BUDAPEST: Nearly two dozen Hungarian banks, including lenders saddled with the biggest pile of distressed project loans, have signed up for the sale of their toxic assets to MARK, a specialised vehicle to tackle the problem, the central bank said on Wednesday.
MARK is part of efforts by central bank Governor Gyorgy Matolcsy, an ally of Prime Minister Viktor Orban, to revive lending to companies and support economic recovery.
After more than a year of wrangling over the nuts and bolts of the programme, the European Commission gave the green light to MARK in February to buy distressed corporate loan portfolios, mostly commercial real estate, from local banks.
"Twenty-three financial institutions, including all banks with the largest distressed commercial property portfolio, registered to MARK's asset purchase programme with over 300 billion forints ($1.08 billion) gross exposure," it said.
The central bank, which did not name the lenders who signed up, said the assets offered represented about 90 to 125 billion forints at transfer value given provisioning by the banks and price caps on portfolios set by the EU Commission.
The programme does not include MKB Bank, which is under resolution and transferred 40 percent of its distressed assets to another specialised entity.
The registration process will be followed by economic and legal due diligence in the next months. MARK, which will have a lifetime of 10 years, was launched by the central bank with an initial budget of 300 billion forints to strip local banks of bad corporate loans that have weighed on their books for years.
"MARK has already catalysed markedly the market, as banks have disposed of distressed commercial real estate assets recently more actively," said the central bank.
"If the offered exposure is cleaned up, the ratio of corporate non-performing loans will fall to around 10 per cent and that of loans in arrears of more than 90 days to around 5 per cent by the end of 2017," it said.
The biggest names in the local bank sector include home-grown OTP Bank, Austrian Erste Bank and Raiffeisen, Italian UniCredit and Intesa SanPaolo.
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