Budapest, 1 December 2020. – In autumn 2020 the MNB reviewed the list of systemically important credit institutions domiciled in Hungary. Based on the regular annual review, the list of the institutions concerned has remained unchanged, as the systemic footprint on financial markets of the credit institutions already identified as systematically important has remained significant. The MNB maintains its previous decision to temporarily release the buffers from 1 July 2020 in view of the extraordinary circumstances caused by the coronavirus pandemic. Institutions will be required to rebuild the buffers gradually in three years starting in 2022.
The potential financial distress of systemically important institutions (O-SIIs) may not only affect their clients adversely, but may pose a threat to the functioning of the financial intermediary system as a whole through contagion effects, and may indirectly lead to problems for the real economy as well. For this reason, the central bank, acting in its macroprudential capacity, defines and annually reviews the list of domestic systemically important institutions, and prescribes capital buffers to them based on their significance to decrease the probability of their default. In 2020 the Magyar Nemzeti Bank (MNB) reassessed and, as a result, reaffirmed the systemic importance of the eight institutions identified last year based on 2019 year-end data.
There were significant differences in the expansion of the activities of the credit institutions in the financial markets monitored to measure systemic importance. Accordingly, the distribution of the scores aimed to represent systemic importance and the relative position of the credit institutions have slightly changed. This justified the decrease of the lower threshold used to identify systemically important financial institutions from 350 basis points to 275 basis points in accordance with the guidelines of European Banking Authority. The lowering of the threshold ensures that all credit institutions that are relevant to the national economy remain identified as systemically important financial institutions.
Due to the extraordinary economic conditions caused by the coronavirus pandemic, in April 2020 the MNB’s Financial Stability Council decided to temporarily release the capital buffers prescribed to domestic systemically important institutions. According to the decision, capital buffer rates for domestic systemically important credit institutions were reduced to 0 percent from 1 July 2020, and the capital buffer rate of the institutions identified this year will remain zero percent in 2021 also. The excess capital freed up as a result will support maintaining the banking sector’s lending activity and its contribution to economic growth. To ensure a proportionate and gradual regulatory treatment, the institutions affected shall gradually in three years from 2022 onwards rebuild their capital buffers initially required for 2020. The MNB may adjust the final buffer rates of the financial institutions during the annual regular review based on any significant change in their systemic importance.
Scores used for the identification of systemically important credit institutions and their capital buffer rates
|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%|
Note: The identification in 2020 was based on audited consolidated data as of 31 December 2019.
Magyar Nemzeti Bank