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
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Previous ArticleJFSA Amends Notices on IFRS 9 and Capital Adequacy Requirements
FSB finalized the toolkit of effective practices to assist financial institutions in their cyber incident response and recovery activities.
HKMA urged authorized institutions to take early action to adhere to the IBOR Fallbacks Protocol, which ISDA is expected to publish soon.
FSB published a global transition roadmap for London Inter-bank Offered Rate (LIBOR).
HM Treasury published a document that summarizes the responses received from a consultation on the approach of UK to transposition of the revised Bank Resolution and Recovery Directive (BRRD2).
HM Treasury published the government response to the feedback received on the consultation for updating the prudential regime of UK before the end of the Brexit transition period.
In a recent statistical notice, BoE announced publication of the reporting schedule for statistical returns for 2021.
EC welcomed the joint declaration by 25 EU member states on building the next generation of cloud in Europe.
MAS published amendments to Notice 648 on the issuance of covered bonds by banks incorporated in Singapore.
FDIC has selected 14 technology companies—including Accenture Federal Services, LLC, Fed Reporter, Inc, and S&P Global Market Intelligence, LLC—for inclusion in the next phase of the rapid prototyping competition.
GLEIF announced that financial institutions worldwide can realize a variety of cost, efficiency, and customer experience benefits by assuming a new “validation agent” role within the Global Legal Entity Identifier (LEI) System.