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excerpt PART IV DEPOSIT INSURANCE AND INSTITUTIONAL PROTECTION Chapter XV The National Deposit Insurance Fund Section 97 (1) Credit institutions - with the exceptions specified in Subsection (3) - must join the National Deposit Insurance Fund (hereinafter referred to as "Fund"). (2) Foreign branch offices of credit institutions that have their registered offices in the territory of the Republic of Hungary shall be covered by deposit insurance services provided by the Fund, except where the laws of the country in which the branch office is established do not permit it. Foreign branch offices of credit institutions that have their registered offices in the territory of the Republic of Hungary may voluntarily join the deposit insurance scheme of the given country. Credit institutions shall notify the Fund when joining the deposit insurance scheme of the host country, whether compulsorily or voluntarily, including the conditions for joining, immediately upon gaining knowledge or when the application is lodged. (3) Branch offices of credit institutions registered in other Member States of the European Union are not required to join the Fund if they are covered by a deposit-guarantee scheme under Directive 94/19/EC of the European Parliament and of the Council. If the Supervisory Authority gives its permission, branch offices of third-country credit institutions shall not be required to join the Fund if the Supervisory Authority determines that they have deposit insurance that is the equivalent of the deposit-guarantee scheme prescribed under Directive 94/19/EC of the European Parliament and of the Council. (4) When judging the equivalence of a deposit-guarantee scheme within the meaning of Subsection (3), the Supervisory Authority shall consider: a) the deposits that are covered by the deposit insurance; b) the clientele that is affected by the deposit insurance; c) the amount of deposit insurance; d) the expected time requirement for deposit payment on the basis of the deposit insurance procedures; e) the possibility of filing deposit claims; f) the opinion of the Fund. (5) If a branch office is not required to join the Fund pursuant to Subsection (3), it may voluntarily join the Fund in order to obtain the supplementary cover referred to in Subsection (7) if it is able to meet the Fund’s requirements for membership. (6) Any branch office of a credit institution established in another Member State of the European Union that is not covered by a deposit-guarantee scheme prescribed under Directive 94/19/EC of the European Parliament and of the Council must join the Fund in order to obtain the supplementary cover referred to in Subsection (7). If, in the opinion of the Supervisory Authority, the branch office of a third-country credit institution does not have deposit insurance that is the equivalent of the deposit-guarantee scheme prescribed under Directive 94/19/EC of the European Parliament and of the Council, it shall join the Fund in order to obtain the full range of insurance coverage. (7) If the maximum amount of compensation provided by the Fund or the scope of deposits covered exceeds the maximum amount guaranteed, the extent of cover or the scope of deposits covered by a deposit-guarantee scheme for branch offices, the Fund shall, at the request of the branch office, provide supplementary cover upon the branch office joining the Fund. Supplementary compensation may be claimed if the competent authority of the country in which the head office of the branch is located notifies the Fund about frozen deposits. Other aspects of supplementary compensation claims shall be governed by the provisions of Section 105. (8) The Fund may enter into cooperation agreements with foreign deposit-guarantee schemes and with foreign supervisory authorities, and may exchange information from the records on deposit holders covered by the deposit-guarantee schemes and on the insured accounts, and for the settlement of compensation claims. The various deposit-guarantee schemes shall inform each other of the amount of compensation they are liable to pay to any given deposit holder. Section 97/A Compensation for deposits collected by branch offices of third-country credit institutions may be paid only up to the amount insured by the Fund. Section 98 (1) The Fund shall be responsible to a) to take the actions specified in Section 104 for preventing the freezing of deposits, b) to pay compensation in the amount specified in Section 101 to a depositor whose account held at a member credit institution is frozen, as well as c) to perform the tasks, related to guarantees provided on certain deposits or to the fulfilment of a given insurance, for a consideration, based on an order under a separate agreement entered into with the Government, d) providing depositors with information in Hungarian or, in the case of foreign branch offices of Hungarian-registered credit institutions, the language of the country in which the branch office has been established. (2) Based on an order received from the depositor and other creditors, the Fund shall carry out representation within its scope of responsibilities defined in Subsection (1) at composition negotiations and during liquidation proceedings. Deposits Insured by the Fund Section 99 (1) The insurance provided by the Fund applies to registered deposits only. (2) The insurance provided by