In accordance with the MoU concluded by the Government, the European Bank for Reconstruction and Development (EBRD) and Erste Bank AG, the Government has decided to purchase a 15 percent stake in Erste Bank Hungary Ltd, Minister for National Economy Mihály Varga announced earlier today. Key terms and conditions have already been laid down, and as soon as there is consensus on the remainder of details, a contract is expected to be signed up to the middle of June, he added.
With the transaction, the most important objective of the Hungarian Government is to prevent the slackening of economic growth momentum, boost lending and help the Hungarian banking system contribute to expansion through a stable background, the Minister said. Independent analyses have reiterated that – based on its business plans – Erste has been expanding in each field, especially in the retail and SME sectors. As Mihály Varga pointed out, the Government has found a partner in Erste Bank that had already declared its intension to significantly increase lending and have long-term plans in Hungary. This deal will further improve trust between one of the largest Hungarian banks and the Government, he added.
The Minister pointed out that on 9 February 2015 the Government signed two MoUs.
In the first one, the Cabinet committed itself to reducing the burdens of the bank sector, and the EBRD has expressed commitment to increase lending in order to facilitate Hungary’s economic growth. In the other one, concluded with Erste Group Bank AG, the bank offered to the Government of Hungary and the EBRD the option of buying stakes of 15 percent each in Erste Bank Hungary Ltd.
The transaction was approved by the EBRD Board of Governors on 4 May 2016. The State of Hungary and the EBRD will purchase the 15 percent stakes for the same amounts.
The Minister said that – contrary to prior plans – the State of Hungary and the EBRD do not intend to raise capital. The funds required for the transaction have been earmarked in the budget.
The exact purchasing price is handled as confidential information until the contract is signed, but we can certainly state that we have reached a price that is favourable for both Hungarian taxpayers and the shareholders of Erste Bank Hungary, he stressed.
(Ministry for National Economy)
