WHERE IS THE MONEY?

2009. February 17.

Over the past two months, it has probably become obvious to everyone that, in all likelihood, funds for project financing will not be provided by banks. Why is it so difficult to get credit? What is the truth, beyond the crisis? Will the market repaired or should we wait long time for backing track? Home Management newsletter summarizes for you the current situation in Hungarian credit market, including the major changes in credit-policies of the famous Hungarian Banks.

Project financing has meant good business for banks for years. The cheaply accessed resources were presented with low premiums and, with a few large deals, it was possible to achieve significant increases in volume that, despite the low margins, meant a simple and measurable result-producing potential. The good old times are over now and the new times have turned out to be quite bitter. Banks practically withhold all credit with any kind of premium now. Interbank markets are not working, parent banks have stopped financing, and the business model in which Western savings were mediated into Eastern Europe (at a price) has come to an end.

The motivation of Hungarian commercial banks under foreign ownership is pretty clear. From a previous 140-150% credit deposit ratio, a significant portion of them - due to pressure from their ownership - want to return to the 100% level of the good old days (or at least something approaching that), which can be most easily and simply achieved by putting a halt to all project credit. To tell the truth, banks have no interest in Hungarian corporate credit portfolios in their current form. However, they do not have too many avenues for getting out of them, since current asset type financial support cannot be recalled without endangering the client and personal loans are usually longer term.

The best method of rapid stringency measures (in addition to the deposit campaigns) is to shift investment and project loans. Commercial banks focus on practically nothing else - other than closing the year with a decent balance. There is simply no room left for further loans in the last one month, unless it is absolutely vital for the survival of the client. (More on: www.resourceinfo.hu)