3.4 Resolution

administration was available at the customer service centre, which, however, could be reached by phone and e-mail.

Official training and examination

In contrast to the almost 20,000 candidates earlier, there were 17,000 candidates for the official examinations organised by training organisations, and in the end the number of those actually taking the examination was below 12,000 due to the suspension of examination activities for almost four months owing to the pandemic. Training organisations held a large number of trainings online from April 2020, and thus the MNB examined the appropriateness of the changed platform during its supervisory proceedings, and almost 30 trainings were audited. The inspections mostly revealed minor shortcomings. Since 1 January 2021, an official electronic certificate with an electronic signature is issued to successful examinees.

3.4 RESOLUTION

In 2020, the MNB’s resolution planning activities focused on the review of resolution plans and the establishment and review of the minimum requirement for own funds and eligible liabilities (MREL), in the case of both crossborder banking groups and domestic institutions. In view of the pandemic, the MNB provided institutions a 6-month moratorium on meeting the MREL requirements for 2020.

The MNB actively participated in commenting on the resolution aspects of the draft law transposing into Hungarian legislation the regulatory package aimed at the reduction of European Union banking system risks. The MNB also contributed to the development of level 2 EU regulatory and implementing technical standards, and in connection with this, it prepared the peer review of the methodology on the MREL requirement calculation, to be finalised in 2021 Q1.

Resolution planning and MREL

Within the MNB’s resolution responsibilities, resolution planning is a key area, which also includes the establishment of the minimum requirement for own funds and eligible liabilities (MREL requirement), as well as the enforcement of compliance. The MREL requirement seeks to ensure that institutions have enough instruments even in a potential crisis to absorb losses through write down and that they are able to transform those into equity when restoring the capital requirement after the resolution.

Within the framework of the international cooperation required by European Union and Hungarian laws, the grouplevel resolution plan was reviewed in the case of a banking group registered in Hungary that also has cross-border group members. Thanks to the comprehensive preparatory work, a unanimous decision was taken together with the national resolution authorities concerned on adopting the plan as well as the parent institution’s consolidated and individual MREL requirement and the affected subsidiaries’ individual MREL requirements. In addition, the MNB, acting as the resolution authority responsible for the subsidiaries of certain European Union institutions registered in Hungary, takes part in the work of 15 resolution colleges, and in 11 cases the group-level resolution authority tasks are carried out by the resolution authority of the banking union, the Single Resolution Board (SRB). During the year, several banking groups reviewed their group-level resolution plans and determined the MREL requirements on a consolidated and individual basis with the active involvement of the MNB. In the case of domestic institutions that do not perform cross-border activities, including the institutions subject to the simplified resolution planning requirements, the MNB reviewed resolution plans and fully determined MREL requirements. In connection with resolution planning, special emphasis was placed on increasing the practical feasibility of the plans, and thus, depending on the resolution strategy, the activities at certain institutions were focused on the internal procedures facilitating the use of bail-in and the availability of the data necessary for valuation.

To mitigate the impacts of the state of emergency due to the pandemic on the financial intermediary sector, the MNB provided a 6-month moratorium on meeting the MREL requirements for 2020. At the same time, the MNB continues to monitor and analyse institutions’ issue plans and market developments to ensure compliance with the MREL requirements.

Active engagement in domestic and international regulation

Fundamental changes – mainly in relation to the setting of the MREL requirement – were introduced by the regulatory package adopted by the European Parliament and the Council in June 2019 aimed at reducing the risks of the European Union’s banking system, parts of which pertaining to the Resolution Directive have already been transposed into Hungarian law and most of which have been in effect since 26 December 2020. The MNB participated in commenting on the draft law, and in connection with this, it prepared a peer review of the methodology on the MREL requirement calculation, which will be finalised in 2021 Q1.

MNB experts actively participated in the development of the level 2 EU regulatory and implementing technical