The Financial Stability Board of MNB has set out a comprehensive package of financial measures to mitigate the impact of COVID-19 outbreak on the financial intermediary system. The measures will reduce the administrative burden on banks and allow for flexible application of macro- and micro-prudential rules. This will help to address the expected temporary difficulties and maintain the lending capacity of the banking system. The banking system will be strengthened by the temporary restriction on the payment of dividends as well as by the tightening of the regulatory limits applicable to foreign currency funding. In addition, MNB is offering guidance to banks in daily operational issues related to maintenance of the required service level in the current situation.
In particular, MNB made the following decisions:
- MNB will provide relief from maintenance of the systemic risk buffer in relation to commercial real estate project loan exposures until the end of 2020.
- The Internal Capital Adequacy Assessment Process (ICAAP) reviews of banks will be suspended until September 30, 2020, while the presently valid capital adequacy ratios expected by MNB will be maintained. The institutions may request the ICAAP review to be conducted if they are able to allocate proper resources and MNB will make a decision on such requests.
- In case of a possible violation of the Pillar 2 capital guidance, MNB will not apply the set of supervisory tools at its disposal.
- Meeting of the level of the minimum requirement for own funds and eligible liabilities (MREL), which is planned for 2020, will be postponed by six months.
- The on-site examinations of financial organizations will be postponed by two months. For examinations that do not require on-site presence, only the most important ones will be initiated.
- The on-site phases of reviews related to the Internal Liquidity Adequacy Assessment Process (ILAAP) will be cancelled until December 31, but MNB will monitor liquidity more closely based on regular data supplies
Keywords: Europe, Hungary, Banking, COVID 19, MREL, Macro-Prudential Policy, Pillar 2, ICAAP, ILAAP, Capital Adequacy, Systemic Risk Buffer, MNB
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Across 35 years in banking, Blake has gained deep insights into the inner working of this sector. Over the last two decades, Blake has been an Operating Committee member, leading teams and executing strategies in Credit and Enterprise Risk as well as Line of Business. His focus over this time has been primarily Commercial/Corporate with particular emphasis on CRE. Blake has spent most of his career with large and mid-size banks. Blake joined Moody’s Analytics in 2021 after leading the transformation of the credit approval and reporting process at a $25 billion bank.
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