There has been some takeover speculation in the local press (Hungarian daily Napi Gazdasag) surrounding FHB over the past week, after two of its strategic investors (IEB and Aegon) sold stakes (total of 3.142m class B unlisted shares), equating to 4.8% interest in the company. Apparently, the IEB transaction (1.142m shares) was at a price of HUF 1,700 per share (2006F P/E of 12.5x and P/B of 3.8x), well above the closing price on Tuesday of HUF 1,405. According to the daily, there could now be an offer for the remainder of the class B unlisted shares. Of course, the bank remains a state-controlled entity and it should be underlined that the privatisation of the bank, originally scheduled for last year, was pulled once it became clear the debt rating of the bank would be threatened. Whilst it’s our belief that the shares of FHB are fundamentally overvalued, an aggressive buyer can’t be ruled out. We expect the speculation to have a positive trading impact on the shares.