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Széchenyi Bank depositors to get HUF 3.7 bln from state compensation fund

History

A total of HUF 3.7 bln will be paid to depositors of the failed Széchenyi Bank from a compensation fund established by the state, National Economy Ministry state secretary Gábor Orbán said at a press briefing on Friday. The compensation will be paid to about 100 depositors, mostly private individuals and SMEs, by mid-January, Orbán said.

Just because the state is paying the compensation does not mean it was responsible for the bank's failure; that responsibility lies with the management, Orbán said. The government decided to pay the compensation to bolster confidence in the system of state-owned credit institutions, he added.

Prime Minister Viktor Orbán announced the establishment of the fund on Thursday. In a statement published later, the National Economy Ministry said the state would pay the compensation on deposits not already covered by the National Deposit Insurance Fund (OBA) in proportion to its 49% stake in the bank. OBA insures deposits up to €100,000 or about HUF 30 mln.

The National Bank of Hungary withdrew the licence of Szechenyi Bank early in December, citing irregularities. The state holds 49% of the bank, which had total assets of just under HUF 52 bln at the end of last year. The majority owner is Istvan Töröcskei, the CEO of Hungary's Government Debt Management Agency (ÁKK). Töröcskei tendered his resignation shortly after the bank went bust.

Gábor Orbán said earlier that chronic capital shortfalls had been the most important irregularity at Széchenyi Commercial Bank. The majority owner made attempts to remedy the situation, but the Ukrainian-Russian conflict as well as other reasons caused these to fail in the summer and the autumn, he explained. The state had no legal means with which to raise capital in the bank, he added.

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