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Hungary's OTP Bank to receive US$ 100 million credit facility from EBRD
Hungary's biggest bank will be able to expand its commercial banking services by making longer-term loans to the Hungarian private sector as a result of a stand-by credit facility to be provided by the European Bank for Reconstruction and Development (EBRD).
The Loan Agreement for the revolving stand-by credit of up to US$ 100 million was signed today at EBRD Headquarters in London by Mr Jacques de Larosière, President of the EBRD, and Dr Sandor Csanyi, Chairman and Chief Executive Officer of Orszagos Takarekpenztar es Kereskedelmi Bank Rt (OTP, also known as the National Savings and Commercial Bank Limited, Hungary).
Mr de Larosière said: "This project is the first of its type for the EBRD and also the first facility of its kind to be offered to any Hungarian bank. With this stand-by credit facility, OTP will be better able to extend longer-term loans on a prudent basis. It will thereby improve OTP's earnings performance and benefit the Hungarian private sector, especially small and medium-sized enterprises, which will be the main recipients of the medium-term loans".
Dr Csanyi said: "OTP is extremely pleased to be the recipient of a stand-by loan of this size without a government guarantee. I believe it reflects the confidence the EBRD has in OTP, and a confirmation of our good international reputation. This stand-by credit facility will give OTP even greater credibility in the international financial markets".
The credit facility is to be provided in two tranches. The first tranche of US$ 50 million will be available immediately, and the second tranche of up to US$ 50 million will be available from the second anniversary of the signing of the Loan Agreement, in each case upon satisfaction of certain disbursement conditions. The facility will expire after five years. Although OTP already has the ability to borrow for up to three years on the international markets, five-year borrowing is not yet easily available for Hungarian banks.
This project marks the first time the EBRD has extended a credit facility on a revolving, stand-by basis. OTP may draw on the facility if necessary in the course of its normal liquidity management. However, the long-term commitment of EBRD enables OTP to use its own funds, mostly in the form of short-term retail deposits, to make medium-term loans. The revolving nature allows OTP to maintain the EBRD commitment for the full credit amount.
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