- The challenges of the global market urge Central European countries to take difficult steps and face difficulties for years: they have to establish the conditions of free competition, radically reduce the paternalistic role of the state and ensure the competitiveness of domestic enterprises and the local economy in general, all at the same time – he continued. – Micro-, small- and medium-sized enterprises were started with a limited amount of capital after the political changes in 1990. Due to the lack of own resources or the insufficient experience of tendering, the accession to the EU as an economic community failed to meet prior expectations: much of the available pre-accession support remained unutilised, and domestic entrepreneurs and micro regions continue to be disadvantaged in terms of quality and technological development. Thus, maintaining and strengthening competitiveness poses further challenges in today’s rapidly changing world: development resources must be explored which may not solve all the problems, yet will create the opportunity for solving them.
Bearing the above in mind, the incoming Government laid down new foundations for the operation of the state-owned MFB in 2002. Since then, the bank has been bridging national development policy and enterprises: it predominantly supports the development projects and investments of SMEs by providing long-term development loans and development capital, on favourable terms and based on market assessment.
– Within a very short period of time, transformation to a classical development banking role was achieved, and best practice instituted. Today, MFB is already profitable and its balance sheet total is constantly growing. What lies behind the success?
– I think success basically hinges upon resolve and quick decisions, but – as these always involve risks – it is useful for bankers or entrepreneurs to diversify. It is also worth paying attention to the fact that competitiveness is not an objective per se, it is only an instrument; it is not success itself, it is only a necessary prerequisite to success. Those poised on the start line for the race are all competitive, and rightfully proud of it, but it is only at the end of the race when we see who is really successful. Well, the really successful racer is the one who knows exactly what he wants, what he would like to achieve.
Hungary does not have to be competitive in order to catch up with the European economy but in order to make her endeavours succeed. It is not a play-on-words – we are a country where the number of Nobel Prize winners in proportion to the size of the population is relatively high, where new inventions are announced almost every day, where major scientific findings are so frequent that they make the country known worldwide… So, the management of the bank was of the firm belief that Hungarian entrepreneurs are not less talented than their European counterparts; but they miss one of the prerequisites for success, and that is money, capital. MFB wishes to help them overcome this problem in the context of development and investment.
– It seems that the product and programme range also reflect the philosophy of the bank...
– Naturally. One of our major strategic decisions was to offer development capital for companies, as well as development loans. It was also a strategic decision that we should create transferable resources from borrowing and the issuing of bonds both on domestic and foreign markets. The excellent, Prime-1/A-1 ratings assigned to us by Moody’s International rating agency in the past two years have boosted funding – thus we have a lot to offer. Finally, another important strategic decision was to establish the MFB Group, made up of various development institutions, in order to provide more efficient support for enterprises. As far as our range of programmes is concerned, one of the most important steps was the simplification and expansion of our loan schemes. Simplification means the concentration of existing investment objectives within the framework of the Enterprise Development, the Municipality Infrastructure Development and the Agricultural Development Loan Programmes. Expansion, on the other hand, comes useful for those on the verge of taking a decision on further development. Today there is almost no field of activity where an entrepreneur would not readily find development resources offered by our bank. The number of these development resources is almost 50, so we can safely say: the ship is there, the wind in the sails is supplied by a development loan or a capital investment, now it depends only on the skills of the steersman to find a safe berth.
– MFB does not have a national branch network; it does not keep company or municipal accounts, so in this respect it is not in direct contact with its future clients. How can then the bank fulfil its mission?
– Within the local banking community, we are summarily described as an EU-conform, transparent and prudent bank. In order to earn such a favourable qualification, among other things, we had to terminate popular loan schemes in 2004 to comply with European regulations. That was not an easy step to take. As transparency is a priority both our clients and our owner, we attach utmost importance to it. Finally, prudence is an essential quality of a good banker, and in the case of a state-owned bank it is even more so.
Although we do not have a branch network, our representation offices, present in each region, function as a compass: they are present when regional economic development plans are elaborated and direct our potential clients to commercial banks we are working with. Our smooth refinancing cooperation with commercial banks has become the mainstay of our activities, although we still come in direct contact with a smaller number of clients on specific individual projects. The supportive role of the state - which takes the form of exchange rate guarantee – is indispensable in fulfilling our mission. It is a very significant element of the development and investment resources available. The preferential interest rate, ranging from 4.2% to 6.4%, depending on the type of the loan, the long maturity of 15-20 years, and the 2-year grace period have made our development loans popular.
We attribute our success to our programmes, which have been developed to meet market demand and launched after a short decision making process, and to our fruitful cooperation with commercial banks. It is our programmes whereby we can help entrepreneurs succeed: by constantly supporting them, so they can develop their business environment, maintain or even create jobs. When local governments are able to do away with several centuries’ backwardness by constructing roads, drain pipes, water and gas conduits with the development loans of MFB, or invest in culture and create a more civilized environment, we also feel to have been part of their success.
All in all, we regard our mission as an important pledge of a successful Hungary. We cannot claim to forge success, but perhaps we can say that we are the source of and opportunity for success.
