MNB outlines proposal for asset management agency

Deals

The National Bank of Hungary outlined a proposal for the establishment of an agency to manage distressed assets in a report published today.

Building on a decision to set up an asset management agency in the spring of 2014, the MNB said it had set up Magyar Reorganizációs és Követeléskezelő Zrt. (Hungarian Reorganisation and Receivables Management Company), known by its Hungarian acronym MARK, "not for the purpose of rescuing the banks but rather to purchase the commercial real estate problem loans and the related commercial properties – already included in the banks' balance sheets, and to thus facilitate portfolio cleaning in a way that creates a market for these assets which is economically accessible for international investors too", according to the proposal outlined in the biannual Financial Stability Report.

MARK plans to purchase project loans related to commercial properties, including plots, included on banks' balance sheets during foreclosure. According to the plans, the loans must be overdue for longer than 90 days or already restructured. The properties must have been on the balance sheet since a certain date to be defined later.

Banks may offer the assets for purchase to MARK over the limit of HUF 500 mln in the case of receivables or HUF 200 mln in the case of properties. The purchase prices will be subject to agreement between the two parties, the MNB said, adding that it may be below book value. The related details are being worked out and no consultations with banks have taken place, the central bank said.

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