The €500 million is part of the bloc's European Peace Facility, which aims to help embattled countries, such as Ukraine.
ADVERTISEMENTEU foreign ministers have failed to agree on new funds to finance weapons for Ukraine, after Hungary blocked the decision over the country's biggest Bank, OTP Bank, appearing on Ukraine's list of "international sponsors of the war".
Ukraine's anti-corruption agency blacklisted the Hungarian bank because they say "it provides preferential credit terms to the Russian military, i.e. actually rewards them for the committed war crimes."
The bank, as well as other companies on the list, vigorously reject these claims, saying the reasoning is incorrect and not objective.
"We will oppose the payment of this new half a billion euros from the European Peace Facility to the arms supplying member states as long as Ukraine keeps the OTP Bank on the list of international sponsors of the war," Péter Szijjártó, the Hungarian Foreign Affairs Minister said on Monday.
"OTP is the largest Hungarian bank. OTP is an important player in the Hungarian economy. I could also say that we are all proud of OTP as a Hungarian bank."
The EU is willing to allocate another €500 million in order to support Kyiv in its fight against the Russian invasion, which comes from the European Peace Facility - an off-budget fund that finances activities that have military implications.
Despite the dispute, the EU's foreign affairs chief Josep Borrell, says that the bloc has nothing to do with it and that they are doing everything to resolve the case in order to release the next payments for Ukraine.
"Bilateral, multilateral, we have to have everything we can in order to make the next package of military support for Ukraine approved," Borrell said.
"If one member state has a difficulty, let's discuss it. That's what we are going to do."
Ukraine's blacklist has no legal consequences but calls on consumers to boycott these companies. It also contains many European businesses in France, Italy and Greece, but Hungary was the only EU member state raising the issue at EU level.