HUNGARY’S PRACTICAL BUSINESS BI-WEEKLY SINCE 1992 | WWW.BBJ.HU
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BUSINESS JOURNAL BUDAPEST
VOL. 29. NUMBER 5
MARCH 12 – MARCH 25, 2021
SPECIAL REPORT Banking
SPECIAL REPORT
MNB Hails Pandemic Response, Charts Path to Recovery
The coronavirus pandemic hit the Hungarian economy at a time when its fundamentals were stable, and growth was strong, according to the latest Inflation Report of the National Bank of Hungary (MNB). 19
NEWS
January Industrial Production Disappoints Industrial output fell by 6.7% on a year-on-year basis in January, which is a greater decline than expected. Industrial production was up, however, from the previous month. Inflation in February was 3.1%, but analysts expect higher CPI in March and April. 3 SOCIALITE
Kadarka on the day of the Kokárda Robert Smyth finds the perfect Hungarian red with which to commemorate the start of the 1848 Revolution and War of Independence on March 15. 23
Learn, Evolve, Move On
SP
LR EC I A
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The businesses that emerge strongest in the post-COVID period will be those that have taken onboard most from their pandemic leanings, says Veronika Spanarova, country head of Citi Hungary. 16
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THE EDITOR SAYS
EDITOR-IN-CHIEF: Robin Marshall EDITORIAL CONTRIBUTORS: Kálmán Béres, Zsófia
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CORONAVIRUS CATCHES UP The first blow landed in the week before deadline, and slightly blindsided us. In terms of employee average age, we are neither a particularly young company, nor particularly old, but there are several of us who have at least one school-age child (I have three) and none of us were happy to hear on the Wednesday that home schooling would start again on the Monday. Annoyingly from the perspective of story-telling and picture building, we don’t have a water cooler, but if we did, we would definitely have been discussing home school hell around it, albeit physically distanced, naturally. The second blow was equally undetected and felt at the time like a haymaker, but to be honest, it was more to do with the cumulative effects of a good old-fashioned one-two than the actual power of the individual punch. In terms of the human aspect of things, we have had a “lucky” crisis. We all know somebody who has had COVID, of course. I have a nephew in Spain, a niece in Germany and a brother and his wife in the United Kingdom who all went into quarantine. More worryingly still, my 91-year-old mother contracted it in her nursing home, just before she was due her first jab. (She had virtually no symptoms, has made a full recovery and has now caught up with her AstraZeneca jab; other vaccines are available.) But the point is, none of us had caught it. Until Monday morning, when it turned out we had our first case, followed in very short order by our second. At the time of writing, other tests are pending. The office hasn’t been fully staffed since the first lockdown back in March 2020 (gosh, that seems a long time ago), but since last fall, the majority of us have come
in three or four days a week, if not more. The realization that a couple of our colleagues had the virus, and the obvious concerns for their health (both seem fine for now), plus the forced switch to full home office just a day or two before deadline was all a little discombobulating. We know the system works. This isn’t virgin territory for us; indeed, I’m very proud of the newspapers we turned out during that first lockdown. But we also know the process takes longer when the production team aren’t working side-by-side (but two meters apart). There is also a curious factor which is, I suspect, generational. When I began my journalistic career, nothing was digitized, everything was paper-based and we used typewriters rather than computers. Although I have got better with time, I still find I am more accurate proofreading from paper than on screen. All of which, I suppose, is an extended plea for your patience. The Budapest Business Journal will continue to come out on time, and will continue to be dedicated to bringing you the best in business journalism from Hungary. It is possible the next few issues will have more typographical or spelling errors than usual. If so, that is my fault, and mine alone, and I apologize for it in advance. I guess all that is left is to wish you a good, if doubtless slightly odd national holiday on Monday, March 15, when Hungary marks the start of the 1848 Revolution against the Habsburg Empire. More than that, stay safe. Robin Marshall Editor-in-chief
AmCham Package Promises Cooperation for a More Competitive and Sustainable Hungary The American Chamber of Commerce in Hungary has unveiled its “Cooperation for a More Competitive and Sustainable Hungary 2021” recommendation package, a collection of proposals to strengthen the resilience of the economy, step on the path of smart and sustainable growth, develop a highlyskilled, flexible workforce and a predictable, investorfriendly business environment with the ultimate goal of improving the competitiveness of the country. BBJ STAFF
The document is strongly related to the recently published Policy Agenda, the strategic guideline for its advocacy work for period 2021-2025. Although it is not an expression AmCham has used, you could look at the package as putting meat on the bones of the strategic guideline. The first publication does the broad strokes, big picture stuff, while the more recent offering fills in the detail. “While the Policy Agenda is a long-term strategic guide that outlines our main principles and the progress we want to see and help achieve, the recommendation package contains more detailed, more concrete proposals across more than 66 pages, which are in line with the structure
we established in the Policy Agenda,” AmCham CEO Írisz Lippai-Nagy told the Budapest Business Journal. The recommendations, 32 altogether, were written based on input from Competitive and Flexible AmCham members, what it calls its “Human Capital” includes proposals policy task force groups (each focusing intended to help create a competitive and on a designated area) and committees flexible labor force through labor code in line with the principles of the Policy amendments and a wide-scale education Agenda, which presents the areas where and training reform. significant progress has to be made to Finally, “Smart Growth” introduces elevate Hungary. The document is divided into three key recommendations to foster innovation areas. “General Business and Investment and research and development, advance Environment” features recommendations the digital transformation and elevate sustainabiliy as a driving force of aimed to establish a predictable and economic policy. stable regulatory environment and The recommendation package has been a competitive tax system, to make administration easier and more effective, sent to the government and the chamber’s and to strengthen the local supplier base. partners and other stakeholders, including
Prime Minister Viktor Orbán, alongside Ministers Péter Szijjártó (Foreign Affairs and Trade), László Palkovics (Innovation and Technology), Mihály Varga (Finance), Miklós Kásler (Human Capacities), Judit Varga (Justice), Sándor Pintér (Interior), Andrea Bártfai-Mager (National Assets) and Katalin Novák (Families). The document has also gone to a number of state secretaries and to Orbán’s cabinet chief Gergely Gulyás and advisor (and former deputy governor of the National Bank of Hungary) Márton Nagy, as well as Róbert Ésik, CEO of the Hungarian Investment Promotion Agency (HIPA), László Parragh, president of the Hungarian Chamber of Commerce and Industry (MKIK), and the presidents and CEOs of other bilateral chambers. It will be discussed throughout the year at AmCham meetings at minister and state secretary levels. The “Cooperation for a More Competitive and Sustainable Hungary 2021” recommendation package is out now in Hungarian, with an English version coming soon. An executive summary is available in both Hungarian and English on the chamber’s website, amcham.hu. Any questions or comments should be directed to AmCham Policy Officer Zsuzsanna Varga directly on zsuzsanna.varga@amcham.hu. For more on the Policy Agenda publication, see “3rd Policy Agenda to Help AmCham ‘lead the way’ to Recovery” and “AmCham sets out Policy Priorities to ‘Work With Government’” in the February 12 issue of the BBJ.
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News///macroscope
January Industrial Production Disappoints Analysts
Industrial output fell by 6.7% on a year-onyear basis in January, which is a greater decline than expected. Industrial production was up, however, from the previous month. Inflation in February was 3.1%, but analysts expect higher CPI in March and April. ZSÓFIA CZIFRA
In January 2021, the volume of industrial production fell by 6.7% year-on-year; based on working-day adjusted data, production declined by 2.8% according to the latest figures released by the Central Statistical Office (KSH). Compared to crude data, the significant difference is due to the fact that there were two less working days in January 2021 than in January 2020. Industrial output was 0.2% higher, compared to the previous month, according to seasonally and working-day adjusted data. The majority of the manufacturing subsections contributed to the fall. The manufacture of transport equipment, representing the largest weight, dropped significantly, while the manufacture of food products, beverages and tobacco declined to a lesser extent. The manufacture of computer, electronic and optical products grew. Industrial output in January, according to both seasonally- and working-day adjusted indices, was 0.2% above the level of the previous month, and had grown by 57% compared to the nadir of April, KSH said.
Inflation in Hungary, 1991-2021 (January-February) Change compared to the same period of the previous year in %
Source:
Analysts gave mixed reactions to the January data. Takarékbank head analyst Gergely Suppan said that the year-onyear decline in January was bigger than he expected. At the same time, the fact that production was able to grow from December surprised him, as car manufacturers had suffered from a narrowing capacity of microchips and many were forced to reduce or halt production.
Extra Push
According to Suppan, we will see further stabilization in the industry in the coming months, and as car makers resumed production in February, that might also give an extra push to the sector. He thinks that 2021 might see an annual growth of 15-16%, and industrial production might contribute to the GDP by more than three percentage points. Industrial output was a positive surprise at the beginning of the year; however, the big picture is far from rosy at the moment, ING Bank head analyst Péter Virovácz commented on the data. He is not so optimistic regarding the near future: according to him, vehicle manufacturing is still not able to utilize its full capacity, and supply chains are still in trouble, while further restricitions introduced in March might cause additional problems. Industry might even hold back the country’s economic performance
in the first quarter of the year. The optimism caused by the better than expected Q4 GDP data has therefore diminished, he noted. The Hungarian industrial recovery came to a halt at the beginning of the year, Századvég analyst Dániel Molnár agreed. The global shortage of microchips has negatively affected Hungary’s vehicle manufacturing, and as for the outlook, external demand is vital. It is also a question whether vehicle manufacturing can make up for the lost production. This year could be hectic in terms of industrial production, K&H Bank head analyst Dávid Németh commented on the data. Industrial performance will greatly depend on when the uncertainties caused by the pandemic disappear and how strong internal and external demand will be during the year, he emphasized.
Big Jumps
Due to the low base effects, he expects notable jumps in industrial production data in April and May, and for the whole year, he believes that the sector might be able to produce a 5-10% growth following a 6% decline in 2020. The KSH also published inflation figures for February. According to this, consumer prices were 3.1% higher on average in February 2021 than a year earlier. Relatively significant price rises were measured over the year for alcoholic beverages and
tobacco, with price rises slightly exceeding the average for food and consumer durables. Core inflation, which excludes volatile food and fuel prices, was at 4.1%. Compared to February 2020, food prices were up by 3.4%, while alcoholic beverages and tobacco grew by an average of 9.9% (within which tobacco was 16.5% more expensive). Shoppers paid 3.8% more for consumer durables, within which new passenger autos had risen by 12.1%. Consumer prices went up 0.7% compared to January. Food became 1% more expensive, motor fuel prices became 3.8% higher.
Industrial output in January, according to both seasonally- and working-day adjusted indices, was 0.2% above the level of the previous month, and had grown by 57% compared to the nadir of April, KSH said. In January-February 2021, consumer prices were up by 2.9% for all households on average, and by 3% among pensioners, compared to the same period of 2020. According to analysts, February inflation data matched forecasts. They also said a further uptick was likely due to the rising fuel prices and a higher excise tax. Takarékbank’s Suppan said he expected 4% inflation for March, and fuel prices might lead inflation to go above 5% in April, he added.
Numbers to Watch in the Coming Weeks The macroeconomic calendar is relatively calm in the next two weeks. The second estimates of January’s industrial data are due out today (Friday, March 12). In the middle of the next week, the KSH will publish January construction industry data, and on March 18, it will detail how commercial accommodation establishments performed in January.
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Budapest Business Journal | March 12 – March 25, 2021
Industrial Records Strong Indicators The industrial market continues to be regarded by analysts as the sector in the most positive position for the postcoronavirus period. The two largest deals in Q4 of last year were a 23,000 sqm letting at CTPark Budapest East and a 16,000 sqm renewal at Prologis Park Budapest-Sziget in Szigetszentmiklós. GARY J. MORRELL
These deals reflect the dominance of the two leading Central European industrial park developers and operators in Hungary. Prologis has completed a land acquisition for the development of 60,000 sqm of space on a 13-hectare site at Prologis Park Budapest-Sziget in Szigetszentmiklós in the south Buda area, 17 km from the center of Budapest and 35 km from Ferenc Liszt International airport. “Our key focus is on the greater Budapest area,” says Máté Szoboszlay, director of capital deployment at Prologis Hungary.
Prologis Park Budapest-Harbor. The developer has 630,000 sqm of industrial space in five parks in the Budapest area with a pipeline of 60,000 sqm. The existing parks are fully let with 98% occupancy. From a demand perspective, take-up for last year stood
at
265,000 sqm,
69,000 sqm of which consisted of new lettings. Total modern industrial stock in the greater Budapest area stands at about 2.4 million sqm as of the end of the year, according to the Budapest Research Forum, consisting of CBRE, Colliers International, Cushman & Wakefield, Eston International, JLL and Robertson Hungary.
Industrial demand remains strong with Hungary having the lowest vacancy rate in the Central European region at an overall 2%. There are few, if any, existing logistics building with more than 5,000 sqm of available contiguous industrial space.
New Leases
Cushman & Wakefield recorded 540,000 sqm in transactions for 2020, 60% of which was net take-up and therefore is new leases. Of the 2% vacant space, only around 1% of this consists of industrial space with the remainder consisting of office space.
Restrictions Tightened Against Coronavirus ///roundup Fast-spreading Variant The Hungarian government decided to close non-essential businesses between March 8 and 22 to curb the rapidly spreading Kent variant of the coronavirus, Gergely Gulyás, the head of the Prime Minister’s Office, announced at a weekly press briefing on March 4, reported state news agency MTI. NICHOLAS PONGRATZ
According to Gulyás, supermarkets, pharmacies and petrol stations were to remain open. The exceptions were later extended to include agricultural and industrial suppliers, as well as shops that sell pet food and livestock feed, gardening
stores, optician’s shops, national tobacco shops and newspaper sellers. Wage support and payroll tax relief which had up to now been available only to hotels and catering companies is to be extended to all businesses required to close because of the restrictions, he added. The government also decided to close kindergartens and primary schools until April 7, the end of the Easter break, he added. These added restrictions have supplemented the existing ones, which the government had decided to extend at the end of February
to
March 15.
At that point, in light of the threat from the new COVID-19 variant, Prime Minister Viktor Orbán warned that the most difficult two weeks of the pandemic were ahead of us. He urged Hungarians to comply with rules intended to slow the spread of the coronavirus and to register for vaccination. On March 5, Orbán told Kossuth Rádió that the number of COVID-19 patients admitted to hospitals could reach 15,00020,000. The next day Orbán estimated that 2.5 million citizens could be vaccinated by
the beginning of April, a tally that could reach 4.5 million by May. That weekend, the number of people vaccinated at least once crossed the one million threshold, but Orbán urged citizens to continue to register for vaccination.
