07 April 2026
Schoenherr publication
czech republic
hungary
to the point: financial regulation | 3/2026
Welcome to our to the point newsletter. Every month, we look back at the most relevant developments in financial regulation in the CEE region.
In this edition, you will get a mix of updates:
- The European Banking Authority (EBA) has published its Regulatory Technical Standards (RTS) that streamline the supervisory approval process for Internal Ratings Based (IRB) model changes, with significant implications for banks using IRB models and supervisory authorities. The new rules reduce the number of model changes classified as "material", meaning that obliged institutions will face fewer situations requiring prior supervisory approval and can instead proceed with many changes through a simpler notification process, provided they fall below newly emphasised quantitative thresholds. This shifts the burden for obliged entities from formal approval procedures toward ongoing compliance and internal risk management, allowing them to implement model improvements and fixes more quickly while still ensuring accountability. At the same time, supervisors will adopt a more risk-based approach, focusing their scrutiny on truly significant changes such as model redevelopments, re-estimations of risk parameters, or major adjustments to default definitions, which still require full approval. The amendments also align the framework with updated prudential rules under CRR3, removing outdated approaches and clarifying expectations.
- The EBA has published its Second Impact Assessment Report on the minimum requirement for own funds and eligible liabilities (MREL), showing that obliged entities, primarily EU banks and resolution entities, have largely adapted to the framework by significantly increasing their loss-absorbing resources and actively issuing eligible liabilities to meet binding targets. For these obliged institutions and the persons responsible for capital, treasury and resolution planning, the rules mean a continuing obligation to maintain sufficient MREL buffers, which has translated into sustained issuance activity and a shift in funding structures, particularly toward instruments like senior non-preferred debt. While the framework has not fundamentally altered business models, it imposes ongoing compliance duties requiring banks to manage capital structures in line with resolvability expectations and regulatory thresholds. Larger banks benefit from easier access to wholesale funding markets and can diversify their MREL instruments, whereas smaller institutions face proportionally higher compliance costs, greater operational complexity and more limited market access, often relying more heavily on retained earnings and core capital to meet requirements.
- The EBA has published its Final draft amending RTS that shorten the timeframe for supervisory approval of reductions in own funds and eligible liabilities instruments, with direct implications banks and the persons responsible for capital management and regulatory compliance. The EBA has clarified that the amendments to Commission Delegated Regulation on own funds and eligible liabilities aim to immediately reduce the regulatory burden for obliged entities by simplifying procedures, meaning institutions benefit from less complex and faster processes, while persons responsible for compliance face fewer administrative steps. At the same time, following the exemption introduced by Directive (EU) 2024/1174, liquidation entities are no longer required to obtain prior permission to reduce eligible liabilities, so the related simplified procedure has been removed, effectively eliminating this obligation altogether for those entities.
- The EBA has issued its Implementing Technical Standards (ITS) under the CRD VI that introduce harmonised supervisory reporting for third-country branches, with important implications for branches operating in the EU. Under the new rules, obliged entities must follow uniform formats, definitions and reporting frequencies, ensuring consistent and comparable data across the EU, which increases standardisation but also requires adjustments to internal reporting systems and processes. At the same time, the framework is designed to be proportionate, so smaller and less complex branches face lighter reporting obligations through a core dataset, while larger and more complex branches must provide more detailed supplementary information, increasing their compliance workload. The introduction of dual reporting, covering both branch-level data and information on the head undertaking, expands the scope of information that obliged entities must collect and submit, placing additional responsibilities on relevant staff to coordinate data across group structures. However, the rules also ease implementation by postponing the start of reporting, extending deadlines and simplifying templates, meaning that while obligations become more structured and comprehensive, the administrative burden is balanced by greater clarity, predictability and operational feasibility. Moreover, the EBA has also published its final Guidelines on instruments for the capital endowment requirement for third-country branches specifying which instruments may be used to meet the capital endowment requirement for third-country branches. Obliged entities must ensure their capital endowment consists only of eligible, high-quality instruments, primarily low-risk assets such as those issued or guaranteed by public authorities or institutions with a 0 % risk weight, thereby restricting the range of usable instruments and requiring adjustments to asset composition. In addition, obliged entities must comply with strict operational conditions ensuring that these instruments are fully available for immediate and unrestricted use to absorb losses, particularly in situations of resolution or winding-up, which increases the responsibility of relevant persons to always ensure the legal and operational accessibility of these assets.
