Financial Crime World

Bank Regulation in Hungary: Key Points

Role of the Magyar Nemzeti Bank (MNB)

The MNB plays a crucial role in supervising banks in Hungary. Its powers include:

  • Supervision: The MNB has the authority to oversee and regulate banks, ensuring they comply with applicable laws and regulations.
  • Resolution actions: In case of a bank failure, the MNB can take necessary resolution actions to protect depositors and maintain financial stability.

Liability and Penalties

Bank managers or directors who fail to comply with regulations may face penalties:

  • Fines: The MNB can impose fines on executive officers who breach laws or internal regulations.
  • Personal liability: Executive officers, members of the board, and supervisory board are liable for ensuring that banks carry out licensed activities in accordance with the Banking Act.

The Hungarian Civil Code sets out general rules for the liability of board and supervisory board members. They must act with due care and diligence, prioritizing the best interests of the company.

Resolution Plans

Banks are required to have written policies and procedures for managing liquidity risk over an appropriate period. This ensures they can respond effectively in case of a bank failure.

Contingent Capital Arrangements

There is no specific mention of contingent capital arrangements in the provided text. However, banks must place 10% of their annual after-tax profits into a general reserve to offset losses incurred during their activities.

By understanding these regulations and requirements, banks can ensure they operate within the framework set by the MNB and comply with relevant laws and regulations. This helps maintain financial stability and protects depositors in case of a bank failure.