Top Hungarian companies oppose bourse merger

Oil and gas group MOL Chairman and Chief Executive Zsolt Hernadi and OTP Bank Deputy Chief Executive Csaba Lantos said the Budapest bourse had years' worth of growth potential left in it and the disappearance of the exchange, even in the distant future, was not an acceptable option.

Their comments come after Andreas Treichl, the chief executive of Erste Bank, which holds 12.2 percent of the Budapest exchange, told Hungarian website Portfolio he favoured the creation of a large regional exchange in Bratislava, instead of the half dozen exchanges in the region.

"Our bourse is a profitable, financially viable exchange with plenty of growth potential and a clear path ahead. There is no economic rationale whatsoever to close it," OTP's Lantos told Reuters.

OTP and MOL are by far the biggest companies on the Budapest Stock Exchange, both in terms of market capitalisation and trading volumes, and are the second- and fifth-biggest capitalisation stocks in eastern Europe, respectively.

"It's interesting that a year ago when the Austrian investors took over they spoke of their long-term development plans for Budapest and now that they have got EU approval, they're talking about closing it," Lantos said. Erste and several other investors including Vienna bourse operator Wiener Boerse and HVB Bank Hungary gained a 69 percent stake in the Budapest bourse last year but only received E.U. approval to complete the deal last month.


ALLIANCE

Lantos admitted that the region is probably too small for so many exchanges and some would be forced to close but he suggested investors should let the market decide.

The Budapest bourse should first complete its acquisition of the commodity exchange than its integration with the clearing house Keler and "once that's done, we should list the bourse and do the same with all of the region's main exchanges," Lantos said.

"Four small regional exchanges probably won't survive but we should let the market decide what everybody's worth and how consolidation should take place," he added.

MOL's Hernadi said closing the Budapest bourse would mean losing touch with local customers, particularly retail investors.

"We can hardly reach local investors as we are now. Move the bourse out of here, and we'll lose most of them," Hernadi said.

"Markets in this region have not had time to develop and if you close bourses, that'll deal a severe blow to people's willingness to save," Hernadi said.

Hernadi and Lantos suggested that a regional alliance could be created through the connection of trading platforms and cross-listing of shares, but a local presence was necessary to maintain investors.

"In the end, it's the companies' decision where they want to be listed," Hernadi said.

Source: Reuters