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Government of Hungary and EBRD join forces
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Vienna (pta026/09.02.2015/16:30) - Government of Hungary and EBRD join forces to strengthen the Hungarian financial sector and bolster economic growth
Erste Group has invited the Government of Hungary and the EBRD to invest in its local operation
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The Government of Hungary and the European Bank for Reconstruction and Development (EBRD) today sealed an agreement aimed at strengthening the country's financial sector, improving its level of
efficiency and profitability and boosting the flow of bank credits to Hungary's private corporations and citizens.
The signing of a Memorandum of Understanding (MoU) in Budapest by EBRD President Sir Suma Chakrabarti and the Hungarian Prime Minister Viktor Orbán is a recognition by the Hungarian Government that with steps taken to address the foreign currency loan issue and the economy showing signs of a sustained recovery, the time has come to gradually reduce the tax burden on the banking sector in order to provide a stable environment and to improve the business climate in the sector for it to support more lending and thus economic growth.
Based on this MoU Erste Group has invited the Government of Hungary and the EBRD to invest in its local operation.
Under the MoU the Government of Hungary pledges to "promote a stable and predictable framework to support macroeconomic stability." The EBRD welcomes this commitment by the Hungarian authorities. It is a strong basis from which to increase the EBRD's engagement in the Hungarian financial sector.
The Hungarian Government also expresses its commitment to the banking sector in the document and underlines that it "does not intend to take direct or indirect majority ownership stakes in systemically important local banks [ ... ] and is committed to transferring all direct and indirect majority equity stakes it currently holds in local banks to the private sector within the next three years."
The MoU also provides for concrete measures such as the substantial reduction of the banking tax for the period 2016-2019 and addressing the persistent challenge of non-performing loans in ways which are in line with international best practice.
Hungary also commits to "refrain from implementing new laws or measures that may have a negative impact on the profitability of the banking sector" and to ensure "fair competition between, and equal treatment of, all financial institutions active on the market" in the country.
EBRD President Sir Suma Chakrabarti welcomed the Memorandum of Understanding as a "good start to open a new chapter for the banking sector". He said: "The document provides for commitments and measures to be implemented by the Government which will allow banks to operate in a stable and predictable framework under which they can resume their crucial role as financiers of the real economy. This represents significant progress towards rebuilding trust and confidence in the financial sector and the EBRD will strongly support its implementation through our activities and careful monitoring."
The signing of a Memorandum of Understanding (MoU) in Budapest by EBRD President Sir Suma Chakrabarti and the Hungarian Prime Minister Viktor Orbán is a recognition by the Hungarian Government that with steps taken to address the foreign currency loan issue and the economy showing signs of a sustained recovery, the time has come to gradually reduce the tax burden on the banking sector in order to provide a stable environment and to improve the business climate in the sector for it to support more lending and thus economic growth.
Based on this MoU Erste Group has invited the Government of Hungary and the EBRD to invest in its local operation.
Under the MoU the Government of Hungary pledges to "promote a stable and predictable framework to support macroeconomic stability." The EBRD welcomes this commitment by the Hungarian authorities. It is a strong basis from which to increase the EBRD's engagement in the Hungarian financial sector.
The Hungarian Government also expresses its commitment to the banking sector in the document and underlines that it "does not intend to take direct or indirect majority ownership stakes in systemically important local banks [ ... ] and is committed to transferring all direct and indirect majority equity stakes it currently holds in local banks to the private sector within the next three years."
The MoU also provides for concrete measures such as the substantial reduction of the banking tax for the period 2016-2019 and addressing the persistent challenge of non-performing loans in ways which are in line with international best practice.
Hungary also commits to "refrain from implementing new laws or measures that may have a negative impact on the profitability of the banking sector" and to ensure "fair competition between, and equal treatment of, all financial institutions active on the market" in the country.
EBRD President Sir Suma Chakrabarti welcomed the Memorandum of Understanding as a "good start to open a new chapter for the banking sector". He said: "The document provides for commitments and measures to be implemented by the Government which will allow banks to operate in a stable and predictable framework under which they can resume their crucial role as financiers of the real economy. This represents significant progress towards rebuilding trust and confidence in the financial sector and the EBRD will strongly support its implementation through our activities and careful monitoring."
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