- The European Insurance and Occupational Pensions Authority (EIOPA) has published its Third Report on the application of the Insurance Distribution Directive (IDD) highlighting how the existing framework affects insurance intermediaries and distributors and pointing to areas where regulatory expectations may evolve. The findings show that obliged entities and persons operate under increasing professional and organisational requirements, contributing to market consolidation and higher barriers to entry, while at the same time facing growing expectations in cross-border activity due to expanded passporting. For persons responsible for advising and selling insurance products, this translates into continued obligations to provide suitable advice and act in the customer's best interest; yet the report indicates that current processes are often overly complex without delivering better outcomes, suggesting a likely shift toward simplification of sales procedures. They must also adapt to emerging challenges such as digital distribution and the use of AI tools, where the current framework lacks clarity, implying future regulatory tightening and the need for stronger internal governance and oversight of automated advice. In addition, compliance obligations around sustainability preferences and disclosures remain demanding and inconsistently applied, requiring improved knowledge and alignment of internal processes, while rules on inducements continue to place pressure on entities to manage conflicts of interest and increase transparency, with the possibility of stricter national measures such as commission bans.
- The Czech Government has prepared a Draft Act (in Czech only) amending the Consumer Credit Act, introducing stricter consumer protection rules mainly by capping excessively expensive loans and tightening obligations for all credit providers, while aligning national law with EU standards. For obliged entities, i.e. all lenders and intermediaries, now explicitly including providers of "buy now, pay later" and even interest-free loans, the key change is that they must operate under full regulatory supervision, obtain authorisation, and comply with the same rules as traditional lenders, significantly expanding the scope of who is regulated. These entities must also respect newly defined price caps, ensuring that loan costs do not exceed levels considered acceptable by existing case law, effectively prohibiting excessively high interest rates and total credit costs. At the same time, their responsibilities when assessing borrowers are strengthened: instead of focusing on formal compliance, they must genuinely verify a consumer's real ability to repay, with serious consequences if they fail. The loans granted to clearly non-creditworthy consumers become unenforceable beyond repayment of the principal. Additionally, obliged entities face stricter disclosure duties, meaning they must provide clear, transparent and understandable information about loan terms upfront so consumers can make informed decisions.
- The President of Poland has signed two amendments to laws of significance to the financial sector. The first concerns legislation relating to the functioning of the financial market and implements the EU Instant Payments Regulation. The amended provisions require commercial banks, cooperative banks and non-bank payment service providers to offer euro transfers available 24/7, executed in under ten seconds and without additional charges compared to standard transactions; banks will be required to receive such transfers from 9 January 2027, and to send them with Verification of Payee from 9 July 2027. The second amendment concerns the Act on the Functioning of Cooperative Banks, their Association and Affiliated Banks. The new provisions simplify the operating rules for associations and institutional protection schemes (IPS), strengthen risk management mechanisms and reduce administrative obligations vis-à-vis the Polish Financial Supervision Authority (KNF). They aim to increase the flexibility of cooperation between cooperative banks and umbrella banks and to accelerate the technological modernisation of the sector.
- Hungary has adopted Directive (EU) 2024/927 (AIFMD II), which establishes, for the first time, a harmonised EU framework governing the ability of alternative investment funds (AIFs) to originate loans directly. A question of immediate commercial significance is whether this reform allows private credit funds to pursue lending activity free from regulatory constraints. The answer is it does not. Loan origination remains an activity requiring authorisation. What AIFMD II delivers is not deregulation but harmonisation: a clear and predictable legal basis upon which private credit funds across the EU can build their lending strategies.
- Amendments to the Hungarian Act on Collective Investment Forms and Their Managers will take effect on 16 April 2026. Under the current framework, investment funds cannot originate loans, with a narrow exception allowing venture capital and private equity funds to extend shareholder loans to portfolio companies. As of 16 April 2026, all AIFs will be able to obtain a licence for loan origination, credit servicing and credit acquisition – and AIFs may also be established specifically for this purpose. This materially broadens the business scope available to fund managers and opens new funding channels for borrowers outside the traditional banking system.
- An AIF will qualify as a "loan-originating AIF" – and be subject to the full suite of associated requirements – if its strategy primarily consists of originating loans or if originated loans represent at least 50 % of its net asset value. Such AIFs must be structured as closed-ended funds, with leverage capped at 300 % of net asset value (or 175 % for open-ended structures approved by the MNB based on robust liquidity management). Venture capital and private equity funds intending to continue extending shareholder loans will also need to obtain a new licence, although a lighter-touch regime will apply to them.
- Under AIFMD II, EU Member States may choose between several approaches to loan‑origination by AIFs. Hungary has taken the most restrictive path, opting to prohibit AIFs entirely from originating consumer loans and from engaging in pure originate‑to‑distribute models.
- One material uncertainty remains: the precise licensing conditions and procedural framework have not yet been published. Additionally, it is unclear whether AIFs with pre-existing shareholder loan facilities may continue to disburse funds after 16 April 2026 without first obtaining the new licence – a live and practical concern for any private credit fund currently operating in Hungary.
contact
our team of financial regulation experts
Our experienced team of financial regulation experts will be happy to support you if you have any questions or wish to be updated regularly via newsletters covering specific regulations affecting your business and/or via webinars on topics of your choice.
Do not hesitate to contact us.
Kristýna
Tupá
Counsel
czech republic