The parent banks of the six largest foreign banks active in Hungary reaffirmed their commitments made in May 2009 to support their subsidiaries, in a meeting of the European Bank Coordination initiative in Brussels on Thursday, November 19, the European Commission (EC) said in the statement late on Thursday.
The six parent banks are expected to submit specific bilateral commitment letters in the coming weeks. The commitments include maintaining an appropriate capital adequacy ratio and exposure of at least 95% of the September 2008 level for the duration of the IMF-EU-World Bank program, the EC statement said.
These commitments, along with the balance of payments support package, are helping Hungary weather the economic downturn and return to a sustainable growth path, the statement added.
The six EU-based banks involved - Bayerische Landesbank, Erste Group Bank, RZB Group, Intesa SanPaolo, KBC Group and Unicredit Group - met the representatives from the European Commission and the International Monetary Fund on Thursday.
The meeting was also attended by the Hungarian financial supervisor PSzÁF, home country supervisors and fiscal authorities, the National Bank of Hungary, the European Bank for Reconstruction and Development, the European Investment Bank, the World Bank Group and the European Central Bank.
The purpose of this meeting was to take stock of the macroeconomic situation and to add specificity to the general commitments made on 20 May 2009, also in Brussels.
The participants expressed satisfaction over the positive role that the bank coordination group has played in averting a deeper crisis in Hungary in the past year along side international financial assistance and the government’s stabilization and reform policies. Parent banks have behaved as responsible owners, increasing their exposures over the past year and maintaining adequate capital in their subsidiaries, the EC statement on the meeting said. The banking system’s capital adequacy ratio was 13% in September 2009.
Participants also welcomed the positive conclusion, earlier this week, by the IMF and the European Commission of their respective reviews of the economic program with Hungary.
Looking ahead, the economic outlook and market access are improving though ensuring that the economy is supported by an adequate supply of credit remains a key priority. Participants underlined that continued engagement of cross-border banks in Hungary and the government's determined implementation of its economic program reinforce each other in strengthening the Hungarian economy and supporting the recovery.
Along with the international financial support package, they will help Hungary's banking system weather the economic downturn, support investor confidence and promote sustainable growth.
In a separate statement issued on the IMF website on Thursday, the six banks vowed continued commitment to their operations in Hungary, including maintaining overall exposure and providing additional capital if needed. They also said that their Hungarian subsidiaries will parttake and cooperate with the National Bank of Hungary in its stress tests which the NBH plans to expand taking into account the multi-country experience of the IMF. (MTI-Econews)