MNB likely to allow lenders to pay dividend from January
Image by Jessica Fejos
The National Bank of Hungary will "most likely" allow lenders to start paying dividend again from January, deputy-governor Csaba Kandrács said in an interview with Napi.hu published on Friday, according to state news wire MTI.
The central bank and financial market watchdog instructed banks not to pay dividend at the start of the coronavirus crisis and extended the mandate, most recently, until the end of 2021.
Kandrács noted that the European Central Bank's recommendation that banks limit dividends expired in September, but MNB kept its instruction in place until year-end because of uncertainty surrounding the repayment moratorium.
Hungary's government rolled out a blanket repayment moratorium in the spring of 2020 to ease fallout from the coronavirus crisis. From November 1, participation in the moratorium was limited to retail borrowers whose incomes have fallen, the jobless, pensioners, and parents raising children, while corporate borrowers must show a 25% fall in revenue to join.
"Now we clearly see that the stock [of loans] remaining in the moratorium can be well managed, and reserve levels are appropriate. Considering this, I don't see any reason for us to maintain the ban [on dividends]. We'll most likely allow payment of dividends from January," Kandrács told Napi.hu.
He said MNB endorses a rethink of the transaction duty in light of its impact on the competitiveness of the local banking sector as well as the cost of using the instant payment system launched in the spring of 2020.
"Use of cash could be better reduced not only if developments related to the instant payment system are more accessible, but if using them becomes cheaper. Additionally, it's a serious threat to the domestic banking sector that players from abroad offering cross-border services aren't burdened with this duty, putting Hungarian banks at a competitive disadvantage. So it's difficult for Hungarian banks to compete with foreign players and offer package pricing for accounts which would further boost the popularity of instant payments," Kandrács said.
"We argue for a restructuring of the transaction duty, and can even offer some ideas, but the decision, naturally, lies with the government," he added.
Kandrács said MNB will make recommendations on "further innovations" to boost the use of the instant payment system, such as QR codes and advancing two-step verification.
He said MNB is in talks on adding bank account packages to its list of "certified consumer-friendly" products which already includes home loans, personal loans, and home insurance policies.
Kandrács acknowledged that the forex market is "an important element for monetary policy transmission in every open economy", such as Hungary's.
He added that MNB policymakers stressed after a policy meeting on Tuesday that the central bank "seeks to break inflation as quickly as possible using all tools and through every channel of transmission".
SUPPORT THE BUDAPEST BUSINESS JOURNAL
Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.