Leaders go Chinese
For his part, Orbán received his first dose of vaccine on February 28. Notably, it was the Chinese Sinopharm vaccine, which had entered the country vaccine mix earlier that week. No doubt the Prime Minister chose the Sinopharm vaccine to set an example and project his confidence that the Chinese vaccine was just as effective and safe as Western vaccines. Hungarian President János Áder also received his first dose of the Sinopharm vaccine on February 26. Interestingly, Hungary is one of only two countries in the world that are utilizing five different vaccines, the other being the United Arab Emirates. Currently, China’s Sinopharm vaccine and Russia’s Sputnik V vaccine account for just over 40% of the vaccines delivered to Hungary thus far, according to the government’s official coronavirus website koronavirus.gov.hu. Some 58%
Hungary’s industrial real estate market could be seen as underperforming in comparison with other major Central European markets. The Czech Republic, for example, has total industrial stock of more than nine million sqm, with an established market in several major industrial towns such as Pilsen, with 27% of total product under construction, compared to 20% in the Prague area, according to the Czech Industrial Research Forum. However, Gábor Halász-Csatári, head of industrial at Cushman & Wakefield Hungary, argues that Budapest is in a similarly strong position to Prague, although Hungary lacks the regional hubs its peers have developed. Cushman has traced a pipeline for this year of 260,000 sqm for Budapest and its surroundings,
with
58%
of the space under construction already prelet. JLL estimates that of the approximately 278,000 sqm of industrial space under construction, 50% is already prelet. With regard to development strategies in the current climate of high demand and low vacancy rates, developers are constructing built-to-suit (BTS) facilities with an additional speculative element. “Generally, logistics schemes have high prelet rates as they are BTS, but now we have registered planned projects that will offer more speculative space for several smaller tenants. Speculative development is driven by demand and there is a need for an increase in speculative development that would allow the market to grow,” says Halász-Csatári.
are the vaccines from BioNTech/Pfizer, Moderna and AstraZeneca. At the end of February, the government said it expected that more than
15 million people
could be vaccinated by the end of the year, according to business daily Világgazdaság (the country has a population of 9.7 million, according to the Central Statistical Office). In the longer term, Minister for Innovation and Technology László Palkovics announced that Hungary would have its own National Coronavirus Vaccine Plant by the end of 2022, according to conservative daily Magyar Nemzet. On March 9, Parliamentary State Secretary Csaba Dömötör, of the Prime Minister’s Office, told TV news channel M1 that three million people had registered for vaccination so far. With mass vaccination underway, anticipation for a post-COVID environment is heightening. Director of Tourism at the Hungarian Tourism Agency (MTÜ) Szabolcs Juhász said that, based on the intensity of reservations being made, it was likely there would be a successful summer tourism season. Minister of Finance Mihály Varga also noted that, if enough people are vaccinated to lift pandemic restriction by Easter, the economy could grow by 4-4.5% this year.
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Business
Leaders Forum with its HBLF interenterprise female mentoring program, or Women in Energy (WONY)”, he says.
COVID Support
Fueling Cleaner Changes for a Better Future
István Kapitány is the global executive vice president responsible for Shell’s Mobility business, overseeing a mobility retail business network of 46,000 sites and operations in close to 80 countries, and president of the Hungarian Managers’ Association. The Hungarian executive tells the Budapest Business Journal how his company is working on leading a positive change in energy. CHRISTIAN KESZTHELYI
Globally, almost 500,000 front-line employees of Shell serve more than 30 million customers every day, selling 200 billion liters of fuel, 250 million cups of coffee, 350 million cold drinks and 450 million snacks each year, according to the company. In Hungary, Shell’s numbers are on an equally grand scale. As the largest international player in the local retail fuel market, its fuel retail network has
almost
200
service stations nation-wide. Hungarian operations are part of Shell Mobility’s growing Central and Eastern Europe business, which plays an important role in its European operations. Humans have burned some kind of fuel to generate energy since ancient times. As is now beyond scientific doubt, we known that when we burn fossil fuels, the released carbon dioxide, together with other greenhouse gases, trap heat in the Earth’s atmosphere, contributing significantly to climate change. The scale of this has grown as mobility has been rapidly changing due to swift urbanization, rising incomes, enhanced digitalization and decreasing costs. As a major producer
István Kapitány and retailer of fossil fuels, Shell insists it is doing its part to drive change. “Last month, Shell released an updated business strategy which sets a new course for the company through the energy transition,” Kapitány, who recently gave the keynote speech to the online conference Managers for Society: Future is in Focus organized by the Hungarian Managers’ Association, tells the BBJ. “As part of our new strategy, our mission is to help the millions of brandloyal customers we serve every day – from large businesses to individual consumers – to decarbonize,” he says. The oil and gas giant’s ambition is to become a net-zero emissions energy business by 2050 by providing cleaner energy in a more responsible manner. The changes that will require are happening in Hungary, too. “Our commitment to the energy transition applies equally in Budapest as much as it does in Amsterdam or Houston. In Hungary, we’re focused on working to accelerate the transition to net-zero emissions and also helping our customers to decarbonize,” Kapitány explains.
Electric Avenue
Shell is growing its electric vehicle charging network in the country: it has launched its Shell Recharge brand, offering 50 kW charging points on the M3 highway (heading east from Budapest to Nyíregyháza) and the M7 (which runs southwest from Budapest, past Lake Balaton, towards the Croatian border at Letenye). Shell has also joined a collaboration with IONITY, a Germany-based high-
power charging station network for electric vehicles, aiming to provide more of the 350 kW super-fast charging points, three of which are already available on the M7 and the M0 (the orbital motorway around Budapest). Given his view from near the top of a major multinational, Kapitány is optimistic both about the local business potential and the labor market. “In my view, the opportunities for Hungarians in business is limitless. In my role as president of the Hungarian Managers Association, I can see the quality of professionals that we have. My career started in Hungary so, naturally, I would like to share my
30 years
of international business experience with talented Hungarian executives,” he says. “One of my goals is to encourage top executives in Hungary to join the association, to mentor and support emerging Hungarian executives to become key players in regional and international business in even larger numbers,” he adds. Kapitány says he is personally involved in a mentoring program within the association, working on shaping the professionals of a more diverse future. “I feel that there has been a positive shift in this area with diversity firmly on the agenda within business in Hungary. But there is always more to do to move further faster. Shell Hungary is very active and supports organizations and initiatives focused on the diversity agenda, i.e. the Hungarian Business
The challenges of the future, however, are already here today. As the COVID19 pandemic has hit the world, with different timing and at different rates, local and national governments have implemented different responses with various requirements. Shell says it kept 99% of its service stations open globally. “To support essential workers, we donated two million units of coffee, food and sanitizers, showing a concerted effort all over the world to provide care, health and safety to frontline workers, our staff and the communities where we operate,” Kapitány says. Shell also implemented enhanced cleaning and safety measures, provided personal protective equipment for staff, and offered free fuel to essential workers. “In many markets, during the peak of the pandemic, we utilized our digital capabilities to start offering home delivery of groceries and supplies for the first time, and in other markets where we already offered this, we’ve scaled it up,” he says by way of example. “This has contributed significantly to our sales in many markets, including Hungary where we partnered with NetPincér GO. We have also seen a marked increase in customers opting to use our touchless mobile payment option for their fuel, paying from within their cars via their smartphones,” the executive VP says. As Charles Darwin said, only those who are most adaptable to change will survive. Shell sees three broad and large-scale changes in the retail landscape which are directing the future of the retail business within the company.
“Our commitment to the energy transition applies equally in Budapest as much as it does in Amsterdam or Houston. In Hungary, we’re focused on working to accelerate the transition to net-zero emissions and helping also our customers to decarbonize.” The first is an increasing willingness of consumers to spend more money in order to save time. The second is the energy and mobility transition and the way in which concern for the environment is changing consumer behavior. The third is the digital revolution and mobile connectivity. “As a society we are going through a significant period of change. In the energy sector where Shell operates, the goods and services that are offered to us as consumers, and the ways in which they are delivered, are changing at a staggering pace. Our challenge of staying agile and relevant in such a dynamic, rapidly evolving marketplace is a big part of what we are currently focused on in the mobility business,” Kapitány concludes.
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Budapest Business Journal | March 12 – March 25, 2021
Communication 1 of the Keys to Empowering Women mindsets and allows connections outside Hungary (through international conferences, webinars, workshops etc.) And then there is management style. Multinationals focus on team work, collaboration, sharing shortand long-term visions, being open to communication and transparency, champion the importance of feedback culture. They have a strong mission/ vision, and empower their teams. That isn’t always the case with traditional Hungarian companies.
With International Women’s Day falling on March 8, we asked communications coach and trainer Anna Jankovich to identify some of the trends around female CEOs in Hungary.
BBJ: What do you think can be done to encourage more women to rise to the top in Hungarian companies?
ROBIN MARSHALL
Jankovich is the founder of “Pods,” moderated conversations with selected business leaders that give them a neutral space in which to talk and share experiences. “Communication is the number one challenge and issue, when there are conflicts in companies as well as in personal lives,” she tells the Budapest Business Journal. “My purpose is to empower people’s communication through sharing, learning and growing without judgement. Giving advice is not allowed in the Pods and that instantly has a positive impact on everyone’s communication.” BBJ: How many CEO participants do you have in your various Pods, and what is the percentage of women to men?
Anna Jankovich: I have 18 CEOs and managing directors presently who are Pod members. The percentage today is 70% women and 30% men. When the concept was developed, it started as a pilot project with eight women. This began as a casual concept in spring 2018 and of the original women, six remain Pod members in Hungary and three have relocated. These numbers absolutely do not reflect the natural gender balance of the business world in Budapest. The idea is to have mixed Pods, ideally half male and half female, half Hungarian, half foreigners and I am not too far from that. There are no egos, everyone is at the same level with similar challenges, despite being from different sectors. They
View From the Pod “I am an ally of women and gender equality because I’m working with many fantastic women internationally bringing in great ideas regardless of their color or age. I want to encourage my male colleagues to participate and champion gender equality and make the world an inclusive place.” András Szakonyi, senior VP EMEA, Iron Mountain
Anna Jankovich truly learn, listen, share and support each other in a unique way. The takeaways that every member is required to contribute at the end of each Pod evening is where the added value comes to life. Before COVID, I managed to set up a second CEO Pod, as well as a first HRD (Human Resources Directors) Pod, and during the first wave of the pandemic I recruited a third CEO Pod that met in April the first time. Once these Pods were established, staying connected through Zoom proved to be even more valuable. Today, I have a new “standby” Entrepreneur Pod ready to go and several more interested CEOs. BBJ: How many of those women CEOs are Hungarian? What do you think this says about gender balance in Hungary?
AJ: Out of the 12 women CEOs to date, eight are Hungarian and four are foreigners. It is interesting to note that there seems to be more opportunities for women to grow, to climb, to have an impact and be a role model in multinationals through their international company cultures and international opportunities. BBJ: You have said that women multinational CEOs have a different mindset to the CEOs of Hungarian companies. Could you give some concrete examples of this, and explore why you think this is so?
AJ: Based on the shared experiences in my Pods, the mindsets of women CEOs/ managing directors from multinationals
View From the Pod “Female leadership brings more color to management and is a perfect fit to the market need of less arrogance and more collaboration becoming the new normal. Women demonstrate high levels of empathy, are great at multitasking, organizing and caring, adding new elements to the decision-making process.” Tibor Bodor, country manager, CEO, ING Bank
differ in several ways compared to Hungarian companies. There are different cultural backgrounds. If the CEO is a foreigner herself, it makes her culturally different. If the CEO is a Hungarian, there is a high chance she has studied/lived/worked abroad. Every international company has its own company culture that it wants to introduce locally, and there are different expectations and training in this respect. For example, compliance in multinationals is generally more important and less talked about in Hungarian companies. Next is language. Multinationals require another language (other than Hungarian), which opens dialogue, opportunities, perspectives, growth
AJ: Slowly there are changes in women reaching senior leadership roles, but there is quite a way to go, and not just in Hungary. What can be done to encourage women in Hungary? It needs to begin at the school level. Talk to, and teach, students about equality, self-confidence, encouragement. And we need to break the bias in favor of men and studies at technical universities, for instance. Then we come to dialogue. Men and women need to listen to each other and express their needs. More specifically, companies have to actively talk to female leaders. I am not sure how active they are at that. We need more communication with male leaders for them to understand the impact women in leadership roles can have on business, sharing numeric evidence with them and gaining their support. Importantly, men outnumber women both in the selection process and decision making, and that needs to change. In the workplace, we need to create a pipeline of talent and offer special programs or training for women, as in many U.S. companies. Support for re-entering the workforce after a long maternity leave is vital, so women do not feel they need to make a choice between career and family. Company cultures that focus on diversity and inclusion also provides encouragement. That leads to the institutional area. There is a very slow increase in the number of women in top government positions. We need the creation of more women’s networks where Hungarians and expats can really mix. There are a few platforms, but they are mainly in Hungarian, for Hungarians. For international diversity to happen, there has to be added value for all participants. More female role models are needed per se. There are women who are ready to rise, but the Hungarian cultural and political position implies a preference towards males, and promotes the role of women as mothers (i.e. at home). The support of the partner/spouse is key; without that, women will have a challenging time, and it requires an ongoing discussion and partnership. Having said all of that, the drive and interest is first needed from women themselves. A strong will is required to reach the top, especially in a mostly male dominated society where education, family and cultural exposure play a key role in shaping such characters.
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Budapest Business Journal | March 12 – March 25, 2021
PRESENTED CONTENT
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Business | 7
Building a ‘Living Environment’ Around Foka Bay Duna Terasz Grande CEO and property manager Csaba Tóth talks to the Budapest Business Journal about an ambitious development close to the District XIII waterfront. BBJ STAFF
BBJ: The Duna Terasz Grande project is said to have the largest number of apartments built in one spot at one time. What are the numbers that back that up?
