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Fitch Assigns MFB Hungarian Development Bank 'BB+'; Stable Outlook
August 29, 2013 / 2:42 PM / 4 years ago

Fitch Assigns MFB Hungarian Development Bank 'BB+'; Stable Outlook

(The following statement was released by the rating agency) WARSAW/LONDON, August 29 (Fitch) Fitch Ratings has assigned MFB Hungarian Development Bank Plc a Long-term Issuer Default Rating (IDR) of 'BB+' with a Stable Outlook. Fitch has not assigned MFB a Viability Rating as the bank's business model is dependent on the support of the state. A full list of ratings actions is at the end of this commentary. KEY RATING DRIVERS MFB's IDRs, Support Rating and Support Rating Floor are based on Fitch's opinion that the bank would very likely be supported by the Hungarian state, if required. Fitch's view of support reflects MFB's policy role, track record of liquidity and capital support for the bank, full state ownership and MFB's small size. It also takes into account dedicated legislation that governs MFB's tasks, the scope of activities and relationship with the state. The Stable Outlook on MFB's Long-term IDR reflects that on the sovereign. There are three separate statutory guarantees that cover repayment risk (of issued bonds and loans), foreign currency risk and credit risk up to limits defined each year in the annual central budget act. The statutory repayment guarantee also limits MFB's total liabilities (from issued bonds and loans) and its amount is reviewed by the government each year. For 2013 and (most likely) for 2014 it stood at HUF1,800bn (about EUR6bn), which in Fitch's view, represents a moderate contingent liability for the state (about 6.1% of estimated 2013 GDP). RATING SENSITIVITIES MFB's ratings are equalised with those of the sovereign and consequently are sensitive to changes in the Hungarian sovereign ratings. Fitch believes that the state's strong propensity to support MFB is unlikely to be revised in the foreseeable future. In assessing the state's commitment to the bank, Fitch will monitor the timeliness of capital injections or liquidity support in light of the bank's very weak internal capital generation and high refinancing needs in Q413 and 2014. MFB is a development bank fully controlled by the Hungarian State through the Ministry of National Development. The bank's policy role is to provide financial services to stimulate economic growth in Hungary. The rating actions are as follows: Long-term IDR assigned at 'BB+'; Outlook Stable Short-term IDR assigned at 'B' Support Rating assigned at '3' Support Rating Floor assigned at 'BB+' Contact: Primary Analyst Michal Bryks, ACCA Director +48 22 338 6293 Fitch Polska SA Krolewska 16, 00-103 Warsaw Secondary Analyst Artur Szeski Senior Director +48 22 338 6292 Committee Chairperson Maria Jose Lockerbie Managing Director +44 20 3530 1083 Media Relations: Hannah Huntly, London, Tel: +44 20 3530 1153, Email: Additional information is available on Applicable criteria, 'Global Financial Institutions Rating Criteria', dated 15 August 2012, 'Evaluating Corporate Governance', dated 12 December 2012, are available at Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria here Evaluating Corporate Governance here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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