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EBRD and MKB sign agreement to boost Hungary's foreign trade
A leading Hungarian bank, Hungarian Foreign Trade Bank (MKB), will strengthen and develop its trade-related services through a guarantee agreement with the European Bank for Reconstruction and Development (EBRD), signed today in Budapest by Peter Reiniger, co-director of the EBRD’s Hungarian team and Tamás Erdei, Chief Executive of MKB. Under the agreement, each party will provide up to US$ 25 million (ECU 19 million) to share country and credit risks in the financing of foreign trade transactions.
Jacques de Larosiére, President of the EBRD, said: “MKB is a bank well known to the EBRD, and we hold 17 per cent of its shares. MKB has a long experience of financing Hungarian foreign trade. The trade facilitation guarantee agreement with MKB is a specific form of EBRD support for intra-regional trade, endorsed by the EBRD’s Trade Facilitation Strategy. This agreement offers a vehicle to support the revival or expansion of trade between Hungary and other countries in the region. Further, it sets an example for other countries with suitable qualifying banks.”
Tamás Erdei, said: “This agreement supports MKB’s business strategy for the region, which sets the countries of central and eastern Europe and the former Soviet Union as target markets. In view of this MKB has, over the past few years, created a wide correspondent network with the financial institutions of these countries. It has also established letter of credit confirmation and guarantee lines for a large number of banks in these countries.”
The trade facilitation agreement enables MKB and a group of selected banks from the EBRD’s countries of operations to develop their trade-related services which thereby become more accessible to their client companies. This will encourage trade between Hungary and other countries in central and eastern Europe and the former Soviet Union.
Under the terms of the agreement, the EBRD and MKB will share the credit and country risks. The EBRD will extend its guarantee for the benefit of MKB which will confirm letters of credit issued by qualifying banks in the region and issue trade-related guarantees upon instruction of such banks.
Through this agreement, the EBRD is for the first time directly promoting trade between countries in central and eastern Europe and the former Soviet Union.
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