MNB announced the decision to maintain the countercyclical capital buffer (CCyB) rate at 0% from April 01, 2021. MNB reviews the CCyB rate for Hungarian exposures on a quarterly basis. MNB is also providing answers to the questions (Q&A) raised in relation to the program on capital requirements for green corporate and municipal financing. This program, which was announced in December 2020, supports the reduction of climate change risks and other environmental risks and, in connection with this, the expansion of the financing of the green economy in Hungary.
Due to the transition risks related to climate change and other environmental anomalies, MNB considers it desirable that the share of environmentally sustainable (green) industries and customers on bank balance sheets should increase compared to the “brown” exposure. To this end, starting with the Internal Capital Adequacy Assessment Process (ICAAP) reviews of 2021, MNB intends to improve the risk profile of the banking sector and encourage green lending through a positive incentive, by releasing a part or all of the capital requirements prescribed in Pillar 2 of capital regulation for environmentally sustainable corporate and municipal exposures that meet the criteria set out in the detailed terms and conditions. This preferential capital requirements will be provided by MNB for five years. As a first step, the preferential capital program applies to the financing of renewable energy production and the purchase of (investment in) green bonds.
Keywords: Europe, Hungary, Banking, Regulatory Capital, COVID-19, CCyB, ESG, ICAAP, Pillar 2, Climate Change Risk, Sustainable Finance, Basel, Q&A, MNB
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