Banks participating in the Market-based Lending Scheme exceeded their commitments with regard to lending to SMEsPrint
Budapest, 3 March 2017 – In 2016 banks participating in the Market-based Lending Scheme of the Magyar Nemzeti Bank increased their lending to SMEs by more than HUF 300 billion as against their commitment of HUF 195 billion. Based on the individual performance of banks reviewed by the central bank, it can be stated that the Scheme made a major contribution to the recovery in lending to SMEs in 2016. 15 of the 17 participating banks or bank groups even exceeded their preliminary commitments, while the performance of 2 institutions fell short of the criterion. As a continuation of the Scheme, banks committed to an SME credit growth of further HUF 170 billion in 2017.
In January 2016, the Magyar Nemzeti Bank (MNB) launched the Growth Supporting Programme (GSP), which facilitates banks’ return to market-based lending with a gradual phase-out of the Funding for Growth Scheme (FGS) and the announcement of the new Market-Based Lending Scheme (MLS). Within the scope of the MLS and by means of concluding interest rate swaps with commercial banks, the MNB developed an incentive system aimed at long-term market-based lending. Through the interest rate swaps conditional on lending activity (LIRS), banks committed to increasing their lending to SMEs proportionally to the allocated deal size, in the total value of HUF 195 billion. The fulfilment of lending commitment is checked annually, based on the lending criterion indicator defined by MNB. Institutions must comply with the lending criterion in relation to a full calendar year.
The revision of the first year of MLS was completed at the end of February 2017. The vast majority of the institutions, i.e. 15 out of 17 banks or bank groups, closed 2016 with significant over-fulfilment. Thus the consolidated annual compliance of the participating institutions amounted to HUF 302 billion, i.e. exceeded 150 per cent. The condition was not fully met by only two institutions; in their case the sanction set out in the notice on the terms and conditions of the transaction was imposed. On the whole, it can be stated that the MNB's Market-based Lending Scheme made a substantial contribution to the fact that outstanding borrowing of small and medium-sized enterprises, including self-employed entrepreneurs, rose by almost 12 per cent, while total corporate loans grew by 4 per cent in 2016.
Those institutions that have not closed their LIRS position outstanding against the MNB by the end of February 2017, committed to increasing their lending to SMEs further, proportionally to the allocated deal size. Based on the maintained deals, the institutions participating in the scheme committed to increasing their loans to SMEs by further HUF 170 billion for 2017, which corresponds to roughly 5 per cent of the current loan portfolio. Thus the MLS will provide support for market-based lending to SMEs in the coming year as well, even after the phase-out of the FGS.
MAGYAR NEMZETI BANK
Phone: + 36 1 428-2751
Facsimile: + 36 1 429-8000