European Banking Group Coordination Meeting for Hungary, Concluding Statement by Participating Parent Banks
May 20, 2009Held in Brussels, Belgium, on May 20, 2009
Concluding Statement by Participating Parent Banks
We, the parent institutions of the six largest foreign-owned banks incorporated in Hungary, met in Brussels, Belgium, on May 20, 2009, at the joint invitation of the International Monetary Fund (IMF) and the European Commission (EC). The meeting was also attended by the international financial organizations, which launched on February 26, 2009, the “Joint IFI Action Plan In Support of Banking Systems and Lending to the Real Economy in Central and Eastern Europe” (EBRD, European Investment Bank Group, and World Bank Group), the home country banking supervisors and other relevant public institutions (from Austria, Belgium and Italy), the Hungarian Financial Supervisory Authority (HFSA), the Magyar Nemzeti Bank (MNB) and the European Central Bank.
We agreed on the following considerations and conclusions:
1. We accept with satisfaction the shared analysis of the HFSA, the MNB, the IMF Hungary team and the EC that all banks in Hungary are currently in good financial condition, and that the parent banks of the foreign-owned Hungarian banks have so far behaved responsibly, providing their Hungarian affiliates with capital, funding, managerial and other types of expertise as the need arose.
2. The IMF, the EC and the World Bank have agreed on October 28, 2008, on an international financial support package of 20 billion Euro for Hungary that was approved by EU Council of Ministers on November 4, 2008 and the Executive Board of the IMF on November 6, 2008. We welcome this important development that is ensuring the consolidation of macro-economic and financial stability in Hungary.
3. We are aware that the success of the macroeconomic program, as well as medium term balance of payments sustainability in Hungary also depends on the continued involvement of all banks operating in or with Hungary, including foreign-owned banks.
4. We entered the Hungarian market as strategic investors and key contributors to its transition toward an open, market-based economy, based on our assessment of and continued confidence in the country’s long-term growth prospects. We have made substantial investments in Hungary over a number of years, and we remain committed to doing business in the country.
5. We are aware that it is in our collective interest and in the interest of Hungary for all of us to reconfirm, in a coordinated way, our commitment to maintain our overall exposure to Hungary. Mechanisms to specify this effort will be developed in due course, taking into account availability of adequate lending opportunities or alternative investment instruments in Hungary within boundaries defined by sound risk, capital and liquidity management practices.
6. We also acknowledge that our subsidiaries in Hungary have been and will continue to adjust to the current challenging economic environment. A need for additional capital cannot be excluded, and will be met as necessary.
7. We are aware that the MNB, like central banks in many other countries, conducts regular credit risk stress tests covering all major players to estimate the potential losses that the Hungarian banks might face under diverse scenarios during the period of the international financial support package. We have taken note of the MNB's effort to extend its existing stress testing framework, taking into account the multi-country experience of the IMF. We acknowledge the usefulness of this exercise to provide confidence in the soundness of the Hungarian banking system, and agree to support our Hungarian subsidiaries as needed in order to: (i) confirm that these affiliates’ current good financial standing will be preserved throughout the period of market turbulences and economic slowdown; (ii) demonstrate our long-term commitment to the development of the Hungarian economy; and (iii) signal our willingness to contribute to the efforts of the international community to respond in a comprehensive and well-coordinated manner to the crisis. We are prepared to discuss the results of stress tests in a group, as well as bilaterally with Hungarian authorities, and to agree on any necessary further steps based on these discussions.
8. We are therefore prepared to confirm these commitments, within the framework of the international financial support package, on a bilateral basis with the Hungarian authorities, and under report to our home country supervisory authorities, according to European and the respective national regulatory frameworks.
(Hungarian subsidiary: MKB Bank Zrt)
The statements made above by Bayerische Landesbank are dependent on the terms and conditions of the approval of Bayerische Landesbank's restructuring plan by the European Commission.
Erste Group Bank AG
(Hungarian subsidiary: Erste Bank Hungary Nyrt)
(Hungarian subsidiary: CIB Bank Zrt)
(Hungarian subsidiary: K & H Bank Zrt)
Raiffeisen International Bank Holding
(Hungarian subsidiary: Raiffeisen Bank Zrt)
UniCredit Bank Austria AG
(Hungarian subsidiary: UniCredit Bank Hungary Zrt)