Hungarian Banking Regulations for Foreign Banks and Entities

Overview of Hungarian Banking Regulations

Hungary has strict laws governing the operation of banks and financial institutions within its borders. These regulations apply to both domestic and foreign entities, including credit institutions, financial enterprises, and payment institutions.

Licensing and Notification Requirements

Step 1: Determine the Type of Financial Services Offered

Hungarian law distinguishes between three types of financial services:

• Credit institutions (banks)
• Financial enterprises
• Payment institutions

Each type requires a separate license or notification process to operate within Hungary.

Licensing and Notification Requirements for Each Entity

Step 2: Identify the Licensing/Notification Requirements for Each Type of Entity

• Credit Institutions: Require a license from the National Bank of Hungary if established in another European Union (EU) or European Economic Area (EEA) Member State but do not have a branch in Hungary.
• Payment Institutions: Also require a license from the National Bank of Hungary for cross-border services and branches within Hungary.

Cross-Border Services and Branches

Step 3: Consider Cross-Border Services and Branches

If a credit institution or payment institution wants to offer financial services on a cross-border basis in Hungary or establish a branch within Hungary, it must notify the National Bank of Hungary. The National Bank will then inform the relevant entity about regulations pertaining to consumer protection.

Ownership and Foreign Ownership Restrictions

Step 4: Determine Restrictions on Ownership and Foreign Ownership

Hungarian law requires that shareholders with an ownership interest of 5% or more in a bank notify the bank of their indirect holding and any changes therein. Shareholders failing to fulfill this obligation may have their voting rights suspended until they meet the requirement.

Requirements for Proposed Acquisitions

Step 5: Consider Requirements for Proposed Acquisitions

Any person acquiring a qualifying holding in a bank must be independent of influences that could jeopardize the bank’s operation, have a good business reputation, be capable of maintaining leadership and control, and have transparency in business connections and ownership structure. The acquisition of a qualifying holding or additional holdings to reach certain limits requires consent from the National Bank of Hungary.

Note: There is no specific numerical answer to this question as it involves providing information on Hungarian banking regulations rather than solving a mathematical problem.