Daily outlook for HUF: Commerzbank

Quotes from Commerzbank Corporates & Markets:

-HUF: NBH added to its Funding for growth scheme (FGS) for SMEs with the launch of FGS+: this new scheme will provide total lending capacity of HUF 500bn and be active until end-2015; for comparison, the existing FGS capacity is HUF 2trn.

-The scheme will be similar to the existing one in that NBH will make funds available to banks at zero interest rate, and banks can lend these funds to qualifying SMEs at maximum 2.5%; but in this new scheme, NBH will also bear half the credit risk for early loans until total guarantees have reached HUF 12.5bn.

-In our view, lacklustre credit growth is a demand-side problem in Hungary, and while this scheme will bring down cost of capital on new borrowing, the impact on investment activity will likely be muted.