the Fund - with the exceptions set out in Section 100 - shall apply to all deposits regardless of the number and currency of deposits which have been placed a) without any state guarantee or state surety assumed according to law until 30 June 1993, and b) without any state guarantee after the 30th June, 1993 at credit institutions which are members of the Fund. (3) The insurance provided by the Fund shall apply to deposit documents issued or offered in series similar to securities until 30 June 1993, irrespective of its denomination. Section 100 (1) The insurance of the Guarantee Fund shall not cover the deposit accounts of a) budgetary organs, b) business associations in exclusive state ownership, c) local governments, d) insurance companies, voluntary insurance funds and private pension funds, e) investment funds, f) the Pension Insurance Fund and the Health Insurance Fund and their management and administration bodies, g) appropriated state funds, h) financial institutions, i) the NBH, j) investment companies, members of the stock exchange and commodities brokers, k) compulsory or voluntary deposit insurance, institution and investor protection funds, Pension Guarantee Funds, l) credit institution executives, a credit institution's appointed auditor, persons who own at least a five per cent interest in the credit institution, and the close relatives of any of the above who share a common household with them, m) economic organizations [Paragraph c) of Section 685 of the Civil Code] in which the person described in Paragraph l) holds a qualifying participation, n) venture capital companies and venture funds, nor the foreign equivalents of such deposits. (2) The insurance provided by the Fund shall not apply furthermore to a) deposits on which the depositor receives significantly higher interests or other pecuniary benefits according to the contract as compared to the deposits of the same amount and for the same fixed period at the time of execution of the contract, and b) deposits in respect of which it has been determined by a definitive court decision that the sum deposited therein originates from money laundering. c) deposits placed in a currency other than the euro or the legal tender of the Member States of the European Union or the Organization for Economic Cooperation and Development. Indemnity Paid by the Fund Section 101 (1) The Fund shall compensate persons entitled to compensation for the principal and interest on frozen deposits up to a maximum amount of six million forints per person and per credit institution. In the case of deposits in foreign exchange, the amount of compensation and the amount limit specified in this Subsection shall be determined based on the official foreign exchange rate effective on the day on which the deposit was frozen, regardless of the time of payment. The amount of compensation paid by the Fund is 100 per cent up to one million forints, and for amounts over the one-million forints limit, one million forints and ninety per cent of the amount over one million forints. (2) The Fund shall compensate persons entitled to compensation for uncapitalized and unpaid interest due on frozen principal prior to the initial date of paying compensation specified in Subsection (1) of Section 105 up to the limit specified in Subsection (1) of this Section by calculating with the interest rate specified in the contract, but by no more than the average central bank prime rate (time-weighted) used during the period of interest payment. (3) In the case of foreign exchange deposits, the Fund shall pay contractual interests but not more than an interest calculated at the mathematical average rate of interests quoted by the five largest Hungarian credit institutions - based on the previous year's balance sheet total - in the same currency for the same fixed period of currency deposits at the time of execution of the contract. (4) In the case of premium deposits, contractual interests shall mean the interests at which the credit institution accepting the deposit has created the prize base since the drawing date preceding date of payment. As for the calculation of interests, the date of drawing preceding the date of payment shall be considered as the date of fixing. (5) The depositor may not, upon any grounds, demand any payment from the Fund over and above the compensation amount defined in Subsections (1)-(4). (6) In the case of joint deposits, the amount limit of compensation defined in Subsection (1) shall be taken into account separately in respect of each person entitled to compensation. From the point of view of calculating the compensation amount - unless otherwise stipulated in a contract -, the depositors shall be entitled to the deposit amount in equal proportions. (7) In the case of merger of credit institutions, the deposits - with the exception of home savings deposits - of the same depositor that were put in the merging or combining credit institutions shall continue to be considered as separate deposits in terms of the amount limit specified in Subsection (1) for a maximum period of five years. (8) In the case of assignment of customer accounts, in terms of the amount limit specified in Subsection (1), the regulations on mergers under Subsection (7) shall duly apply. (9) No compensation shall be paid on deposits in connection with which a criminal action is in progress due to money laundering allegations until the