The Hungarian National Bank (MNB) identified seven banking groups as systemically important credit institutions and determined their capital buffer rates based on its annual assessment. MNB also published updates on the development of green housing loan products under the Qualified Consumer Friendly Home Loan (MFL) framework and assessed supervisory compliance at Takarékbank Zrt. and Polgári Bank Zrt.
Below are the key highlights of these recent updates:
- MNB reassessed the importance of domestic credit institutions in 2022 based on the data at the end of 2021 and identified seven banking groups as systemically significant. These institutions are OTP Bank Plc., MKB Bank Nyrt., UniCredit Bank Hungary Zrt., Trade and Credit Bank Zrt., Erste Bank Hungary Zrt., Raiffeisen Bank Zrt., and CIB Bank Zrt. Based on the assessment, there is only one change with respect to the list of systemically important credit institutions, which relates to MKB Bank Nyrt taking over the responsibility for group-level compliance with prudential requirements from Magyar Bankholding Zrt. MNB set out the assessment score and the planned transitional path for rebuilding the capital buffers at these institutions during 2022-2024. MNB noted that the capital position of other systemically important institutions (O-SII) has been adequate to establish the capital buffers required from 2023 to the increasing extent previously foreseen. The central bank clarified that, in 2023, the temporary buffer rates will increase by a quarter of the planned final rate, which will reach the planned target value from 2024.
- MNB decided to expand the scope of MFL framework by encouraging the development of green housing loan products and the banking sector financing of green loan goals. Pursuant to the amendment, from April 2023, no disbursement fee or fee and other costs related to the verification of the green loan target may be charged for green loan targets that are in line with the Green Capital Requirement Discount Program of MNB. MNB also announced that to support the wider spread of online lending processes, from January 2024, all MFL loan customers will have the opportunity to complete the loan application process electronically before signing the contract.
- MNB conducted an ex officio target inspection at Takarékbank Zrt. (Takarékbank) and imposed a fine of more than HUF 42 million on Takarékbank due to the shortcomings revealed in connection with the prevention of money laundering and terrorist financing. MNB also imposed a fine of HUF 32 million on Polgári Bank Zrt. (Bank) due to deficiencies in corporate governance, credit risk management, impairment calculation, information technology, data provision, and deposit insurance and obliged the credit institution to eliminate the violations.
Keywords: Europe, Hungary, Banking, Basel, Regulatory Capital, Capital Buffers, O-SII, Systemic Risk, Reporting, Green Loans, Lending, Credit Risk, Mortgage Lending, Takarekbank, Polgari Bank, Governance, Compliance Risk, MNB
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