Vienna Stock Exchange Ups Stake In Budapest Stock Exchange To 37.7%

The 25.2% package got to UniCredit via the acquisition of HVB Bank, which was a member of a consortium that obtained a majority stake in the BSE in 2004.

The Austrian consortium currently holds a 68.8% stake in the Budapest bourse, which breaks down as follows: Oesterreichische Kontrollbank AG 12.5%, Raiffeisen Zentralbank Österreich AG 6.4%, Erste 12.22% (Erste Group Bank AG 6.37%, and Erste Befektesi 5.85 %).

The deal is a mere rearrangement of holdings within the consortium that has not purchased further stakes in the BSE.

“We believe in the Hungarian capital market and the acquisition of this stake is an expression of our commitment. In addition, the more simplified structure of the decision makers within the Budapest Stock Exchange will make it possible to implement future activities more swiftly," said Michael Buhl, CEO of the Vienna Stock Exchange and member of the Board of Directors of the Budapest Stock Exchange.

“Smoothening out the decision making process can also mean that Vienna will pay more attention to what is happening on the BSE," Buhl told Hungarian news portal index.hu in an interview last October.

“I sometimes have the feeling that the management of the BSE may be hesitating a wee too much. Some things may be done faster, but all I can do is to point out for them a few advantages we are already enjoying," he added.

At that time Buhl supported the recurring notion to maintain the independence of the BSE, but when it came to the MOL-OMV bout he said the weight of trade in the Hungarian oil papers waned lately. “[...] while MOL does play a highly important role in the turnover of the BSE, we shouldn't forget that over 40% of the company is held by MOL itself or parked at friendly institutions and another 20% is owned by OMV. This means that the actual volume of free-floating shares is strongly limited."

Meanwhile, the free float of Hungary's biggest bank OTP has also dropped, owing to old-new investors acquiring an over 10% stake in the bank.

And these two giants turned in a joint letter to Vienna, putting a defending arm around the shoulders of BSE Chairman Attila Szalay-Berzeviczy, who was rumoured to be on the brink of being fired by the Austrians.

The two companies also criticised Vienna for the non-realisation of strategic developments and signalled that they wanted a bigger say in forming the future of the Hungarian bourse.

The battle that ensued took place mostly behind the scenes, but threatened with potentially dire results. For some time it was rumoured that the two giants would contemplate withdrawal from the BSE and that OTP would team up with other banks to buy out the Austrians. The ripples smoothed out eventually, Szalay-Berzeviczy remained unseated, MOL and OTP did not leave either, but the erosion of the BSE's role continued.

A yellow flag in this respect was last waved by the management of Cashline Securities. They said that while general market conditions supported their choice not to have a ‘Buy' recommendation on any of the Hungarian stocks, a growing number of their local clients are turning to foreign investments anyway. They also noted that interest for the BSE from abroad also abated and liquidity and daily turnover were diminishing. This was partly attributable to the fact that less and less MOL and OTP shares were on the virtual floor, which made investors think twice before buying these. They knew they might have a hard time finding a buyer for these stocks quickly if they chose to part with them.

In the past, the Budapest Stock Exchange has launched a number of measures, such as the purchase and integration of the commodity exchange and the foundation of the “IPO incubator", Club of Quotables, which acted to really galvanize the Hungarian capital market. In addition, activities are in planning in order to promote the internationalization of the Budapest Stock Exchange.

“We believe that collaboration is very important and are already engaged in talks with some market participants," said Buhl in a statement released today by the Wiener Börse.

As of the end of May, there were 43 companies listed on the Budapest Stock Exchange and market capitalization was EUR 28.45 bn."

Source: Portfolio Online Financial Journal