The Hungarian National Bank (MNB) fined MBH Bank and its subsidiaries a total of HUF111mn (€289,000) for regulatory shortcomings uncovered in a comprehensive probe, the financial market watchdog said on August 11. The probe revealed that the biggest merger in the financial sector, which was finalised earlier this year, was deeply flawed.

MBH Bank failed to fully comply with rules on enterprise management, risk management, IT security, capital adequacy, risk provisions and data provision.

The central bank conducted a comprehensive examination of Hungary’s second-largest bank group.

MBH Bank completed the three-way tie-up between three mid-sized banks, MKB Bank, Takarekbank and Budapest Bank at the end of April to become the country’s second-largest lender with HUF11 trillion (€30bn) in assets, 500 branches, 2mn clients and 10,000 employers.  The state holds 30% of the stake in the bank through Corvinus investment holding. The rest of the stakes are split between private equity funds owned by businessmen close to the government, including Lorinc Meszaros.

The MNB found delays in adopting group-level regulations at subsidiary companies, and there were deficiencies in keeping individual and group-level customer group records. The bank's fraud management practices did not align with its own regulations and the bank's risk management regulations need updating, the MNB added.

Annual reviews of corporate client qualifications were not consistently conducted and the bank's collateral registry base system was incomplete.

Broken down by companies, the parent bank MBH received HUF87mn in fines and MNB also imposed a HUF13mn fine on MBH’s investment subsidiary, HUF3mn on its mortgage unit.

Euroleasing, the company that reportedly leases the luxury yacht on which Meszaros and his family members were spotted earlier this month, was fined HUF6mn.

Edited to correct HUF to EUR conversion.