About the Foundation



AVHGA - Rural Credit Guarantee Foundation provides on-demand credit-default guarantees to micro, small and medium-sized enterprises which are engaged in the agricultural sector or whose activity is related to rural areas.

These guarantees promote financing of enterprises that lack sufficient colleterals which cause high risks to banks.

AVHGA acts in form of a foundation, as a financial enterprise equivalent to banks, which status is unique in the Hungarian financing sector. The Foundation’s status ensures that credit institutions apply more favourable risk rating owing to the guarantee in the financing process, improving the creditability of the SMEs and mitigating banks' risk exposure.


AVHGA – Rural Credit Guarantee Foundation was established in 1991 in the framework of the EU pre-accession fund PHARE Programme, by the Ministry of Agriculture and by 5 commercial banks.

AVHGA cooperates with the whole Hungarian banking system. Thanks to AVHGA’s guarantee, small businesses reach improved creditability and more favourable risk rating by mitigating banks' exposure. Since 1st of January 2008 the Foundation has been operating as a financial enterprise and later the predecessor of the Central Bank of Hungary acknowledged after the necessary approval procedure that the operation of the Foundation as a financial enterprise complies with the criteria relevant for credit institutions, so it authorized the operation of AVHGA as a "financial enterprise equivalent to banks" from 1st of January 2011.

The Hungarian State grants 85% counter-guarantee for guarantees issued by the Foundation. Since 3rd of October 2016, EIF provides AVHGA with 50% counter-guarantee under the COSME programme.

The Foundation's services are used by "small-sized enterprises" as defined by the relevant EU standards

The concept of "small-sized enterprise" is used by the Foundation as referred to in the terminology defined by law with the difference required by the objective of the Foundation. The Foundation applies the concept "SME" as referred to in the relevant Hungarian legislation and, with respect to categories, it applies the provisions of Commission Regulation 70/2001 and Commission Regulation 364/2004 relating to small and medium-sized enterprises. The Foundation grants rural enterprises access to guarantee facilities for loans raised by intermediary bodies directly collaborating for the purposes of SMEs.

Preserving the agricultural profile; differentiated definition of rural areas as used by the Foundation

Agricultural activities and those intended for rural development immediately related to rural areas should remain in the forefront of the Foundation's activities. The rural development objective laid down in the Deed of Foundation might justify extension of the scope of guarantee activities while maintaining simultaneously the appropriate proportions.

The rural development objective laid down in the Deed of Foundation should be practically achieved – in line with the rules of the European Union – first of all in the framework of the General Business Conditions.

Reaching as wide range of agricultural and rural enterprises as possible

Due to the characteristic features of the agricultural sector and to lending problems, guarantees play a key role in direct and indirect financing granted by banks. Guarantees need to be granted not only to agricultural enterprises but also to enterprises operating in rural economic areas and to non-agricultural enterprises. The objectives include making the Foundation's guarantee available for any eligible and viable agricultural and rural enterprise, raising their awareness of the funding facilities and allowing them access to the appropriate bank resources with the necessary institutional guarantee background. To this end, the Foundation has to pursue active marketing-communication activities on the on hand and, on the other hand, it needs to dispose of professional skills which follow up market changes continuously and sufficient assets to ensure its ability to grant more and more guarantees in the agricultural sector if demands increase and in order to satisfy the financing needs of other enterprises operating in the countryside.

Compliance with equity requirements conforming to prudential regulation equivalent to that of credit institutions

The Foundation has to use such asset management practices which enable it to perform the activities intended for the long-term public purpose laid down in its Deed of Foundation.

Owing to the characteristic features of foundations, the Foundation is not aimed to increase assets but to achieve the Foundation's objective on a continuous basis, with no limitation in time. The Foundation will invest and utilize its income and assets over and above those from guarantees claimed and operation in a manner defined in its internal regulations. The assets (equity) include subscribed capital, capital reserve and profit reserve.

The Board of Trustees provides for the compliance with the equity requirements conforming to prudential regulation equivalent to that of credit institutions at any time. The main organizing principle of the management of equity (subscribed capital, capital reserve, profit reserve) is to be able to cover the losses in the process. If the minimum capital adequacy ratio defined in law is reached, the Foundation will make mandatory intervention for the purposes to consolidate its equity position or to narrow its guarantee-taking activity. In addition, it will define specific points of intervention in order to avoid undesirable risk levels and, if any such risk level is established, an action plan needs to be prepared.

Decisions on additional capital raising and on the modification of the risk strategy are made by the meeting of the Board of Trustees and those on payment of founders' contributions are made by the Founders' meeting.