definitive conclusion of such proceedings. (10) The amount limit of compensation defined under Subsection (1) for deposits placed in collective deposits shall be taken into account separately for each depositor irrespective of the date on which the deposit was made. Section 102 (1) In the case of deposits insured by the Fund, any set-offs may be made between the credit institution and the depositor if the depositor has overdue debts or debts falling due until the repayment of the deposit towards the credit institution relating to loans or other transactions. The credit institution shall inform the Fund about its set-off claims and provide sufficient evidence to substantiate such claims. The credit institution shall produce documents in proof of having notified the depositor (debtor) of its set-off claim. The Fund shall suspend payment on the deposit in question until evidence is produced. If the set-off is executed, the Fund shall pay the depositor the amount remaining after deduction of the amount specified in Section 101 due and transferred to the credit institution. (2) In the course of determining the amount of compensation, all frozen receivables due to the client from a member of the Fund are to be added up. If a member of the Fund has overdue receivables or receivables falling due by the time the compensation is paid to the client, it shall be included in the client's receivables when determining the compensation amount. (3) In the case of deposits serving as collateral, the Fund shall effect any payment only if the title to receiving the compensation amount can be determined beyond doubt based on the parties' agreement or on the definitive resolution of a court or authority. Section 103 (1) The Fund may assume insurance of deposits intended to be insured by the state following 30 June 1993 for a fee agreed upon. (2) If deposits of a credit institution authorized to accept deposits covered by a state guarantee (joint and several guarantee) are frozen, the central budget shall begin to pay the funds required for honoring the guarantee to the Fund within thirty days following the freezing of the deposit concurrently with making payments to the depositors. The Fund may only use these funds for fulfilling payment obligations deriving from honoring the state guarantee, which payments may be supervised by a representative of the Ministry of Finance in the premises of the credit institution. (3) The Fund may execute the tasks described in Subsections (1) and (2) according to a written agreement with the state. (4) Receivables due to the depositors from the credit institution shall pass to the state up to the amounts paid on the grounds of honouring the state guarantee. By passing of the receivables, the state shall succeed the formerly entitled party. The state is entitled to enforce its receivables in course of the liquidation proceedings. In the course of liquidation of the credit institution, the state is entitled to declare itself as a creditor also in respect of the deposits from which the rights have not yet been passed on the state if the state is otherwise required to effect payments under a guarantee. Chapter XVI Compensation Prevention of Payment of Compensation Section 104 (1) In addition to payment of compensations, the Fund may also assume other commitments (extension of loans and subordinated loans, acquisition of ownership interests in a credit institution, assumption of joint and several guarantees, providing collaterals for the transfer of deposit holdings, etc.) to facilitate the beneficial effects of extraordinary measures (Sections 157-168) taken by the Supervisory Authority as well as to avoid the freezing of deposits within the framework as defined in this Section and in a manner as agreed upon with the Supervisory Authority. (2) In order to avoid payment of compensation, the Fund shall choose the course that bears the least amount of long-term deficit for the depositos, the credit institutions and the central budget alike. (3) The Fund may assume the commitments described in Subsection (1) exclusively on customary business conditions (interests, commissions, rates). (4) The Fund shall cover the commitments defined in Subsection (1) with adequate security. In the event the credit institution is liquidated, such securities must be considered as validly stipulated in due time even if they have been stipulated on terms other than those defined in Paragraph b) of Subsection (1) of Section 57 of the Bankruptcy Act. (5) In the interest of settlement of the credit institution's position, the total amount of the conditional and unconditional commitments, assumed according to Subsection (1), may not exceed the expectable total amount of compensations to be paid on insured deposits placed with the credit institution pursuant to Section 101 and the costs incurred by the Fund in connection with the payment thereof. Payments from the Fund Section 105 (1) The Fund shall begin to compensate the depositors within fifteen days of the day on which the deposits were frozen or, if in the case of a Supervisory Authority decision under Paragraph c) of Subsection (1) of Section 30 or if liquidation proceedings have been initiated, within fifteen days of the publication of the court order on liquidation, whichever of the three occurs first. Such compensation payments shall be completed within three months. The Fund may make no more than two requests to the