“The agreement is based on the realisation that a strong financial sector is essential for the sound and sustainable growth of the real economy,” he said.

“The Hungarian government fully understands the need for a more supportive environment in which transparency, predictability and search for the common interest are essential elements.”

The EBRD chief noted that some government measures in recent years had raised cause for concern but Monday’s agreement would be “an important step” in improving the relationship between banks and Hungary’s authorities, which he said had become “quite difficult”.

Concerning EBRD’s motivation to participate in the deal, Chakrabarti said it was important for Hungary’s banking sector “to retain the presence of strong private players” such as Erste “to ensure fair and transparent competition”.

The investment in Erste may contribute to the future consolidation of Hungary’s banking sector and boost lending to the private sector, he said, adding that the latter objective accorded with the Hungarian central bank’s Funding for Growth programme.

The EBRD hopes that it could step up its activities in Hungary “if the policy environment improves”, he said.

Source www.hungarymatters.hu

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