IFLR 1000
The Guide to the World's Leading Financial Law Firms

Of all the CEE countries, it is fair to say that Hungary's economy has been impacted the most severely by the global downturn. The country's massive exposure to public and consumer borrowing during the lending boom post-EU accession meant that when the credit crunch hit, it hit particularly hard....

Of all the CEE countries, it is fair to say that Hungary's economy has been impacted the most severely by the global downturn. The country's massive exposure to public and consumer borrowing during the lending boom post-EU accession meant that when the credit crunch hit, it hit particularly hard. With both sectors suffering so badly, the economy had to be bailed out by the IMF – making Hungary the first European country to need such assistance since the UK in the 1970s.

Corporate lending, especially for commercial real estate, came to a standstill in 2009. Any large facilities that were arranged tended to be organised as club deals rather than syndicated loans. When asked in Q2 2009, banking partners across the board could not commit to having noticed any signs of recovery in the middle distance. But firms were kept busy with debt restructurings in 2009, as well as a flood of requests for regulatory advice – including those for help with structured finance issues and Mifid compliance.

There have been a couple of departures from banking and finance teams over the last year. Zoltán Martonyi left Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie to set up an independent firm and Marcell Németh left Allen & Overy to join Pinsent Masons in London.

The knock-on effects of the global downturn had a dramatic impact on M&A in Hungary during 2009, with one international news agency reporting a 90% drop in activity. Far from having experienced a straightforward drop-off of work, though, partners have been reporting a change in its nature, saying they have witnessed a shift from pure M&A to internal restructurings – some consisting of downscaling and other crisis measures, but others involving optimisation measures and mergers....

The knock-on effects of the global downturn had a dramatic impact on M&A in Hungary during 2009, with one international news agency reporting a 90% drop in activity. Far from having experienced a straightforward drop-off of work, though, partners have been reporting a change in its nature, saying they have witnessed a shift from pure M&A to internal restructurings – some consisting of downscaling and other crisis measures, but others involving optimisation measures and mergers.

The type of clients being represented also changed in 2009. Instructions from financial institutions and private equity funds fell steeply, but work from large industrials – including energy market participants – picked up, with companies seeking advice and representation on matters such as outsourcing and foreign-exchange issues.

Many firms have also reported being busy acting for portfolio groups that are planning exits or structural changes to their investment strategies.

Firms also found that it was necessary to strengthen their existing restructuring and insolvency teams in preparation for a surge of new work, some reassigning lawyers from their real estate and private equity teams, as well as laying on specialised training schemes for associates.

Hungary's extremely high exposure to public and consumer borrowing before the global financial crisis toppled the credit markets has meant that lending has been very tight in 2009. Of course, these problems have a major impact on the world of project finance....

Hungary's extremely high exposure to public and consumer borrowing before the global financial crisis toppled the credit markets has meant that lending has been very tight in 2009. Of course, these problems have a major impact on the world of project finance.

However, project finance has shown more signs of life than, say, the real estate market, due to the presence of development banks and export credit agencies that have stepped in not only to create liquidity for lenders but also to lead commercial banks in lending in project and infrastructure financing structures.

All in all, firms reported a steady flow of project finance activity, including road projects and PPPs involving prisons, schools and libraries.