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Local councils to receive government support

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Local councils struck by the Buda-Cash scandal are expected to receive approximately HUF 245 mln in government support under an agreement reached today, Bertalan Havasi, spokesperson for the Prime Minister's Office, told Hungarian news agency MTI.

The agreement was reached at a meeting with Prime Minister Viktor Orbán and the heads of the 67 local councils affected by the scandal, which involves about HUF 100 bln, Bertalan Havasi told the news agency.

According to the spokesperson, the Hungarian government seeks consultations with the Hungarian Banking Association and the MNB on how to improve oversight.

The National Bank of Hungary (MNB) on Tuesday said it had withdrawn Buda-Cash’s license and reported suspected criminal activity to the police. The MNB also put a limit on withdrawals at members of the DRB Bank group, which have ownership ties with Buda-Cash. The participants at the meeting considered how the central bank, in its role as market watchdog, could better prevent similar cases of fraud.

The Hungarian central bank revoked the operating licenses of the DRB group's members on Monday, paving the way for the depositors' compensation. Last week, the central bank, also the financial market watchdog, put a limit on withdrawals from DRB members after suspending the activities of Buda-Cash, which had close ties with DRB. The initiation of a criminal procedure followed.

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