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Gov't submits amendment expanding MFB scope of lending

The National Development Minister submitted amendments to Parliament on Friday that would expand the financing instruments of the state-owned Hungarian Development Bank (MFB).

The amendment was submitted to ensure MFB's can continue its usual activities in spite of the narrowing room for fiscal manoeuvre and spending to alleviate the effects of catastrophes. It expands MFB's scope of lending beyond investment projects to include working capital loans, even to its own subsidiaries.

The amendment would raise the limit of MFB's net exposure via banks or banking groups from 150% to 200% of its warranty capital, and would set a 35% limit on net exposure per client or client group. The amendments would also reinstate a ban on taking dividend from the bank's earnings that was lifted in June 2004. MFB paid the state a HUF 12 billion dividend in 2010, using all of its 2009 profit and dipping into profit reserves.

In the interest of maintaining transparency, the changes to the law would exclude MFB's clients and their transactions from rules on bank secrecy. (MTI-ECONEWS)