UPDATE 1-EBRD lends OTP 200 million euros, invests 20 mln

* EBRD's stake in OTP rises to 2 pct from 1.5 pct

* CFO says loan will help OTP increase lending activity

(Adds detail, analyst, share price)

BUDAPEST, July 10 (Reuters) - The European Bank for Reconstruction and Development (EBRD) will provide Hungary's OTP Bank OTPB.BU with a 200 million euro ($279 million) subordinated loan, the EBRD and OTP said on Friday.

The EBRD will use a further 20 million euros to acquire OTP treasury shares, the banks said in a statement.

This will increase EBRD's stake in OTP to 2 percent from 1.5 percent, OTP said.

OTP, Central Europe's biggest independent bank, can draw on the loan facility for a period of six months.

"The capital enhancement from the EBRD will help OTP Bank mitigate the impact of the recession and strengthen its market position in the current challenging environment in Hungary as well as in the region in which it operates," the satement said.

The EBRD investment is part of the joint pledge by the EBRD, the World Bank Group and the European Investment Bank (EIB) to provide over 24.5 billion euros in support of the banking sectors in the region.

"This transaction will further strengthen the capitalisation of OTP Bank and will contribute to raising the overall level of confidence in the banking sector in Hungary and in the region." EBRD Business Group Director Peter Reiniger said.

OTP's Chief Financial Officer Laszlo Urban said the EBRD deal will help OTP increase its lending activity.

Analysts said the announcement was in line with expectations and was unlikely to have a major market impact.

"On the whole, this announcement was no big surprise, but obviously it's positive and increases confidence in the bank," said Peter Dobar, analyst at CIB Bank in Budapest.

Urban told Reuters earlier this week that OTP remains on track for a full year net profit above 150 billion forints ($756.2 million) and needs no fresh capital until the end of 2010. [ID:nL8684314]

But he said the bank may still tap markets as the recent improvement in sentiment created a window of opportunity.

He said that any such move would have to be preceded by a Eurobond offer by the Hungarian government, now under consideration, and would be mostly a confidence boosting step.

At 0720 GMT on Friday OTP traded at 3,170 forints, up 0.6 percent. ($1=.7173 Euro) (Reporting by Krisztina Than; Editing by Hans Peters)