Featured Product

    MNB Publishes Decision to Amend Systemic Risk Buffer Requirement

    September 16, 2019

    MNB published the General Decision of the Financial Stability Council of MNB to amend the systemic risk buffer (SRB) requirement. While calculating the capital requirement, MNB will take into account not only problem project loans but also non-problem foreign currency project loans in the future to prevent the potential re-emergence of systemic risks related to the unhealthy structure of commercial real estate project financing. The modifications will come into effect on January 01, 2020. MNB also notified EBA, ECB, and ESRB about its decision on changing the scope of an existing systemic risk buffer (SRB).

    As of January 01, 2020, the calibration of systemic risk buffer required by MNB will be extended to new risks. In addition to problem exposures already covered, project loans qualified as non-problem, but denominated in foreign currency, will also be included in the determination of the capital buffer rate. To ensure that the capital buffer does not unduly hinder lending processes, non-problem foreign-exchange commercial real estate project financing loans will initially be taken into account with a low, 5% weight. The de minimis limit for the exemption threshold is also being modified. The limit on the amount of problem and non-problem foreign currency project loans is raised to HUF 20 billion to exempt institutions that manage a stock which is non-material from a systemic risk perspective.

    So far, the systemic risk buffer requirement has been aimed at mitigating systemic risks related to non-performing and restructured, but not yet performing, project loans, together with on-balance sheet held-for-sale commercial real estate (the so-called problem stocks). As the targeted systemic risk related to problem exposures has been substantially decreased with the support of the existing systemic risk buffer and along favorable market conditions, adjusting the instrument in accordance with the changing risk environment has become timely. The amendment of the requirement is intended to strengthen the shock resilience in case of an excessive outflow of foreign currency project loans and may also contribute to counteracting excessive risk-taking. In line with the preventive nature of the modification, it is expected that no institution will be required to maintain a systemic risk buffer as of January 01, 2020, based to the rate determination conducted on the third quarter data for 2019. 

     

    Related Link: Notification to EBA, ECB, and ESRB (PDF)

    Effective Date: January 01, 2020

    Keywords: Europe, Hungary, Banking, Systemic Risk Buffer, Systemic Risk, Capital Requirement, MNB, EBA, ECB, ESRB

    Featured Experts
    Related Articles
    News

    BoE Clarifies Approach to Treatment of Payment Holidays on Form PL

    BoE published a statistical notice (Notice 2020/9) explaining the approach for treatment of payment holidays on the profit and loss return or Form PL.

    August 11, 2020 WebPage Regulatory News
    News

    BoE Provides Reporting Update on Form AS and Form FV

    BoE updated the known issues document for the statistical reporting Forms AS and FV.

    August 10, 2020 WebPage Regulatory News
    News

    FED Announces Capital Requirements for Large Banks

    FED announced individual capital requirements for 34 large banks and these requirements go into effect on October 01, 2020.

    August 10, 2020 WebPage Regulatory News
    News

    SRB Publishes Guidance on Implementation of Bail-In Tool

    SRB published a set of documents to give operational guidance to banks on implementation of the bail-in tool.

    August 10, 2020 WebPage Regulatory News
    News

    BIS Publishes Update on G20 TechSprint Initiative

    BIS published an update on the G20 TechSprint Initiative, which was launched in April 2020 and aims to highlight the potential for technologies to resolve regulatory compliance (regtech) and supervisory (suptech) challenges.

    August 10, 2020 WebPage Regulatory News
    News

    OSFI Provides Update on Implementation of IFRS 17 in Canada

    OSFI published a letter that provides an update on the milestones for the implementation of the IFRS 17 standard on insurance contracts.

    August 07, 2020 WebPage Regulatory News
    News

    EBA Provides Clarity on Implementation of Guidance on COVID Reporting

    EBA updated the report on the implementation of selected COVID-19 policies.

    August 07, 2020 WebPage Regulatory News
    News

    FSI Note Discusses Challenges Associated with COVID Relief Measures

    The Financial Stability Institute (FSI) of BIS published a brief note that examines the supervisory challenges associated with certain temporary regulatory relief measures introduced by BCBS and prudential authorities in response to the COVID-19 pandemic.

    August 06, 2020 WebPage Regulatory News
    News

    BCBS Consults on Principles for Operational Risk and Resilience

    BCBS is consulting on the principles for operational resilience and the revisions to the principles for sound management of operational risk for banks.

    August 06, 2020 WebPage Regulatory News
    News

    BoE Updates Template and Definitions for Form ER

    BoE updated the reporting template for Form ER as well as the Form ER definitions, which contain guidance on the methodology to be used in calculating annualized interest rates.

    August 05, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5649