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.
Producing journalism that is worthy of the name is a costly business. For over 30 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.
