MNB announced that the list of systemically important credit institutions (also known as SIIs) domiciled in Hungary has remained unchanged, based on the annual assessment. MNB also maintained its previous decision to temporarily release the buffers from July 01, 2020 in view of the extraordinary circumstances caused by the COVID-19 pandemic. The capital buffer rate of the systemically important institutions will remain 0% in 2021. Institutions will be required to rebuild the buffers gradually in three years starting from 2022. In addition, MNB has introduced the preferential capital requirements for green corporate and municipal financing; it also plans to consult about details of the related reporting requirements with banks in the coming weeks.
Introduction of Preferential Capital Requirements for Green Corporate and Municipal Financing
Due to the transition risks related to climate change and other environmental anomalies, MNB considers it desirable that the share of environmentally sustainable (green) industries and customers on bank balance sheets should increase compared to the “brown” exposure. To this end, starting with the Internal Capital Adequacy Assessment Process (ICAAP) reviews of 2021, MNB intends to improve the risk profile of the banking sector and encourage green lending through a positive incentive, by releasing a part or all of the capital requirements prescribed in Pillar 2 of capital regulation for environmentally sustainable corporate and municipal exposures that meet the criteria set out in the detailed terms and conditions. MNB will provide this preferential capital requirements for five years. The preferential capital program will initially cover the financing of renewable energy production (as defined by the EU Taxonomy) and the purchase of (investment in) green bonds, but this list of eligible exposures will gradually expand in 2021.
Announcement on Systemically Important Institutions
MNB has reassessed and reaffirmed the systemic importance of the eight institutions identified last year based on the 2019 year-end data. These institutions are OTP Bank Nyrt., UniCredit Bank Hungary Zrt., Kereskedelmi és Hitelbank Zrt., ERSTE BANK HUNGARY Zrt., Raiffeisen Bank Zrt., MTB Magyar Takarékszövetkezeti Bank Zrt. CIB Bank Zrt., and MKB Bank Nyrt. MNB also published a table that sets out the assessment score for these institutions and the planned transitional path for rebuilding the buffers during 2022-2024.
Keywords: Europe, Hungary, Banking, COVID-19, Regulatory Capital, ESG, ICAAP, Pillar 2, Systemic Risk, O-SII, Capital Buffers, Sustainable Finance, Climate Change Risk, Reporting, Basel, Transition Risk, MNB
FDIC is seeking comments on a rule to amend the interagency guidelines for real estate lending policies—also known as the Real Estate Lending Standards.
ISDA is consulting on the implementation of fallbacks for the sterling LIBOR ICE Swap Rate and for the USD LIBOR ICE Swap Rate.
BIS and BoE launched the BIS Innovation Hub Center in London, which is the fourth new Innovation Hub Centre to be opened in the past two years.
ESRB published recommendations on the reciprocation of macro-prudential measures in Belgium, France, Luxembourg, Norway, and Sweden.
SEC announced that the Office of Information and Regulatory Affairs released the Spring 2021 Unified Agenda of Regulatory and Deregulatory Actions.
EC published the Delegated Regulation 2021/931, which supplements the Capital Requirements Regulation (CRR or Regulation 575/2013) with regard to the regulatory technical standards specifying the method for identifying derivative transactions with one or more than one material risk driver.
BCBS is consulting on preliminary proposals for the prudential treatment of cryptoasset exposures of banks.
EBA issued a revised list of validation rules under the implementing technical standards on supervisory reporting.
BIS Innovation Hub, BDF, and SNB announced that, together with a private-sector consortium led by Accenture, they will conduct an experiment using wholesale central bank digital currency (wCBDC) for cross-border settlement.
ESAs published two amended implementing technical standards on the mapping of credit assessments of External Credit Assessment Institutions (ECAIs).