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    MNB Increases CCyB Rate, Revises Mortgage Funding Adequacy Ratio

    June 30, 2022

    The Financial Stability Board of the Hungarian National Bank (MNB) has decided to increase the countercyclical capital buffer rate to 0.5% from July 01, 2023. Additionally, MNB published a report on fintech and digitalization and revised the regulation on the mortgage funding adequacy ratio (MFAR).

    Fintech and digitalization report. MNB published the fintech and digitalization report on the global and Hungarian fintech ecosystem and the digital maturity of the domestic banking and insurance sectors for the third time. In 2021, the digital transformation of the financial sector gained new momentum both at the international and domestic levels. In the banking sector, there has been substantial development at several participants, also supported by MNB’s digital transformation recommendation. An increasingly wide range of banking products are available through digital channels and users are also more and more open-minded: as a new record, already more than 80% of customers use digital banking channels. Simultaneously with this, the domestic fintech sector has continued to expand, with Hungary becoming home to nearly 150 active fintech enterprises. Additionally, the digital maturity of the domestic insurance sector has strengthened compared to the level seen a year ago, but on the whole it is still at medium level.

    Revised MFAR regulation. Pursuant to the amendment, from July 01, 2022, in addition to the Hungarian forint mortgage-based funds, mortgage bonds and refinancing loans denominated in other foreign currencies will also be eligible for the calculation of the MFAR. To further encourage banks to raise green funds, but to allow sufficient time for the adaptation and build-up of an adequate stock of green mortgage collateral, eligible foreign currency mortgage-backed funds must also meet sustainability (green) requirements after September 30, 2023. In addition, the planned MFAR tightening (increase of the required minimum level from 25% to 30%, stock exchange listing requirement, cross-ownership limitations) will be postponed by one year, so these amendments will take effect on October 01, 2023.

     

    Keywords: Europe, Hungary, Banking, CCyB, Basel, Regulatory Capital, Fintech, Digitalization, Regtech, MFAR, Mortgage Funding Adequacy Ratio, Credit Risk, Lending, MNB

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