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Projects

Project Brief

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. Environmental and Social Review Summaries are provided for projects assigned an Environmental Assessment Category of A or B.

 

Project name
UniCredit Bank Hungary Zrt.
Project ID
8502
Fiscal year
2011
Status
Not Active
Guarantee holder
UniCredit Bank Austria AG
Investor country
Austria
Host country
Hungary
Environmental category
FI
Sector
Banking
Date SPG disclosed
September 14, 2010
Project Board date
September 30, 2010
Gross exposure
 $259.4 million
Project type
Non-SIP

View Summary of Proposed Guarantee


On September 30, 2010, MIGA issued a guarantee of $259.4 (€190) million to UniCredit Bank Austria AG’s (UBA), covering its €200 million shareholder loan to its Hungarian subsidiary, UniCredit Bank Hungary Zrt. (UCBH). The guarantee is for a period of 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 improve further UCBH’s long-term liquidity profile.

MIGA’s coverage for this loan falls under the framework of the Financial Sector Initiative, intended to support financial institutions’ cross-border investments into their emerging market subsidiaries, at a time when Hungary’s economy is recovering from economic shocks. 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.

The project will help increase the availability of credit for Hungary’s corporate, retail, and sub-national borrowers and help UCBH strengthen its structural liquidity profile, enabling UCBH to maintain a higher level of financial intermediation than it would have been able to otherwise accomplish. It will also help provide job opportunities in a consolidating sector and a soft labor market. Despite financial sector consolidation and cost-cutting, UCBH has continued to pursue an approach of strategic expansion, resulting in the opening of 19 new branches and the direct creation of resultant jobs.

 
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