Csaba Tóth: A total of 790 apartments and 19 retail premises will be built in two buildings at the same time, which is unique in this category. The project is executed on an area of two hectares, which can be considered outstanding in itself, but in terms of apartments’ numbers, we can talk about a large investment. The Duna Terasz Grande is also the largest development close to the waterfront in District XIII; its area stretches from Úszódaru utca to Csele utca, bordered on one side by Kelén utca and on the other by Cserhalom utca. The previous two residential buildings of the Duna Terasz Residential Area were built with a smaller number of apartments: 362 flats in the Duna Terasz Residential Park, handed over in 2009, and 322 apartments handed over in Duna Terasz Premium in 2019. BBJ: When did work start, and when will it be completed? Is there any particular reason it is going ahead now?
CsT: Duna Terasz Grande is our third phase, and preceded with careful planning. The actual construction works started before the sales period, in April 2020. Sales began in early January 2021, and delivery of the building is expected in March 2023. BBJ: How are sales going? When will the first owners move in?
CsT: The sales period was divided into two phases: From the 464 apartments
offered for sale in the first period, we sold 164 apartments in the first two successful months. This is more than 35% of the current phase and more than 20% in terms of total development. As I mentioned, the handover of the building is expected by March 2023, so we are waiting for the first residents of the Duna Terasz Grande to move in soon after. BBJ: Have there been any particular challenges working on the project during the pandemic? Have these affected costs and/or timing?
CsT: The planning and permitting process was completed before the pandemic. So far, we have not seen the impact of pandemic either on sales or on construction works. Our sales team is prepared for any situation: if personal administration cannot be managed due to the pandemic, the customers can be informed about the details of the project with the help of online conference programs, even with a 3D model, and the booking of the apartments and the conclusion of the registration contracts can also be done online. BBJ: Do you have any data or idea about how many owners will buy their primary home, and how many will buy as an investment?
CsT: Typically, investors buy in the early life cycle of a development. They are the first to move, making quick decisions in the hope of later economic gain or price increases. Customers of Duna Terasz Grande are different. Based on two-months’ experience, the rate of buyers for investment and for move-in is mixed. Customers of
our previous projects would like to move to a larger home, and many new buyers imagine their future life in this residential building, thanks to the carefully planned layouts of the apartments. This, I think, is a positive feedback on our previous phases: we have managed to build a loyal, satisfied customer base. Buying a home is a matter of trust: in Hungary, there is a much greater willingness to own a property than to rent it, so it is essential to develop a relationship of mutual trust with our customers. BBJ: Why is Duna Terasz Grande unique, aside from its size? Why should a potential homeowner choose this project?
CsT: The main feature of any development is the location. Duna Terasz Grande is built in one of the unique locations in Budapest: on the riverside part of the popular District XIII, one street from the port and within easy reach of the Danube promenade. In addition, it is an infrastructurally constantly developing area: underground, public transport, bicycle path, close to a shopping center and restaurants. Grande can be convincing with its technical content, too: green solutions, smart home, first-class materials and community services: communal toolbox and sports equipment storage, yoga, sunbathing and barbecue terrace, and reception services. I think it is important to emphasize that the partners of the D&B Real Estate Development Group are capitalstrong. The general contractor of the project is Kész Építő Zrt., while OTP
Bank is supporting the Duna Terasz Grande development by providing a HUF 23 billion loan, which is Hungary’s largest project financing loan to date for residential development. From the financial point of view, the discounted 5% VAT and the possibility of the Family Housing Allowance Program (CSOK) scheme could also have a favorable effect on potential homeowners; in addition, OTP Bank, as our financial partner, offers customers a free convenience service. BBJ: What is the background of D&B Real-Estate Development Group, the company behind Duna Terasz Grande?
CsT: The D&B Real Estate Developer Group was established in 2008 in Hungary as the subsidiary of an international financial investor group. At that time, we purchased the semifinished building of the first phase’s as well as the nine-hectare area on the bank of the Foka Bay. D&B Real Estate Development Group business and marketing professionals all have at least 15-20 years of experience in the field of residential real estate development. Experience in real estate also plays a prominent role in the project’s technical team; we have colleagues who have more than 50 years of experience. BBJ: What is next for Duna Terasz Grande and for D&B?
CsT: We are developing in one of the most excellent locations in Budapest. Our first goal is to complete the Duna Terasz Grande residential building in the first quarter of 2023; in addition, we are already planning further residential projects in this area. Our long-term vision is to create a living environment around Foka Bay that harmonizes with the environment, the needs and ideas of our customers. Due to our cooperation with the municipality, the infrastructural environment of the area will definitely improve: the roads will be renewed, Foka Bay will be reborn for recreational purposes, and we will also create a running track.
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Business
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Budapest Business Journal | March 12 – March 25, 2021
Where is Recent Market Turmoil Heading? Yield Curve Control Corporate finance columnist Les Nemethy examines what has been driving recent market turbulence in the United States, and what options the Federal Reserve may have to settle things down. Spoiler alert: they are limited. Financial markets are currently experiencing unprecedented circumstances. Already high debt levels are spiraling out of control: total U.S. debt has reached USD 80 trillion, some 400% of GDP. (Plus, there are well over USD 100 tln in unfunded future liabilities for pensions, Medicare, etc.) Past growth was artificially subsidized by an unsustainable debt bubble. There has been massive and continuous stimulus since 2008, now reaching a crescendo: the U.S. Senate last week
approved
USD 1.9 tln
of stimulus (in addition to USD 4 tln of stimulus in 2020). The United States is also discussing another USD 3 tln infrastructure plan. Money supply growth has been high and is accelerating: 22% of circulating U.S. dollars were printed in 2020 alone, according to somagnews.com. The largest financial market in the world is the U.S. Treasury market, and the most important economic signal is U.S. Treasury interest rates. (The rates going from 0-30 years create a curve known as the yield curve). The 10 year interest rate shot up by 60% in February 2020 (reaching 1.6% on March 5). Markets (and presumably also the Fed) are concerned not just
The Corporate Finance Column
The United States Federal Reserve Bank building on Constitution Avenue, Washington, D.C. The Fed must weigh its options carefully. Photo by MDart10 / Shutterstock.com about the absolute rate, but the speed at which rates are rising.
Interest Impact
Higher interest rates impact individuals, corporations and government. For example, if the cost of financing USD 80 tln of U.S. federal government debt goes up just 1%, that’s an increased interest cost of USD 800 billion per year, more than a quarter of federal tax receipts. The United States experienced a postWorld War II
record
16%
deficit-to-GDP ratio in 2020, as politico. com has pointed out, and that is quite an accomplishment given the very low interest rates at the time. The world is awash in such massive debt levels, it cannot support higher interest rates. What are the Fed’s options? It is caught between the proverbial rock and a hard place. There is the option of letting interest rates rise, which would rapidly suck oxygen out of the economy, causing a crash that might rival or even exceed the Great Depression. The only possible justification for recent equity valuations has been low interest rates; a rise in interest rates triggered the recent tantrum on stock markets; interest rates rising much further could trigger a crash.
The other option for the Fed is to suppress interest rates via Yield Curve Control, or YCC. It can do so because it may print virtually infinite amounts of money, with which it may buy bonds (thereby driving up prices bonds and reducing yields). YCC was successfully used after World War II to help pay back mountains of wartime debt. We are likely to see YCC for the first time since the 1940s. The Fed will do everything possible to avoid YCC, a massive distortion of free markets which would increase moral hazard and risk taking. The Fed will wait until there is a trigger point of pain in financial markets, which leaves no choice.
Bumpy Ride
The turbulence of the past weeks is a prelude to the volatility we are likely to experience in coming weeks, until either interest rates subside without YCC (unlikely) or the Fed implements YCC. Why are interest rates rising? The Fed claims it indicates a healthy recovery; an likelier explanation is that rising inflation expectations are driving up interest rates. If the latter, it has the power to drive interest rates much higher. There are many direct and indirect signs of inflation: • Commodity prices from soybeans to metals are rising dramatically, working their way into the supply chain.
• Transport and logistic costs are also rising (container costs from China to the United States have more than doubled in 2020). • There has been strong job growth in America; a doubling of the minimum wage is under consideration by Congress. • Chinese exports were 60% higher in February 2021 compared to a year ago. • Microchips shortages are creating bottlenecks. For example, several auto manufacturers had to shut plants for weeks. Many market observers foresee an unleashing of demand once the pandemic subsides, speeding up velocity of money. While acknowledging that there are also strong deflationary forces at work, I would wager that over a two-to-five year horizon, inflationary forces will dominate. Inflation often appears as a surprise; once the toothpaste is out of the tube, it’s very difficult to put it back in. Inflation expectations will push interest rates to a level leaving the Fed no choice but to implement YCC. YCC would likely suppress 10 year interest rates below 2% in the United States, with lesser rates on shorter maturities. It would represent an unprecedented transfer of wealth from savers to borrowers and cause a loss of confidence in the U.S. dollar, leading to its devaluation. This, in turn, will help trigger even higher inflation in the States. Turbulent times lie ahead. Disclaimer: This article does not constitute investment advice and makes certain projections for the future which may or may not materialize. Les Nemethy is CEO of Euro-Phoenix Financial Advisers Ltd. (www.europhoenix. com), a Central European corporate finance firm. A former World Banker, he is author of Business Exit Planning (www.businessexitplanningbook.com) and a former president of the American Chamber of Commerce in Hungary.
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Budapest Business Journal | March 12 – March 25, 2021
Country Focus
China PRESENTED CONTENT
‘Eastern Opening’ Policy Reaping Dividends With China For the first time, China became the leading investor in Hungary in 2020. The Budapest Business Journal asked the Hungarian Investment Promotion Agency (HIPA) to chart the rise in influence in terms of FDI of the Asian giant. BBJ STAFF
BBJ: When were trade relations between China and Hungary first established? When did they begin to become significant?
Hungarian forint (HUF) and Chines Yuan Renminbi (RMB) bank notes. Photo by Mc_Cloud / Shutterstock.com year, although it includes a large number of projects related to the temporarily available COVID-specific funds, aimed mostly at Hungarian SMEs, on top of the usual FDI deals. This resulted in a total investment worth almost EUR 4.1 billion, creating 12,900 new jobs. Regarding China-related investments, the first production unit of the Semcorp Group outside China, a lithium-ion battery separator film plant to be established in Debrecen (Hungary’s second-largest city, 231 km east of Budapest) is notable. The investment of more than EUR 183 million will create 440 new jobs and was the largest Chinese investment in 2020. The Hong Kong based Lenovo also decided to expand its portfolio with its first European in-house manufacturing unit in Hungary. The company will manufacture products for data centers and desktop systems in its new facility in Üllő (just 28 km south of the capital), in an investment worth EUR 24.7 mln, creating 1,000 new jobs.
HIPA: The very first written trading relations between the two countries root back to the 19th century, nevertheless 1949 should be considered as the beginning of the present relationship, when the two countries established an embassy in each other’s capital. Chinese-Hungarian trading relations received a new boost when the government of Hungary announced its new strategy regarding the Eastern markets in 2010, initiating the “Eastern Opening” policy. Since that time, Hungarian diplomacy has turned with attention to the countries of the Far-East and in the first place to China, working for the comprehensive enhancement of economic, political and cultural relations with the BBJ: What are the most significant sectors country. As a consequence, Hungary for Chinese investment in Hungary, and was the first European country to sign a who are the biggest players? Where in the cooperation agreement for China’s “One country do they invest? Belt One Road” initiative in 2015. The HIPA: Chinese companies are present effectiveness of the policy can be measured in almost every sector; however, by the by the growing number of Chinese number of employees and annual turnover, investors present in Hungary. In 2020, a the chemical industry, the automotive record number of greenfield investments industry, electronics and information and arrived from China. In fact, China was number one in terms of investment volume, info-communications technology (ICT) are the highlights. The top 10 Chineserepresenting almost 30% of share in capital expenditure. Arising from the two countries’ owned companies from the abovementioned industries jointly achieved HUF bilateral engagement, continuity in the 1.13 billion annual turnover in 2019 and increasing trend of Chinese investments’ maintained stable jobs for almost 16,000 magnitude can be expected. employees in Hungary. It is also notable BBJ: How much FDI came into Hungary last that our Chinese partners have locations year, and how many jobs will this create? all around the country. Therefore, we HIPA: Despite the fact that 2020 is are proud that, although Hungary is deemed an extraordinary year for wellan unusually capital-centric country, known reasons, Hungary did very well, Chinese corporations were openconsidering the FDI volume and the minded enough to also see the number of newly created jobs. Indeed, potential business opportunities in the number of projects handled by countryside locations, which resulted HIPA set a new record at 907, which is a in diversity in their choice of sites. massive increase comparing to the 101 Among the top 10, we can mention successfully closed projects in the previous such trusted and reputable companies as
the Wanhua-owned BorsodChem Zrt., a chemical raw material manufacturing company with HUF 459 bln net turnover and 2,900 employees, operating in Kazincbarcika (207 km northeast of Budapest). The tech giant Huawei is seated in Budapest with more than 200 employees. The automotive industry features several outstanding Chinese companies, such as S.E.G.A. Hungary Kft., a member of the Henan Machinery Investment Group, which manufactures starters and alternators in Miskolc (186 km northeast of the capital) with more than 1,900 employees and exceeding HUF 128 bln net turnover. The leading global automotive supplier Yanfeng in Pápa (166 km west from Budapest) manufactures interior parts for premium brands. BBJ: How many projects are you working on now that originate from China?
HIPA: It is important to stress that Asian related FDI has been showing a strengthening tendency for years. While in 2019, South Korea was the number one in investment volume, last year China took over the lead. In 2020, among large FDI deals, the second largest number of projects (15) was also related to Chinese companies. In terms of investment volume, China took first place with a share of 27.1% (EUR 663.82 mln), followed by Germany with a share of 17.9% (EUR 437.53 mln) and South Korea 17.8%, (EUR 436.28 mln). In terms of newly created jobs, U.S. companies finished first with 24.7% of total job creation (2,496 jobs), followed by China with 21.3% (2,158 jobs) and Germany at 14.4% (1,454 jobs). It is also a reason for growing confidence that in 2020, as well as greenfield projects, a significant amount of reinvestment activity was recorded, like Huawei’s new R&D center in Budapest, which will focus on artificial intelligence, streaming, image processing, signaling technologies and extremely large distribution systems. Hungary has been particularly strong in the automotive sector, which accounts for approximately 30% of the country’s production industry output. The same ratio can be seen in last year’s Chinese
investments, as five projects come from this sector. For instance, Chevron Auto established its first plant outside China in Hungary. The value of this greenfield investment, aimed at serving European partners more efficiently, is more than EUR 50 mln. The new plant in Miskolc (186 km north-east from Budapest) will have a capacity to produce up to two million vehicle parts per year and nearly 150 new jobs will be created. Another traditionally strong industry among Chinese investments is the electronics sector, where four projects were realized. Last but not least, the chemical industry last year had five investments. At the moment, we are negotiating with almost 20 Chinese companies that are considering Hungary as a potential investment location but have not yet made their final decision. These projects could result in a EUR 1.2 bln investment volume and approximately 8,000 new jobs. On these grounds, we hope that we will not just maintain, but improve the outstanding results of the previous year. BBJ: What sort of subsidies or incentives are you able to offer Chinese investors? Are any of these unique to China?
