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Hungary’s National Bank Urges Lenders To Support Economic Growth

Tamás Székely 2015.05.10.

Hungary’s central bank (MNB) wants banks to declare how they plan to support economic growth in the coming years, as Erste Bank recently did in an agreement with the EBRD, a central bank official said. Although increased lending is not formally linked to a planned reduction in the bank levy, banks are still expected to boost their corporate lending activity in light of their reduced tax burden, the National Bank of Hungary’s managing director Márton Nagy told public television.

Banks which reduced their lending will benefit not only from a cut in the bank levy but also from a lower tax base, he told news channel M1. The tax base for the bank levy will change from total assets in 2009 to total assets in 2014. Under the government’s agreement with the European Bank for Reconstruction and Development, the bank levy is set to fall from 0.53% of total assets to 0.31% from next year, leaving banks with a combined 60 billion forints.

Meanwhile Hungary’s financial sector has to face a new financial burden of up to 30 billion forints each year as the country tackles the fallout from the collapse of altogether three brokerages in February and March, central bank director Márton Nagy said. Annual payments by the financial sector into deposit insurance fund OBA and investor protection fund BEVA will rise, and the extra amount, which the financial sector would have to pay over a period of maximum ten years, also includes payments into a special fund to compensate clients of bankrupt brokerage Quaestor. This latter may be deductible from the corporate tax, Nagy added.

via photo: public domain