Budapest Banking Association ltd
BB Ltd. was basically established in 1879 by the merger of two previous organisations, of which the Pest-Buda Crafts Bank was the legal predecessor of the later company. It is true that it was founded in 1869 because the small businessmen who (also) stood behind the later institution were not satisfied with the operation of the other predecessor, the General Savings and Loan Association of Industrialists (from 1876 Lipótvárosi Bank), founded earlier for the same purpose, and objected to its opaque financial operation.
The General Savings and Loan Association of Industrialists
The General Savings and Loan Association of Industrialists was founded in 1868 and was based in the Mocsonyi House, nowadays located in Vörösmarty Square. The institution was founded with a capital of 2 000 000 forints and, according to Jakab Pólya (1895:81-83), the first years brought exceptionally high profits, the reasons for which are not detailed in the balance sheets, but which were partly due to the Losonczi Postal Factory, which was owned by the bank at the time. It is therefore described as a true miracle bank, since it was this institution that was able to absorb several small Budapest institutions that had gone bankrupt during the 1873 crisis. In 1873, it acquired the Pest-Lipótvárosi Takarékpénztár, which it re-established in the same year as a subsidiary under the name of General Pest-Lipótvárosi Takarékpénztár. In 1874, it also absorbed the bankrupt Pesti Settlement Bank.
The year 1875 shook the trust between the bank's shareholders and the former director (a certain Keller), as the latter embezzled about half a million forints from the bank's assets, for which he was prosecuted and the institution closed with a loss of about 167 thousand forints. The new management of the institution was then set up, with the following members:
President: Dr. Miksa Falk
Directors: József Árvay, Sámuel Deutsch, Mór G. Deutsch, Max Grünbaum, Imre Halász, Ármin Schwarz, Vilmos Tóth. Assistant Director. Supervisory Board: Hugó Mandello, Jakab Pirnitzer, Jakab Weltner, Adolf Rosenthal.
By the end of the year, the new management had merged the savings bank and the credit union that had been a phantom company, and the new company, Lipótvárosi Bank Rt. (headquartered in the Diánafürdő building on Ferencz-József Square) was born. The bank's share capital was reduced to HUF 750 000, and Ágoston Imendörffer was appointed as the new CEO. The report of the Board of Directors of that year details a very authentic method of share disposal, according to which: 'the 5,000 own shares held by the institution were burnt under the supervision of the royal notary and the capital disposal decided upon was now actually carried out.' As a result of these changes, the bank closed 1877 with a surplus of FRF 16 768, which in 1878 was worth FRF 8 451.
The Pest-Buda Crafts Bank Rt.
As we have already mentioned, the Pest-Buda Crafts Bank Ltd. was founded in 1869 with 500,000 forints with the aim of helping the small entrepreneurs of Budapest, mainly craftsmen and artisans. The company was based at 9 Erzsébet tér. According to the first general meeting document available to us - from 1871 - the bank's president was Henrik Ellenberger, vice-president Zsigmond Falk, directors Lajos Adler, Gusztáv Neustadt, Ármin Schwarz, members of the Supervisory Board were József Bárdos, Jakab Boschnan, Simon Fahnrich, Dr. Mór Kövesdi. The profit of the company at that time was 18 177 HUF, which was 23 582 HUF in 1876, 19 512 HUF in 1877 and 27 401 HUF in 1878. The extent to which the bank was a grass-roots institution is shown by the fact that, according to the 1876 general meeting, it had 142 shareholders, who attended the meeting. This was a particularly high number at the time.
The Budapest Banking Association Rt.
The Budapest Banking Association Ltd. was thus formed from the merger of these two institutions, the Lipótvárosi Bank Rt. and the Pest-Budai Kézművesbank Rt. in 1879 with a share capital of HUF 500,000. The company had its headquarters at 18 Erzsébet tér and its management was composed as follows:
President: Henrik Ellenberger
Vice-President: Knight Zsigmond Falk
Board of Directors: Lajos Adler, F. Árvay, Sámuel Deutsch, M. Grünbaum, G. Neustadt, Ármin Schwarz.
Supervisory Board: József Bárdos, József Éder, Mór Kövesdy, Simon Mahler.
CEO: Schwarz Ármin.
The company closed its first year with a profit of HUF 50 388. In 1881 the share capital was increased to 750 000 forints, while the profit was 57 640 forints, and in 1882 the profit was 89 538 forints after the share capital was increased again, this time to 1 000 000 forints. The bank's activity continued from then on, if we look only at the profits, they were 100,513 forints in 1883, 134,818 in 1884, 88,683 in 1885, 98,550 in 1886, 132,232 in 1887, 167,578 in 1888, 178,405 in 1889, 208,261 in 1890, 286,507 in 1891, 344,251 in 1893, 236,127 in 1894 and 622,965 in 1895.
