2024-05-29 16:50:43
The Hungarian central financial institution requested OTP Financial institution on Wednesday to additional scale back its publicity to Russia and take a number of precautions which the Hungarian Monetary Supervisory Authority will monitor repeatedly.
Central Europe’s largest unbiased lender has step by step decreased its footprint in Russia since Moscow’s invasion of neighboring Ukraine in February 2022, though its publicity stays the third largest amongst European banks, behind Raiffeisen Financial institution and UniCredit, in keeping with a rating by Morningstar DBRS.
The Hungarian central financial institution stated dangers associated to Russian OTP exercise and cost transactions may come up resulting from Western sanctions imposed on Russia, in addition to variations between Russia and the EU guidelines on prevention of cash laundering, financing of terrorism and compliance measures.
“The compliance division of the guardian financial institution ought to set up and repeatedly replace a set of standards authorised by the final administration of OTP Financial institution relating to worldwide cost transactions which might be thought of to have a suitable stage of threat for the group,” the central financial institution says.
The central financial institution additionally stated that OTP ought to scale back the inventory of company loans in Russia, hold the inventory of non-public loans secure and scale back the inventory of non-public deposits.
“These measures may help be sure that the banking group continues to function in a secure, worthwhile and dependable method,” the central financial institution stated. She additionally requested OTP to develop an motion plan authorised by the board and report recurrently on its implementation.
OTP stated the implementation of the Hungarian central financial institution’s suggestions wouldn’t have an effect on administration’s group-level expectations for 2024.
“Based mostly on knowledge for the primary quarter of 2024, the share of the native credit score market of the Russian subsidiary of the OTP group is just 0.14%, and the share of your complete OTP group is 4.2% based mostly on complete belongings,” the financial institution stated in a press release.
OTP says the inventory of company loans in Russia has fallen by 85% for the reason that begin of 2022, whereas the dimensions of its Russian department community has shrunk by 39%.
“OTP Group has already considerably restricted its worldwide cost companies to and from Russia,” the financial institution stated. “As a part of this, for instance, it utterly canceled its companies associated to buyer transactions in US {dollars} involving Russia. (Reporting by Gergely Szakacs in Budapest Modifying by Anna Wlodarczak-Semczuk Modifying by Timothy Heritage, Richard Chang and Matthew Lewis)
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