The controversial foundations of the Magyar Nemzeti Bank (MNB) will reduce investment in government bonds and instead concentrate on real estate, Hungary's central bank announced on June 9.

The MNB argues that the rationale behind the decision is that the return on real estate is expected to be higher than on government bonds. At the same time, the portfolio restructuring looks likely to be aimed at alleviating pressure from the European Central Bank (ECB), which has repeatedly expressed concern over the investments in sovereign debt. The ECB noted in both 2015 and 2016 that the MNB's purchases of government bonds may conflict with rules prohibiting monetary financing.

The change in strategy is yet to be approved by the Boards of Trustees of the foundations, but the head of one appeared confident there will not be any issue. "The necessary decisions will be made in the coming weeks, and the investment portolio of the Pallas Athene foundations will be restructured,” Zoltan Fekete, CEO of Pallas Athene Domus Optima Zrt. told Figyelo.

The central bank’s six charitable foundations received HUF245bn (€790mn) in 2014 from the MNB, officially to promote financial literacy and conduct economic research. They currently hold around HUF200bn in government bonds. The foundations have already have HUF24.5bn invested in real estate, and will start purchasing new properties before the end of this year, the paper reports.

The foundations – which are mired in scandal over their spending and investments in Tesla and Netflix bonds - have already set up five new companies with the aim to purchase and manage real estate.