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European Bank approves US$ 103 million for agricultural restructuring in Hungary
A package of four loans totalling US$ 103 million (ECU 90 million equivalent) to four Hungarian banks was approved on Tuesday, 27 July 1993 by the Board of Directors of the European Bank for Reconstruction and Development. The loans will provide medium and long term financing to private small and medium enterprises in the agricultural and agribusiness sector for eligible investment projects.
Mario Sarcinelli, Vice President of the European Bank, said: "This project will help Hungary's agricultural sector reform by assisting the transition to a privately-owned, market-based system. It will also strengthen the participating banks as viable financial intermediaries, facilitating their eventual privatisation."
The borrowers of the loans are: Commercial and Credit Bank (US$ 40 million equivalent); Hungarian Credit Bank (US$ 30 million equivalent); National Savings and Commercial Bank (US$ 25 million equivalent); and Budapest Bank (US$ 8 million equivalent). These banks will make sub-loans to finance investment programmes of private ventures in agribusiness and related rural activities, in particular new types of cooperatives, family farms and companies emerging from the restructuring of cooperatives.
All sub-loans above US$ 1 million will require prior approval from the European Bank. An additional grant of ECU 500,000 will be provided for training and advisory services aimed primarily at strengthening the participating banks' capability in credit risk management.
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