HIPA: The Hungarian government equally supports investors from every corner of the world by providing a stable political and economic environment, and a clear agenda on economic development and FDI strategy. As a consequence, there are no unique subsidies or incentives which are only accessible to Chinese investors. One of Hungary’s competitive advantages over other countries in the region is the government’s strong commitment to streamlining business processes, and increasing the competitiveness of the already reputable value chains in Hungary. To help achieve this, Hungary ensures a wide-range of incentives, both refundable and non-refundable, to facilitate FDI and also reinvestments by enterprises already present in the country. The main types of incentives are cash subsidies (either from the Hungarian Government or from EU funds), tax incentives and low-interest loans. These subsidies and incentives are also diversified based on the purpose of the investments, like helping the aims of a project in a specific activity, which could be R&D or employee training. HIPA offers a one-stop-shop management consultancy service to address all the needs of investors, including but not limited to providing various information packages: on business environment, taxation, legal questions, HR availability, site-selection advisory and even the recommendation of potential suppliers. We support our clients both administratively and financially, since HIPA is the managing body of a wide range of incentives as well.
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Focus
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Budapest Business Journal | March 12 – March 25, 2021
Can a Lizard Compete With a Dragon? Hungary plans to establish the first overseas campus of China’s Fudan University in Budapest in 2024. The initiative raises an array of questions on the potential risks and opportunities the Hungarian higher education sector will consequently face. ÉVA KASZAP
Minister for Innovation and Technology, László Palkovics signed a Memorandum of Understanding (MoU) with the president of Fudan University Xu Ningsheng in 2019 on establishing a new campus in Budapest. The Hungarians hope the establishment of the campus will turn the country into a “regional knowledge hub” and attract large Chinese research and development companies, according to Levente Horváth, head of department and chief adviser of the National Bank of Hungary (MNB), who played a key role in shaping the agreement. “In the long-term, the Budapest campus may become one of the most prestigious and international graduate school of Central and Eastern Europe,” János Setényi, an expert on education and head of Expanzió Humán Tanácsadó Kft. (Expansion Human Consulting Ltd.), explains to the Budapest Business Journal. “From a Chinese point of view, since
the
1980s
Chinese universities were busy catching up with the top American universities. The catch-up game is now over, and in the top leagues Chinese institutions like Fudan can start their international expansion,” he argues. “The scarcest global resource, however, is talent. Globally expanding universities are hunting for ‘beautiful minds’ in order to achieve innovation breakthroughs; Central and Eastern Europe is an ideal hunting field for talents.” Setényi believes Hungary can gain from the process in three different ways. “Firstly, a new generation of talented
“The Hungarian side offered this opportunity to Fudan, together with the real estate for the new campus. If other country had made this offer, Fudan would have gone there.”
Predictions Difficult
The Fudan University website. Photo by Postmodern Studio / Shutterstock.com Hungarians will graduate in a top Chinese university with direct access to the largest and most developed economy of the world,” he explains. “Secondly, if Hungarian universities were able to create a unique innovation ecosystem with Fudan, hundreds of Hungaro-Chinese startups could be created with access to Europe and China at the same time. Finally, Fudan may become ‘an object of desire’ for all talented and ambitious Polish, Czech, Serbian, Greek or Russian students, and Budapest will reap the benefits of further globalization”, Setényi tells the BBJ.
Promoting China
Paweł Paszak, a China expert of the Poland-based Warsaw Institute think tank, warns of some associated risks in terms of informal influence, however. “The agreement can be used to promote Chinese politics, to establish contacts and reduce criticism of the Chinese Communist Party,” he cautions. Paszak adds that the removal of the “freedom of thought” passage from the university’s constitution in December 2019 also raises concerns. When it comes to United States and its CEE concerns around security policy, academic integrity and intellectual property theft, Setényi says, “Chinese educational export is non-ideological. Central and Eastern Europe is
15-50 years
behind Chinese technology.” China may concern the United States, he says, but for the EU it seems to be a very different question. In 2020, China became the largest trading partner of the European Union (demoting the States into second place). “Some weeks ago, EU and China signed a Comprehensive Agreement on Investment with strong German support. Furthermore, the EU is not a federal state and it has no coherent foreign policy.
Some EU member states often criticize China, but bilaterally they are very pragmatic and positive about Chinese trade. We are living in a multipolar world and China is here with us,” Setényi says. Tamás Matura, an assistant professor of Corvinus University, also thinks China knows the eyes of the world will be upon it.
“Some weeks ago, EU and China signed a Comprehensive Agreement on Investment with strong German support. Furthermore, the EU is not a federal state and it has no coherent foreign policy. Some EU member states often criticize China, but bilaterally they are very pragmatic and positive about Chinese trade. We are living in a multipolar world and China is here with us.” “I believe Fudan takes its first European campus very seriously and will do everything to avoid even the slightest chances of political criticism. Therefore, I do not expect any controversial issues to happen at its campus in Budapest,” Matura tells the BBJ. Hungarian sinologist Gergely Salát believes Hungary may yet reap the dividends of its move. “China’s economic presence is marginal in the CEE region; only about 2% of Chinese investments to Europe go to the 16 countries of CEE, and trade is insignificant as well,” he says.
According to Matura, it is hard to predict the impact of the establishment on the Hungarian higher education sector, as there is not much to know about the details of Fudan’s planned activities in Hungary. “In case it intends to have mostly Chinese students, Hungary can benefit a lot. However, should it wish to have mostly Hungarian or European students, other Hungarian universities may have to face a painful drop in numbers, as many would rather choose Fudan. It is noteworthy that Fudan’s annual budget is bigger than Hungary’s total national budget for higher education, what means that Fudan’s means are beyond imagination compared to its Hungarian competitors,” Matura explains. MNB chief adviser Horváth emphasized that Fudan is not coming to Hungary as a competitor. Quoting a Chinese proverb he said “No matter how strong the local dragon is, a lizard in another city can surpass it.” One of the reasons why the hand Hungary has extended to Fudan is so controversial in some circles is that it follows the very public falling out the government here had with Central European University (CEU), founded by Hungarian-born U.S. financier George Soros. The U.S. embassy, at least initially, publicly backed the CEU, but as a result of that arguement, the university says it has been forced to relocate its campus from Budapest to neighboring Vienna, where it now offers more than
80% of
its courses. “I do not think that the arrival of Fudan to Budapest is a deliberate message to the U.S., but it definitely shows that the Hungarian government wishes to keep the country’s doors open to all actors,” Matura explains. Headquartered in Shanghai, Fudan University is ranked 34th in the QS World University Ranking with its 30,000-strong student population. According to the current plans, the new campus will be located in the former Buda City Hall on Úri utca and will accommodate 5,000 students. Fudan University has previously partnered with Corvinus University on a double degree program. Its new campus will provide five faculties in the fields of economics, international relations, medicine, and engineering sciences. The campus is expected to open in 2024, until when, and modelled on the existing Fudan-Corvinus cooperation, it plans to establish a double degree program with further Hungarian institutions such as the Semmelweis University (SOTE), the Budapest University of Technology and Economics (BME) and Eötvös Loránd University (ELTE).
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Budapest Business Journal | March 12 – March 25, 2021
Bank of China Seeks Further Expansion in Region, CEO Says The Bank of China Hungary, with its two combined units, is ranked among the top 10 biggest banks by total assets in Hungary. In 2021, it will continue to benefit from the advantages of Bank of China’s global services and maintain its position as a leading foreign bank in Hungary. The CEO of Bank of China (CEE) Limited Li Kexin talked to the Budapest Business Journal about the bank’s plans to further expand in Central and Eastern Europe and about its products in the pipeline. GABRIELLA LOVAS
“To reach our goals, we need to step up our efforts in the entire CEE region, while we continue to be based in Hungary,” says Kexin, who is also the general manager of Bank of China Limited Hungarian Branch. “We seek to expand the corporate and institutional banking business and also provide personal financial services, thus contributing to the long-term economic development of Hungary and China,” he added. “We believe that the development of cross-border RMB international settlement business is facing an unprecedented opportunity,” Kexin says. The implementation of the China-EU Investment Agreement will accelerate trade cooperation between China and CEE countries. Moreover, China has launched a series of facilitation measures on RMB cross-border usage, which are conducive to boosting the international settlement and cross-border RMB business.
Focus | 11
Over the past few years, China’s trade and investment cooperation with CEE countries, particularly with Hungary has developed vigorously and the people-topeople and cultural exchanges have also become deeper. “Thus, we have several reasons to believe that the region has huge and promising business growth prospects,” Kexin says. Kexin argues that China and CEE countries have always enjoyed a traditional friendship. CEE states were among the first to acknowledge and establish diplomatic ties with the People’s Republic of China, providing a solid public support for cooperation. The establishment of the China-CEEC cooperation mechanism has opened a new stage in the relations between China and the region. BoC says it strives to be the bank of choice for financial services under the mechanism.
“We believe that China and CEE countries can build on each other’s strengths and work together to advance social and economic development.”
Transport Hub
Li Kexin, CEO of Bank of China (CEE) Limited and general manager of Bank of China Limited Hungarian Branch As the only RMB clearing bank in CEE, the bank will make full use of its advantage in international settlement, explore potential cross-border RMB business opportunities, actively expand the RMB correspondence bank business, and continue to improve its market position in the international settlement and cross-border RMB business, Kexin says. The bank says it has plans to grow green finance, too. In 2020, it provided a HUF project financing loan equivalent of EUR 70 million to Hungary’s largest photovoltaic power station, as a first step. BoC is exploring the possibility of issuing local currency green bonds to boost green finance innovation in the region and get funding through the local market. CEE is favored by what the bank calls “new energy vehicles” and relevant upstream and downstream enterprises due to its geographical location and labor cost advantages, and BoC says it will continue to work with its global network to seize business opportunities in this field.
Expand Services
This year, the bank aims to further expand financial services to local SMEs. Bank of China has held several China-
CEE SME Matchmaking Events during the China-CEEC Leaders’ Summit in February, thus promoting the cooperation and development of SMEs in China and the region. The BoC’s main customers now include many of the biggest companies in the CEE region as well as the Chinese “go global” customer group. Besides existing customers, the bank says it aims to serve top-quality companies with Chinese elements in the region, especially those with a market leading position or with headquarters in region.
Bank of China Timeline Bank of China (CEE) Limited, formerly known as Bank of China Hungary Limited, was established in Budapest in February 2003 as the first commercial financial institution set up by a Chinese bank in Central and Eastern Europe. In December 2014, another entity, the Bank of China Hungarian Branch was officially opened as a direct branch of its
The CEE region has outstanding geographical advantages as a transit point to both Western and Northern Europe. As a transport hub, the region also plays an important role in the integration of China’s “Belt and Road” initiative into the European economic circle, according to Kexin. CEE countries, most of which are emerging markets, have great potential in infrastructure and energy investment. “We believe that China and CEE countries can build on each other’s strengths and work together to advance social and economic development,” Kexin says. Since the outbreak of the pandemic, the bank has been focusing on business continuity by reviewing and improving its business continuity plan. “At the same time, we continue to adjust and update the bank’s financial services and operations in line with the latest developments to ensure the stability of our daily operation,” Kexin says. “So far, our business has not been affected.”
Beijing head office. In 2015, the Hungarian branch was officially authorized as the RMB clearing bank. This is the first (and thus far only) RMB clearing bank in the region. In 2020, Bank of China Hungary Limited changed its official name to Bank of China (CEE) Limited, to emphasize its CEE regional headquarter status. The bank now has four sub-branches in Prague, Vienna, Belgrade and Bucharest.
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Focus
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Budapest Business Journal | March 12 – March 25, 2021
DI P LOM AT IC A L LY S P E A K I N G : C H I N E S E A M B A S S A D OR DAY U QI
China Hoping to Build Pragmatic Economic, Trade Cooperation With Hungary Hungary was among the first countries to establish diplomatic relations with the People’s Republic of China, the two countries establishing formal ties on October 6, 1949. China’s Ambassador to Hungary Dayu Qi discusses the current state of relations with the Budapest Business Journal. ROBIN MARSHALL
BBJ: In recent years, Hungary has pursued a foreign trade policy of “Opening to the East”, while China has its own “Belt and Road” initiative. Do these link up?
Dayu Qi: The “Opening to the East” policy is an independent choice made independently by the Hungarian government, in light of its own national conditions. The greatest characteristic of the “Belt and Road” initiative is its emphasis on openness and cooperation. Hungary is the first country in Europe to sign a cooperation agreement with China on the joint construction of the “Belt and Road”. This is a tangible manifestation of the convergence between Hungary’s “Opening to the East” and the “Belt and Road” initiative. It is in line with the direction of China-EU cooperation, while also being beneficial to promote the interconnectivity of the Eurasian continent. Recently, during the China-CEE Countries Leaders’ Summit, China and Hungary jointly signed the “ChinaHungary Belt and Road Initiative Priority Cooperation Project List.” Both sides will focus on the economic development of the post-COVID era, consolidate the foundation of cooperation, and explore emerging areas in order to let the connection of the “Belt and Road” initiative and the “Opening to the East” policy produce more results. BBJ: Recent years have seen a rapid development of bilateral trade between China and Hungary. What is the current situation and what are the categories of goods currently imported and exported between China and Hungary?
