News and announcements
Loan portfolios changing hands across Europe
In 2015 European banks striving to clean up their balance sheets got rid of a loan portfolio worth EUR 104 billion, but the selling spree is not over yet. Another loan portfolio of EUR 44 billion is in the pipeline, and the sale of non-performing mortgage portfolios can start in Hungary too.
MARK welcomes registration by financial institutions
Pursuant to authorisation from the European Commission, MARK Magyar Reorganizációs és Követeléskezelő Zrt. (MARK Zrt.) is about to start purchasing the distressed project loans of commercial banks. The aim of the Company is to kick-start the clean-up of bank balance sheets so that the baking system can more efficiently contribute to the sustainable growth of the Hungarian economy.
What do you need to know about the MARK project?
In mid-February the European Commission approved the methodology developed by MARK Magyar Reorganizációs és Követeléskezelő Zrt. (MARK Hungarian Restructuring and Debt Management Plc. – MARK Zrt.) for the acquisition of non-performing loans and commercial real estate portfolios.
Pursuant to the decision (260961_1733345_231_2.pdf), MARK Zrt. can start the acquisition of non-performing loan receivables secured by commercial real estate and real estate assets that formerly served as collateral for receivables from financial services, and are specified in the Regulation of the European Parliament and of the Council. The targeted programme of the central bank is strictly based on market conditions and is absolutely free from state aid. The following is a brief summary of the major components of the project.
Banks can register for the sale of their distressed project loans from 21 March
The decision, which approved the pricing model of MARK Magyar Reorganizációs és Eszközkezelő Zrt. (MARK Zrt.) for the purchase of non-performing debts and commercial real estate portfolios in mid-February, has been published on the website of the European Commission too. The Company can start acquisitions on the basis of market conditions after it has been determined that the targeted program of the Central Bank of Hungary (MNB) is free of illegal state aid. Financial institutions can register to join the program between 21 March and mid-June.
Green light for cleaning up the banks, which can kick-start lending
On 10 February 2016 the Directorate-General for Competition of the European Commission approved the market pricing methodology developed by MARK Magyar Reorganizációs és Követeléskezelő Társaság (MARK Zrt.) for the purchase of commercial real estate portfolios. The decision put an end to a series of expert discussions that had dragged on for over a year. Consequently, MARK Zrt., which was established for the efficient completion of the macroprudential tasks of the central bank, can rightfully start acquisitions at market prices. The goal is to create a successful precedent by MARK Zrt. giving a kick-start to the clean-up of bank balance sheets, and consequently helping the banking system contribute to sustainable growth.
EU permission on MARK operation
MARK can start purchasing distressed commercial real estate assets from banks, following decision by the European Union. The operation of the asset management company established by the central bank, pursuant to supporting its macroprudential legal mandate, is expected to give a significant boost to the clean-up of non-performing bank portfolios, which may contribute to a revival in bank lending and a recovery of the real estate market from recession. Since MARK will purchase assets at market price, based on the validation of the European Commission, the planned asset acquisition programme does not contain state aid.
What can MARK bring to the market of forced liquidations?
MARK Zrt. was established with the objective to wind down part of these non-performing loans from banks" balance sheets, on condition that they are easy to identify and can be homogenously handled. In the present market situation credit institutions are only able to sell individual assets, and in the cases of category "B" and "C" offices, industrial properties or retail buildings the number of transactions remains low, as there is no market for such real estate.
Hungary to accelerate the clean-up of banks
The Civil Code must be amended to simplify the transfer of non-performing corporate loans. This can be achieved by ensuring that the lien on the loan does not expire with the transfer, and the deadline for appeal does not restart after the sale of a loan, Balázs Bodzási, Deputy Minister of State of the Ministry of Justice in charge of judicial and private law legislation said.
Even distressed properties can make money with some creativity
Not all segments of the domestic property market have seen an upswing lately. Finding the proper utilisation for the assets behind failed loans requires innovative solutions. Interview with Zsolt Pilhál, the CBO of MARK Ltd.
NPL Europe 2015 - 1-2 of October 2015, London
With an estimated €2.2trn of non-core assets and €800bn of NPLs remaining on the balance sheets of European banks and huge pressure from the Regulators to deleverage, 2015 is set to be another record year of trading. Now in its second year, NPL Europe once again brings to Mayfair in London, key Sellers, Buyers & Servicers from some of the hottest markets in the European region to network and discuss the latest trends in the booming European Distressed Debt Market.
