There is no news yet of government measures to boost corporate lending, promised in May, even though companies’ demand for credit is higher than banks are willing to provide.

No significant progress has been made in facilitating bank lending

He has been informed by bank executives requesting their names to be withheld. Initially, the government and the Banking Association wanted to agree on the means by which the government will support banks to boost corporate lending, apart from helping foreign currency lenders, in May.

According to our information, bank representatives continue to lobby at informal meetings in order to obtain a bank tax credit in exchange for stimulating lending. As one of the bankers asking for his name to say is silent, they expect this version to be finalized in next year’s tax law debate, and from 2012 onwards, banks that boost their corporate lending may pay lower bank taxes.

A similar solution was reached last summer

In Slovenia, a similar solution was reached last summer when the government introduced a bank tax. There, the tax rate is much lower and it gives preferential treatment to banks that boost their domestic lending. Banks that provide companies with a loan equivalent to at least 60 percent of their balance sheet total receive a tax credit. Banks that expand their corporate lending by at least 5 percent a year are also exempt from the special tax.

Companies in Hungary are in dire need of recovery, as the Bank of Hungary’s lending survey released last week shows that banks are very subdued in corporate lending. Márton Nagy, director of financial stability at the National Bank of Hungary, said that the supply side of the corporate segment is holding back credit expansion.

This means that banks are prudent in lending to companies

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Putting minimal money into companies, primarily overdrafts and operating loans.

Preliminary GDP data for the second quarter show poor performance and the outlook is unfavorable. In the third quarter, the Swiss franc broke records, which may further dampen the already sluggish domestic consumption, and new orders from the industry have declined, indicating that the sector will be slower than before.