The Hungarian National Bank (MNB) decided to maintain the countercyclical capital buffer (CCyB) rate at 0% after April 01, 2022 and made announcements addressing climate-related financial disclosures, green mortgage bonds, and fines imposed on K&H Bank Group.
Key highlights of these recent developments follow:
- MNB became on of the first central banks to publish its climate-related financial disclosures relying primarily on the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD). The report on climate-related financial disclosures identifies, measures, and publishes climate risks related to the operational activities and financial instruments as widely as possible and in a transparent manner, thereby providing guidance to the participants of the domestic financial sector.
- MNB published its journal The Credit Institution Review, with the March issue focusing on certain financial issues related to climate change. The studies presented in this issue focus on impact of climate change on U.S. mortgage lending, the climate exposure of Hungarian credit institutions, credit risk loss estimates, and the transition to IFRS-based reporting. Assessment of the climate exposure of the corporate loan portfolio of credit institutions operating in Hungary reveals that Hungarian institutions may be more exposed to the negative effects of climate change than their European Union counterparts: 1.2% of Hungarians are classified in the upper quarter, which is presumably very exposed to transition risks, while more than 55% are classified in the upper middle quarters, which are exposed to high transition risks.
- MNB and the Monetary Council decided to increase the energy requirements for eligible housing by increasing the budget of the FGS Green Home Program by HUF 100 billion and to tighten the conditions of the Green Mortgage Bond Purchase Program. The amendments will come into effect on July 01, 2022.
- MNB conducted a comprehensive group-wide investigation of four members of the K&H Bank Group and imposed HUF 67.3 million in supervisory fines. The group’s leading credit institution, K&H Bank Zrt., was identified with deficiencies in the areas of collateral management, collateral valuation and registration, credit risk, impairment training, corporate governance, information technology and security, supervisory data provision, and the "NDIF deposit register."
Related Links (in Hungarian)
- Press Release on CCyB Rate
- Press Release on Climate Disclosures
- The Credit Institution Review, March 2022
- Press Release on Green Mortgage Bonds
- Press Release on K&H Bank
Keywords: Europe, Hungary, Banking, Credit Risk, Regulatory Capital, Basel, Climate Change Risk, ESG, Reporting, CCyB, Disclosures, TCFD, Green Bonds, Lending, RRE, IFRS 9, MNB
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