The bank in question is the OTP Bank, the largest commercial bank in Hungary and one of the largest independent financial institutions in Eastern Europe. Hungarian Minister of Foreign Affairs Peter Szijjarto called Ukraine's listing of OTP Bank "scandalous and unacceptable." (Related: Poland threatens to cut off oil exports to major German refinery if Russian state-owned oil company remains a major shareholder.)
In response, Szijjarto warned that Hungary would continue blocking the release of approximately 500 million euros ($541 million) from the EU's European Peace Facility until the bank is removed from the list.
The EU's proposal would have moved the 500 million euros from the fund to allow EU member states to submit new claims to be reimbursed for the weapons, ammunition and vehicles they send to Ukraine. Since the beginning of Russia's special military operation in Ukraine, the EU has withdrawn a total of about 3.6 billion euros ($3.89 billion) from the European Peace Facility to reimburse member nations for their military aid to Ukraine.
"We cannot support the allocation of another half a billion euros from the European Peace Facility for arms transfers to Ukraine, and we will not give it the green light as long as OTP is on this particular list," said Szijjarto. "It's fair to say that we've had enough."
Szijjarto added that Hungary will also continue opposing any new sanctions against Russia and its allies, saying: "I want to make clear that as long as Ukraine keeps OTP on its list of international sponsors of war, we can't support decisions requiring new economic and financial sacrifice on the part of the European Union and its member states."
Ukraine's National Agency on Corruption Prevention added the bank to its list of "international sponsors of war" on May 5, claiming that the bank continues to operate in Russia despite sanctions and because of its "de-facto recognition of the so-called 'people's republics' of Donetsk and Luhansk."
Relations between Hungary and Ukraine, which share a border, have been tense ever since early 2022, as Budapest continues to refuse to supply Kyiv with weapons or to allow military aid to be transported through Hungary.
Under conservative Prime Minister Viktor Orban, Hungary has maintained close ties with Moscow, argued against EU sanctions and sought to purchase more Russian energy to maintain its energy security.
Szijjarto said Kyiv has become "increasingly belligerent" to Hungary, citing Ukraine's threat to close down Hungarian-language schools catering to the Hungarian minority of the western Zakarpattia Oblast, making up around 12 percent of the Oblast's population.
The foreign minister also cited Ukrainian President Volodymyr Zelensky's threat to bomb the Druzhba pipeline, which links Russia to Hungary via Ukraine.
In response to the current scandal, EU officials said they are working to resolve the issue, including acting as a middleman between Kyiv and Budapest and trying to get a statement from the Ukrainians on whether they had blacklisted the entirety of OTP or just its Russian branch.
"We'll talk to the Ukrainians and we'll talk to the member states, including Hungary," said one senior EU official who spoke with Reuters. "Our priority is clear – it's to help Ukraine win a war. And to do that, there needs to be military and financial aid. It's an absolute priority for the European Union."
Learn more about the situation in Ukraine at UkraineWitness.com.
Watch this episode of the "Ron Paul Liberty Report" as co-hosts former Texas Rep. Ron Paul and Daniel McAdams discuss Hungary's call for a ceasefire in Ukraine.