State-owned Budapest Bank has joined a strategic cooperation earlier formed by MTB Magyar Takarekszovetkezeti Bank (MTB), the „central bank” for Hungary’s integrated savings cooperatives, and MKB Bank, the parties said on Tuesday.

In the framework of the cooperation, „experts are reviewing and making preparations for the establishment of a new, domestically-owned banking group that has definitive market weight”, the lenders said.

Together, the three bank have almost 1.9m clients and over 920 branches. Their combined total assets stand close to HUF 5,800bn, which could make them the country’s second-biggest banking group „by far”, they added.

OTP Bank is Hungary’s biggest commercial lender, with total assets of HUF 21,858bn at the end of March, but foreign businesses make up much of its balance sheet.

MTB and MKB announced on May 15 that they had signed a memorandum of understanding on setting up a 50pc-50pc financial holding company, called Magyar Bankholding, and would mull the form their cooperation could take.

On Tuesday, the lenders said MTB, MKB and Budapest Bank now each hold one-third of Magyar Bankholding.

A decision on the shape the cooperation between the three banks will take, such as a possible merger, in part or in whole, will be taken later, after international consultants are brought in and negotiations take place, the lenders said.

The state acquired Budapest Bank from General Electric (GE) for USD 700m in June 2015. Last year, the government mandated the minister without portfolio in charge of managing state assets to conduct talks with potential buyers on the sale of the bank.

In a separate statement issued on Tuesday, Andrea Mager, Hungary’s minister without portfolio in charge of managing state assets, said she had been mandated by the government to continue talks with potential financial institutions on divesting the state’s majority stake in in Budapest Bank.

Budapest Bank joining MTB’s and MKB’s strategic cooperation can support the achievement of all of the state’s aims with regard to the lender, Ms Mager said.

Making use of the lenders’ synergies could result in a „serious increase in value”, she added.

She said that joining a financial holding company had been among the many options weighed when analysing the divestment of Budapest Bank.

The state of Hungary wishes to retain its presence on the domestic banking market as a minority owner and strategic investor, and Budapest Bank joining the cooperation formed between MTB and MK creates an opportunity to do just that, too, she added.