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Banking Regulations in Hungary: Understanding the Role of MNB
The Hungarian National Bank (MNB) plays a crucial role in regulating banking activities in Hungary. In this article, we’ll explore the key aspects of bank failures, resolution planning, capital requirements, liability of managers and directors, and personal liability.
MNB’s Role in Bank Failures
The MNB has the authority to pass resolutions in case of bank failures. The MNB may appoint a supervisory commissioner if the dissolution procedure opens after the date of the resolution, at the same time passing the resolution of dissolution. The commissioner’s assignment shall end at the time when the receiver takes over.
Key Responsibilities of MNB
- Appointing a supervisory commissioner in case of bank failure
- Passing resolutions related to bank dissolution
- Ensuring the smooth transition of bank operations
Resolution Planning
Credit institutions are required to have written policies and procedures for identifying, measuring, managing, and monitoring liquidity risk over an appropriate period. They must also distinguish between pledged and unencumbered assets that are available at all times, including during emergency situations.
Key Aspects of Resolution Planning
- Written policies and procedures for liquidity risk management
- Distinguishing between pledged and unencumbered assets
- Emergency preparedness and response plans
Capital Requirements
Banks must maintain a minimum subscribed capital of 2 billion forints. The requirement of prudent operation as it relates to banks means they have to manage funds placed in their custody and own resources to maintain liquidity and solvency at all times.
Key Capital Requirements
- Minimum subscribed capital of 2 billion forints
- Prudent operation and management of funds
- Maintenance of liquidity and solvency at all times
Liability of Managers and Directors
The liability of members of the board and supervisory board is regulated by different acts. The Hungarian Civil Code sets out general rules for due care and diligence, while specific regulations are laid down in the Banking Act.
Key Liability Provisions
- Due care and diligence as per the Hungarian Civil Code
- Specific regulations in the Banking Act
- Executive officers’ liability for breaching rules and managerial duties
Personal Liability
Managers or directors may be personally liable for damages caused by breaching rules, charter documents, or managerial duties. They will act at all times with due diligence and expertise consistent with professional requirements applicable for their respective positions.
Key Aspects of Personal Liability
- Personal liability for damages caused by breaching rules
- Due diligence and expertise as per professional requirements
- Application of Labour Code rules for employee managers or directors.