Hungarian Development Bank

Hungarian Development Bank Private Limited Company or Hungarian Development Bank in short (Magyar Fejlesztési Bank Zártkörűen Működő Részvénytársaság , Magyar Fejlesztési Bank in short) (MFB Zrt.), is a credit institution fully owned by the Hungarian State. Its legal status, tasks and scope of activities are defined in Act XX of 2001 (the MFB Act), its Memorandum of Association, and the strategy approved by the Hungarian Parliament and Government. Its core tasks include the provision of funding for growth under favourable terms and conditions to Hungarian enterprises, supporting the long-term development objectives of the state, and obtaining funds from money markets for these purposes. MFB Zrt. has been receiving individual international credit ratings from Moody’s Investors Service since 19 May 2003.

The legal predecessor of MBFB (later called MFB) was Hungarian Investment and Development Co. (Magyar Befektetési és Fejlesztési Rt.), which was established by three state-owned institutions, Hungarian Asset Management Co. (Állami Vagyonkezelő Rt.), Hungarian Asset Management Agency (Állami Vagyonügynökség) and Hungarian Development Institute Co. (Állami Fejlesztési Intézet Rt.) on 27 November 1991 and was not a bank at the time of its establishment. It was transformed into an investment bank on 1 July 1993, from which time it was called Hungarian Investment and Development Bank Co. (Magyar Befektetési és Fejlesztési Bank Rt.). MBFB was involved in the provision of Japanese, German and EU loans in Hungary from 1995, and also acquired interest in regional development companies and subsequently in Rákóczi Bank. In the same year, MBFB took over the Bank Centre (Pénzintézeti Központ) from the Ministry of Finance and became a shareholder in Investbank.

The bank changed its name to Hungarian Development Bank in 1997 and played an active role in the consolidation and improvement of Hungarian financial institutions in the second half of the 1990s. Between 1996 and 1998, it grew into a complex banking group having among its members a broker company, specialised banks and the above-mentioned regional development companies. The separation of strategic activities serving economic policy priorities from the activities performed at the bank’s own business risk in 2000 was an important milestone in the history of the bank. In the same year, six SME funding programmes were launched and a funding product targeting family farms was introduced.

Another turning point was Act XX of 2001 on the Hungarian Development Bank, which has been the legislative framework for the operation of the Bank ever since. The strategy developed in 2002 and adopted by the Government in 2003 made a difference by positioning the bank as a classic development bank. This strategy set the main directions of operation until 2008, which were subsequently adjusted in the light of the changes in international and domestic conditions in 2007, outlining a set of objectives and a toolkit for the period until 2013. Commercial banking activities were terminated by selling Konzum Bank (2003/2004). The strategy developed in 2002 prescribed the structure and activities necessary for the performance of classic development banking activities and ensured adaptation to the principles of Hungarian economic policy. It promoted preparation for EU accession as well as compliance with the international requirements to be met by the bank. This strategy provided the basis for the organisation of a single banking group – a system with a “cleaned up” profile – around MFB in 2006. In order to clearly identify the structure and functions within the banking group, MFB and its owner, the Hungarian State, jointly decided on the improvement of the strategy and its extension to the period 2007–2013.

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