Supervisory Authority to extend the payment deadline by up to three months each time. (2) The Fund shall publish the first day of enforcement of claims, the name of the credit institution entrusted with effecting payments, and the place(s) and method of enforcement of claims in at least two daily newspapers of nationwide circulation. (3) If the person entitled to compensation provides the necessary data for proving his entitlement and these data are consistent with the data on record specified in Subsection (4), the Fund shall have due compensation paid to such person or to another person authorized by that person in a private document with full probative force. (4) In the case of registered deposits, the deposit collecting credit institution must record two further identification data - from among those listed in Schedule No. 3 as prescribed by the Fund - in addition to the depositor's name for the purposes of clear determination of the entitlement to compensation. (5) Payments shall be made through orders given to credit institutions, by means of depositing the sum of compensation in another credit institution, postal transfer, check or direct cash payment in the legal tender of the country where the deposit is placed. Compensation shall be paid out only if above the equivalent of five hundred forints. Section 106 An insolvent credit institution shall, when requested by the Fund, enter into an agreement with the Fund to receive the compensation claims (claim applications) that are due on the deposits covered by the Fund and perform settlement-related duties. For these services, the credit institution shall be entitled to a fee as stipulated in its last standard service agreement to be in effect while it was operating or in accordance with the item in its last standard service agreement that is most similar in content. Assignment of Paid Deposit Receivables Section 107 (1) In the event the Fund has paid compensation to the depositor, the receivables due from the credit institution shall be assigned - up to the amount paid - from the depositor to the Fund. With such assignment, the Fund shall take the place of the formerly entitled party. The Fund shall be entitled to enforce the assigned receivables in the liquidation proceedings. (2) The credit institution concerned shall repay or reimburse the Fund the amounts paid and the costs incurred by the Fund in relation to the payments in the case of any payments made from the Fund to the person entitled to compensation or of any payments deriving from the fulfilment of commitments assumed by the Fund under Section 104. This provision shall also be observed if the credit institution's membership in the Fund has been terminated. (3) In the course of liquidation of a credit institution, the Fund shall also be entitled to declare itself as a creditor in respect of the deposits from which the rights have not yet been assigned to the Fund but in respect of which it has a payment obligation according to Section 101, including the costs incurring in relation to effecting of the payments. (4) For the purposes of Subsection (2), the paying credit institution's fee, the costs of transfers, printing costs, and communications costs shall be considered as costs incurred by the Fund in connection with making compensation payments. Chapter XVII Legal Status and Organization of the Fund Legal Status of the Fund Section 108 (1) The Fund is a legal entity. (2) The Fund is seated in Budapest. (3) The Fund may not be obliged to pay any corporate taxes, local taxes or duties on its assets, revenues and proceeds. (4) The Fund's monetary assets may not be diversified and may not be used for purposes other than those specified in Section 98. (5) The Fund's equity capital may not be distributed. Section 109 The Fund's financial and accounting audit shall be performed by the State Audit Office. Section 109/A (1) The Fund shall appoint an auditor. (2) The Fund’s auditor shall be selected from among persons entitled to audit financial institutions. (3) The term of appointment for an auditor who is a natural person shall be limited to five years. The same auditor may be contracted once again three years after the original term expires. An auditor employed by an auditing firm (employee, executive officer, working member) may audit the books of the Fund for a maximum period of five years and may be contracted once again three years after the original term expires. (4) It is the auditor's responsibility to audit the Fund’s accounting records and annual report and to comment on the authenticity of the material submitted to the board of directors in connection with the management of the Fund and the management and use of assets. Organization of the Fund Section 110 (1) The Fund's governing body is the board of directors. (2) Members of board of directors of the Fund are: a) the Secretary of State for Public Administration of the Ministry of Finance, b) the Vice President of the NBH, c) the Chairman of the Supervisory Authority, d) two persons appointed by the interest representation organizations of credit institutions, and e) the managing director of the Fund. (3) Members of the board of directors - with the approval of the board of directors - shall appoint a permanent proxy who shall attend the meetings of the board of directors in the absence of the member with full rights of making decisions. (4) Meetings of the board of directors shall