DQ: In 2020, China became the EU’s largest trading partner, while also ranking as Hungary’s third largest trading partner and second largest import source country. According to Chinese statistics, the bilateral trade volume reached USD 11.69 billion in
Dayu Qi, China’s Ambassador to Hungary 2020, an increase of 14.4%, despite headwinds; Hungary exported USD 4.28 bln to China, which is a year-on-year increase of 14.3%. The top five categories of goods imported from Hungary to China are: electrical machinery, electrical equipment and parts; vehicles and accessories (except railway vehicles); mechanical appliances; precision instruments; and pharmaceuticals. China’s exported goods to Hungary mainly consist of: electrical machinery, electrical equipment and parts; precision instruments and equipment; mechanical appliances; vehicles and accessories (except railway vehicles); and other textile products. Hungarian agricultural products are also very popular in the Chinese market. On February 8, during the special live broadcast of the “Central and Eastern European Goods Festival,” the Hungarian Tokaj wine achieved sales of nearly CNY 2 million in just a few hours. The Embassy of China also actively serves as a bridge to facilitate local cooperation between China and Hungary. I believe that in the post-COVID era, new Chinese business models, such as online conferences and live commerce, will promote the steady growth of cross-border e-commerce transactions between China and Hungary. BBJ: Do you foresee more investors from China entering Hungary?
DQ: Investment is an important driving force for economic growth. According to Hungarian statistics for 2020, for the first time, China became Hungary’s largest foreign investor. We are very pleased to see that more Chinese enterprises are investing in and setting up businesses in Hungary, creating more than 23,000 jobs. China’s cumulative investment in Hungary had exceeded USD 5.5 bln dollars by the end of 2020, accounting for half of China’s investment in CEE. Hungary has been China’s largest investment destination in the region for many years. Last year alone, at least 10 new Chinese corporate investment projects were launched. There are numerous favorable factors attracting Chinese investors to Hungary, including the excellent bilateral
friendship, Hungary’s good investment environment, high-quality labor force, excellent geographical location, logistics and infrastructure. Both China and Hungary will make joint efforts to promote pragmatic economic and trade cooperation, as well as to actively expand the digital economy and green cooperation. BBJ: Compared to the United States and the EU, Hungary is more welcoming of Huawei’s investments and technology. Has Hungary receive special treatment from China as a result?
DQ: Huawei is the world’s largest telecommunications equipment supplier, and a leading enterprise in 5G technology. Some countries attempt to discredit Huawei in a completely baseless manner, which is a blatant act of discrimination. The Hungarian government attaches great importance to providing a fair, just, open, and transparent business environment for foreign companies. Therefore, it is natural for Huawei to be willing to come to Hungary to carry out investment and technical cooperation. Since 2005, Huawei has been operating here on the principle of “in Hungary, for Hungary”, investing a total of USD 1.5 bln and creating more than 2,400 jobs. It also established a European Supply Center and its Budapest Research and Development Center. From 2015 to 2019, Huawei’s local tax payments reached USD 277 mln, promoting local economic growth through its own development and actively assuming social responsibilities. We believe that under the protection of Hungary’s market rules and business environment, Chinese enterprises such as Huawei will make further contributions to Hungary’s economic and social development, along with its digital transformation. BBJ: China has been investing heavily into railway infrastructure in the region, particularly the high-speed rail link between Budapest and Belgrade. Why?
DQ: Due to out-of-date equipment and aging, the operating speed of the BudapestBelgrade Railway is not compatible with the growing economic development needs of
this region. As a Chinese saying goes, “If you want to get rich, first you need to build a road.” To achieve economic development, one must first develop transportation infrastructure. Hungary is committed to developing itself into a logistics center in the region. The Budapest-Belgrade railway will play an important role in enhancing Hungary’s location advantage. In this context, both Hungary and Serbia are willing to expand and reconstruct the railway connecting the two countries, but this requires a long-term, large-scale investment and the involvement of a third party. In recent years, China’s railway has developed rapidly, so its advantages in terms of technology, equipment, construction experience etc. are obvious. It is believed that this project will play a positive role in promoting the interconnection and development of the region. BBJ: In 2019, Hungary and China reached a memorandum of understanding, for the establishment of a Fudan University campus in Budapest, but recently it has caused controversy in certain areas. How would you comment on this?
DQ: Diversity spurs interaction among cultures, which in turn promotes mutual learning and their further development. As early as 2004, the Hungarian government set up a Hungarian-Chinese bilingual school in Hungary. This is the only public school in CEE that uses Chinese besides local languages in teaching and is popular among many primary and middle school students. Over the years, there have been many international cooperative education projects in China such as New York University Shanghai, Duke Kunshan University, Xi’an Jiaotong-Liverpool University, University of Nottingham Ningbo China, Shenzhen MSUBIT University. On February 9, President Xi Jinping gave his speech at the ChinaCEE Countries Leaders’ Summit, where he expressed China’s support for Fudan University opening a campus in Hungary. A common way for countries to develop international cooperation is through education, therefore it should not cause any controversy. I believe that the establishment of this campus will build a new platform for friendly exchanges between the youths of China and Hungary. BBJ: Finally, what are your thoughts on vaccinations using Sinopharm’s coronavirus vaccine having begun in Hungary?
DQ: The first batch of Chinese COVID-19 vaccine arrived successfully in Budapest on February 16. Vaccination of registered persons began on February 24. As it stands, the vaccination work is carried out in an orderly manner, with no adverse reaction reported. China has been implementing President Xi Jinping’s declaration on China’s vaccine as a global public product with practical actions and has taken the lead in joining the WHO’s COVAX global initiative to promote the fair distribution of vaccines. As of March 7, China had provided vaccine assistance to 69 countries and two international organizations and exported vaccines to 43 countries, with ever increasing numbers. Fighting the pandemic is a race against the virus and time. Accelerating the vaccination process means protecting more lives from the virus. We hope that these vaccines will play an important role in fighting the epidemic, restoring the economy and protecting life and health.
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Budapest Business Journal | March 12 – March 25, 2021
Focus | 13
‘Stable’ Business Environment Attracts Chinese Giant In the fall of 2020, Chinese company Semcorp announced one of the biggest greenfield investments in Hungary of the year, a HUF 65.5 billion (EUR 183 million) project that drew an additional HUF 13 bln (EUR 36.5 mln) in support from the Hungarian government. The 97,000 sqm factory will be built on a 19-hectare site and create 440 new jobs. The Budapest Business Journal spoke with James Shih, vice president for global projects and legal at Semcorp Global, about the company and its first out-of-China development in Debrecen. ZSÓFIA VÉGH
BBJ: Why did you choose Hungary as a location? What were the main considerations?
James Shih: We evaluated several countries in Eastern and Northern Europe, and ultimately chose Hungary for several reasons. Hungary has become a hub for the e-mobility industry, and our location in Debrecen gives us proximity to a number of our lithium-ion battery customers. The country provides a welcoming and stable environment for businesses, and especially Chinese businesses, given the government’s steadfast support for the “Belt and Road” Initiative. It also offers a highly skilled and educated labor force at a reasonable cost. BBJ: When are you planning to finish construction and start hiring?
JS: We expect to complete construction in the second half of 2022. We will likely start the hiring process for top positions
including consumer electronics, e-mobility (including electric vehicles and e-bikes), energy storage solutions (ESS), and power tools, among others. As of yearend 2020 we have more than 400 patents. We are the only separator film supplier in the world that has mastered both water-based and oil-based coating technologies, as well as online separator coating technology (i.e., coating processing is performed at the same time as the base film production). BBJ: What expansion are you planning in the next two-to-three years?
James Shih later this year, with the bulk of the hiring to be done throughout 2022. We expect production to start in the first quarter of 2023. When we reach our planned full capacity at our Debrecen site, we expect it will be responsible for just over 10% of our overall production of wetprocess separator film, based on yearend 2020 data. Our initial estimate for the investment was approximately EUR 180 mln, but our plans are growing and we may revise the number upward as our design work continues. BBJ: How has the coronavirus affected the firm’s activities including production, orders, revenues, and also markets?
JS: Although we experienced some slowdowns in the early stage of the pandemic, because of our strong management team and workforce, we captured the resurgent market as soon as the virus was under control in China, and achieved the best Q3 and Q4 in the company’s history. Overall, Semcorp enjoyed positive year-on-year growth in 2020 in both revenue and volume. It has also entrenched itself as the global leader in the lithium-ion battery separator film industry by a large margin. BBJ: What makes it the global leader in this field and to what do you attribute the company’s rapid expansion and success?
JS: Semcorp was founded in 2010, and within a decade had become the largest supplier of lithium-ion battery separator film in the world. In China, we are by far the largest player, serving all of the top Chinese battery makers. We also serve the top battery manufacturers abroad, and aim to become the leading supplier of separator film globally, as we are in China today. In our short 11 years in existence, we have made some acquisitions, but have achieved most of our growth organically. There are a few major contributing factors to Semcorp’s success, including state-of-the-art production equipment, which enables us to
produce high-quality products with faster and larger production lines compared to the industry average; a strategic toptier global customer base; strong R&D capability; and our management’s strategic insights into the industry and regional demands. BBJ: What makes Semcorp’s technology unique?
JS: The core founders of Semcorp all come from technical backgrounds. Before founding the company, they worked on the research and development of polymer materials at global companies for many years. So, they attach great importance to investing in technology and relentless technical innovation. This focus on technology is evident in Semcorp’s research center, which occupies a 16,000 sqm space at the company’s Shanghai headquarters and can accommodate 500 R&D personnel. It is the world’s largest lithium battery separator R&D center. We conduct R&D on basic raw materials, separator base films, various coating films, manufacturing processes, battery performance evaluation, energy saving, and emission reduction, among other topics. Additionally, we have established deep collaborative relationships with our lithium battery customers in order to provide customized development services. We have more than 100 product models in mass production, which can meet the separator technology needs of different customers for different purposes. Semcorp also attaches great importance to the development of nextgeneration technology. We have carried out a number of projects in theoretical research with world-class universities, R&D institutions, and enterprises. BBJ: What are some of the innovations and patents that are exclusively to your firm?
JS: Semcorp’s products are used in numerous downstream applications
JS: Over the next few years, the consumer electronics, electric vehicle, and ESS markets are all expected to grow at high CAGRs [compound annual growth rates]. Semcorp is well-positioned to grow with the market and become an instrumental part of the energy revolution. As we further expand our capacity in our six existing production sites in China, we are also moving forward quickly with our European capacity expansion in Debrecen. We are also exploring North America.
“When we reach our planned full capacity at our Debrecen site, we expect it will be responsible for just over 10% of our overall production of wetprocess separator film, based on yearend 2020 data. Our initial estimate for the investment was approximately EUR 180 mln, but our plans are growing and we may revise the number upward as our design work continues.” Additionally, we recently agreed to enter into a joint venture with the U.S.based company Celgard, which is the industry leader in dry-process separator film. Semcorp has so far specialized in wet-process film, but we believe dryprocess film will see enormous growth in ESS, which are large-scale batteries used in electrical grids to store solar and wind-generated energy. The joint venture will commence activities later this year, subject to regulatory approvals, and Semcorp looks forward to the opportunity to grow in a new market. We are a Chinese company, and one of our biggest challenges in our next phase of growth is to become a world-class company. We have a small team that is able to move quickly on global projects, and we believe it’s very important to find the right local partners who can support us in the new regions into which we’re expanding.
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Focus
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Budapest Business Journal | March 12 – March 25, 2021
BorsodChem Wins top Award for Sustainability and CSR BorsodChem, the Hungarian chemicals company, has been awarded the EcoVadis Platinum Medal for the first time for its sustainability and Corporate Social Responsibility (CSR) activities in 2020, according to the latest survey by the international certification organization. BBJ STAFF
Based on its achievements in sustainable development from year to year, BorsodChem was ranked “in the top one percent of companies in the chemical and related sectors participating in the evaluation,” BorsodChem said in a press release. Asked to comment on the award, Béla Varga, vice president for HR and communication, and responsible for sustainability activities at BorsodChem, said: “We are happy that EcoVadis recognized us with its highest award and ranking for our sustainability efforts,” adding that
environmental policies, and EcoVadis “also recognized the company’s ethical conduct and respect for human rights.”. Asked to confirm and comment on the award, Chrissy Azevedo, a spokesperson for EcoVadis replied in an email, stating: “I can confirm on behalf of EcoVadis that yes, BorsodChem was awarded a Platinum medal for the activities stated in the press release. Beyond that, EcoVadis doesn’t comment and/or expound on the companies that they rate.” When asked how many companies comprised the top 1% in the chemical and related sectors participating in the evaluation, Azvedo declined to reveal details. BorsodChem became part of the Chinese Wanhua group early in BorsodChem became part of the Chinese Wanhua group 2011. The company declined to reveal early in 2011. Photo by Pavel Kapysh / Shutterstock.com company data, citing stock exchange regulations. However, according to company information provider Opten, Ethical Conduct the company’s goal henceforth is “to BorsodChem had sales revenue in 2019 In addition, BorsodChem has of EUR perpetuate this outstanding ranking.” “significantly improved by integrating With its principal production and developing the sustainability facilities located in Kazincbarcika with an after-tax profit of some EUR 168 approach into procurement principles” (200 km or 125 miles northeast of million. The average headcount of the in its procurement operations. The Budapest), BorsodChem is one of company that year was just under 2,900. company was also acclaimed for its the leading European manufacturers of MDI and TDI isocyanates, one of the main raw material groups of polyurethane plastics. These, in EcoVadis boasts World’s Most Trusted Business Sustainability Ratings turn, are used to create both flexible plastics for furniture and apparel, and EcoVadis is a Paris-headquartered is a unique methodology that hard plastic for construction and the company founded in 2007 which currently analyzes and evaluates automotive industries, for example, measures and evaluates how well the sustainability activities of vehicle dashboards. a company has integrated the approximately 75,000 organizations According to the press release, principles of sustainability and CSR in 160 countries and 200 industries. BorsodChem’s high score in the into its business and management In 2019, it employed 600 people EcoVadis audit was a result of the system, including companies in globally. The analysis assesses company adhering to “comprehensive global supply chains. company performance in the areas sustainability guidelines, actively According to its website, it of environment, labor and human participating in the work of international provides “The World’s Most rights, ethics, and sustainable professional organizations such Trusted Business Sustainability sourcing, and identifies strengths as UNGC and TfS (Together for Ratings.” It uses what it says and areas for improvement. Sustainability).”
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Xiaomi Looking to Internet to Boost Sales Even Further in Hungary Chinese multinational electronics company Xiaomi, headquartered in Beijing, has made huge strides since it was founded in April 2010. Andrew Wong, its general manager for Central and Eastern Europe, Nordics and Baltics, talks exclusively to the Budapest Business Journal about what is driving sales, not least here in Hungary. BBJ STAFF
BBJ: Last year’s overall mobile phone sales figures worldwide were not too bright. Following a decrease in YOY in Q1, in Q2 the trend continued, with 20% less devices sold. Despite that, Xiaomi managed to grow. Do you expect the global trends to impact your sales in Q1/Q2 2021?
