May 19. 2024. 12:45

The Daily

Read the World Today

Budapest-based Russian ‘spy bank’ faces bankruptcy

The Budapest-based International Investment Bank (IIB), which has almost 50% Russian and 25.27% Hungarian ownership, has used up nearly all of its liquidity reserves after being hit by EU sanctions.

The development bank has been previously described as “Putin’s Trojan Horse” by the Hungarian opposition and has raised concerns domestically and internationally, especially in the United States. The bank is also “widely seen as an arm of the Russian secret service,” according to nine US senators in 2019.

Without its funds, frozen under sanctions imposed in the wake of the Russian-Ukrainian war, “the bank is at risk of insolvency or will be forced to restructure its bonds as early as May 2023,” EURACTIV’s partner Telex reports.

“I don’t know if it is possible to save the bank,” which is “in an extremely difficult situation,” Gergely Gulyás, Minister of the Prime Minister’s Office, said during a press conference on February 25.

A senior bank executive sent a letter to the management in mid-December declaring that the Belgian financial firm Euroclear blocked IIB’s funds after the EU sanctions packages and predicted “such a severe shortfall for the first quarter of this year that even the sale of the loan portfolio would not be enough to make up for it.”

In October 2022, the Belgian Finance Ministry blocked the release of funds, arguing that several members of the bank’s board of directors ‘have links with the Russian government, which has a controlling influence on IIB’.

A letter retrieved during a cyber-attack on the bank on 17 February revealed that Hungarian Minister of Economic Development Márton Nagy lobbied the Belgian Minister of Finance to unblock IBB’s funds, with no success.

Neither Márton Nagy nor the Belgian Finance Ministry commented on the letter by the time of publication. Another document made public by the cyber-attack envisages the inclusion of Serbia and an increase in the Hungarian stake.

The bank’s financial hardship is of concern for the Hungarian government, which, after Bulgaria withdrew from it in February, is now the only EU member state owner, next to Russia, Cuba, Mongolia, and Vietnam.

(Max Griera with Telex |