have a quorum if more than half of the members are present. Resolutions of the board of directors shall be passed by simple majority of votes. In the case of a tie vote, the chairman's vote shall be decisive. Any assumption of commitments by the Fund shall be subject to the affirmative votes of at least four members of the board of directors. The measures specified in Paragraph o) of Subsection (1) of Section 111 shall not be applicable if they are opposed by any member of the Fund's board of directors. (5) The board of directors shall elect a chairman and a deputy chairman annually from among its members. The managing director may not be elected as chairman or deputy chairman. Duties of the Board of Directors Section 111 (1) The board of directors shall a) govern and control the financial management and other activities of the Fund, b) approve the rules and regulations of the Fund, c) determine the tasks and remuneration of the managing director and representatives of the Fund, d) decide on the composition of special ad-hoc committees created for the performance of certain tasks, e) determine the time, location and agenda of meetings of the board of directors, f) determine the application of special symbols, information and other instruments for credit institutions based on which it can be determined that the deposits placed with the credit institution are insured, g) decide on actions to be taken in respect of performance of the Fund's tasks, h) determine the order of payments to be effected by the Fund under this Act, i) decide on the Fund's budget, including its operating costs, j) approve the Fund's annual account and auditor's report, determine the Fund's financial position once a year on or before 30 May of the year following the end of the financial year, and it shall submit its report thereupon to the State Audit Office and send the same to the credit institutions, k) establish once a year the Fund's fee policy within the framework of this Act and shall notify the credit institutions on this policy; shall determine the members' annual payment obligations based on the fee policy, l) decide on any exclusions, m) determine any obligation to pay increased and extraordinary fees as described in Subsections (6)-(8) of Section 121, n) decide on the criteria for the measures described in Section 104, o) decide on the application of measures described in Section 104, p) devise the Fund's control plan once a year, q) perform other tasks described in this Act. (2) When performing its tasks, the board of directors may use the services of the Supervisory Authority. Section 112 (1) The board of directors shall appoint and recall managing directors as well as exercise employer's rights in respect of them. The board of directors may transfer this right - with the exception of appointment and dismissal - to the chairman of the board of directors. (2) The board of directors shall control the activities of the Fund's managing director. Managing Director and Labour Organization of the Fund Section 113 (1) The Fund has an independent labour organization. (2) The managing director shall perform the operative management of the Fund's activities. The managing director shall exercise employer's rights in respect of the employees. (3) The managing director - with the consent of the board of directors - may issue orders beyond employment or sign cooperation agreements for the performance of certain tasks. (4) In respect of the Fund's manager and employees, the provisions of Act XXII of 1992 on the Labour Code shall be applied. Section 114 When acting within the scope of its responsibilities, the board of directors shall issue the orders by duly applying the rules of conflict of interests described in this Act. Disclosure of Information to the Fund Section 115 (1) The Fund may only request information from the credit institutions which are necessary for its activities and which are not available to the NBH or the Supervisory Authority. (2) Upon the Fund's request, a) the credit institution shall be required to provide information from the data described by the Fund in compliance with this Act, b) the Supervisory Authority and the NBH shall be required to provide information from the data available to them. (3) The executive officer of the branch office that has joined the Fund shall immediately notify the Fund in writing if the parent credit institution or any of its branch offices in any country has become insolvent. (4) The Fund may use the information described in Subsection (2) only to the extent required for the performance of its duties. (5) Upon the board of directors' consent, the Fund shall have powers to conduct inspections at member institutions to examine compliance with the obligations pertaining to deposit insurance. (6) If, on the basis of the available data, the Fund reaches the conclusion of any likelihood of it having to intervene at a credit institution as described in this Act, the Fund shall be entitled to examine the credit institution's books, accounts and records. The Fund must obtain the permission of the Supervisory Authority to carry out such examinations. (7 During the examination described in Subsections (5) and (6), the Fund or the person representing the Fund may inspect the credit institution's books, accounts and records and request information from the credit institution's executive officers, employees, auditor, receiver or liquidator. Section 