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Varga: Government to set up fund for non-performing mortgages

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Hungaryʼs government plans to set up a special housing fund in which banks can place some of their non-performing mortgages, National Economy Minister Mihály Varga told Reuters in conjunction with the Eastern Europe Investment Summit, Hungarian news agency MTI reported yesterday.

“This would improve banksʼ balance sheets, and would allow smaller provisions and increased lending,” Varga told Reuters in an interview for the summit at his office in Budapest. 

He said 40,000-50,000 mortgages could be placed in the fund, adding that details would be announced after talks with all partners are completed. 

Varga told Reuters the government would probably close a deal to buy a 15% stake in Erste Bankʼs Hungarian unit in the first half of June. 

The government decided to acquire the stake under an agreement reached with the European Bank for Reconstruction and Development (EBRD) and lenders in February 2015.  

Varga told Reuters that Hungary would pay between HUF 30 billion and HUF 40 bln for the stake, but declined to reveal the final figure before the contract is signed. 

Varga said he expected the sale of state-owned Budapest Bank to be finalized by next year, with proceeds already flowing into the 2017 budget. 

“I very much hope we will sell this bank for as much as we paid for it,” Varga told Reuters.  

The state purchased Budapest Bank from GE Capital for $700 million last year. 

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