Licencing & Notification

Jump to: Footer

If your entity conducts transactions requiring a banking licence as defined in the Banking Act (BWG – Bankwesengesetz), your entity will require a licence issued by the competent supervisory authority. The European Central Bank is competent for the licencing procedure for credit institutions pursuant Article 4 (1) 1 CRR (“CRR-credit institutions” i.e. those credit institutions that accept deposits or other repayable funds from the general public and which grant loans on their own account) with regard to the Common Procedures. (See: ECB Authorisations)

All credit institutions headquartered in Austria that are not directly supervised by the European Central Bank (referred to as “non-CRR credit institutions”) are granted their licence directly by the Financial Market Authority.

The list of banking transactions that require a licence can be found in Article 1 para. 1 BWG.

Credit institutions are authorised to conduct banking transactions. Banking transactions are the activities listed in Article 1 para. 1 BWG, provided that they are performed on a commercial basis. A valid licence is a pre-requisite for the conducting of banking transactions.

The licence for conducting banking transactions may have certain conditions and obligations attached to it, while parts of individual types of banking transactions may be excluded from the scope of the licence. Such restrictions are marked in the licence query. Queries can be made using the following link:

Link to the company database

 

 

Permitted transactions

In addition to the classic deposit-taking business, credit institutions may also conduct exchange bureau business and/or leasing operations without requiring an additional licence. This is stipulated in Article 1 para. 3 BWG (legal licence). Furthermore, credit institutions are also permitted to conduct all other activities pursuant to this legal licence, which are directly connected with banking activities in accordance with the scope of the licence held. This means that these institutions are allowed to perform activities ancillary to the respective banking transaction, in particular brokering of

  • Building savings plans,
  • Undertakings and companies,
  • Investment fund shares, and
  • Equity shares.

The provision of services in the field of automated data processing as well as sale activities relating to credit cards, trading of coins, medals and gold as well as the renting of safety deposit boxes (safes).

Credit institutions are also authorised to carry out the activities listed in Article 3 para. 2 nos. 1 to 3 of the Securities Supervision Act 2018 (WAG 2018; Wertpapieraufsichtsgesetz 2018) (investment advice, portfolio management, receiving and transmitting of orders in relation to financial instruments) and – in the event that licences are held for specific banking transactions – are authorised to conduct the payment services listed in Article 1 para. 2 of the Payment Services Act 2018 (ZaDiG 2018; Zahlungsdienstegesetz 2018) (see also Article 1 para. 3 BWG).

In the event that a licence is held in accordance with Article 1 para. 1 nos. 1 and 3, or pursuant to para. 1 no. 2 or no. 6, credit institutions may also issue electronic money in accordance with the Electronic Money Act 2010 (E-GeldG 2010 – E-Geldgesetz 2010).

Since the Single Supervisory Mechanism (SSM) commenced operations on 4 November 2014 the European Central Bank has sole competence for the granting and extension of licences for CRR-credit institutions. In accordance with the internal distribution of competences within the European Central Bank, such procedures are within the scope of competent of DG-MS IV, Authorisations Division (Directorate General, Micro-Prudential Supervision IV).

The European Central Bank shall apply the national legislation (the BWG in Austria) in performing its competence. The lead role in the procedure is split between the national supervisory authorities (in the case of Austria: the Financial Market Authority) and the European Central Bank.

 

For Austrian non-CRR-credit institutions as well as branches of foreign credit institutions competence remains solely with the Financial Market Authority.

This is set out in point a) of Article 4 (1) of the SSM Regulation (SSM-R).


All applications triggering the procedures are submitted to the FMA, regardless of whether the decision is to be taken by the FMA or the ECB.

In the event that the application is for an Austrian non-CRR-credit institution or a branch of a foreign credit institution, then the entire licencing procedure is conducted by the FMA.

In the case that institution making the application fulfils the definition in accordance with the CRR the Financial Market Authority then forwards the applications together with a draft decision and the relevant documentation to the European Central Bank for the decision-making process.

The Financial Market Authority specifically advises in relation to the transmission of data in relation to this procedure about the Data Protection Declaration of the European Central Bank. The applicant for the licence is required to include a signed copy of the Data Protection Declaration of the European Central Bank with the application that initiates the procedure (see also the data protection declaration).

