1. 1
The model of
Garantiqa Creditguarantee Ltd.
in Hungary
Zoltán Urbán CEO
Istanbul, 16.10.2014
www.garantiqa.hu

2. 2
International outlook 2-3
Ownership Structure 4
Credit Guarantee institutions on the
Hungarian market 5
Main figures 6
The impact of creditquarantee activity
on the budget 7
Products, Process, Collaterals 8
Actions of
Garantiqa Creditguarantee Ltd. 9
Content

3. 22.07.20143 2
5,1%
In international comparison the role of Hungarian credit guarantee
subsidies is high in the economy
Credit Guarantee Schemes worldwide: volume of outstanding guarantees in portfolio, 2011
As a percentage of GDP
Source: OECD: SME and Entrepreneurship Financing: The Role of Credit Guarantee Schemes and Mutual Guarantee
Societies in supporting finance for small and medium-sized enterprises - 30-Jan-2013

4. 22.07.20144 3
5,1%
The role of Hungarian guarantee subsidies is significant in regional
comparison
Outstanding guarantee volumes of national schemes by country in the CESEE region
(%GDP)
Source: EBCI Vienna Initiative: Working group on credit enhancement schemes – September 9, 2014, Brussels

5. 5

6. Credit Guarantee institutions on the Hungarian market
Market share [%]
0,4%
20,0%
5,1%
74,5%
2013.12.31.
Institution
Market share
2013
Garantiqa Credit Guarantee Co. Ltd. 74,5%
Rural Credit Guarantee Foundation (AVHGA) 20,0%
MV Co. Ltd. (Venture Finance Hungary Co.
Ltd.) – JEREMIE Holding Fund 5,1%
Start Guarantee Co. Ltd. 0,4%
 10% of the slightly less than HUF 4000 billion SME loan
portfolio as of end 2013
2013 results:
 HUF 280,6 billion (EUR 0,95 billion) new guarantees
 HUF 332,3 billion (≈EUR 1,12 billion) guarantee portfolio (cca.
33000 contracts) .
Track record
5

7. Main figures
 Significant growth of total exposure
(2005-2009)
 Counter cyclical behaviour led to
heavy losses, negative PAT for 2009-
2012
 Beneficiary's municipality guarantee
business ran out in 2014 (EIB
Counterguarantee)
 Own Risk portfolio declined strongly
 Guarantee capacity increased
Observations
-8
-6
-4
-2
0
2
4
6
8
0
100
200
300
400
500
600
2005 2006 2007 2008 2009 2010 2011 2012 2013
NetIncome,billionHUF
Portfolio,billionHUF
Portfolio Net Income
Counterguarantee Type (EUR
million)
2008 2009 2010 2011 2012 2013
(EUR million)
State Counterguarantee 1 242,1 1 375,6 1 298,4 1 215,3 1 128,1 995,6
JEREMIE Counterguarantee 0,0 0,0 0,0 0,0 0,3 2,0
Without State Counterguarantee 167,9 354,6 382,1 264,0 201,2 121,2
- EIB Counterguarantee 37,8 57,0 90,3 67,0 60,4 33,3
- Own Risk 130,1 297,6 291,8 197,1 140,8 87,9
Total Portfolio 1 407,5 1 730,2 1 680,1 1 479,3 1 329,6 1 118,9
CAR (Capital Adequacy Ratio) 36,4% 23,4% 17,0% 13,6% 12,3% 33,4%
 State counterguarantee rose from
70% to 85% starting from 20 June
2011
 The main owner (MFB Co. Ltd.) raised
HUF 3 billion (cca. EUR 10 million)
capital in Garantiqa in June 2013
Changes in operating conditions
6

8. The impact of creditguarantee activity on the budget – assessment
of the National Bank of Hungary
8
 The Financial Stability Report of the National Bank talks about the role of creditguarantee.
 The National Bank of Hungary in its analysis about the „enterpreneurial financing” concluded that the impact of
Creditguarantee Institution GHG on the GDP was cca.1 % on a cumulative basis. The analytical approach is on a „what if
„ basis: What could have been the GDP level without the creditguarantee support to SMEs
Year GDP, million HUF
Potential GDP decrease
p.a. in the lack of GHG-
creditguarantee
/estimation by National
Bank
Potential GDP
decrease in HUF
million
Drawdown of state
counterguarentee in
HUF million
Counterguarantee
drawdown / est.GDP
decrease, %
Counterguarant
ee drawdown /
annual GDP, %
2009 25 626 480 -0,40% 102 506 16 894 16% 0,07%
2010 26 607 339 -0,40% 106 429 20 084 19% 0,08%
2011 27 886 401 -0,30% 83 659 13 675 16% 0,05%
Összesen 80 120 220 - 292 594 50 654 17% 0,06%
 The Hungarian State Budget between 2009-2011 cca. 26-26T billion HUF
 The GDP decrease in 3 consequtive years could have reached 293 billion HUF – stated the National Bank.
 The direct public cost of creditguarantee is the drawdown of state counterguarantee: 0,06% of the 3 year GDP
resource: 1) GDP-data: http://www.ksh.hu/docs/hun/xstadat/xstadat_eves/i_qpt015.html
2) National Bank of Hungary
http://www.mnb.hu/Root/Dokumentumtar/MNB/Kiadvanyok/mnbhu_stabil/mnbhu_stab_jel_201211/jelentes_penzugyi_stabilitas_201211_hu.pdf
3) Counterguarantee figures of GHG
7

9. Products, Process, Collaterals
Garantiqa offers guarantee for
 Loans
 Standard, small exposure
products (exp under EUR
80.000)
 Széchenyi card (state
supported product, process
fully automatized, collateral:
suretyship of the owner)
 Normal products (higher
exposures)
 Factoring deals
 Leasing deals
All type of SME loans supported:
 working capital loans (mostly
overdraft)
 Investment loans, etc.
I. standard process, individual assessment
 receipt of application
 assessment of client and transaction
risks
 decision 7 days
II. Simplified process (‘packages’)
 surety guarantees undertaken on basis
of bilateral agreements with banks
 big number of smaller amount,
standardized loans
 preliminary analysis of risk management
and
 lending practices of the financial
institution
 exact definition of the product terms and
conditions
 decision making within 3 days
 For transactions guaranteed by
Garantiqa it’s essential to have
sufficient collaterals (prescribed
by law)
 Collateral structure must be in
conformity with the risk taken by
Garantiqa
 In case of smaller exposures
(under EUR 80.000) the
suretyship of the company
owner might be enough
 In case of higher exposures
(above EUR 80.000) with
tangible collaterals
Product Range
The Process of Undertaking a
Guarantee Collaterals
8

10. Actions of Garantiqa Creditguarantee Ltd.
targets
Favorable terms
Simpler, faster process
Support the Funding for
Growth Scheme (FGS)
Counterguarantee
actions
■ Capital increase in 2013, guarantee fees are down
■ Guarantee fee subsidy from the state after June 2013
■ These measures led to fees paid by SMEs reduced from 1,7-2,2% to 0,3-0,8%.
■ Reduced the term for the decision making early in the year 2014 (Simplified process 3
day, individual assessment 7 day)
■ e-application possibility in 2014
■ New scoring system start 31.03.2014
■ On 1 June 2013 the MNB (the central bank of Hungary) has launched Funding for
Growth Scheme (FGS) to alleviate disruptions observed in lending to small and medium-
sized enterprises
■ Garantiqa mainly supported the participation in FGS micro and small companies
■ New terms in JEREMIE counterguarantee since 31.12.2013
■ Scope of EU financial instruments (2014-2020)
9