MNB prescribes capital buffer rates for biggest lenders

Banking

Image by Jessica Fejos

The National Bank of Hungary (MNB) on Wednesday prescribed capital buffer rates for the country's seven "systemically important" banking groups, according to a report by state news wire MTI.

The central bank and financial market watchdog noted that it had lifted capital buffer requirements for systemically important credit institutions from July 1, 2020 because of the extraordinary circumstances caused by the coronavirus pandemic. Those capital buffers will have to be gradually rebuilt by the lenders over three years starting in 2022, MNB said.

After a regular annual review, MNB prescribed a capital buffer rate for OTP Bank, Hungary's biggest commercial bank, of 0.5% for 2022. That rate is set to rise to 1% in 2023 and 2% in 2024.

For Magyar Bankholding, UniCredit Bank Hungary and K&H Bank, capital buffer rates have been prescribed at 0.25% in 2022, 0.5% in 2023 and 1% in 2024.

The rates for Erste Bank Hungary, Raiffeisen Bank and CIB Bank have been prescribed at 0.125% for 2022, 0.25% for 2023 and 0.5% for 2024.

MNB has required systemically important institutions - banks that, due to their systemic importance, are more likely to create risks to financial stability - to adopt systemic risk buffers since 2017. The capital buffer rates were gradually raised and reached target levels in 2020.

The number of systemically important institutions has been reduced to seven because of a tie-up between Budapest Bank, MKB Bank and Takarék Group under the aegis of Magyar Bankholding which is set to become Hungary's second-biggest commercial lender.

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