MNB announces additional capital buffers applicable from Jan 2017

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The National Bank of Hungary (MNB) announced last Wednesday the capital buffer rates expected to apply from January 1, 2017 in addition to other capital buffers, to the nine banks it classified as systemically important according to EU regulations, Hungarian news agency MTI reported yesterday.

The MNB may levy additional capital buffers of not more than 2% of risk weighted assets on banks it identified as “other systemically important institutions”. Such institutions are identified by member states while the global systemically important institutions are identified at an international level. The buffer must be met at a consolidated level and must be in the form of Common Equity Tier 1 (CET1) capital, in addition to other buffers.

The nine banks with expected capital buffer rates in brackets are as follows: OTP Bank (2.0%); Kereskedelmi és Hitelbank (K&H Bank) (1.0%); Unicredit Bank Hungary (1.0%); Erste Bank Hungary (0.5%); Raiffeisen Bank (0.5%); Magyar Takarékszövetkezeti Bank (Takarékbank) (0.5%); MKB Bank (0.5%); CIB Bank (0.5%) and FHB Mortgage Bank (0.5%).

The aforementioned institutions had an aggregate share of more than 83% in terms of balance sheet totals based on audited data from December 31, 2014, MTI said.

The MNB said it will set the final capital buffer requirements for other systemically important institutions individually, in the form of MNB Decrees, in the third quarter of 2016, based on audited data from the end of 2015.

Afterwards, the central bank will annually review the range of systemically important institutions and individual capital buffer rates.

The MNB said it had provided information in advance to the European authorities and market participants regarding the new capital requirement.

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