|Summaries of proposed guarantees are provided prior to Board consideration and before final contract signing, and they are therefore subject to change. Project briefs are disclosed after Board consideration and contract signing and reflect the terms of the project at the time of contract signature.|
This summary covers a guarantee for UniCredit Bank Austria AG’s (UBA) $254 million shareholder loan to its Hungarian subsidiary, UniCredit Bank Hungary Zrt. (UCBH). UBA has applied for a MIGA guarantee of up to $241 million for a period of up to ten years against the risks of transfer restriction, expropriation, and war and civil disturbance.
This long-term shareholder loan is expected to serve a dual purpose: support the recovery and growth of corporate lending; and further improve UCBH’s long-term liquidity profile.
The project is a Category FI under MIGA’s environmental review procedures.
MIGA’s coverage for this loan is being proposed under the framework of the Financial Sector Initiative (FSI), intended to support financial institutions in cross-border investments into their emerging market subsidiaries, at a time when Hungary’s economy is recovering from the economic shocks of the recent past. Hungary, like many other countries in the Europe and Central Asia region, is currently facing difficult fiscal adjustments along with the need for external financing. This shareholder loan from UBA to UCBH will support an institution of systemic importance to the financial sector, while contributing to the growth of new lending in the economy.
Specifically, this project’s developmental impacts include: