MNB: 90% of banks commit to increased lending
Roughly 90% of banks in Hungary said they are willing to increase their lending activity, chiefly among SMEs, in response to the Hungarian government reiterating statements that the extraordinary tax on the banking sector would be lowered in favor of banks lending more.
Increased lending activity is the "missing link", National Bank of Hungary (MNB) managing director Márton Nagy said this morning on state-owned all news channel M1. Nagy also noted that the government has already taken steps to reduce the bank levy, referring to the budget bill of 2016, which was recently submitted to Parliament.
The managing director also expressed his hope that banks would fulfill their commitment, adding that the central bank would observe them to keep the plan on course. Hungary’s Prime Minister Viktor Orbán said earlier that the levy on the banking sector would be cut, however, banks are not “legally bound” to increase lending activity. Conversely, Hungary’s National Economy Minister Mihály Varga said earlier that whether the cut for increased lending would require legal regulation was still "up for debate".
Hungary introduced the extraordinary bank levy as a temporary measure for three years in 2010, but it became permanent in 2013 and Varga said earlier that it is likely to be maintained, but at a lower rate.
It was reported yesterday that the Hungarian Banking Association had compiled and presented to the National Bank of Hungary (MNB) a commitment from local banks to boost their lending activity.
The Hungarian government agreed to lower the bank levy under an agreement with the EBRD signed in February. As part of that agreement, both parties said they would acquire stakes in Erste Bank, which pledged to raise its lending activity.
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