The banking industry of the past years has been characterised by considerable liquidity difficulties of the Hungarian banks. In order to improve this situation and in preparation for the privatisation of banks, a consolidation programme has been initiated.

A parliamentary fact-finding committee consisting of eight members shall scrutinise the governmental consolidation of banks during the past years. The consolidation of the banks which was initiated in 1992 and implemented in several steps has been under fire from the beginning. The programme which cost the state an overall amount of 385 billion Ft will incur further extraordinary budgetary burden in the next few years.

14 banks and 68 saving cooperatives took part in the first consolidation phase 1992. During such phase, consolidation loans amounting to 98,4 billion converted into bank claims in the amount of 119,8 billion Ft. By reason of a further capital increase with respect to eight banks in 1993, the state became the majority owner of such banks. The consolidation of the banks was followed by a consolidation of debtors in the course of which the state first acquired the bank debts of 14 state enterprises amounting to 52,7 billion Ft. Thereafter, the "accelerated consolidation of debtors" was implemented in the course of which the bank debts of further 46 state enterprises amounting to 40 billion Ft were acquired. During the third phase of the consolidation of banks - at the beginning of 1994 - the capital of Ungarische Kreditbank, Handelsbank, Budapest Bank and Takarekbank (saving banks) was increased again by the overall amount of 18 billion Ft. These banks received this capital injection in order to achieve a liable equity capital ratio of 4 %. Four other smaller banks - Mezobank, Agrobank, Iparbankhaz, Dunabank - received an injection in the form of subordinated loan capital. Furthermore, OTP received 4 billion Ft for the purpose of expanding its electronic data processing. The last consolidation of banks at the end of 1994 was aimed at achieving an 8 % liable equity capital ratio in the course of which four banks and several savings cooperatives received subordinated loan capital of almost 30 billion Ft.

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