Erste Bank Hungary will probably take advantage of a planned change to Hungary’s covered bond law that would permit universal banks to issue covered bonds, a spokesperson for the bank told The Covered Bond Report.

The Hungarian central bank (MNB) said on 15 February that it expects to launch a covered bond purchase programme after the country’s framework is changed from one with a specialist banking principle, which only allows mortgage banks to issue covered bonds, to allow commercial banks to participate in the market.

Some Hungarian mortgage bank officials criticised the move, which represents a U-turn by the Hungarian central bank. However, the move has now received a positive endorsement away from the traditional issuer base.

“Erste Bank Hungary welcomes the announcement of the Hungarian National Bank, which will most probably enlarge the financial capacity of our bank,” a spokesperson for the bank told The CBR. “However, we are waiting for the details of the new regulation to judge its full impact of its funding, but due to the size and maturity of its mortgage bond portfolio, a covered bond programme is a natural way to secure the long term funding of the bank at reasonable costs.”