sancho Panza? “We have many of them,” answers guitarist Rafał Wojczal.

It looks like they do.

With that, Trupa Trupa wandered onto the stage. Before they did so, Kwiatkowski took off his thick glasses and stared at the ceiling a lot. This, coupled with what looked like complete absorption in the music and klutzy, spasmodic leg kicks, made him look demented. Which, of course, meant I couldn’t take my eyes off him.

Szeged is only 90 minutes’ drive from Budapest (175 km southeast of the capital, just follow the M5 motorway and the signs). It’s a little over two hours by train.

There are several good hotels in the center of the city. Perhaps you could say the same about Debrecen, just to pick a name out of the air. I’m looking forward to finding out.

4

www.bbj.hu

Budapest Business Journal | February 14 – February 27, 2020

Socialite | 23

Furmint February Fever at Home and Abroad Furmint February has become a favorite fixture on the Hungarian tasting scene, with the centerpiece Budapest tasting backed up by sister events in the Hungarian cities of Miskolc and Debrecen, as well as in the Romanian city of Timișoara, and in London, in 2020.

ROBERT SMYTH

Zsuzsa Toronyi, the figurehead of Wines of Hungary U.K., which organized the London event that saw 36 Hungarian Furmint producers head to the British capital, described “huge interest” with 300 trade and press visitors, and more than 100 consumer visitors to the tasting held at Merchant Taylor’s Hall on January 29.

Incidentally. Jancis Robinson MW, known as the “Madonna of wine”, was one of the experts in attendance.

Meanwhile, the main Budapest tasting of Furmint February, held at the Hungarian Agricultural Museum on February 7, was as buzzing as usual, and marked the start in earnest of the 2020 tasting season.

Furmint, which has forged ahead as Hungary’s flagship grape, is starting to garner more attention beyond Hungary’s borders and is very much liked by critics for its ability to make wines in a gamut of styles to excellent effect.

Last February, Kate Hawkings in The Guardian asked whether Furmint is “the tastiest grape you’ve never heard of?” and declared: “Of all the grapes in all the wines in all the world, Furmint is probably my favorite.”

The last 20 years have been about developing high quality dry wine from the grape that was synonymous with sumptuously-structured sweet botrytized beauties.

It now appears in the dry category that Furmint can do both lighter reductive wines that are vinified only in stainless-steel tanks, as well as fuller bodied oaked wines (though a common problem has been over-oaking, which can block out Furmint’s fairly restrained, but often elegant aromas.

A cluster of botrytized furmint grapes in the fall, during late harvest in the Tokaj Wine Region. Photo by Szilard Csaki/Shutterstock.

Classic Quince

A fine example of the former style is Carpinus’ steely, fresh and fruity Furmint 2018, with the variety’s classic quince note.

I actually preferred it to the same winery’s oaked efforts (which were still very good wines) for representing pure, unadulterated Furmint and for being so zesty, crispy and mouth-wateringly delicious.

Furmint’s ability to capture the characteristics of different places of growth, including even individual vineyards (another big tick in its quest for greatness) is very apparent when you taste a wine from a vineyard like Rány in Erdőbénye, in the Tokaj region. The vineyard effect with this stony spot is so strong that is overrides the grape and often even the winemaker.

“Olaszrizling is very important to us and we really like working with Riesling, but Furmint is really in our hearts.”

Made by Sarolta Bárdos, Tokaj Nobilis Rány Furmint 2018 (HUF 4,350 from Bortársaság), which comes from old vines, has the vineyard’s trademark Rány acidity (that I’d compare to an edgier Chablis), even though 2018 was, overall, lacking in acidity across the region, and a grassyherbal note that I’ve found in other wines from the same vineyard.

This, and other wines from the same spot, such as by Tokaj Sanzon, are very distinctive indeed and exude an exhilarating cool-climate chillingly fresh factor.

Another very nice, yet entirely different, dry Furmint from Nobilis is the juicy, waxy and oily Barakonyi Furmint 2018, which was spontaneously

fermented in used, local Zemplén barrels, from organically grown grapes.

Furmint frenzy is reaching fever pitch as Hungarian growers up and down the land race to plant it, or in many cases re-plant it in areas where it once thrived before being wiped out by the phylloxera louse that devastated European vineyards over a century ago.

‘We Love Furmint’

When I quizzed Gyula Pálffy about what Furmint means to a winemaker in the Káli Basin, close to Lake Balaton, he pointed to his “We love Furmint” badge.

“Olaszrizling is very important to us and we really like working with Riesling, but Furmint is really in our hearts,” he said, explaining the important historical connection with the grape.

It was once widely planted around Lake Balaton, and went by the name of Szigeti, before phylloxera turned up.

Now it is taking hold once again.

Pálffy’s Furmint Brut Pezsgő 2016 shows the grape’s ability to cut it as a traditional method sparkling wine, possessing all the traits of a good bottle-fermented sparkling wine, with an appealing zestiness, elegant bubbles but that varietal quince character.

This sparkler has run out at the winery, but there are still some examples available at Bortársaság for HUF 6,950.

Over in Somló, the Kreinbacher winery makes outstanding traditional method sparkling wine, with Furmint at the forefront.

Pannonian Plain

Some say that the Furmint grape hails not from Tokaj, but from Szerémség (Syrmia), an area that today straddles the southern Pannonian Plain, between the Danube and Sava rivers, located in what is now northern Serbia and Croatia.

When I asked Ernő Sagmeister, an ethnic Hungarian winemaker who makes wine in Serbia, whether he thought the Furmint grape originates from Szerémség, he didn’t quite jump at the opportunity to claim it for his own region.

“Perhaps, but it’s also a responsibility to have a connection with Furmint. It’s not just ours, it has too many lovers by now, but this is OK; we just have to love it and be happy to share it.” His excellent Kanias Furmint 2016 is available from Bortársaság.

The main Budapest Furmint February tasting featured many new releases from the 2018 vintage, which was very hot in Tokaj and, remarkably, the grape variety’s notoriously sharp acidity has been tempered, in many cases in fact a little too much so, rendering some wines very much in the “drink now” category.

It was those who beat the heat who made the most impressive wines. The pocket-sized Pelle Pince did just that to deliver a delectable Birtok (Estate) Furmint from the vintage and owner László Pelle explained that small can be beautiful, and indeed flexible, in terms of getting to the grape in time.

The next thing that will need to be proven in Furmint’s pursuit of greatness is for the wines to age well, picking up complexity along the way. As yet there aren’t many older vintages knocking around to test this.

Walk in.

Get better.

Instant help.

No appointment needed.

Check out our pre-paid packages at walkincenter.hu or e-mail us at info@wmc.hu

walkincenter.hu WÁBERER WALK-IN CENTER Hill Side Offices 1123 Budapest, Alkotás utca 55–61.

Open: Monday – Saturday, 8 A.M.– 8 P.M.