MNB bolsters resilience of most significant institutions by building up capital buffers

Budapest, 1 December 2022 – The phasing in of the capital buffers of domestic systemically important institutions continues in 2023 along the path previously envisaged and already commenced. Increasing the buffers contributes to safeguarding long-term financial stability amidst the turbulent economic environment; the graduality of reimposing the buffers supports maintaining bank lending to the real economy.

In 2022, the Magyar Nemzeti Bank (MNB) reassessed the systemic importance of domestic credit institutions based on end-2021 data, and as a result identified seven banking groups as systemically important, the same as last year. During the year the group of the systemically important credit institutions has been modified due to the MKB Bank Nyrt. assuming the role of the parent institution and taking over the responsibility for group-level compliance with prudential requirements from the Magyar Bankholding Zrt. in April 2022, and therefore being identified as systemically important.  The organizational transformation did not modify the significance of the banking group in providing systemically critical financial services.

The MNB has already commenced the gradual reinstatement lasting until 2024 of the capital buffers required for Other Systemically Important Institutions (O-SII), which had been released due to the extraordinary economic conditions resulting from the coronavirus epidemic. Since then, the MNB has assessed the capital position of systemically important banks as sufficient to prescribe once again the phase-in of the buffers along the path envisaged earlier from 2023 onwards. Accordingly, in 2023, the transitional buffer rates will increase by one-quarter of the expected final rates, which are intended to be reached by 2024. The phasing in of the capital buffers further strengthens the loss-absorbing capacity, which is a paramount regulatory objective amid the current economic environment burdened with risks. The MNB will modify the final buffer rates if material future changes in the systemic importance of the credit institutions necessitate adjustments during the annual revisions.

The potential financial distress of systemically important institutions may not only affect their clients adversely, but may also pose a threat to the functioning of the financial intermediary system as a whole through contagion effects, and may indirectly lead to turbulences in the real economy as well. Therefore, 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.

Scores used for the identification of systemically important credit institutions and their capital buffer rates

MNB Note: The identification was based on audited consolidated data as of 31 December 2021.
Source: MNB

Detailed information on the identification of systemically important institutions

Magyar Nemzeti Bank