The risk management of Garantiqa Hitelgarancia Zrt. is equivalent to the riSK managEment of the banks

Garantiqa Hitelgarancia Zrt. recently published an advertisement announcing that the Hungarian Financial Supervisory Authority issued a certificate, which means that the company’s risk management practice fully complies with the risk management performed by the banks. We have asked György Radnai, Managing Director about the meaning and significance of the certificate.

• You are very proud to show this equivalency certificate to the public. Why is this so important?
• The acknowledgment of the Hungarian Financial Supervisory Authority has a principal and practical significance. The principal acknowledgement means that all work and effort is appreciated, which we spent on giving an impulse to the company and on altering it compared to the needs of the market. New strategy, higher risk taking willingness, decreasing fees and a much wider product range is behind us now compared to how we were two years ago.
• What is the practical significance of the certificate?
• The Hungarian Financial Supervisory Authority after a screening of several months issued the equivalency certificate for Garantiqa Hitelgarancia Zrt. first among the Hungarian guarantee institutions. We have tried to comply with the regulations as soon as possible, because however the certificate gained its full significance by the enactment of Basel2 in January, it is very important that we are able to apply loan judgement procedures equivalent to the banks. This obviously makes easier the establishment of guaranteed loan constructions subject to simplified procedure, which have already played a significant role in the outstanding results of last year
• What will change by the enactment of Basel2?
• The directive is a uniform risk management system of rules, which is compulsory for all European financial institutions. In virtue of this, banks shall use a 100 percent multiplier factor for stating the compulsory reserves for the calculation of the capital ratio based on the loan parts guaranteed by the guarantying institutions. If the guarantying institution is a bank itself or performs equivalent level risk management practice to the banks, the risk multiplier is only 20 percent. This opportunity was given now to Garantiqa Hitelgarancia Zrt.
• You have mentioned that you have closed a successful year 2007. Could you give us some supporting data?
• Last year we have undertaken new guarantees in a value of nearly 300 billion HUF, which means an increase of 30 percent compared to last year. This itself is an outstanding achievement, as it considerably exceeds the growth rate of the enterprise loan market. But as for me, I find it even more important that within our portfolio extremely favourable changes took place. The number of transactions subject to individual assessment – typically larger sized transactions - grew, the local governmental guarantee stock has also increased and the factoring and lease guarantee is also performing well. In the meanwhile the significance of Széchenyi card transactions decreased similarly to the ratio of cashing the guarantees in. It says all that we managed to achieve also in 2007 our `regular` result of over one and a half billion HUF, which is an outstanding performance besides the significant and conscious increase of our risk-taking willingness.
• The advertisements about the equivalency certificate are showing a brand new image. What’s the reason for that?
• The trade already knows the Garantiqa product range, as last year all our new and renewed products were introduced to the market typically under this name. It was high time that the wider public also got to know our new image. I believe that a new image will not bring the expected success for a business, if the image is not in compliance with the real content, namely with the philosophy of the company and its products. We managed to put all this together and we couldn’t have found a more favourable time to introduce this, when the Hungarian Financial Supervisory Authority acknowledged, that our company works exactly like a bank.