Andrew Wong: In 2020, despite the impact of COVID-19 and great global uncertainties, Xiaomi’s diversified business ecosystem demonstrated its resilience, as both revenue and adjusted profits beat market consensus, while our operations continued to expand. I’m confident that our sales will continue to grow in 2021 as we are making all efforts to keep our momentum. BBJ: With a fierce competition on the market, what is it that differentiates Xiaomi from others? Do you have studies on why customers choose Xiaomi smartphones?
AW: The price-value ratio is the key differentiator. We focus on
Andrew Wong advancements that offer real added value to consumers. Turning our profits back into such developments makes it possible to deliver products incorporating the highest levels of know-how and technology in a given price category. Our strength lies in the mid-range price category, represented by the various devices in the Redmi Note series, whose product line is among Xiaomi’s most popular. The introduction of the Mi 10T series in the Hungarian and European markets signals our entry into the upper category segment. We are making great efforts to give Xiaomi in highend positioning. As I see it, we have managed to introduce price-competitive products to the upper tier, showing it is possible to buy a device with excellent technical parameters at a consumerfriendly price. BBJ: As a regional manager, you have a broader perspective on customer preferences across several countries. What are the peculiarities of the Hungarian market or customers vs. Romania, Czech Republic, Slovakia etc?
AW: The Hungarian market is driven by service providers: 80% of mobile phones are sold through Telekom, Telenor and Vodafone. Hungarian consumers are still quite conservative in terms of online purchases, with
internet purchases accounting for less than 20% of total sales in Hungary. Xiaomi is quite strong in e-commerce, so we are considering how to strengthen our internet channel for mobile phone sales in Hungary. Recently, the Hungarian mobile market has stagnated, with sales estimated at only 2.4 million units per year. Our growth is not only attributable to market growth, but also to the dynamic growth of the Xiaomi ecosystem, which is built on multiple products and software solutions. As a result, we’ve been able to cut an ever-increasing piece of the pie for ourselves. I expect further expansion of our share of the Hungarian market in the fourth quarter. BBJ: What are the main features that customers are looking for in a mobile phone? What are the main reasons for changing a phone (apart from breaking, scratching etc)?
AW: Xiaomi sees a huge opportunity in 5G devices, as the company is a trailblazer in democratizing new technologies that are relatively expensive and bringing them to market quickly and at an affordable price. We have now released 5G phones that are 40% cheaper compared to our competitors’ units, with the goal of making this new technology more accessible to users.
Focus | 15
BBJ: Xiaomi has a product range that spans everything from mobile phones to all manner of smart devices imaginable. What categories are proving a success in Hungary?
AW: We have just begun distributing televisions in Hungary, and would like to move even further into that direction this year with more types and product ranges. Worldwide, wearable bands, electric scooters, and robot vacuum cleaners are popular, from which overseas revenue surpassed that from mainland China in the third quarter of 2020. At present, 289.5 million Xiaomi Internet of Things (IoT) products are connected to our IoT platform worldwide. In retrospect, Xiaomi did not burst onto the scene in Hungary with phones, but with IoT products that were imported by wholesalers, which was an important step in building brand awareness. We would also like to import routers to Hungary, which have not been officially available here so far, as well as Xiaomi’s own brand-name smartwatch.
“The Hungarian market is driven by service providers: 80% of mobile phones are sold through Telekom, Telenor and Vodafone. Hungarian consumers are still quite conservative in terms of online purchases, with internet purchases accounting for less than 20% of total sales in Hungary.” BBJ: How do you think smartphones will evolve over the next five years?
AW: Smartphones with touch screens and apps will continue to dominate the phone market for a long time to come; I can’t even imagine what could replace them. It is conceivable that, one day, bioelectronics will evolve to such an extent that we no longer have to touch the display, but will be able to control a device mentally, but that is not a technology that we’ll see tomorrow. BBJ: In terms of global market share, Xiaomi is fourth. Is there room for Xiaomi to grow here?
AW: According to the Q4 report of IDC, Canalys, and Counterpoint, we are in third place in the global smartphone market, and in the CEE region we have now reached first place, based on the latest market analysis of Canalys. We will continue to take advantage of the internet business mode, as well as adapt to the local customs and purchasing habits in Central and Eastern Europe, to consolidate both online and offline sales channels, and diversify our product portfolios to fulfill the increasing demands for Xiaomi’s innovative products with affordable prices.
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Budapest Business Journal | March 12 – March 25, 2021
Special Report Banking
Moving Next Door and Learning how to Move On The businesses that come out strongest from the post-COVID period will be the ones that have been able to learn most from their pandemic leanings, says Veronika Spanarova, country head of Citi Hungary. ROBIN MARSHALL
“We have been watching very closely what we can take forward as learnings from this, and how we can best utilize those processes have been accelerated,” she tells the Budapest Business Journal in her first interview with the publication. She makes the point that Citi has long been a digital champion, seeing technology as a point of difference for the global bank. “With the process of digitalization, it is important we take stock of what we already had, what was accelerated by the pandemic and what we will utilize even after the pandemic, as opposed to temporary measures we only adopted to get through that period,” Spanarova says. “There has been some big progress on the treasury and trade side, for example. Where I think we will go back to nondigital will be a lot of conversations like this interview.” Our interview is taking place via Zoom, and while she says we have all grown comfortable with the technology, it cannot replace humanto-human interactions in the longer term. But video conferencing will have growing importance in today’s more environmentally aware world, Spanarova says, when a business trip might not be necessary, for example. Citi has been present in Hungary as a bank since 1985 (it marked its 35th anniversary in December with a tree planting ceremony, symbolic
Veronika Spanarova of “our interest in the future and our interest in the environment,” Spanarova says), but has also had a strategic global Citi Solutions Center here since 2005; combined, the business currently employs close to 2,500 staff. “That says a lot about Citi’s confidence in the franchise and the talent here,” the country head says.
Undiminished
Interestingly, that confidence did not diminish during the pandemic. “We actually had more than 200 new colleagues join Citi over the last year.”
That was 200 people not just starting a new job, but doing so while also largely working from home and thus having limited ability to meet team members and learn the company culture. Spanarova says onboarding has had to pay special attention to matters such as these. Indeed, looking after staff has been one of the four key priority areas for the business during the pandemic (the others being: clients and partners; processes and controls; and community). The team is not about to start plateauing anytime soon, either. “We are looking at growing our team further in 2021 by about the same amount, so 200 people as we did last year. The primary areas are finance, information security, and technology, and we are also working on growing the banking side as well,” she explains. “I am particularly excited that we are seeing increasing specialization
and senior positions coming here to Hungary.” Those are just the sort of interesting career options that might tempt fresh graduates right out of university, attract Hungarians working overseas back home, or even people from other countries looking for stimulating work. “We have colleagues from 65 countries, speaking more than 35 different languages,” Spanarova says of the Citi franchise in Hungary. Matching that sort of sustained growth is dependent on attracting the best talents, naturally, but it also requires good through-flow from the Hungarian education system. Spanarova says Citi takes on 60-70 graduates a year from Hungarian universities such as Corvinus, Budapesti Gazdasági Egyetem (Budapest Business School) and Óbuda University, with which it has cooperation programs.
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Budapest Business Journal | March 12 – March 25, 2021
Not Unknown
Photo by LookerStudio / Shutterstock.com
Spanarova and her family moved to Hungary in the fall, between lockdowns. She took over the role of country head from Kevin Murray, well known to readers of this publication. He still has a role to play as Central Europe head, but neither he nor Hungary were new to her. “I have worked with him for four years in my previous role as Country Head of Slovakia, which is part of the same Central Europe cluster led by Kevin. That was another point that made the transition [to Hungary] very nice and easy. He introduced me to peers, to clients and key partners,” she points out. She adds that she is delighted she is still able to pick his brains and learn from his experiences. Her professional links with Hungary go back further still, to the year 2000, when she had responsibility for the
transactional banking business in Central Europe, meaning she already knew many of her now Citi Hungary colleagues. But as a Czech national, she has an even longer personal connection.
“We are looking at growing our team further in 2021 by about the same amount, so 200 people as we did last year. The primary areas are finance, information security, and technology, and we are also working on growing the banking side as well.” “I remember learning to swim in Lake Balaton, when my father was teaching me. It is a very strong memory, so I am happy to be back here,” she says. Having previously lived and worked abroad in Brazil and South Korea, the move from the Czech Republic to Slovakia, and from Slovakia to Hungary hardly represented a culture shock, as she points out. “From Bratislava to Budapest is only 200 km on a very good highway; logistically it could not have been much easier,” she says with a laugh. As a mother of three now teenage children, balancing a high-level career, she is a living embodiment of Citi’s commitment to drawing on all talents. But she points out that gender diversity must be a two-way street. From January 1, the business has globally offered all new parents four weeks of parental leave, with 100% of the salary covered, and that has already seen men in Hungary taking time off to bond with their new born for the first time in Citi’s history here.
INSIDE VIEW
How 2020 Changed the Financial Market and What to Expect in 2021? Erika Papp Managing Partner of CMS Budapest and the Head of Finance in CEE/ CIS at CMS CEE CMS Budapest
sustainability in financing. As a result, banks are now including reporting obligations to prove that that green and other sustainability objectives are reached during the lifetime of a project. To this end, the EU has issued the new Sustainable Finance Disclosure Regulation, which introduces new rules and concepts that will assist businesses in honing and devising economic, social and corporate governance (ESG) strategies for the future. These rules will also apply to participants, advisers and products in the financial market sector, who will now be required to consider sustainability risks when making investment decisions, consider possible adverse results for each decision, and ensure that remuneration is linked to sustainability risks.
The ramifications from the pandemic and measures put in place in response to it are still being felt on financial markets in 2021. This article analyses the key market and legal developments Restructuring and NPLs As a result of the crisis, companies have anticipated in 2021, been able to postpone and defer loan including banking M&A, repayments. Although a necessary crisis measure, these deferments cannot real estate, private equity continue indefinitely and businesses are and project financing. adopting strategies for the future. Thus,
Banking M&A
Banking M&A has shown solid results over the last year. However, due to the crisis some banks may scale back operations and others could become branches or continue business in Hungary without a local branch. International banks hit by the crisis in their home countries may limit their activity and divest non-core elements of their businesses, which will fuel opportunities in banking M&A. Nevertheless, the outlook for banks remains positive in many areas. Some banks are expected to expand as they acquire new portfolios and businesses. Transactions are also expected to increase in the fintech sector and among “lesstraditional banks,” which are areas where CEE economies have enjoyed success.
Project Financing
Solar projects have been popular investment targets in recent years and will continue to be sought after in 2021. The financing of METÁR projects in Hungary will begin this year as KÁT-based projects are slowly phased out. METÁR still has certain financing issues, such as a shorter maturity period and lower prices, but overall METÁR promises to be a competitive product for bank financing, which the Hungarian National Bank (MNB) intends to support with financing. European banking regulators also support renewable financing projects with the CRR Quick Fix, which offers beneficial capital treatment for bank loans in renewable projects. The MNB has issued a management circular explaining some of the more complex provisions surrounding the CRR Quick Fix.
more restructuring is expected in 2021. The success of these strategies and the overall state of the market will be clearer by the end of the third quarter, but more disposals may take place at this time as adjustments continue. One important tool that has been introduced to help struggling companies fend of bankruptcy is the new EU Preventative Restructuring Directive. This permits the rapid sale of companies, which should provide relief to many hard-hit businesses.
Acquisition Finance
Over the last year, the pandemic did not dampen investor readiness to conduct transactions, especially in private equity with some sectors revealing particular resilience, if not robustness. These included e-retailers, who saw an obvious uptick in business during lockdowns, IT and pharma. Solar projects remain popular targets for acquisition. By the second quarter of this year, the overall investment climate should become clearer. As valuations stabilize, markets are expected to gain strength, particularly as privateequity investors introduce new products and banks prepare for acquisition financing deals. Clearly, the current crisis is not over, but light is visible at the end of the tunnel, financial markets remain flexible and strong, and policies are being introduced that should help companies navigate the final stretch of the crisis and profit in the post-pandemic world.
Real Estate
Due to the continued demand for retail and commercial properties, real estate financing should remain strong. Furthermore, lenders want environmental
Law . Tax cms.law
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“I started with Citi straight from university, so that is very much part of my personal focus: how do we provide those first career opportunities.” But she says the program also goes far beyond that. Citi gives out career advice, its staff give lectures and provide up-todate examples of the sort of skills and knowledge needed in today’s commercial world. It all circles back to community being one of the four priority areas mentioned earlier. (Citi gave a donation of HUF 38.6 million to the Hungarian Red Cross last year to be spent on the most deprived areas, made further donations to the Hungarian Food Bank and, with other banks, joined the Digital Fast Lane program of the Hungarian Banking Association, which aims to bridge the digital divide.)
