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Facilitation, deadline-extension in the Green Preferential Capital Requirement Programme

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Budapest, 20 July 2020 The MNB extended its Green Preferential Capital Requirement Programme, announced for resident credit institutions, by one year, until the end of 2024. The Programme does not only recognise discounts for interest rates but also for fees in the future, which provides incentives to introduce additional mortgage loans for energy efficiency purposes. The more flexible conditions may counteract the temporary decline in credit demand resulting from the pandemic situation.

The Magyar Nemzeti Bank (MNB) extended its Green Preferential Capital Requirement Programme, announced to increase the share of energy efficient housing loans offered by resident credit institutions, by one year until 31 December 2024.

The Programme was developed as the risks of green housing loans are lower relative to those of other similar constructions. Therefore, the MNB has prescribed lower capital requirements for banks since the beginning of 2020, if their new, eligible green housing loans, offered while the Programme runs, are priced no less than 0.3 percent lower. It is well noted that originally the Bank had announced this measure in December 2019 before the emergency situation, caused by the pandemic, emerged.

A key facilitation measure in the Programme is that the MNB now also acknowledges deductions offered for fees linked to loans, in addition to the current lower interest rates under the Programme. To allow consumers, opting for green loans, to continue to access loans with favourable conditions to achieve their energy efficiency goals, the credit institution must offer these loans with lower interest rates and/or fees resulting in  at least 0.3 percentage points discount relative to the Annual Percentage Rate of Charge (APRC).

The coronavirus pandemic also poses a great challenge, the financial sector must face, and the uncertainty causes many consumers to delay their planned borrowing and investment. Therefore, in the dimension of ecological long-term sustainable convergence, the Bank decided to extend the Programme and make pricing conditions more flexible, taking account of its goals set under its Green Programme.

To participate in the Programme, credit institutions must execute supplemental data reporting. Its Explanatory notes and table design have been finalised by the Bank, following a consultation with the institutions concerned and a peer review. To reduce the burden on banks, financial institutions may be granted exemption from their data supply obligation deadline of 30 June 2020, but they must apply for it. The MNB also published a detailed information release about the current modifications to the Programme for market participants.

Magyar Nemzeti Bank

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