The licence is granted, if:

  • The entity is intended to be operated as a credit institution in the legal form of a joint stock company, a cooperative society or a savings bank;
  • The articles of association do not contain any provisions which would place the safety of the funds entrusted to the credit institution and the orderly execution of transactions pursuant to Article 1 para. 1 BWG in doubt;
  • The initial capital or the initial endowment capital is at least EUR 5 million and is available to the directors without restriction and encumbrance in Austria;
  • The directors are, on the basis of their previous experience are professionally qualified and have the necessary experience required for operating the credit institution.
  • The credit institution has at least two directors and the articles of association rule out individual powers of representation, individual powers of commercial representation and individual commercial powers of attorney for the entire business operation, or, in the case of credit cooperatives, the management of the business is restricted to the directors;
  • None of the directors practices another main profession outside the banking industry or outside of an insurance undertaking or pension companies;
  • The place of incorporation and the head office are located in Austria;

 

The necessary contents for the licence application can be found in Article 4 paras. 3 and 4 BWG. A legal listing of the requirements for granting a licence can be found in Article 5 BWG.

In this instance, the following also applies: In the case that the entities are non-CRR-credit institutions or are branches of a foreign credit institution, then the FMA is the competent authority. The European Central Bank has sole competence for the surrendering of CRR-licences. Applications for the voluntary surrendering of the licence are submitted to the Financial Market Authority, and are then forwarded to the ECB. A licence withdrawal may occur either at the initiative of the European Central Bank or the Financial Market Authority.
A licence that has been granted may be subsequently revoked pursuant to Article 6 para. 1 BWG, if the business activities for which the licence was applied for, are not commenced within twelve months of the licence being granted or is no longer conducted for longer than six months. In this case, the revoking of the licence lies within the competence of the competent supervisory authority. However, no such discretionary powers exist for the cases listed below. The competent supervisory authority must consequently revoke a licence pursuant to Article 6 para. 2 BWG, if for example the licence was:

  • obtained as a result of incorrect information having been submitted,
  • if certain prudential requirements have not been fulfilled,
  • If obligations towards creditors have not been fulfilled
  • or if bankruptcy proceedings have been initiated against the assets of the credit institutions.

This is set out in European law in Article 18 SSM-R.

A licence lapses “automatically”, if it is voluntarily surrendered by the credit institution. In this case the credit institution is required to also submit a confirmation by the bank auditor, that all transactions have been settled. The licence lapses if as a result or a merger or a demerger double or multiple licences would exist as a consequence.

Requirement to hold a Banking Licence

The performance of banking transactions is strictly reserved for credit institutions that hold a banking licence. The authorisation to provide banking business such as deposit-taking business (by way of bank accounts, savings books etc.), current account business and lending business is therefore contingent on the existence of a valid banking licence (Article 4 para. 1 in conjunction with Article 1 para. 1 no. 1 BWG).

Competent Authority

Since Autumn 2014 the European Central Bank (ECB) has been competent throughout the entire European Union for the granting of and revoking of banking licences (Article 4 (1) of the SSM Regulation (SSM-R). The national supervisory authorities, in the case of Austria the Austrian Financial Market Authority (FMA) perform the preparatory work in this process and submit draft decisions to the ECB (Article 14 SSM-R).

In the case of procedures where disputes arise (e.g. In relation to the revoking of licences) the ECB conducts a further separate investigative procedure based on the FMA’s draft decision, in particular including a hearing for the affected credit institution.

Relinquishing a Banking Licence

The relinquishing of a banking licence by a credit institution itself shall only be permissible, if all banking operations have been liquidated (Article 7 para. 3 BWG) and this is confimed by an external auditor to be the case. It is therefore not permissible for a credit institution to relinquish a licence voluntarily while, e.g. deposits continue to be held, and loans are still being granted.

Withdrawal/Revocation of a Banking Licence

The ECB may revoke a banking licence, in the case that

  • business operations are not commenced within twelve months of the licence being granted (Article 6 para. 1 no. 1 BWG) or
  • where business operations thereafter are interrupted for more than six months (Article 6 para. 1 no. 2 BWG).

