Hungary’s bank sector grew stronger once again

The transaction through which the State of Hungary and the European Bank for Reconstruction and Development (EBRD) obtained a stake of 15 percent each in Erste Bank Hungary was concluded on 11 August, as the purchasing price has been transferred.

The objective of the Government continues to be to bolster bank lending and thus boost economic growth.

With this step, another condition stipulated by the Memorandum of Understanding concluded by the EBRD and the State of Hungary on 9 February 2015 has been fulfilled. In the document, the Government of Hungary committed itself – among others – to significantly reducing the bank tax and conducting closer negotiations with the bank sector on regulatory issues concerning financial institutions. As promised, the Government reduced the special bank tax by altogether HUF 80bn in 2016 and 2017, and it has also fulfilled other obligations set out by the MoU.

The contracts on purchasing stakes in the Bank were signed by the Parties on 20 June 2016, and in line with these the State of Hungary and the EBRD have paid EUR 38.9bn for 15-15 percent stakes of the Bank. The price had been determined by external experts, on the basis of market valuations.

Minister of State for Financial Affairs Ágnes Hornung said, it was very important from the aspect of economic growth that Erste Bank has expressed long-term commitment to Hungary. Rapid lending growth has been assisting Hungarian enterprises to more easily obtain resources required for their operation and investments and it thus underpins further economic expansion. Erste Bank’s growing business activity, confirmed by favourable earnings data from the first half of the year, also makes the state’s investment more profitable.

Under the agreement, Erste Bank Hungary continues to be managed by Erste Group, but the State of Hungary can delegate one member to the Board of Directors and another one to the Supervisory Board. At the Board of Directors, Deputy State Secretary Zoltán Marczinkó will represent the Ministry for National Economy (NGM). The politician with a degree in economics has been active in the field of finance for 23 years: prior to his public administration job he had worked at various commercial banks. At the Supervisory Board, the NGM is going to be represented by NGM Department Head Alíz Zsolnai. She has been working as government officer responsible for bank regulation issues since 2001 and has a PhD degree in economics.

Source: Ministry for National Economy