The state of Hungary will provide OTP Bank with a loan of more than HUF 400 billion and FHB Bank with a two-installment loan of around HUF 120 billion in order to boost corporate and retail lending, Finance Minister János Veres announced in the presence of the two banks’ heads late on Wednesday.
The loans will carry a market interest rate, Veres said. The loans will be provided in several foreign currencies, and they will carry a spread of 250bp over the respective benchmarks, press reports said.
The state loans will be provided on the back of a €20 billion international financial package granted to Hungary by the IMF, the EU and the World Bank late last year, the minister said. The loan contracts were signed on Wednesday.
OTP has undertaken to use the loan to finance domestic clients, including granting at least HUF 200 billion in corporate loans. FHB will use the state loan to grant retail (home) and SME loans.
The state will receive one seat on OTP Bank’s supervisory board and one on its audit committee to oversee the use of the loan. The state is already represented on FHB’s board.
The two banks have a scattered ownership structure, unlike the bulk of Hungarian banks which are the units of branches of large, mostly West European banks. (MTI-Eco)