Less state support, greater bank risk? The impact of Hungary's guarantee framework reform on lending markets

The changes, aiming to decrease the extent of exposure undertaken by the State, may have important implications for banks, corporate financing market players and state-supported investment financing structures.

Reduction of the state counter-guarantee framework

A key element of the Resolution is the planned reduction of the aggregate cap for state counter-guarantees under the 2026 budget framework, from HUF 12,800bln to HUF 11,200bln.

Guarantees as a risk-mitigation tool for banks

In bank financing, state guarantees function not only as support measures but also as tools for risk-sharing. By absorbing part of the credit risk, state-backed guarantees influence banks' risk positions, capital requirements and lending capacity.

A reduction in guarantee coverage may therefore result in:

• stricter credit approval requirements;
• increased importance of the underlying risk profile of companies and projects; and
• a greater proportion of credit risk retained directly on banks' balance sheets. 

Implications for the project finance market

State guarantees and other risk-sharing tools traditionally support projects characterised by high upfront capital requirements, long investment horizons or strategic importance.

However, the reduction of such instruments does not necessarily limit access to financing; rather, it may lead to a reallocation of risks among market participants. Future transactions may place greater emphasis on:

• the project's capacity to generate cash flow;
• the sponsor's financial robustness and equity contribution;
• contractual risk allocation mechanisms; and
• the long-term sustainability of the underlying business model.

Key area of review: state guarantees related to MFB operations

The Resolution also addresses state guarantees supporting the operations of Hungarian Development Bank Plc. (MFB).

The review covers, among others:

• the capital compensation mechanism;
• the interest rate compensation mechanism;
• the foreign exchange hedging mechanism; and
• other state risk-sharing elements connected to MFB's lending activities.

Given the role of MFB in development and investment financing, the outcome of this review may be particularly relevant for transactions where financing provided by MFB complements commercial bank lending.

Reform of Széchenyi Card MAX+ products as a practical example of the new approach

The reform also extends to certain Széchenyi Card MAX+ products. Under the planned changes, currently mandatory guarantee elements may become optional for:

• Széchenyi Card Overdraft MAX+;
• Széchenyi Tourism Card MAX+; and
• Széchenyi Liquidity Loan MAX+.

Banking sector adjustment: pricing and risk premia

A reduction in state-backed guarantee coverage should also affect financing conditions. If banks retain a larger share of credit risk, this may translate into:

• higher risk premia;
• stricter collateral requirements;
• more differentiated borrower assessments; and
• more conservative financing limits.

Conclusion

Government Resolution No. 1239/2026. (VIII. 3.) initiates a gradual restructuring of Hungary's state guarantee framework. The reform does not alter existing financing arrangements but recalibrates future state risk-taking.

For banks and project finance participants, the key implication is a potential decline in the role of state-backed credit enhancement, accompanied by greater importance placed on fundamental credit analysis, robust security structures and sustainable project economics.

The ultimate impact will depend on whether market-based financing solutions can effectively replace part of the risk-sharing capacity previously provided by the State.