116 (1) All bank secrets and business secrets as well as data, facts or circumstances, obtained by the persons employed by the Fund, or being in other legal relationship for the performance of work or appointed by the Fund, as well as the members of the executive board, and all data, facts or circumstances which are not required to be disclosed by the Fund to other authorities or to the public shall be kept thereby as professional secrets. (2) In course of any inspection carried out by the Fund, the persons referred to in Subsection (1) shall be treated as official persons. Section 117 Any claims against the Fund for damages caused unlawfully may be enforced only if properly evidenced that the Fund's action or negligence violates any law and the incurred damages have been caused thereby. Keeping of the Accounts and Cash Management of the Fund Section 118 (1) The Fund's bank account is operated by the NBH. (2) All of the Fund's revenues, including those from its operation, shall be credited to the Fund's current account; on the other hand, operating expenses and payments in connection with insurance activities and payments relating to the prevention of the freezing of deposits shall be made from this current account. (3) The Fund's monetary assets - with the exception of petty cash, the liquidity reserve kept on the current account and the amounts transferred to a credit institution for effecting payments or for other purposes necessary for the Fund's operation - shall be kept in government securities. (4) The Fund's profits, if any, may only be used to increase its equity capital. Chapter XVIII The Fund's Resources Section 119 (1) The Fund's resources shall be: a) affiliation fees, b) regular or extraordinary annual payments by the credit institutions, c) eighty percent of the fines collected by the Supervisory Authority from credit institutions, not including credit unions which are members of a voluntary deposit insurance or institutional protection fund, d) loans raised by the Fund, e) other incomes. (2) The Fund may raise loans from: a) the NBH or b) credit institutions to perform the tasks conferred under Paragraphs a)-b) of Subsection (1) Section 98. (3) Upon the Fund's request, in the case described in Subsection (2), the NBH may grant a loan within eight days and the Government shall assume joint and several guarantee - on the loan borrowed by the Fund in the interest of fulfilment of its obligations described in Paragraph b) Subsection (1) of Section 98 - according to Section 33 Subsection (3) of Act XXXVIII of 1992 on the State Budget. Affiliation Fee Section 120 A credit institution that has been authorized by the Supervisory Authority to collect deposits shall, upon joining the Fund, pay a one-time affiliation fee equal to half percent of its subscribed capital to the Fund within thirty days of receiving the authorization. Annual Fees Section 121 (1) The obligation of the Fund's members to pay annual fees shall be determined by taking into account the total amount of deposits kept - in accordance with Sections 99 and 100 - by the credit institution insured by the Fund on 31 December of the previous year, the credit institution's membership in voluntary deposit insurance and institutional funds, and other aspects stipulated in the Fund's rules and regulations. When providing supplementary cover, the amount of the deposits for which supplementary cover is provided shall be taken into consideration when determining the annual fee, along with the cover afforded by the deposit-guarantee scheme of the country in which the branch office's home office is located. When determining the annual fee, the Fund may consider the ratings determined for the credit institutions and their obligations by the rating organization prescribed by specific other legislation. (2) The amount of the annual fee to be paid as determined pursuant to Subsection (1) may not be higher than two thousandths of the aggregate total interest holdings indicated under accrued and deferred liabilities on deposits insured by the Fund and kept with the member institution on the 31st of December of the previous year and the deposits insured by the Fund as stipulated by statutory provisions on credit institutions' obligation to prepare annual reports and to keep books. (3) The credit institution shall pay the annual fee in quarterly instalments, by the fifteenth day of the quarter to which it pertains to the Fund's current account. (4) The amount of the fee to be paid by the credit institution shall be determined on the basis of the declarations forwarded by the credit institution to the Fund in the form and at the date as described in the regulations of the Fund. (5) The fee to be paid by the credit institution for the year when receiving authorization for banking operations shall be determined by multiplying 1/365 of the annual fee determined based on the deposit holdings at the end of the year with the number of days insured by the Fund, according to the general rules. (6) If a credit institution is engaged in high-risk activities justifying an increase in the fee according to the regulations, the Fund may increase the fee to be paid by the credit institution in the course of the year. Prior to increasing the fee, the Fund shall a) request an opinion from the Supervisory Authority and the NBH; b) allow the credit institution to submit its comments. (7) The fee increased as per