In 1895, the bank increased its share capital to HUF 6 000 000 and, according to the Board of Directors' report, it already had interests beyond national borders, including shares in the Berlin-based Montan Industrie Actien Gesellschaft, Vereinigte Eisenbahnbau- und Betriebs-Gesellschaft, the Timisoara-Nagyszentmiklós railway, the Hungarian-Galician Taghta Industrie Aktientársaság, the Malomipar Aktientársaság, the Győr-Veszprém-Dombovár railway, the Nógrádvármegye local interest railway companies and founded the Bankegyesellschaft váltóüzlet Rt.
In 1896 the bank closed with a profit of 667 398 forints, while the capital was increased to 10 000 000 forints. In the same year, they continued to expand, gaining influence in the following businesses: Rheinisch-Westphälische Kalkwerks Act.-Ges., Arad waterworks, Esztergom rural coal mining company, Fertővidéki h.é. railway, the Szeged-Karlovai h.é. railway, the Nagykikinda-Nagybecskerek local interest railways. In 1897, profits amounted to 558 877 HUF, while the bank continued to expand: Breslauer Discontobank, South Hungarian Coal Mining Company. In 1898 profits amounted to 433 404 HUF, in 1899 to 450 774 HUF.
In 1900, the bank also switched to the new currency, the Koruna. According to the company's balance sheet, however, the share capital in that year amounted to 10 000 000 forints, of which 12 000 000 crowns were actually paid in. The bank's profits for 1900 amounted to 825 463 kronor, although the board of directors' report sounded alarm bells because the shares in their possession were not yielding any income. As a consequence, the balance sheet for 1901 was published as a company in liquidation, when profits fell to 209 408 crowns. The reasons for the liquidation are vaguely stated in the directors' report. The local interest railways in which they had an interest had made a satisfactory profit, as had the Lombard loans they had extended. However, some loss-making transactions caused such a stir that shareholders turned away from the company in droves and everyone tried to get rid of their shares. This can be seen in the company's stock market quotation, which was K174.5 per share at the end of 1900, K115 in 1901 and K82.5 in 1902, when the 1901 report was made. The consequence, according to the Board of Directors' report, was that the continuation of day-to-day operations became doubtful, as their liquidity was rapidly diminishing, while no one was willing to lend them money. So, in April 1902, the management ordered liquidation in the interests of the shareholders. By international standards, however, it is known that in 1901 there was a period of panic on the New York Stock Exchange, which made many small investors there impossible. At that time BB Rt had a number of outstanding debts on the international market and these were primarily blamed for the situation. It is perhaps not an exaggeration to say that the panic in the international financial markets was a victim of the crisis in the banking sector.
The liquidation also provides some information about the bank's further foundations: 'The institution was formed in 1880 from the merger of the Pestbuda Crafts Bank and the Lipótváros Bank Joint Stock Company. In 1894, with the help of the Erlanger firm of Frankfurt and the Landau firm of Berlin, the Institute was reorganised, the share capital was increased and the instalment and lottery note business was transferred to the Bankverein note business joint-stock company set up by the Institute. In 1902, in order to write off its losses and other dubious claims on the industrial companies it had set up, the Institute carried out a share buy-back, which resulted in a profit of K 650 000, but as confidence in the Institute did not return and the market made it impossible to raise new capital and deposits were withdrawn, it was declared liquidated, with the Hungarian Pseudo Credit Bank taking over the task of carrying it out. Foundations: Hungarian Building and Plastics Factory, Farina Pasta and Chemical Industry Ltd, Hungarian-Galician Naphtha Industry Ltd, Mill Industry Ltd, Magnesite Industry Ltd, South Hungarian Coal Mine Ltd, Arad Waterworks, Hungarian Straw Material Factory Ltd, Cséry Garbage Transport and Processing Factory Ltd, Eisenbahn-Bank in Frankfurt, Ált.
However, the liquidation process was extremely slow, as shown by the fact that even in 1918, for example, the annual general meeting was still being held with many shareholders present, and nothing could be decided on the liquidation.
