An international syndicate arranged by ABN AMRO Bank and Commerzbank, comprising also Deutsche Genosschenschaft Bank, the European Investment Fund, as well as Raiffeisen Zentralbank, has agreed to guarantee a European Investment Bank (EIB) loan of EUR 50 million(1) which was granted to the Hungarian telephone company MATAV in 1995. This loan brought to EUR 230 million the amount lent to MATAV since 1990 for its ten year investment programme to bring the Hungarian telecommunications network to EU standard. Before privatisation, EIB loans to MATAV were guaranteed by the Republic of Hungary. Following privatisation of MATAV a syndicate arranged by ABN AMRO Bank took over all guarantee obligations in 1997, except for the last EUR 50 million.

Commenting on the guarantee agreement signed with the banking syndicate in Budapest today, EIB Vice-President Wolfgang Roth said: 'This is another example of an EIB loan for a project in a Central European countries being guaranteed by commercial instead of Government guarantees. The EIB is increasingly using such schemes as the Central European countries progress on the road to privatisation, and in particular, as the financial and banking systems in the region develop.'

The EIB was established in 1958 under the Treaty of Rome as the European Union's long-term financing institution. Nearly two thirds of the EUR 30 billion lent in 1998 helped finance schemes in the less developed EU regions which need to catch up with the rest, while some EUR 2.4 billion went to projects in the ten EU-applicants in Central Europe: Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia.

(1) 1 euro = 1.9553 DEM, 1.07420 USD, 0.666300 GBP, 254.820 HUF.