Subsection (6) may not exceed three thousandths of the credit institution's insured deposit holdings as of 31 December of the previous year. (8) In the interest of repaying the loan borrowed by the Fund as per Paragraph d) Subsection (1) of Section 119, the Fund may prescribe an extraordinary payment obligation for the credit institutions determined on the basis of uniform principles, and the extent and schedule of such payment obligation must be adjusted to the conditions of loan repayment. The amount of the extraordinary payment obligation may not exceed the amount of the fee determined according to Subsection (2) in respect of any credit institution. (9) Should the Fund gain any income in connection with the insurance events making necessary for the Fund to raise the loan, it must above all be used to reduce the existing loan debt and thereafter to reduce the extraordinary payment obligation of the credit institutions and to refund the same. (10) In the initial year of its liquidation (voluntary or compulsory), the credit institution must pay the prorated annual fee in accordance with the provisions described in this Section by the initial day of the liquidation or winding up proceeding. The fee shall be projected on the basis of the average insured deposit holdings in the quarter preceding payment. Accounting of Fees Received Section 122 The credit institution shall show the amount paid to the Fund (including the affiliation fee) under other operating charges. Joining the Fund Section 123 (1) Simultaneously with submitting the application for authorization to engage in the activities governed under Section 18, the credit institution must also send a declaration on joining the Fund and attach a copy of such declaration to the application for authorization to perform business activities, unless the credit institution is a branch office and it is not obligated to join the Fund according to Subsection (3) of Section 97. (2) The declaration on joining must be prepared in the form as published by the Fund. Chapter XIX Initiation of Actions and Sanctions, Termination of Membership in the Fund Section 124 (1) If a credit institution a) fails to fulfil the payment obligations described in Sections 120 and 121 by due dates, b) indicates its membership in the Fund in its standard service agreement or on deposit documents in a deceptive manner or provides third parties with false information on material issues related to the deposits insured by the Fund, c) advertises the deposit insurance in an unlawful manner, or d) has records from which the depositors' entitlement to indemnity cannot be unambiguously determined, e) violates the regulations on deposit insurance, the Fund shall call upon the credit institution to discontinue the unlawful conduct and shall simultaneously inform the Supervisory Authority. (2) If the credit institution fails to end the unlawful conduct referred to in Subsection (1) within thirty days of the warning, the Fund may request the Supervisory Authority to take action against the credit institution, impose a fine on it, or, with the assent of the Supervisory Authority, suspend the credit institution's membership for a minimum of twelve months after issuing a warning about the measures pertaining to this if the credit institution still fails to cease the unlawful conduct during this time. The Fund shall concurrently notify the NBH about the initiation of the regulatory measures. (3) In the case of initiation of exclusion, the credit institution's membership in the Fund shall be terminated after the date specified in the preliminary call, with the exception if a) the credit institution has taken the actions aimed at conforming to regulations or terminating an improper conduct. Section 125 The Fund shall exclude a credit institution with immediate effect, if the credit institution is no longer permitted to collect deposits by decision of the Supervisory Authority. Section 126 (1) Exclusion of a credit institution or termination of its membership shall not effect the insurance of deposits placed with the credit institution during the period of its membership. (2) If a credit institution has been excluded from the Fund or its membership has been terminated, it may not request a refund of its earlier payments. The exclusion or the termination of membership shall not effect the obligation of the excluded credit institution to pay the annual fee on the insured deposits as described in Section 121. (3) A credit institution, when increasing or decreasing its subscribed capital, shall not be required to pay an affiliation fee on the amount of increase, and may not request the prorated portion of the paid affiliation fee to be refunded. Section 127 In the event of an exclusion under Section 124, the Fund shall notify the Supervisory Authority and the NBH in writing - within twenty four hours - about the exclusion and the reasons therefor. The Fund shall publish the same within forty-eight hours in at least two daily newspapers of nationwide circulation. Prohibited Advertisements Section 202 It is prohibited to use any information regarding deposit insurance, the Fund or the voluntary deposit and institutional protection fund in advertisements, for the purpose of increasing deposit holdings. Information to Depositors Section 204 (1) Credit institutions must provide deposit holders with readily intelligible information concerning the important