Research Update: Outlook On MTB Magyar Takarekszovetkezeti Bank Zrt. Revised To Developing From Stable As Planned Merger Progresses

The majority owner of MTB Ltd. signed an investment and shareholders' agreement with the majority owners of MKB Bank Plc. and Budapest Bank Group, and we expect the parties will transfer their respective shares to Magyar Bankholding Ltd. by end-2020 to form a new banking group. Regulatory approval of the transaction is still pending. While synergies could result from the merger, we also see high execution risks, and do not yet have clarity on the financial strength of MKB Bank and Budapest Bank Group, or new group's strategic targets. We are therefore revising the outlook on MTB Magyar Takarekszovetkezeti Bank Zrt. (MTB), a core member of the Takarek Group, to developing from stable, and affirming our 'BB/B' ratings on the

...- The majority owner of MTB Ltd. signed an investment and shareholders' agreement with the majority owners of MKB Bank Plc. and Budapest Bank Group, and we expect the parties will transfer their respective shares to Magyar Bankholding Ltd. by end-2020 to form a new banking group. Regulatory approval of the transaction is still pending. - While synergies could result from the merger, we also see high execution risks, and do not yet have clarity on the financial strength of MKB Bank and Budapest Bank Group, or new group's strategic targets. - We are therefore revising the outlook on MTB Magyar Takarekszovetkezeti Bank Zrt. (MTB), a core member of the Takarek Group, to developing from stable, and affirming our '##/B' ratings on the bank. - The developing outlook indicates that we may raise, lower, or affirm the long-term rating over the next 12 months, depending on our evaluation of the impact of the transaction on MTB's creditworthiness....

Research Update