Support to enterprises

The overwhelming majority of the demands for guarantees to be granted by the Foundation is given by demands for subsidized guarantees that is well demonstrated also by the fact that, during the Foundation's existence for near two decades, more than 90% of the guarantees were used in the subsidized guarantee category. Guarantee is considered an aid due to the counterguarantee, however, the aid is granted practically from the Foundation's assets. In terms of economics, the essence of an aid lies in and it can be defined so that the Foundation charges a lower fee for its services than it should charge theoretically for covering its costs (defined in the methodology as a "market fee"), i.e. in line with the essence of its operation, it may not strive to achieve a profit rate similar to that of a profit-oriented enterprise. Consequently, optimization of the aid activity can be considered an important strategic goal of the Foundation, which is enabled collectively by the initial capital provided to the Foundation, the profit reserve it has accumulated during its operation, the aid rules of the European Union, and the institution of counterguarantee provided by the Government.

Maintenance of operation in compliance with the provisions of Hpt and high-level guarantees

The Foundation applies the provisions of Act CXII of 1996 on Credit Institutions and Financial Enterprises (hereinafter: "Hpt") relating to solvency margin and capital adequacy, risk reduction and investment restrictions, as well as the rating of assets, the control system and risk management, and management and controlling.

Well fitted into the system of domestic financial infrastructure, the Foundation is pursuing activities of high professional standard in a manner recognized by credit institutions and by the European Mutual Guarantee Association (AECM) as well. The Foundation has to endeavour to maintain this high level while complying with the efficiency requirements, as well as to develop it further in accordance with the requirements of credit institutions and enterprises, partly by means of further extension and clarification of the guarantee conditions and partly through raising its employees' professional work to a higher standard while using expenses economically and reasonably. The number of the Secretariat's staff needs to be maintained or extended to enable the Foundation to perform its tasks in full and at any time.

Organizational structure
Board of Trustees

The Board of Trustees is the managing, decision-making and representative body of the Foundation.

Members of the Board of Trustees:

  • István Pongrácz, Entrepreneur – Chairman of the Board of Trustees
  • Zoltán Szentirmai, Head of Department, Ministry of Agriculture – Co-Chairman
  • Dr. András Herczegh, CEO of the Foundation – Member
  • László Tóth, Deputy CEO of the Foundation – Member
  • László Szabó, Delagate of the Ministry of Finance – Member
  • István Szabó, Director of OTP Bank Nyrt. – Member
  • Miklós Weisz, Enterpreneur – Member
  • Dávid Váczi- Director of Budapest Bank Zrt. - Member

Permanent participants:

  • Éva Fabríczius Hegyi – Head of Department, Hungarian State Treasury
  • Balázs Mészáros, Delegate from PricewaterhouseCoopers Kft.
Supervisory Body

The members of the Supervisory Board represent the interests of the Founders and are responsible for enabling the Foundation to perform its activity in accordance with the provisions of the Banking Law and other specific legislations.

Members of the Supervisory Body of the Foundation:

  • Péter Horváth, Entrepreneur - Chariman 
  • István Tresó, Managing Director of K&H Bank Zrt – Member
  • Richárd Szabados, Head of Corporate Business of Erste Bank Zrt. – Member
  • István Szántó, Entrepreneur - Member
Internal Organization Structure

Management of the Foundation:

  • Dr András Herczegh – Chief Executive Officer
  • László Tóth – Deputy Chief Executive Officer
  • Tamás Leskó – Deputy Chief Executive Officer
  • Árpád Juni – Guarantee Director
  • Gábor Tóthpál – Redemption Director
  • Dr Brigitta Verebélyi – Compliance Director
  • Attila Becsák – IT Director
  • Zsolt Kecskeméti – Risk Control and Monitoring Director
  • Lénárd Kálmán- Operative Director
International relations


AVHGA is a member of the European Association of Guarantee Institutions (AECM), that is a non-profit association representing the credit guarantee institutions in Europe. AECM has been operating in accordance with the Belgian Association Act since 1992 as a democratic organization independent of any political or financial group. It is now representing 48 guarantee societies operating in 23 countries of the European Union, and Azerbaijan, Bosnia and Herzegovina, United Kingdom, Kosovo, Russia, Serbia, Swizerland and Turkey.

According to AECM Statutes, the main objectives are:

  • to represent the common interest of members,
  • to consolidate the role of the guarantee societies in lending to and development of SMEs, 
  • to harmonize the legal framework of the operating conditions of guarantee societies,
  • to foster the professional operating conditions of guarantee societies,
  • to foster the exchange of information and best practices among members,
  • to make proposals for establishing economic policy guidelines at European level for the intermediate bodies, including the European Union.

Long-term co-operation with AECM is highly essential for the Foundation since thus it has an opportunity to maintain direct relations with European guarantee institutions and to share common experiences and best practices. AVHGA is an active member of AECM: the working group Agriculture is chaired by László Tóth, AVHGA’s deputy CEO.


Website: https://aecm.eu/