issues that affect the deposit holders in regard to the Fund and foreign deposit-guarantee institutions and, in the event of participation in such, the voluntary deposit guarantee and institutional protection funds specified in Chapter XX; thus, for example, the types of deposits covered by the Fund; the extent of cover; and - when deposits are frozen or the credit institution has been liquidated - the conditions for compensation payments under Subsection (1) of Section 101 as well as the procedure required for obtaining the cover. (2) Unless otherwise agreed, credit institutions shall supply the information referred to in Subsection (1) in the Hungarian language. Section 205 (1) A credit institution shall inform its depositors if its membership in the Fund or in a foreign deposit-guarantee institution has been terminated, and it shall remove all mention of the deposit insurance stipulated by this Act in all notices. Such notices shall contain the rights of depositors and the procedure for asserting such rights. (2) Unless otherwise agreed, credit institutions shall supply the information referred to in Subsection (1) in the Hungarian language. Standard Service Agreement Section 207 Financial institutions are required to adopt lay down the standard general contract terms and conditions for the services they provide under authorization in a standard service agreement. Section 208 The standard service agreement containing the terms and conditions of deposit transactions shall include, in particular g) information on insurance coverage of deposits, h) in the case of registered deposits, the personal identification data recorded by the financial institution. Section 211 (1) Credit institutions may only enter into deposit contracts (release deposit documents) or issue debt securities if the underlying contract contains a reference to the regulations specified under Subsection (1) of Section 100 and Paragraph c) of Subsection (2) of Section 100. (2) If a credit institution that is a member of the Fund carries out deposit transactions through another legal entity on the basis of Paragraph h) Subsection (1) of Section 14, such legal entity must also indicate the credit institution on behalf of which it is accepting the deposit. (3) Deposit documents made out in the form of securities must visibly indicate that the contract serving the basis thereof is a savings deposit contract. Chapter XXXII Transitory and Closing Provisions Section 233 (1) New payments made after 30 June 1993 into accounts under deposit contracts signed prior to 30 June 1993 - insured by the state guarantees (sureties) described in specific other legislation - shall be insured - by the Fund - according to the provisions of this Act. (2) Payments made from the deposit accounts described in Subsection (1) must in all cases be effected from the amount deposited at the earliest. Schedule No. 2 to Act CXII of 1996 Interpretative Provisions I. Financial Services 2. 'Deposit' means a liability created by virtue of a deposit contract or a savings deposit contract within the meaning of the Civil Code, including any positive balance which results from funds left in an account. IV. Definition of Terms for the Purposes of Part IV only 1. 'Deposit' means the deposits described under Point I/2 of this Schedule and debt securities issued by credit institutions, not including a) deposits placed with a credit institution by another credit institution, b) mortgage bonds issued by mortgage loan companies in accordance with specific other legislation, c) subordinated loan capital, d) junior subordinated loan capital, e) contributions by a cooperative member to a cooperative credit institution. 2. 'Depositor' means the person under whose name the account was opened, or - solely in respect of bearer deposits - who presents the deposit certificate. 3. 'Authorized signatory' means the owner of a deposit, or, if he is not the owner of the deposit, the person duly authorized by the account-holder to dispose of the account with or without restrictions. 4. 'Beneficiary' means the account-holder or the person designated as such by the account-holder to the credit institution in writing. 5. 'Joint deposit' means an account, other than a collective deposit, that has more than one owner or beneficiary (opened on behalf of more than one person). 6. 'Person entitled to indemnity' means the deposit holder. Deposits whose contractual terms and conditions stipulate an agreement to the contrary shall constitute an exception. The person who, on the basis of the deposit owner's authorization, has powers to dispose of the account at the time the account is frozen but who is, however, neither the owner nor beneficiary of the account shall be deemed the person entitled to indemnity. 7. 'Frozen deposit' means an account for which the credit institution is unable to make payments within five business days of the due dates stipulated by law or as contracted. 8. 'Registered deposit' means a deposit whose owner can be unmistakably identified on the basis of the identification data contained in the deposit contract, savings deposit contract or bank account contract. 9. 'Collective deposit' means the accounts of condominiums, housing cooperatives, school associations and building societies.
További írásaink Definition for the deposit insurance in the Act  EU Directive of deposit insurence |
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