After an in-depth investigation, the Commission concluded that the measures were in line with its guidance on state support for banks during the crisis because the revised restructuring plan will restore the bank's viability while ensuring that the distortion of competition created by the aid is kept to the minimum.
Commission Vice President in charge of competition policy, Joaquín Almunia, said: "The updated restructuring plan and the additional remuneration for the capital it received ensure that FHB will become viable without continued state support and that the distortions of competition created by the aid are adequately addressed".
In October 2011, Hungary submitted an updated restructuring plan that will result in reducing FHB's involvement in the mortgage bond market and its exposure to adverse currency movements. The bank has also managed to increase its share of retail loans.
Taking into account the limited importance of FHB in the retail and commercial markets in Hungary, and the fact that the bank repaid the State capital less than one year after the capital injection, the Commission found that the distortions of competition remain limited. Moreover, the remuneration paid to the State is in line with the criteria set in the Hungarian recapitalisation and guarantee scheme that the Commission authorised in February 2009.
The Commission therefore concluded that the restructuring plan is in line with the Commission's guidelines on restructuring aid for banks.
Background
In 1997, FHB was set up by the Hungarian State which was also the majority stake holder. In August 2007, the State reduced its share in the bank to just over 4 per cent.
FHB was originally set up as a mortgage bank in order to promote the use of mortgage bonds. Mortgage bonds were also the main funding source of its lending activity. Further, the bank refinanced mortgage loans extended by other banks. Over time, FHB started selling various retail and corporate loan products, as well as offering account management, deposit-taking and card services.
On 25 March 2009, Hungary granted FHB a mid-term State loan scheme of approximately HUF 120 billion (€400 million) under the Hungarian liquidity scheme. On 31 March 2009, Hungary injected HUF 30 billion (ca. €100 million) of capital into the bank. Those measures were required to ensure the solvency of the bank and to resist the liquidity stress faced by the whole banking sector in Hungary.
On 19 February 2010, FHB paid back the full amount of the recapitalisation to the State. In September 2010, FHB acquired Allianz Commercial Bank Ltd and concluded a long-term strategic agreement with Allianz Hungaria Insurance Co Ltd.
Press release
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