Interview with Mr. Zoltán Zsámboki, Deputy Chief Executive Officer, Magyar Fejlesztési Bank (MFB)

Magyar Fejlesztési Bank (MFB), officially Magyar Fejlesztési Bank Zártkörűen Működő Részvénytársaság, is not a typical retail bank. The state-owned Hungarian Development Bank, established in 1993 under a legal mandate to support balanced national economic growth, provides long-term, development-oriented financing. MFB specialises in policy-aligned lending, combining private-sector financial practices with public policy goals to focus on strategic sectors, foster sustainable economic transformation and enhance Hungary’s broader development and competitiveness. MFB aims to bridge gaps where commercial banks fall short in providing efficient long-term financing, particularly for investment projects, infrastructure and strategic sectors aligned with national and EU policies. It offers loan guarantees, venture capital and investment funds to support growth-stage companies, while managing the distribution of EU development funds and financial instruments. The bank collaborates with international partners to promote financing for renewable-energy investments, with a focus on small and medium-sized enterprises and infrastructure. Several hundred MFB Points across Hungary, situated within partner banks, offer loans and EU-funded products to businesses and individuals. The bank’s vision is to be Hungary’s growth catalyst by fulfilling four key priorities: filling financing gaps where commercial banks hesitate, supporting the green transition, leveraging digitalisation and AI to better serve clients and manage risk, and deepening partnerships with other development banks and private investors. In our recent interview, MFB’s deputy chief executive officer, Mr. Zoltán Zsámboki, shared the bank’s latest progress not only in responding to current challenges but also in forging a more resilient economic future for the bank and the country. Mr. Zsámboki, thank you for speaking with us today…. How would you describe the commercial-banking landscapes in both Hungary and Eastern Europe? As the Hungarian Development Bank, in what key ways does MFB’s work complement the activities of the region’s commercial banks? In our region, mainstream banks focus on shorter-term, lower-risk lending—mortgages, consumer credit and big corporate deals. That means that long-term projects such as infrastructure upgrades, renewable-energy plants and support for tiny start-ups often get left behind. Our job as a development bank is to fill those gaps. So while commercial banks stay in their comfort zone, we step in with long-term funding and a higher tolerance for risk. We channel European Union (EU) and government funds into student loans, housing programmes and digital-transformation projects. By doing this, our aim is to complement the commercial banking system rather than compete with it. How high a priority is collaborating with other national development banks from the wider Central and Eastern European region for MFB? Can you share any recent examples of successful collaborations? Collaborating with our peers is essential—not just across Central and Eastern Europe but across the globe. It allows us to mobilise larger resources and learn from each other. Over the past three decades, we’ve built a wealth of experience and are eager to share what we’ve learned while also adapting best practices from others. For example, we have participated and co-invested in innovation funds alongside our peers in Central and Eastern Europe, demonstrating our commitment to cross-border collaboration and knowledge sharing. This mutual exchange of knowledge helps us avoid reinventing the wheel and ensures that development banks reinforce one another’s efforts around the world. In May 2025, the bank participated in its largest-ever Eurobond placement, securing €1 billion at a compressed spread. Are you happy with how this transaction was executed? Can you explain the key role that international partners played in facilitating this placement? We were delighted with it. It was our biggest bond yet—a five-year issue that attracted strong demand and was priced at a tight spread. The timing was right: European bond spreads were narrowing, thanks to improving fiscal fundamentals, and investors were looking for solid, government-backed issuers. International banks helped us reach a wide range of investors across Europe, North America, the Middle East and Asia. The funds raised are already being channelled into green projects, social programmes and SME (small and medium-sized enterprises) financing. If I’m not mistaken, MFB has maintained a strategic partnership with the European Investment Fund (EIF) for more than two decades. What have been the key features and/or milestones of this partnership during this time? And in what main ways has it advanced financing solutions for Europe’s SMEs? Our relationship, not only with the EIF but also with other European institutions, spans more than two decades. Together, we’ve rolled out guarantee schemes that have allowed Hungarian banks to lend to innovative SMEs without bearing the full risk. We’ve co-invested in venture-capital funds that have nurtured start-ups at home. Most recently, we both contributed to the Three Seas Initiative Innovation Fund, which targets growth-stage companies in Central and Eastern Europe. We also work closely through the European Investment Advisory Hub (EIAH) to provide project-preparation support—think of it as a help desk for companies planning complex projects. All these initiatives have one goal: to make sure good ideas don’t die for lack of funding. What are some of the most effective bespoke instruments and programmes the bank has recently implemented to serve market segments not addressed by conventional financing? Would you say that such financial solutions typically have more complex structures than conventional financing products? Recent examples include our energy-efficiency programmes financed through EU funds, where we work with a wide range of stakeholders to deliver financial solutions. The National Champions Combined Loan Programme, for instance, channels EU grants and long-term loans to help SMEs adopt green and digital technologies; it’s unique because it combines grant and loan elements for the first time to incentivise targeted development goals. Another is a student-loan scheme we co-finance with the national Student Loan Centre; it finances tuition loans and includes debt forgiveness for young mothers. In 2025, we launched new housing-finance products that blend government subsidies with longer maturities to keep payments affordable. We also financed the Housing Equity Programme—a large-scale housing-capital programme of around 300 billion forints—to support the supply side of the housing market. Demand had driven housing prices up, but supply had lagged; far fewer homes were being built than needed. By financing this programme, we have stepped in to empower market players to develop more housing projects and restore balance. On the green side, we’re focusing on big battery projects. Energy storage is the missing piece of the renewable puzzle, and commercial banks find it too risky; we’re stepping in with long-term, structured