Sources:
HU_BFL_VII_2_e_01665_1915 Pest-Budai Kézműves Bank Rt., 1871-1924 (File)
https://adt.arcanum.com/hu/collection/MagyarCompass/
Jakab Pólya:The History of the Banks of Budapest in the Years 1867-1894 (Budapest, 1895)
Founded in 1879
Date of cessation: 1902
Founders are not set
Securities issued:
| Budapest Banking Association ltd |
Decisive leaders:
1879-1884 | Henrik Ellenberger |
1885-1894 | Knight Zsigmond Falk |
1895-1902 | Kálmán Radó from Szentmárton |
Main activity not set
Main products are not set
Seats are not configured
Locations are not set
Main milestones are not set
Author: by Dr. Márton Pelles
Founded in 1879
Founders are not set
Decisive leaders:
1879-1884 | Henrik Ellenberger |
1885-1894 | Knight Zsigmond Falk |
1895-1902 | Kálmán Radó from Szentmárton |
Main activity not set
Main products are not set
Seats are not configured
Locations are not set
Main milestones are not set
Author: by Dr. Márton Pelles
Budapest Banking Association ltd
BB Ltd. was basically established in 1879 by the merger of two previous organisations, of which the Pest-Buda Crafts Bank was the legal predecessor of the later company. It is true that it was founded in 1869 because the small businessmen who (also) stood behind the later institution were not satisfied with the operation of the other predecessor, the General Savings and Loan Association of Industrialists (from 1876 Lipótvárosi Bank), founded earlier for the same purpose, and objected to its opaque financial operation.
The General Savings and Loan Association of Industrialists
The General Savings and Loan Association of Industrialists was founded in 1868 and was based in the Mocsonyi House, nowadays located in Vörösmarty Square. The institution was founded with a capital of 2 000 000 forints and, according to Jakab Pólya (1895:81-83), the first years brought exceptionally high profits, the reasons for which are not detailed in the balance sheets, but which were partly due to the Losonczi Postal Factory, which was owned by the bank at the time. It is therefore described as a true miracle bank, since it was this institution that was able to absorb several small Budapest institutions that had gone bankrupt during the 1873 crisis. In 1873, it acquired the Pest-Lipótvárosi Takarékpénztár, which it re-established in the same year as a subsidiary under the name of General Pest-Lipótvárosi Takarékpénztár. In 1874, it also absorbed the bankrupt Pesti Settlement Bank.
The year 1875 shook the trust between the bank's shareholders and the former director (a certain Keller), as the latter embezzled about half a million forints from the bank's assets, for which he was prosecuted and the institution closed with a loss of about 167 thousand forints. The new management of the institution was then set up, with the following members:
President: Dr. Miksa Falk
Directors: József Árvay, Sámuel Deutsch, Mór G. Deutsch, Max Grünbaum, Imre Halász, Ármin Schwarz, Vilmos Tóth. Assistant Director. Supervisory Board: Hugó Mandello, Jakab Pirnitzer, Jakab Weltner, Adolf Rosenthal.
By the end of the year, the new management had merged the savings bank and the credit union that had been a phantom company, and the new company, Lipótvárosi Bank Rt. (headquartered in the Diánafürdő building on Ferencz-József Square) was born. The bank's share capital was reduced to HUF 750 000, and Ágoston Imendörffer was appointed as the new CEO. The report of the Board of Directors of that year details a very authentic method of share disposal, according to which: 'the 5,000 own shares held by the institution were burnt under the supervision of the royal notary and the capital disposal decided upon was now actually carried out.' As a result of these changes, the bank closed 1877 with a surplus of FRF 16 768, which in 1878 was worth FRF 8 451.
The Pest-Buda Crafts Bank Rt.
As we have already mentioned, the Pest-Buda Crafts Bank Ltd. was founded in 1869 with 500,000 forints with the aim of helping the small entrepreneurs of Budapest, mainly craftsmen and artisans. The company was based at 9 Erzsébet tér. According to the first general meeting document available to us - from 1871 - the bank's president was Henrik Ellenberger, vice-president Zsigmond Falk, directors Lajos Adler, Gusztáv Neustadt, Ármin Schwarz, members of the Supervisory Board were József Bárdos, Jakab Boschnan, Simon Fahnrich, Dr. Mór Kövesdi. The profit of the company at that time was 18 177 HUF, which was 23 582 HUF in 1876, 19 512 HUF in 1877 and 27 401 HUF in 1878. The extent to which the bank was a grass-roots institution is shown by the fact that, according to the 1876 general meeting, it had 142 shareholders, who attended the meeting. This was a particularly high number at the time.
The Budapest Banking Association Rt.
The Budapest Banking Association Ltd. was thus formed from the merger of these two institutions, the Lipótvárosi Bank Rt. and the Pest-Budai Kézművesbank Rt. in 1879 with a share capital of HUF 500,000. The company had its headquarters at 18 Erzsébet tér and its management was composed as follows:
President: Henrik Ellenberger
Vice-President: Knight Zsigmond Falk
Board of Directors: Lajos Adler, F. Árvay, Sámuel Deutsch, M. Grünbaum, G. Neustadt, Ármin Schwarz.
Supervisory Board: József Bárdos, József Éder, Mór Kövesdy, Simon Mahler.
CEO: Schwarz Ármin.
