The state of Hungary will provide OTP Bank with a loan of more than HUF 400bn and FHB Bank with a two-installment loan of around HUF 120bn in order to boost corporate and retail lending, Finance Minister Janos Veres announced in the presence of the two banks' heads late on Wednesday.

The loans will carry a market interest rate, Mr Veres said. The loans will be provided in several foreign currencies, and they will carry a spread of 250bp over the respective benchmarks, press reports said. The state loans will be provided on the back of a EUR 20bn international financial package granted to Hungary by the IMF, the EU and the World Bank late last year, the minister said. The loan contracts were signed on Wednesday.

OTP has undertaken to use the loan to finance domestic clients, including granting at least HUF 200bn in corporate loans. FHB will use the state loan to grant retail (home) and SME loans.

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