Featured Product

    MNB Maintains CCyB at 0.5%, Announces Green Initiatives

    The Financial Stability Board of the Hungarian National Bank (MNB) decided to maintain the countercyclical capital buffer rate (CCyB) at 0.5% from October 01, 2023 and launched a research project, within the framework of its Green Program, to develop supervisory methodology for assessing financial risks resulting from the decline of biodiversity. MNB also announced that new green reporting requirements will be added to the collateral management system of MNB.

    With respect to the assessment of biodiversity risks, MNB launched a two-year cooperation project with the European Commission Directorate-General for Structural Reform Support (DG REFORM), which the European Union finances. Under this project, a supervisory framework for the assessment of financial risks related to biodiversity is being developed, including the transmission channels of physical and transition risks, which will contribute to increased awareness of MNB and banks operating in Hungary, assessment of the exposure, effects, and vulnerability points related to these risks, and the implementation of possible ways to manage these assessed risks. As part of another related development, which follows the adoption of the green toolkit strategy in July 2021, MNB announced that it will continue to supplement its collateral management practice with green elements to develop the domestic green securities market and consolidate best practices.  To strengthen green aspects, develop the domestic green securities market, and consolidate best practices, MNB decided in September 2022 on additional measures to support increased transparency. Pursuant to the decisions, in the case of green securities, a preferential haircut can be applied in the future if the following transparency conditions are met:

    • Publication of the annual allocation report on the issuer's website.
    • Publishing an impact report on the issuer's website: (a) In the case of bonds financing individual projects and investments, a minimum of 2 reports must be published. The first report is to be published before the implementation of the project or investment, the second report after the implementation of the investment, already taking into account specific data. (b) In the case of portfolio-based financing that issues several green bonds and finances several projects, annual impact reports are required.
    • In the case of mortgage bonds, MNB introduces an additional transparency requirement in addition to the normal green bond regulations. Mortgage bonds represent the second largest weight in the Hungarian securities market after government securities. The condition for the application of the preferential haircut, in addition to the allocation and impact reports, is that in the case of the issuer's green mortgage bond, publish a transparency report on its website from the fourth quarter, in which the climate risk aspects of the mortgage bond program are presented.

    MNB considers increasing transparency important not only in the case of green securities, but also in relation to non-green securities markets. For as many non-green issuers as possible to take climate risk aspects into account in their operations and publish a climate risk report on their operations, MNB will also accept non-green securities whose issuers have published a climate risk report on a preferential haircut from October. The purpose of the new regulations is to increase the transparency of green financing forms, thereby helping the development of domestic reporting standards.

     

    Related Links (in Hungarian)

     

    Keywords: Europe, Hungary, Banking, CCyB, Regulatory Capital, Basel, Climate Change Risk, ESG, Sustainable Finance, Collateral Management, Biodiversity Loss, MNB

    Featured Experts
    Related Articles
    News

    US Agencies Issue Several Regulatory and Reporting Updates

    The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.

    January 04, 2023 WebPage Regulatory News
    News

    ECB Issues Multiple Reports and Regulatory Updates for Banks

    The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.

    January 01, 2023 WebPage Regulatory News
    News

    HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements

    The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.

    December 30, 2022 WebPage Regulatory News
    News

    EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR

    The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.

    December 29, 2022 WebPage Regulatory News
    News

    CBIRC Revises Measures on Corporate Governance Supervision

    The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.

    December 29, 2022 WebPage Regulatory News
    News

    HKMA Publications Address Sustainability Issues in Financial Sector

    The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.

    December 23, 2022 WebPage Regulatory News
    News

    EBA Updates Address Basel and NPL Requirements for Banks

    The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.

    December 22, 2022 WebPage Regulatory News
    News

    ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite

    The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.

    December 22, 2022 WebPage Regulatory News
    News

    FCA Sets up ESG Committee, Imposes Penalties, and Issues Other Updates

    The Financial Conduct Authority (FCA) is seeking comments, until December 21, 2022, on the draft guidance for firms to support existing mortgage borrowers.

    December 20, 2022 WebPage Regulatory News
    News

    FSB Reports Assess NBFI Sector and Progress on LIBOR Transition

    The Financial Stability Board (FSB) published a report that assesses progress on the transition from the Interbank Offered Rates, or IBORs, to overnight risk-free rates as well as a report that assesses global trends in the non-bank financial intermediation (NBFI) sector.

    December 20, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8697