Austria's Erste has plans to divest a minority stake in its Hungarian unit to the Government of Hungary and the European Bank for Reconstruction and Development (EBRD) if the government embraces a more favourable policy towards the banking sector.
The government and the EBRD have joined forces to strengthen the country’s financial sector and boost the flow of bank credits to local private corporations as well as citizens.
On Monday, Hungarian Prime Minister Viktor Orban was quoted as saying by Associated Press that Hungary plans to acquire stake as much as the EBRD "as long as we can agree on a price."
Reuters quoted Erste spokesman Michael Mauritz as saying: "If there is a change in the framework for the financial sector, we will invite both parties to invest in our local entity."
Earlier, Hungarian news website Portfolio reported that the government and EBRD plan to acquire 15% stake each in Erste’s Hungarian unit.
In 2010, the government levied huge taxes on the banking sector; however, it now has promised to improve its relations with the sector in return for more lending in order to help the country’s economy grow at approximately 3%. A deal with the bank and the EBRD could be a way towards that direction.
Erste is the third-largest lender in Europe and is the one of largest retail banks in Hungary with approximately 900,000 clients. It employs around 3,000 people and boasts of 128 outlets.
Over the next three years, Erste intends to introduce new loan programs totaling $622m with an aim to support the country’s economy, reported Associated Press.
Image: Hungary and the EBRD set to bolster financial sector and economic growth. Photo: courtesy of European Bank for Reconstruction and Development