The ECB is required to revoke a banking licence, if

  • the licence was obtained by false means (Article 6 para. 2 no. 1 BWG),
  • the credit institution has breaches requirements stipulated under Austrian and European banking supervision law and other sanctions are unable to ensure the ability of the credit institution to function in an orderly manner (Article 6 para. 2 nos. 2 and 3 BWG) or
  • the credit institution is unable to fulfil its obligations towards its creditors or where bankruptcy proceedings are initiated for the assets of the credit institution (Article 6 para. 2 nos. 2 and 4 BWG)

Impact of the Withdrawal/Revocation of a Banking Licence

The withdrawal of the banking licence does not generally lead to the liquidation of the entire entity, but banking operations are however to be discontinued: Due to a lack of authorisation to do so , no new banking transactions may be entered into and the company name and its purpose of business must be changed. In the case of existing business, especially continuing obligations such as deposit taking and credit provision business, siuch business shall remain valid, but such business must also be discontinued in an appropriately prompt manner, for example by repayment of funds held to savers and depositors, and by the disposal of outstanding loans.

The rights of creditors (e.g. savers, depositors and investors) remain unaffected by the licence having been revoked.  The former credit institution placed under resolution shall remain competent for the repayment of deposits.

The withdrawal of the licence therefore requires the banking operations to be liquidated (or wound down), but does require the entire entity to be liquidated. A liquidation of the entire entity shall only occur in the case that no steps are taken to wind down banking operations (Article 6 Abs. 4 BWG).

Wind-down and Appointment of a Wind-Down Administrator

Once the licence has been revoked, the directors of the former credit institution are generally appointed to wind down banking operations in an orderly manner.

Where they are however unable to provide any guarantee that an orderly wind-down, then the FMA must petition the competent court (Commercial Court (Handelsgericht)) to appoint a wind-down administrator (Article 6 para. 5 BWG).

Supervision following withdrawal/revocation of a licence

The FMA’s supervision of the institution ends with the licence being withdrawn/revoked.

Where doubts exist about the reliability of the bodies of the bank, then the FMA must petition the competent Commercial Court (Handelsgericht) to appoint a wind-down administrator. The continuing supervision is therefore conducted by the court-appointed wind-down administrator or the Commercial Court (Handelsgericht).

Withdrawal/revocation of a licence and safeguarding of deposits

The mere withdrawal/revocation of a licence does not per se trigger a deposit guarantee pay out event (and in particular does not trigger bankruptcy proceedings). The rights of the creditors remained unaffected. The credit institution that is in wind down remains responsible for the repayment of all deposits and for satisfying all other claims.

Deposits that were taken up until the point of the licence being withdrawn/revoked remain covered by the competent deposit guarantee facility (Article 7 para. 1 no. 4 in conjunction with no. 3 in conjunction with Article 10 para. 1 ESAEG).

In the event that a court opens bankruptcy proceedings against the credit institution in wind-down then this shall be considered a case of default that triggers the deposit guarantee scheme (Article 9 ESAEG). In the event of default the pay-out of the eligible (i.e. Covered) deposits (as a rule EUR 100 000, under special circumstances EUR 500 000) shall be conducted within seven working days by the competent deposit guarantee facility, which independently contacts the depositors (Article 13 ESAEG). The deposits that are not covered and other claims become part of the bankruptcy estate and are satisfied during the bankruptcy procedure.

Further information about the safeguarding of deposits can be found on this website at: https://www.fma.gv.at/en/bank-accounts/deposit-protection/

The link below describes how, and in what form, banks that have the necessary permission in their Member State may also operate in the European Economic Area (“European Passporting”). The relevant legal basis is also listed on this page.
Freedom to provide services and freedom of establishment in the EEA

The licence for conducting banking transactions may have certain conditions and obligations attached to it, while parts of individual types of banking transactions may be excluded from the scope of the licence. Such restrictions are marked in the licence query. Queries can be made using the following link:

Link to the company database

All institutions which are authorised to conduct banking transactions in Austria can be found in the queries and downloads below:

Licensed credit institutions in Austria

Investment Fund Management Companies

Real Estate Investment Fund Management Companies

Representative Offices of Foreign Credit Institutions

Severance and Retirement Funds licensed in Austria

 

Further information