Press Release No. 09/420

Press Release: European Commission and IMF Welcome Reaffirmed Commitments of the Largest Foreign Banks in Hungary

November 19, 2009

In a meeting in Brussels of the European Bank Coordination Initiative held today the parent banks of the six largest foreign banks active in Hungary reaffirmed their commitments made in May 2009 to support their subsidiaries. These commitments, along with the balance of payments support package, are helping Hungary weather the economic downturn and return to a sustainable growth path.

Representatives from the European Commission and the International Monetary Fund (IMF) met today in Brussels, with the parent banks of six systemically-important Hungarian financial institutions. The six EU-based banks are Bayerische Landesbank, Erste Group Bank, RZB Group, Intesa SanPaolo, KBC Group and Unicredit Group. The meeting was also attended by the Hungarian financial supervisor, home country supervisors and fiscal authorities, the National Bank of Hungary, the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the World Bank Group and the European Central Bank (ECB). The purpose of this meeting was to take stock of the macroeconomic situation and to add specificity to the general commitments made on May 20, 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 banking system’s capital adequacy ratio was 13 percent 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 programme 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 programme reinforce each other in strengthening the Hungarian economy and supporting the recovery.

To this end, taking into account the outcome of the September 24, 2009 Full-Forum Initiative and Hungary’s improved external position, 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 percent of the September 2008 level for the duration of the program. 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.