Identification of other systemically important institutions and the applicable capital buffer
The MNB identifies and annually reviews the list of globally and other systemically important credit institutions and investment firms based in Hungary, and if necessary, imposes an additional capital buffer requirement on these institutions while continuously monitoring their operation.
Improving the loss-absorption capacity of systemically important institutions is a preventive macroprudential tool intended to limit the severe contagion effects stemming from the insolvency or stress situation of systemically important institutions. The purpose of the buffers is to lower the probability of negative external financial and real economy effects generated by the stress situation of important institutions (as well as the costs to be incurred by the state budget during the prevention of such effects). The requirement may curtail the misaligned motivation of managers and owners of capital arising from the moral hazard problem, as a higher “skin in the game” may prompt stakeholders to reduce the extent of their risk-taking.
On the negative side, banking operations may become more expensive due to the increase in the cost of funds. Imposing the surcharge may reconfirm the institution's priority status both for the relevant institution and its creditors, which could give rise to a special kind of moral hazard , as it increases their expectations about a funding subsidy in the event of a default. This risk, however, is considerably reduced by the uniform resolution framework (BRRD) harmonised at the EU level (e.g.: through bail-in).
Taking into account the exceptional circumstances caused by the coronavirus pandemic, the MNB has decided to release capital buffer requirements set for domestic systemically important banks from 1 July 2020. The excess capital freed up as a result will support the banking sector’s lending activity and its contribution to economic growth. To ensure a proportionate and gradual regulatory treatment, the institutions affected must gradually in three years from 2022 onwards rebuild their capital buffer initially prescribed for 2020.
|Name of the institution||Score||O-SII capital buffer rates|
|MNB Methodology||From 07.01 2020||2021||Planned path|
|OTP Bank Nyrt.||3203||0%||0.50%||1.00%||2.00%|
|UniCredit Bank Hungary Zrt.||1006||0%||0.25%||0.50%||1.00%|
|Kereskedelmi és Hitelbank Zrt.||844||0%||0.25%||0.50%||1.00%|
|ERSTE BANK HUNGARY Zrt.||689||0%||0.125%||0.25%||0.50%|
|Raiffeisen Bank Zrt.||585||0%||0.125%||0.25%||0.50%|
|MTB Magyar Takarékszövetkezeti Bank Zrt.||477||0%||0.125%||0.25%||0.50%|
|CIB Bank Zrt.||437||0%||0.125%||0.25%||0.50%|
|MKB Bank Nyrt.||312||0%||0.125%||0.25%||0.50%|