Budapest, 28 June 2019 – The MNB in the course of its regular revision in June 2019 – considering the portfolio cleaning performed – reviewed the systemic risk buffer rates required to be maintained by credit institutions. Based on problem stock of the first quarter of 2019, from 1 July of this year, the MNB does not require CIB Bank Zrt. to maintain a systemic risk buffer following the appropriate cleaning of problem exposures.

The persistently high stock, ratio and concentration of problem project loan exposures resulting from excessive lending in the commercial real estate financing market during the period prior to the 2008 crisis, posed high financial stability risks. To manage those risks, the Magyar Nemzeti Bank (MNB) decided to introduce the systemic risk buffer (SyRB) in autumn 2014, and decided on the details of its application in November 2015.

Considering the stock of problem exposures, the central bank first prescribed the systemic risk buffer from 1 July 2017 in the case of CIB Bank Zrt. and Raiffeisen Bank Zrt.. From 1 July 2018, the MNB revised this decision in accordance with its previously defined schedule, which resulted in a systemic risk buffer only for CIB Bank Zrt.. In June 2019, the MNB reviewed the buffer rates determined in 2018 in accordance with the general decision constituting the basis for use of the systemic risk buffer.

Following the determination of the systemic risk buffer, banks conducted a significant clean-up of their balance sheets, and this tendency continued after the first imposition and first revision of the capital requirements. The banking sector’s stock of problem exposures of HUF 128 billion on 31 March 2018 decreased by a further HUF 69 billion to HUF 59 billion until the reference date of the current review at the end of the first quarter of 2019. The instrument has maintained the incentive for further portfolio cleaning, and therefore the targeted systemic risk decreased considerably in the course of the last year.

Due to the portfolio cleaning during the course of the last year, the capital buffer requirement of CIB Bank Zrt. is reduced from the previous 1 percent to 0 percent. The systemic risk buffer continues to operate as a measure preventing the build-up of systemic risks related to problem exposures; furthermore, the central bank is examining the possibilities for employing the capital buffer for reducing the risks related to project financing.