The company closed its first year with a profit of HUF 50 388. In 1881 the share capital was increased to 750 000 forints, while the profit was 57 640 forints, and in 1882 the profit was 89 538 forints after the share capital was increased again, this time to 1 000 000 forints. The bank's activity continued from then on, if we look only at the profits, they were 100,513 forints in 1883, 134,818 in 1884, 88,683 in 1885, 98,550 in 1886, 132,232 in 1887, 167,578 in 1888, 178,405 in 1889, 208,261 in 1890, 286,507 in 1891, 344,251 in 1893, 236,127 in 1894 and 622,965 in 1895.
In 1895, the bank increased its share capital to HUF 6 000 000 and, according to the Board of Directors' report, it already had interests beyond national borders, including shares in the Berlin-based Montan Industrie Actien Gesellschaft, Vereinigte Eisenbahnbau- und Betriebs-Gesellschaft, the Timisoara-Nagyszentmiklós railway, the Hungarian-Galician Taghta Industrie Aktientársaság, the Malomipar Aktientársaság, the Győr-Veszprém-Dombovár railway, the Nógrádvármegye local interest railway companies and founded the Bankegyesellschaft váltóüzlet Rt.
In 1896 the bank closed with a profit of 667 398 forints, while the capital was increased to 10 000 000 forints. In the same year, they continued to expand, gaining influence in the following businesses: Rheinisch-Westphälische Kalkwerks Act.-Ges., Arad waterworks, Esztergom rural coal mining company, Fertővidéki h.é. railway, the Szeged-Karlovai h.é. railway, the Nagykikinda-Nagybecskerek local interest railways. In 1897, profits amounted to 558 877 HUF, while the bank continued to expand: Breslauer Discontobank, South Hungarian Coal Mining Company. In 1898 profits amounted to 433 404 HUF, in 1899 to 450 774 HUF.
In 1900, the bank also switched to the new currency, the Koruna. According to the company's balance sheet, however, the share capital in that year amounted to 10 000 000 forints, of which 12 000 000 crowns were actually paid in. The bank's profits for 1900 amounted to 825 463 kronor, although the board of directors' report sounded alarm bells because the shares in their possession were not yielding any income. As a consequence, the balance sheet for 1901 was published as a company in liquidation, when profits fell to 209 408 crowns. The reasons for the liquidation are vaguely stated in the directors' report. The local interest railways in which they had an interest had made a satisfactory profit, as had the Lombard loans they had extended. However, some loss-making transactions caused such a stir that shareholders turned away from the company in droves and everyone tried to get rid of their shares. This can be seen in the company's stock market quotation, which was K174.5 per share at the end of 1900, K115 in 1901 and K82.5 in 1902, when the 1901 report was made. The consequence, according to the Board of Directors' report, was that the continuation of day-to-day operations became doubtful, as their liquidity was rapidly diminishing, while no one was willing to lend them money. So, in April 1902, the management ordered liquidation in the interests of the shareholders. By international standards, however, it is known that in 1901 there was a period of panic on the New York Stock Exchange, which made many small investors there impossible. At that time BB Rt had a number of outstanding debts on the international market and these were primarily blamed for the situation. It is perhaps not an exaggeration to say that the panic in the international financial markets was a victim of the crisis in the banking sector.
The liquidation also provides some information about the bank's further foundations: 'The institution was formed in 1880 from the merger of the Pestbuda Crafts Bank and the Lipótváros Bank Joint Stock Company. In 1894, with the help of the Erlanger firm of Frankfurt and the Landau firm of Berlin, the Institute was reorganised, the share capital was increased and the instalment and lottery note business was transferred to the Bankverein note business joint-stock company set up by the Institute. In 1902, in order to write off its losses and other dubious claims on the industrial companies it had set up, the Institute carried out a share buy-back, which resulted in a profit of K 650 000, but as confidence in the Institute did not return and the market made it impossible to raise new capital and deposits were withdrawn, it was declared liquidated, with the Hungarian Pseudo Credit Bank taking over the task of carrying it out. Foundations: Hungarian Building and Plastics Factory, Farina Pasta and Chemical Industry Ltd, Hungarian-Galician Naphtha Industry Ltd, Mill Industry Ltd, Magnesite Industry Ltd, South Hungarian Coal Mine Ltd, Arad Waterworks, Hungarian Straw Material Factory Ltd, Cséry Garbage Transport and Processing Factory Ltd, Eisenbahn-Bank in Frankfurt, Ált.
However, the liquidation process was extremely slow, as shown by the fact that even in 1918, for example, the annual general meeting was still being held with many shareholders present, and nothing could be decided on the liquidation.
Sources:
HU_BFL_VII_2_e_01665_1915 Pest-Budai Kézműves Bank Rt., 1871-1924 (File)
https://adt.arcanum.com/hu/collection/MagyarCompass/
Jakab Pólya:The History of the Banks of Budapest in the Years 1867-1894 (Budapest, 1895)