Magyar Nemzeti Bank conducted a comprehensive group-wide investigation, including an on-site inspection, at CIB Bank Zrt. (CIB Bank) and CIB Lízing Zrt. (CIB Lízing) as of March 30, 2020, to review the work of the Banking Group. . Among other things, the supervisory investigation identified deficiencies with regard to delays in reporting and record-keeping of external activities, internal control area activities, and the organization and recording of fraud prevention operations. He also mentioned that
The CIB Bank Group’s internal regulatory framework is not consistent with actual practice, and the regulation of some topics is excessively fragmented.
According to the Central Bank’s announcement, it is difficult to see the bank’s internal regulations on credit risk monitoring, and effective risk monitoring is not guaranteed in all cases. While handling problematic cases, the bank collects return data from collateral. Presentation and approval of collection strategies to corporate clients was delayed, and there was a lack of tendering and review for the selection of external debt managers on the retail side. Furthermore, there is a need to clarify the bank’s internal regulations regarding the definition of customer groups, and customer groups are not always formed in accordance with legislation.
Some of the bank’s personal loans violated income-proportional repayment (JTM) regulations, as well as late submission of data to the central credit information system.
Magyar Nemzeti Bank also stated that CIB took into account some claims with incorrect risk weighting while calculating capital requirements, deficiencies arose in the area of impairment assessment, and in many cases, the weighting of credit limits was not consistent. Credit institution regulation regarding credit rating and assessment under IFRS 9 is fragmented and sometimes contradictory. MNB also established that some supervisory data services were also completed incorrectly or incompletely. The bank used many legacy IT systems and software supported by the manufacturer.
They were severely punished
Due to the violations, the Financial Supervision Authority fined CIB Bank 62.5 million forints, and CIB Lízing 5.5 million forints. It also obligated institutions to report on the measures taken to solve problems within the dates specified in the decisions. When determining the amount of the fine, in the case of CIB Bank, the significant or high risk weight of a number of legal violations was considered an aggravating circumstance, as well as the fact that
The credit institution has not yet completely eliminated some of the deficiencies discovered during previous investigations.
“At the same time, the unique or low number of violations of certain rules, the cooperative behavior of CIB during the investigation, and the measures already implemented or planned to resolve the problems are considered mitigating circumstances,” the central bank concluded its announcement. .