Special Report | 17
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Special Report
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Budapest Business Journal | March 12 – March 25, 2021
Old Banks and new Fintechs Walk Hand-in-hand Just a few years ago, when financial technology companies first popped up, what they had to offer seemed unreal. Opening a bank account via a mobile application in minutes and receiving a bank card a few business days later made banks with legacy digital systems seem sluggish. Today, a mutually beneficial competition has developed where fusion may be possible sooner rather than later. CHRISTIAN KESZTHELYI
“It became clear pretty quickly that rivalry is not the way forward for banks and fintech companies. What customers want is not provided in its entirety by either party,” Márton Homola, director of digital products at Telenor Hungary, tells the Budapest Business Journal. “Banks have realized that they need to keep up with new expectations that they were ill-equipped to deliver on their own. So now what we see is cooperation where the final product is something that incorporates the best of two worlds. It’s a fast, convenient, modern service that is secure and exhaustive,” he explains. OTP Mobile CEO Péter Benyó shares this view. “It would be fair to assess that, although we [banks and fintechs] are competitors in some way, we are also allies when it comes to increasing the penetration of digital banking here in Hungary,” he says. “We consider them to be allies when it comes to encouraging customers to try out new payment and banking methods. Also, we are of the view that the more actors are on a certain market, the better service the customer can receive,” Benyó adds. OTP Mobile’s Simple mobile payment service has 1.5 million users and dates back to 2013.
risk cyber security, data protection or general service levels,” Nagy weighs in. Transforming a banking organization and choosing the best IT architecture strategy to measure up the new digital game requires implementing complex system changes that have been shown to be a tough challenge. All the hard work and effort should bear fruit, however, as they will create immense opportunities. “In Hungary, the share of transactions in cash is still pretty high. By digitalization and making cashless/ digital payment methods really available for everybody, there can be a further boost in increasing the share of digital payments (which have already been boosted by COVID),” says Homola. “This is an aim for the banking sector and for the whole economy as well. Other than that, through digitalization Ádám Gusztáv Nagy there is an opportunity to merge sectors and services into one ecosystem, or at Changing Landscapes least into more holistic packages,” adds Although fintechs go well beyond especially during the last year, has Telenor’s director of digital products. banking, smart devices and faster data shifted into overdrive. Most of the Benyó of OTP Mobile goes further. connections are continuously changing banks offer and develop digital banking “Creating a simpler, transparent and safe the financial landscape, both on the user solutions; the biggest question now is banking world for our customers, that is our and provider side. As customers become how customers will implement these mission. With most fintech solutions one increasingly keen on using smart devices solutions in their everyday life,” OTP can handle finances in a more conscious for payments, merchants are happy to do Mobile’s Benyó adds. way. By now, people have realized that away with cash and bank card payments Beside payments solutions, however, finances are not just something you have as digital transactions are quicker and financial and wealth management are to deal with; you can shape these solutions cheaper. This boosts traffic and business. areas where further growth can be in your own way,” he says. How does digitalization appear in the expected. banking business in Hungary? “Most of the Hungarian banks have “One obvious answer is Instant implemented the core digital capabilities Payment, which is a form of and upgraded their digital frontends. digitalization. There are also attempts Either it was their own solution or they by banks to allow customers to conduct brought the regional standard of their more and more bank related business banking groups. These have the basics online that previously required face-toright: transaction, authentications face meetings. More and more providers and some PFM [personal financial are offering QR-code payments and management] functionalities. The quicker, easier and safer registration of question is what the next step will bank cards and payment by them due to be, how to build on these basics, sell 3D secure,” Homola says. investments, loans, integrate third-party solutions,” Nagy, of PwC, states. But change comes with challenges. “Building trust is a challenge in a constantly changing environment, among a clientele, where you can find both ends of the spectrum: those who are open, and demanding toward new innovations and also those who prefer traditional banking,” Benyó notes. Márton Homola Another challenge is the interest in, and acceptance of, innovative solutions by the Hungarian population. Fintechs and digitalization can break “They do not bang on the doors of old habits in customer behavior and banks to demand new banking services. that represents a great opportunity for In the last few years, the Hungarian Hungarian banks. National Bank put measures in place “They do not have to fight all the to support innovative, digital financial initial battles but can integrate, scale services with bold legislative moves and up and monetize working solutions. we are assuming that this regulation The instant payment system and KAÜ support will remain,” Homola says. [Central Client Authentication Agent, Balancing Act an electronic identification service by Péter Benyó Banks must meet fast go-to-market electronic identity card] acceptance and customer experience expectations, for KYC [know your customer while maintaining a more conservative protocols] are good places to start risk taking policy and measuring up Digitalization affects every single in Hungary. The great question is their IT capabilities. aspect of how banks are doing business if they build their own solutions or “A key challenge is how to become today. “Therefore, innovation, and integrate third parties to provide a an agile ‘tech’ company, bring new constant development must be a part complete set of services? We will digital solutions to the table that do not of our everyday life. Digitalization, see,” PwC’s Nagy concludes. Arguably, fintech Revolut has done most to speed the popularity of mobilebased payments across the world through its easy and intuitive user interface and quick digital transactions and payments. “When we talk about digital neobanks such as Revolut, those are still the number one place to go for top notch customer experience and developing new services fast. N26 has just hit 7 million customers, Revolut has more than 15 million users and is continuously expanding its service portfolio,” Adam Gusztav Nagy, senior manager at PwC Hungary’s Digital Consulting unit, says. “While incumbents are still focusing on strengthening their core digital services, these digital companies are stepping up the game in wealth management and small business payments, just to mention a few,” he adds.
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Budapest Business Journal | March 12 – March 25, 2021
Special Report | 19
Photo by Space_Cat / Shutterstock.com
MNB Hails Pandemic Response, Charts Path to Recovery The coronavirus pandemic hit the Hungarian economy at a time when its fundamentals were stable, and growth was strong, according to the latest Inflation Report of the National Bank of Hungary (MNB). ZSÓFIA VÉGH
A quarterly publication that reports on inflation developments and assesses the macroeconomic developments that determine inflation, it also gives an insight into the monetary policy steps taken by the central bank. The economic policy pursued over the past decade has contributed to maintaining the country’s macroeconomic balance and has reduced its external and internal vulnerability, MNB writes. This stronger stance, together with what it calls the quick and effective measures of the government and the MNB, helped mitigate the adverse consequences caused by the first wave of coronavirus to the real economy and the financial markets, MNB says in summarizing its responses. In spring 2020, MNB introduced a number of monetary policy instruments with the aim of maintaining price stability and ensuring adequate liquidity in the banking system and financial markets. It was also the bank’s intention to have influence to shape long-term yields and flexibility in short-term yields, MNB writes. In April 2020, MNB launched the Funding for Growth Scheme Go!, with which MNB says it has provided more than HUF 1.8 trillion in funding for the SME sector. Since last spring,
28,000 businesses
have benefited from the scheme. More than a quarter of the outsourced volume went to microbusinesses and a third to small companies, MNB writes. Within its asset purchase program, the central bank has purchased more than HUF 1.77 tln worth of securities and mortgage bonds, according to MNB data. It also purchased HUF 409 billion in corporate bonds under the Bond Funding for Growth Scheme.
Crisis-proof
The programs to provide liquidity for banks have made the financial system
crisis-proof, while the moratorium on mortgage instalment payments and the subsidized credit schemes support the continuation of earlier trends in lending during the pandemic situation, MNB writes. Hungary’s health defense against the first wave of coronavirus pandemic was successful, broadly speaking; however, due to the second wave of the pandemic, the economic recovery is taking longer than earlier expected, the report says. This is affected by many factors, including the pace of the recovery in Hungary’s export markets, as well as the effect of widespread vaccination. Following negative net exports last year, in line with subdued external demand from 2021, the contribution of net exports to growth will be positive again as a result of the expected increasingly wide application of the vaccine and the ensuing economic expansion in Hungary’s export markets, the report says. Based on all of the above, the MNB expects the economy to grow
by
3.5-6%
in 2021 (the unusually wide range is down to the as yet unknowable results of the current third wave of the pandemic in Hungary), by 5-5.5% in 2022 and by 3-3.5% in 2023. Due to the uncertainty, many companies have postponed or simply not implemented some of their investment projects. This year, however, investment activity is expected to increase again in the household, corporate and government sectors as well, according to MNB. An expansion in corporate loans will support the recovery of investment activities, while the pick-up in
household investment will be boosted by public home creation programs (cheap loans and subsidies for renovations of existing homes, and a reduction to 5% VAT for new builds), MNB says. The current account balance will improve gradually from 2021, while the country’s net lending position will remain stable as a result of the surplus on the capital account, the report claims. Consequently, the country’s net external debt will decline further in the coming years.
Based on all of the above, the MNB expects the economy to grow by 3.56% in 2021 (the unusually wide range is down to the as yet unknowable results of the current third wave of the pandemic in Hungary), by 5-5.5% in 2022 and by 3-3.5% in 2023. By the end of this year, the government deficit is likely to start decreasing again. After falling steadily since 2011, the government debt-toGDP ratio rose in 2020 on the back of state sponsored COVID response spending; however, it is likely to shift back on to a downward path from 2021 as the economy recovers and the deficit declines, the publication notes.
Macro Outlook
The macroeconomic outlook continues to be surrounded by both upside and downside risks according to MNB.
Its rate-setting Monetary Council highlighted two alternative scenarios around the baseline projection in the December Inflation Report. One scenario presumes a global protraction of the coronavirus pandemic in which the economic recovery points to a domestic inflation path that is slightly lower than the baseline scenario and to a much more subdued growth path. In the alternative scenario, featuring an increase in risk aversion vis-à-vis emerging markets, inflation is higher than in the baseline forecast. The Monetary Council also discussed scenarios that assume a strong domestic labor market adjustment, the implementation of competitiveness reforms and a permanent rise in food prices. Regarding inflation, pricing decisions have shown higher volatility and an unusual seasonal pattern following the coronavirus outbreak; this volatility will continue in the coming quarters, the report notes. Due to the increase in excise duty on tobacco products at the start of the year and base effects, the consumer price index is expected to be temporarily
around
4%
in spring 2021, MNB says, a stance that is in line with other analysts’ expectations. The tax effects of the new measures will lift inflation by an additional 0.4 of a percentage point in 2021 and by 0.1 of a percentage point in 2022, the report says, adding that beyond the moderate external inflation environment, weak domestic demand is also leading to a slowdown in price growth.
20 | 4
Special Report
www.bbj.hu
Budapest Business Journal | March 12 – March 25, 2021
Commercial Banks pRivate Banking
1
otp Bank nyRt.
10,138,804
193,354
1,653,719
370
✓
Investor (26.88), other (1.78) Investor (71.25), other (0.09)
sándor Csányi – –
1051 Budapest, Nádor utca 16. (1) 473-5000 informacio@otpbank.hu
2
k&H Bank ZRt.
3,554,179
50,415
356,907
208
✓
– KBC Bank N.V. (100)
david moucheron – –
1095 Budapest Budapest, Lechner Ödön fasor 9. (1) 328-9000 bank@kh.hu
3
UniCRedit Bank HUngaRy ZRt.
3,380,945
51,291
388,066
55
✓
– UniCredit S.p.A. (100)
4
eRste Bank HUngaRy ZRt.
2,862,136
55,536
387,487
117
✓
Corvinus Nemzetközi Befektetési Zrt. (15) Erste Group Bank AG (70), Európai Újjáépítési és Fejlesztési Bank (15)
Radován Jelasity – –
1138 Budapest, Népfürdő utca 24–26. (40) 222-221 erste@erstebank.hu
5
RaiFFeisen Bank ZRt.
2,591,837
20,602
235,519
98
✓
– Raiffeisen International BankHolding AG (100)
györgy Zolnai – –
1054 Budapest, Akadémia utca 6. (40) 484-848, (1) 484-8484 info@raiffeisen.hu
6
takaRékBank ZRt.
2,167,752
-9,849(1)
123,460
790
✓
MTB Magyar Takarékszövetkezeti Bank Zrt. (73.38), Magyar Posta Zrt. (17.66), other (8.96) –
József vida Antal Martzy –
1117 Budapest, Magyar tudósok körútja 9. (1) 311-3110 kozpont@takarek.hu
7
CiB Bank ZRt.
2,009,417
13,981
229,087
64
✓
– Intesa Sanpaolo S.p.A (100)
pál simák – –
1027 Budapest, Medve utca 4–14. (1) 423-1000 cib@cib.hu
8
mkB Bank ZRt.
1,772,456
42,012
193,555
98
✓
Metis Magántőkealap (35), RKOFIN Befektetési és Vagyonkezelő Kft. (13.62), EIRENE Magántőkealap (9.99) Blue Robin Investments SCA (32.90)
Ádám Balog – –
1056 Budapest, Váci utca 38. (1) 327-8600 kommunikacio@mkb.hu
9
BUdapest Bank ZRt.
1,515,148
15,999
161,233
94
✓
Corvinus Nemzetközi Befektetési Zrt. (100) –
koppány lélfai – –
1138 Budapest, Váci út 193. (1) 450-6000 info@budapestbank.hu
10
CitiBank eURope plC. magyaRoRsZÁgi Fióktelepe
566,579
10,153
15,366
1
✓
Citibank Europe Plc.0
kevin a. murray – –
1051 Budapest, Szabadság tér 7. (1) 374-5000 citibankmagyarorszag@citi.com
ing Bank n.v. magyaRoRsZÁgi Fióktelepe
437,687
-3,381
41,777
1
–
– ING Bank N. V. (100)
tibor Bodor Gyula Réthy –
1068 Budapest, Dózsa György út 84/B (1) 235-8700 communications.hu@ingbank.com
Rank
no. oF Bank BRanCHes in HUngaRy in 2019
Ranked by total assets in 2019 (HUF mln)
Company WeBsite
www.otpbank.hu
www.kh.hu
www.unicreditbank.hu
www.erstebank.hu
www.raiffeisen.hu
www.takarekbank.hu
www.cib.hu
www.mkb.hu
www.budapestbank.hu
total assets in 2019 (HUF mln)
aFteR tax pRoFit in 2019 (HUF mln)
eqUity (HUF mln)
www.citibank.hu
11
www.ingwholesalebanking.hu
oWneRsHip (%) HUngaRian non-HUngaRian
top loCal exeCUtive CFo maRketing diReCtoR
addRess pHone email
Balázs tóth Silvano Silvestri Gabriella Károlyi
1054 Budapest, Szabadság tér 5-6. +36-1/20/30/70-325-3200 info@unicreditgroup.hu
4
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Special Report | 21
pRivate Banking
oWneRsHip (%) HUngaRian non-HUngaRian
top loCal exeCUtive CFo maRketing diReCtoR
addRess pHone email
27
–
– Sberbank Europe AG (99), Türkise Halk Bankasi (1)
Richard szabó – –
1088 Budapest, Rákóczi út 7. (1) 328-6666 info@sberbank.hu
30,527
4
✓
– Commerzbank Auslandsbanken Holding AG (100)
andreas d. schwung – –
1054 Budapest, Széchenyi rakpart 8. (1) 374-8100 info.budapest@commerzbank.com
1,169
14,572
2
✓
Pannónia Nyugdíjpénztár (9.90), E. P. M. Kft. (61.20), other (18), MKB Nyugdíjpénztár (10) –
éva Hegedűs – –
1095 Budapest, Lechner Ödön fasor 8. (1) 235-5900 info@granitbank.hu
323,625
345
20,648
4
✓
– Korea Development Bank (100)
József kurunczi – –
1054 Budapest, Bajcsy-Zsilinszky út 42-46. (1) 374-9900 info@kdbbank.eu
Bnp paRiBas magyaRoRsZÁgi Fióktelepe
252,573
1,898
-203
1
✓
– BNP Paribas S.A (100)
Jean-François Bandini – –
1062 Budapest, Teréz körút 55-57. (1) 374-6300 info.hu@bnpparibas.com
17
Bank oF CHina (HUngÁRia) ZRt.
