Following the recent publication of the National Bank of Hungary (NBH)'s discussion paper on the proposed merger of the Central Bank and the Hungarian Financial Supervisory Authority (HFSA), the Hungarian Government passed a resolution on the termination of HFSA's activities without legal successor and submitted an amended draft version of the Central Bank Act to the Parliament. According to the proposal, NBH would take over all the supervisory, consumer protection and market surveillance roles of HFSA.
In the above mentioned material, NBH supported the merger of the two institutions and proposed that it should take place at the beginning of 2014, while in the draft legislation the effective date is indicated as 1 October 2013.
The draft submitted to the Parliament contains proposals for the new organisational structure of NBH. In addition to the currently functioning Monetary Council, Management Board and Supervisory Board of NBH, Financial Stability Council (FSC) will be established within the Central Bank. It will consist of minimum three and maximum ten members with the chairman being the Governor of NBH. According to the draft bill, the Board of NBH will be responsible for the execution of the FSC decisions. The Governor of NBH will have the right to issue decrees in the same fields as the Chairman of HFSA does today.
The institutions currently liable to pay supervisory fees will continue to pay the same fees to NBH following the merger.
For further details on the discussion paper of NBH on the proposed merger, please refer to the June edition of our GSS Newsletter available on our GSS website here.
Impact on investors: The proposed legislation on the merger aims at the establishment of effective coordination between macro-prudential and micro-prudential supervision so that the oversight of the stability of the entire financial system as well as of the individual institutions on the market can be controlled.