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Hungary strengthens Allianz ties, says no div

  Hungarian mortgage bank FHB said on Thursday that it had signed a letter of intent on strategic cooperation with shareholder Allianz group and that it would not pay a dividend for 2008.

The bank said in a statement it had signed the letter with two Hungarian units of Germany’s Allianz, Allianz Bank and stakeholder Allianz Hungária, which at the end of 2008 held 9.82% stake in FHB.

Under the deal, FHB will provide Allianz Bank with refinancing and interbank credit lines which the latter will use to extend euro denominated mortgage loans to retail clients. FHB will also sell insurer Allianz Hungária’s products in its branch network.

“As part of the strategic cooperation, Allianz Hungária Biztosító Rt has declared that it wants to maintain its significant ownership position in FHB in the medium term,” FHB said in the statement. FHB is one of the few private banks in Hungary with no foreign parent to provide it with financing aid in the global credit crunch.

The Hungarian members of Allianz group have undertaken to lengthen the average maturity of the FHB mortgage notes and bonds, which they hold and they also plan to increase the volume of these securities in their investment portfolio, FHB said.

FHB said in a separate statement to the Budapest Stock Exchange that it did not plan to pay a dividend on its earnings this year. It did not pay a dividend in 2007.

It also said shareholders would vote at a meeting on meeting on April 28 on a HUF 30 billion ($138.2 million) capital increase by the state, decided last month, to help the bank compete better with foreign rivals.

The capital hike would boost the state’s ownership in FHB to 43.57% from 4.11% but voting rights would not change, FHB said in the statement.

The government has granted loans to FHB and also to OTP, the country’s biggest bank, which does not have a foreign parent bank either. It has also said it plans no dividend. (Reuters)