meta_id 3286479

On June 25, 2026, the Hungarian National Bank (MNB) published Recommendation 7/2026 establishing expectations for identifying and classifying connected client groups under Article 4(1)(39) of Regulation (EU) 2013/575 (Capital Requirements Regulation or CRR). The recommendation aims to enhance predictability in legal application and promote uniform implementation of prudential requirements for credit institutions and investment firms. It applies to Hungarian-based credit institutions and investment firms, as well as third-country branches of institutions from outside the European Economic Area. The MNB developed the guidance by considering the European Banking Authority's (EBA) guidelines on connected clients (EBA/GL/2017/15) and the European Commission's delegated regulation (EU) 2024/1728 supplementing the CRR with technical standards on identifying connected client groups. The recommendation establishes two primary connection types: control-based relationships and economic dependencies. For control-based connections, institutions must identify when one or more clients exercise control over others through shareholding majorities, board appointment rights, or decisive influence. For economic dependencies, institutions must assess whether financial difficulties of one client would likely cause financing or repayment difficulties for another. The MNB specifies that institutions must conduct proportionate investigations based on exposure size, with enhanced scrutiny when total exposure to a single client or group exceeds 5 percent of the institution's core capital. The recommendation requires institutions to establish comprehensive procedures for identifying, documenting, monitoring, and updating connected client relationships. Institutions must maintain current registries of connected client groups and conduct regular reviews, at minimum annually or when material exposure changes occur. For large exposures reaching 95 percent of the large exposure limit, quarterly reviews are mandatory. The MNB expects the highest credit risk decision-making forum to approve and monitor exposures to connected client groups classified as large exposures under CRR Article 392. Institutions must apply these expectations from July 1, 2026, replacing the previous MNB recommendation 28/2018 on the same subject.