FHB expects new agreement with state to clear up matter of illegal state aid

Mortgage lender FHB on Thursday concluded a new agreement with the state on a capital injection that it expects will clear up any doubts the recapitalisation was not in line with European Union rules, the bank said late Friday.

FHB Bank said the new agreement was concluded with the state because of proceedings initiated by the European Commission on January 24, 2011. Under the agreement, the bank paid the state HUF 1.74bn as a further consideration and default interest, it added.

The Commission said on December 16, 2010 that it had doubts the state aid granted FHB Bank during the crisis was not used for the bank’s expansion at the expense of competitors.

FHB benefited from a loan of about HUF 120bn and a capital injection of HUF 30bn from the state in March 2009.

An overview of pending decision and on-going investigations by the Commission published on December 1, 2011 shows the Commission’s decision related to its statement about FHB on December 16, 2010 was replaced. A decision taken by the Commission on January 24, 2011 puts the case "under assessment".

"FHB’s expectation is that by means of the additional consideration and default interest paid on the basis of the new agreement above, the proceedings announced by the European Commission can be terminated as soon as possible in such a way that it will be declared that the consideration paid in return for state aid provided by the Hungarian State in the form of capital injection is in accordance with the relevant regulations of the European Union," FHB said on Friday.