finance. These products are often more complex than standard bank loans because they combine state funds, EU grants and private capital, but that complexity is what makes them work. Mr. Zsámboki, I understand that your main responsibilities at MFB are to oversee the bank’s financing and investment business activities, including structured and project finance, SME financing and investments that address market failures that commercial banks do not. How has your background in venture capital helped you to fulfil such responsibilities more effectively? First and foremost, I’m fortunate to work with a talented team whose dedication and expertise are essential to our success. My own background—more than 20 years working across banking and investment, from commercial banks to venture-capital funds and later to public institutions—has helped me look at opportunities from both a lender’s and an investor’s perspective. Both private-equity and venture-capital knowledge can be useful, but as a technocrat, I focus on implementing the best market practices, both digitally and from a business perspective. Efficiency is a must when you’re trying to make the most of limited resources. Having seen what works and what doesn’t over two decades helps me ensure that every programme we design delivers maximum impact. I understand that your role also involves structuring financing and investment programmes that channel resources and expertise to underserved areas. What are some of the most underserved areas? And what internal process does the bank employ to formally identify such areas? We focus on segments that traditional banks either overlook or find too risky: micro-enterprises in rural areas, affordable housing and critical infrastructure such as energy storage. Our mandate also includes supporting policymakers and acting whenever necessary to finance underserved markets. We identify these gaps through a mix of data analysis and ground-level consultation. We look at where credit flows are lowest, talk to ministries and local authorities, and meet with business and professional associations. For example, when a foot-and-mouth disease outbreak hit Hungarian livestock farms recently, we quickly rolled out a special financing package—including interest-free working-capital loans and guarantees—to help affected farmers and exporters. This rapid response complemented the government’s emergency measures and kept many businesses afloat. Recently, we introduced a loan programme that helps develop charging stations across the country in partnership with market players; this initiative is supporting more than 140 new charging stations. It’s a structured but flexible process that ensures we channel resources where they’ll have the most impact. In 2024, MFB reinforced the importance of sustainability considerations by developing an ESG (environmental, social and governance) strategy. What are the key objectives of this strategy? And have you made progress toward achieving them? We launched our ESG strategy in 2024 to align our business strategy with environmental and social sustainability. First, we have integrated ESG-risk assessment into our lending decisions—so we look at carbon footprints and social impacts, not just credit risks. Second, we set up our sustainable-finance framework for our own sourced funds and started issuing green and social bonds to support projects with environmental and social impacts. Third, we have focused on sectors such as energy storage, energy efficiency, the circular economy and sustainable mobility—areas that often fall outside mainstream bank lending. Finally, we have emphasised social inclusion through housing, education and SME programmes that create jobs. Apart from launching the ESG strategy, we rolled out our Corporate Energy Efficiency Loan Programme in 2023 and introduced our Green Momentum Loan Programme in 2025. Furthermore, we have expanded our green-bond issuance and embedded ESG assessments into our credit processes. Sustainability in our own internal operations and sharing financial knowledge with our customers are also parts of our strategy. Transparency is important to us, too, so we published our first integrated sustainability report in 2025, and we publish regular updates on our progress. As I understand it, Mr. Zsámboki, leading a digital transformation and introducing AI (artificial intelligence)-based processes within a highly regulated environment has been a particular challenge for you in your capacity. What have been some of the key hurdles you have faced in this regard? And what cutting-edge innovations do you aim to introduce in the future? First, let’s underline that it is already a success that we can even talk about rolling out AI in a development bank, as it is a highly regulated institution. AI offers huge potential, but rolling it out in a heavily regulated environment isn’t straightforward. You need high-quality data, clear explanations for how algorithms make decisions and robust privacy safeguards. We’ve spent a lot of time on data governance—organising data and ensuring compliance with the General Data Protection Regulation (GDPR)—and on building an internal AI-governance framework. That means having committees to oversee model development and making sure there’s a human in the loop for sensitive decisions. Going forward, we are analysing potential use cases: for example, whether chatbots could improve customer service, analytics tools could help us lend to SMEs with limited credit histories or portfolio-optimisation models could enhance our risk management. But we’ll move to automated credit decisions only once the regulatory picture is clearer. What would you describe as the key planks of MFB’s long-term strategic vision? And what is the bank’s most significant objective over the next 18 months? Our vision is to be Hungary’s catalyst for sustainable, inclusive and innovative growth. That translates into four priorities: filling financing gaps where commercial banks hesitate—like micro-enterprises, rural areas, housing and energy storage; supporting the green transition by scaling up storage, sustainable mobility and circular-economy projects; leveraging digitalisation and AI to serve clients better and manage risk; and deepening partnerships with other development banks and private investors. Looking ahead, we will follow a long-term strategy that emphasises providing loans to address structural gaps and foster sustainable development. Rather than chasing short-term targets, our programmes are designed on multi-year horizons and adjusted as the economy evolves. As a policy-driven institution, we have a mission to support policymakers and the wider economy to make the most of our resources. That means continuing to expand loan programmes for areas such as energy storage, affordable housing and rural development, increasing our issuances of green and social bonds, and investing in digital tools to improve efficiency. By aligning our strategy with national economic goals, we aim not only to react quickly to challenges but also to help shape a more resilient future. MFB is certainly on track to accomplish those objectives. Mr. Zsámboki, thank you again for sharing your bank’s progress with us today.