182,346
221
16,532
2
✓
– Bank of China Ltd. (100)
xu Haifeng – –
1051 Budapest, József nádor tér 7. (1) 429-9200 bocbp@pronet.hu
18
magnet Bank ZRt.
163,166
1,421
14,739
9
–
FR-Invest Kft. (71), individuals (29) –
Zsolt Fáy, János salamon – –
1062 Budapest, Andrássy út 98. (1) 428-8844 info@magnetbank.hu
19
magyaR Cetelem Bank ZRt.
117,361
7,916
37,607
2
–
– BNP Paribas Personal Finance (100)
Péter Szabó – –
1062 Budapest, Terézkör út 55–57. (Eiffel Square Office Building) (1) 458-6070 cetelem@cetelem.hu
20
dUna takaRék Bank ZRt.
87,466
-208
4,255
18
–
Emese Balogh (19.90), Garancsi István (19.90), Illés Zoltán Pál (19.90), individuals (40.30) –
Zoltán illés – –
9022 Győr, Árpád út 93. (96) 550-720 kozpont@dunatakarek.hu
21
sopRon Bank BURgenland ZRt.
83,213
668
8,662
13
–
– „Communitas” Holding G.m.b.H. (100)
mag. andrea maller-Weiß – –
9400 Sopron, Kossuth Lajos utca 19. (99) 513-000 sopronbank@sopronbank.hu
22
polgÁRi Bank ZRt.
39,938
62
3,165
17
–
Individuals (97.06), corporate (2.94) –
lászlóné Béke – –
4090 Polgár, Hősök útja 8. (52) 573-035 titkarsag@polgaribank.hu
NR
deUtsCHe Bank ag magyaRoRsZÁgi Fióktelepe
A
A
2,902
A
–
– Deutsche Bank AG (100)
Zsolt pintér – –
1054 Budapest, Hold utca 27. (1) 301-3700 db.hungary@db.com
oBeRBank ag magyaRoRsZÁgi Fióktelep
A
A
A
A
✓
– Oberbank AG (100)
Franz gasselsberger – –
1062 Budapest, Váci út 1–3. (1) 298-2900 bp@oberbank.hu
Rank
no. oF Bank BRanCHes in HUngaRy in 2019
Budapest Business Journal | March 12 – March 25, 2021
Company WeBsite
total assets in 2019 (HUF mln)
aFteR tax pRoFit in 2019 (HUF mln)
eqUity (HUF mln)
12
sBeRBank magyaRoRsZÁg ZRt.
423,401
2,361
46,900
13
CommeRZBank ZRt.
398,455
1,202
14
gRÁnit Bank ZRt.
398,168
15
kdB Bank eURópa ZRt.
16
www.sberbank.hu
www.commerzbank.hu
www.granitbank.hu
www.kdb.hu
www.bnpparibas.hu
www.bankofchina.com/hu/
www.magnetbank.hu
www.cetelem.hu
www.dunatakarek.hu
www.sopronbank.hu
www.polgaribank.hu
www.db.com/hungary
NR
www.oberbank.hu
notes: (1) Deficit due to savings cooperate integration's special accounting effect in 2019.
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www.bbj.hu
Budapest Business Journal | March 12 – March 25, 2021
Socialite
Searching for Guitarist Gábor Szabó I began researching a biography of the great Hungarian guitarist Gábor Szabó around the middle of 2020. For the past month or so, together with my co-author Mike Stax, I’ve been going deeper into the Szabó’s story as we gain momentum.
“Between 1965 and 1969, his music explored a dizzying array of styles: gypsy jazz, Indian ragas, mesmeric psychedelia, bachelor pad jazz, and even sunshine pop.”
DAVID HOLZER
The musician was born in Budapest in 1936. After seeing a Roy Rogers movie when he was 14, in which the “Singing Cowboy” played guitar, Szabó became obsessed with mastering the instrument himself. He did so rapidly, falling at the same time for the American jazz which the Communists sneered at for being imperialist, cosmopolitan and decadent. Listening to “Jazz Hour” presented by Willis Conover on U.S. propaganda station Voice of America, collecting original U.S. jazz albums that cost the equivalent of several weeks’ salary on the black market and playing clandestinely with fellow obsessives honed Szabó’s skills. He soon developed a sound that was instantly recognizable. This singular sound is there on the earliest recordings he made as a contributor to the collection of music recorded at the U.S. embassy in Budapest on Friday, November 23, 1956, shortly after the start of the Hungarian revolution. These were smuggled out of the country and broadcast on Voice of America. Not long after, Szabo escaped to the United States. After a couple of years at the Berklee College of Music, he joined Chico Hamilton’s band in 1961. Leaving Hamilton in 1965, Szabó made his first solo album in 1966. This was “Spellbinder,” which Szabó, in his liner notes, described as having “the feeling of witchery, of the casting of spells.” After a remarkable run of albums that had a profound impact on musicians
gathered outside the Radio Budapest building. They were insisting that their demands for Hungarian independence and the withdrawal of Soviet troops be broadcast. Kabok went down to see what was happening and was there when the AVH, the hated secret police, began to fire their machine guns – called “Russian guitars” – into the crowd. “I just turned around and went home,” he told Stax. “What else can you do?” Kabok was once more with Szabó when they played at the legendary Fillmore in San Francisco with the Jefferson Airplane and Jimi Hendrix. Hendrix, Kabok said, was louder than the cannon fire of a Russian T-54 tank up close.
Gábor Szabó. Photo by Fortepan / Zoltán Szalay as diverse as Carlos Santana, Robby Krieger of The Doors and jazz guitarists Kenny Burrell and Bill Frisell, Szabó’s career drifted somewhat throughout the 1970s. He died of liver and kidney failure in a hospital in Budapest in 1982.
Spell Casting
Szabó has certainly cast a spell on Mike Stax, my co-author, and me. Stax is the British-born publisher of “Ugly Things”, a magazine and website devoted to strange, obscure and often unjustly forgotten music. We agreed to co-write the biography of Szabó (working title “Spellbinder: Celebrating the psychedelic jazz magic of Gabor Szabo”, after Stax published my article “The Rambler Returns: Gabor Szabo comes back to Hungary” in Ugly Things. Stax contributed an exhaustive, insightful guide to Szabó’s groundbreaking 1960s albums, beginning with “Gypsy ’66” and ending with “Gabor Szabo” (1969). Stax described Szabó as embodying the spirit of genre cross pollination that was part of so much 1960s music. “Between 1965 and 1969, his music explored a dizzying array of styles: gypsy jazz, Indian ragas, mesmeric psychedelia, bachelor pad jazz, and even sunshine pop,” he says.
As Stax and I exchanged emails, we discovered that we were equally fascinated by Szabó’s music and his extraordinary life, and so we agreed to collaborate on a biography of the musician. Since then, we have interviewed several characters from Szabó’s life. Among other memorable encounters, I’ve spoken with Szabó’s brother John a few times. He shared his love and understanding of his brother with me. Stax tracked down a Hungarian jazz musician named Lou Kabok who played with Szabó in Budapest before the revolution and escaped to America shortly after him. In a long article soon to be published in Ugly Things, Kabok describes life in Hungary and the United States in mesmerizing detail. He remembers playing with Szabó at the Astoria Hotel in Budapest back when it was “a very elegant place, just a beautiful hotel” and being given bananas by some Americans who loved the music. “I’d never had bananas in my life,” Kabok told Stax.
Revolution
On the night of October 23, 1956, Kabok was playing with Szabó at the Astoria when the room began buzzing with news that thousands of people had
Now 89, Kabok played with Szabó until the eponymous “Gabor Szabo” album in 1969. By then, Szabó’s heroin addiction had really taken hold and, while he was still enormously admired, his reputation for unreliability began to precede him. Kabok went on to a career in music that continues to this day. When Disney made their “Fantasia” reboot, “Fantasia 2000”, Kabok was part of the orchestra, and was also the stand-in for Leopold Stokowski in the recreation of the famous scene where Mickey Mouse shakes hands with the great conductor in silhouette at the end of the movie. These are just some of the fascinating details we’ve uncovered in our search so far. My current favorite is that Swedish guitarist Janne Schaffer, who played a 1959 Gibson Les Paul on two albums Szabó made in Sweden, used the same guitar on all of Abba’s hits. We may never get to the heart of what made Szabó a unique, enormously admired musician and a man remembered with enormous affection, but the details we’re uncovering are worth the price of admission in themselves.
Fortunately, you can find most of Gábor Szabó’s music on YouTube and Spotify. If you would like to know more about him or have a story about him to share, our Facebook page is Gabor-Szabo-Spellbinder.
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Budapest Business Journal | March 12 – March 25, 2021
Kadarka on the day of the Kokárda I will admit to having got the words Kadarka and Kokárda mixed up once or twice as I got to grips with Hungarian vocabulary. While the former is a grape variety and the latter the rosette of ribbons in the colors the Hungarian flag that can be seen pinned to the jackets of patriots on the March 15 holiday, Kadarka could be the ideal red wine with which to celebrate the 1848 revolution. ROBERT SMYTH
This is not only because Hungary’s other main indigenous black grape, Kékfrankos, can be considered as much an Austrian grape as a Hungarian one (without wanting to get at all political), even though Blaufränkisch (to use its Austrian moniker) is predominantly planted in Burgenland, which was formerly part of Hungary. It is also because Kadarka is light, playful, spicy and sometimes floral, and also delicious with paprikainfused fare that might be part of the festivities, as well being a superb red wine for spring. I am not the first to connect Kadarka with the March 15 holiday, however. Two years ago, on March 15, Dániel Kezdy (the man behind the epic Furmint February tasting that is usually held in Budapest, but not this year due to COVID) launched a new campaign to promote Kadarka as the Szabadság Bora (The Wine of Freedom). The current lockdown measures mean he will not be holding any Kadarkarelated tastings at his Kálvária Pince, in Budakalász, this March 15, but he does urge people to open a bottle of Kadarka and enjoy the Wine of Freedom in the comfort of their own home.
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the Ménesi wine region, near the city of Arad, in present-day Romania. The latter was deliciously exotic, concentrated and quite oaky, having been aged in small barrels, which for me somewhat hid Kadarka’s varietal character, although the grape variety over there has most likely evolved to become quite different to what we consider Kadarka over here. The Best Buy wine from the Bormedence tasting, Koch Borászat’s Kadarka 2018, made by Csaba Koch, the Hungarian Wine Academy’s Winemaker of the Year for 2019, is currently on sale at a remarkable HUF 1,350 from Pannonborbolt.hu. Beyond the tasting, János Németh Kadarka 2018, which is the 2020 Országház bora (Hungarian Parliament wine) in the Kadarka category, really ticks all of the key boxes, with that tasty spiciness, crispy cranberry and rosehip with a delightful lightness of touch on the palate. It comes from the fruit of nine new clones of Kadarka. Németh explained that the classic P9 clone makes spicy wines, but its compact bunches can be too tight and make it highly susceptible to disease, meaning that good wine can only be Miklós Klein (in lighter colored shirt), the Eszterbauer made in very good, disease-free vintages. winemaker, and winery owner János Eszterbauer. The clones that Németh works with have looser bunches. This wine costs HUF 3,350 from wineloverswebshop.hu. There was a bit of Kadarka action to be grapes are needed; that addition has long As Országház bora, it is supposed to be had, however, at a recent tasting of the been a must in Szekszárd, but can now served to visiting foreign leaders and Bormedence Borklub, which showed that increasingly be found in Eger also. dignitaries, though due to the current Hungarian vintners are beginning to get From Eger, Ferenc Tóth’s Kadarka circumstances it probably means they’ll a handle on the tangy yet temperamental 2017 (HUF 3,370 from Borkereskedes. have plenty of bottles to lay down and grape, with the wines overall showing hu) claimed third place at the gain further complexity. good, even surprising consistency. Bormedence tasting and had a pleasant The Heimann winery, also from tawny color suggesting a bit of age, Szekszárd, has done a lot of work with Fragile and Tricky which it wore well with complex notes of Kadarka clones, while Eszterbauer It is a fragile and tricky grape to mushroom and leaves. has a plot of Kadarka vines that were cultivate and is prone to uneven ripening. planted in 1912 as bush vines (not Aging Well It is thin-skinned (hence its light trained), which János Eszterbauer, who Some bottle age appears to suit the tannins), but also a late-ripener, making dropped in on the Bormedence tasting variety. The joint-winners were both a it at risk from rot. Nevertheless, it can via internet linkup, says comprises some make the kind of light but complex wines year older still: Pál Mészáros’ St. Grál 30-40 clones. Mészi Kadarka Reserve 2016 (HUF that consumers are starting to crave, in The resulting wine from the 2019 6,000 from Selection.hu) from Szekszárd place of fuller-bodied blockbusters. vintage, 108 éves kadarka 2019, is with very appealing rosehip, hibiscus After years of being predominantly really elegant and featherlight, yet and floral aromas with the promise either underwhelming (too watery and full of many of the aforementioned followed up on the long palate; and Balla characteristic Kadarka flavors. It costs slight) or overwhelming (too much oak Sziklabor Kadarka 2016 (HUF 7,350 and extraction), plenty of delicious HUF 6,490 from Eszterbauer.hu, and is from Bortársaság) from rocky slopes in Kadarka wines with light tannins and also available from Borfalu. playful acidity are coming through that typically exude a distinctively aromatic rose hip/red fruit scent with delicious spiciness. Szekszárd is the Hungarian epicenter of the Kadarka grape (essentially the same variety as Bulgaria’s Gamza), which came to Hungary from the Balkans, supposedly brought by Rascians from present-day Serbia, who were fleeing Ottoman invaders. In Szekszárd, the grape variety somehow survived the communist cull, but it was pretty much eradicated from Eger’s vineyards, where it was once the dominant variety, as more productive, higher-yielding grapes were sought in its place. However, a welcome trend now is the re-emergence of the grape in Eger, as vintners look to make single varietal wines, as well as spice up their Bikavér, Eszterbauer has a plot of Kadarka vines that were planted in 1912 which is dominated by Kékfrankos. Just as bush vines (not trained along wire, relatively unusual in Hungary). a few percent of the aromatic Kadarka
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