Central and eastern Europe’s second-biggest lender Raiffeisen Bank International will not be selling its Hungarian unit, despite media reports to the contrary.

There were rumours that the small Hungarian lender Szechenyi Bank, which is 49% government-owned, was negotiating a purchase after Raiffeisen’s announcement in November that it wanted to review offers.

However two sources have revealed to Reuters that Raiffeisen have decided against a deal at its current low price as it would lead to unacceptable losses.

Raiffeisen has so far remained silent on the matter.

The unit lost €81m ($110m) in the nine months to September 2013. Hungary’s banking sector has suffered a great deal since the 2008 financial crisis due to government measures to help foreign currency loan-holders. Raiffeisen said it wanted to sell in order to focus on more promising markets.

Prime Minister Viktor Orban has insisted that the predominently foreign-owned banking sector is undesirable and that 50% of the banking sector should be domestically owned.

Hungarian National Bank (which is also country’s financial regulator) spokesman Istvan Binder has revealed that applications for licenses have not been sent fromeither of the banks in question.

"For sale, the license of the National Bank of Hungary would be needed," he said.


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