Creative debt management solutions
We will not confine ourselves to loan rescheduling or the extension of maturity periods, but will also use creative debt management and consolidation techniques. There is a realistic opportunity for major restructuring affecting the amount of receivables too, in case this would offer business benefits for MARK Zrt., CEO of MARK Zrt. Csaba Kandrács said in an interview with Portfolio.hu.
At the request of the Hungarian Central Bank (MNB), representatives from the Monetary and Capital Markets Department (MCM) of the International Monetary Fund (IMF) visited Budapest during June 2–4, 2015 to examine the structure and operation of MARK Zrt. established by MNB in November 2014 with the aim of accelerating the transmission process of monetary policy, promoting corporate lending and supporting economic growth.
MNB acts in compliance with the relevant legal requirements
The Hungarian Central Bank (MNB) handles information required for the continuous supervision of the financial intermediary system as bank and trade secrets
The primary goal of MNB is to enhance the stability of the Hungarian financial system, and in line with this, to eliminate the systemic risk inherent in non-performing loans. Pursuant to the decision of the Monetary Council MNB will extend a credit line of HUF 300 billion to MARK Zrt. under market conditions so that it could buy up bad loans from commercial banks.
MARK Zrt. to introduce an integrated system for efficient financial management
MARK Hungarian Restructuring and Debt Management Private Company Limited by Shares (MARK Zrt.) is to introduce a standard, integrated IT business system. In this move MARK Zrt. is supported by SAP Hungary Kft. as a solution supplier and consultant partner by using the best domestic and international practices, the parties announced.
In its latest economic forecast OECD pointed out that the involvement of MARK Zrt. in the purification of the portfolios of commercial banks operating in Hungary in the second half of the year may help restore lending.
Non-performing project loans pose risks
One of the major problems of the Hungarian banking system is the portfolio of corporate project loans the purification of which is going on at a slow pace only. By setting up MARK Zrt. MNB aims to reduce the inherent risks to financial stability. First the Company would buy up syndicated loans, then bank portfolios, and finally individual receivables from the banks, CEO of MARK Zrt. Csaba Kandrács said at the Portfolio Lending Conference 2015.
S&P: MARK Zrt. may improve the quality of bank portfolios
According to Standard & Poor's, the newly established asset management company of MNB may significantly reduce the risks of the Hungarian banking sector. The latest analysis of the credit rating company points out that MARK Zrt., established by MNB, may further improve the quality of assets and promote the real estate market. Altogether lending risks in Hungary may stabilise in 2015, in part due to the favourable economic conditions. Between 2015 and 2017 the GDP may grow by 2.5% on average in contrast with the credit rating agency’s former forecast of slightly over 2%.
IMF’ opinion on MARK Zrt.
Basically, IMF has a positive opinion about the so called “bad banks” that – according to international experience – can free the banks from bad debts hindering their activities, can improve the efficiency of and standardise the management and valuation of such bad debts. IMF emphasises the importance of specialised knowledge related to the management and valuation of bad assets in the operation of such institutions, and believes that communication plays a key role in the transparent and efficient operation of an asset management company.
Forbes interview about the plans of MARK Zrt.
MARK Zrt. is a second generation asset management company established by MNB to buy up bad assets that have got stuck in the banking system. Csaba Kandrács, CEO of MARK Hungarian Restructuring and Debt Management Private Company Limited by Shares answered the questions asked by the Hungarian Forbes magazine in its April issue.
Professional cooperation with RICS
The Brussels based RICS and MARK Zrt. are planning to closely cooperate in the future. It is of utmost importance for MARK Zrt. to conduct its property management activities using the best market practices and international standards. The Royal Institution of Chartered Surveyors (RICS) accredits nearly 118,000 individuals and companies working in the field of real estate. Its strict quality assurance rules and code of ethics ensure that RICS members will represent the customers’ interests while complying with the highest professional norms..
EBRD to assume a role in the clean-up of non-performing project loans
The cleaning of the balance sheets of Hungarian banks from non-performing project loans may speed up. At the professional forum of MNB it was announced that the recommendations of international organisations would be respected when launching the central bank affiliated asset management company aiming to buy up project loans and properties at market prices.
Development of the organisation of the new asset management company under way
The asset management company established by the Hungarian Central Bank (MNB) last autumn has begun its activities. “We are currently setting up the organisation of the Company; we are conducting professional consultations to determine the principles and methodologies on the basis of which the asset management company will take over bad property loans from the banks,” CEO of MARK Zrt. Csaba Kandrács told MTI.