Commission approves prolongation of Hungarian liquidity scheme for banks

Budapest, March 22 (MTI) - The European Commission has authorised, under EU state aid rules, the prolongation of a Hungarian aid scheme for banks until June 30 this year.

The Commission first approved the liquidity scheme on January 14, 2010 and prolonged it six times including the announcement on Friday.

The scheme covers liquidity measures in favour of banks operating in Hungary. All conditions of the original scheme, as last prolonged on July 30, 2012, remain unchanged, the Commission explained in a release on Friday, and said that the prolonged measures to be in line with its guidance on state aid to banks during the crisis.

In the context of an IMF-EU-World Bank financing package signed in November 2008, Hungary enacted a liquidity scheme in March 2009, aimed at providing loans to Hungarian financial institutions to enable them to maintain lending to the real economy in spite of the severe liquidity shortage.

The Hungarian government lent about 2.3 - 2.4 billion euros to three banks under the scheme in 2009, using part of the money drawn but not used from its late-2008 package with the international lenders.

OTP Bank was granted 1.4 billion euros, which it paid back ahead of schedule by the first quarter of 2010. FHB Bank received 400 million euros, which expired in November 2012 and fully state-owned development bank MFB received a multi-currency loan worth 155 billion forints, part of it to finance its unit Eximbank.

The only capitalisation support the Hungarian state has given under another, so-called capitalisation programme, was a 30 billion forint capital injection, parallel with the loan of 400 million euros, to FHB Bank in March 2009. FHB paid back the full amount of the capital support to the state in February 2010.