FMA Annual Report 2019: Austria’s financial market is stable and resilient against crises. Financial services providers are a pillar of strength for the real economy in the COVID-19 crisis.
In 2019, the Austrian Financial Market Authority (FMA) and its 393 employees supervised 999 in total, of which 884 are licensed undertakings in the financial economy and the remaining 115 exchange-listed undertakings, for whom observance of information obligations and the orderly nature of securities trading are monitored. The financial undertakings managed total assets of around EUR 1,191 billion. Compared to the Global Financial Crisis of 2008, today’s financial service providers are stable and resilient against crises, as the FMA’s Executive Directors, Helmut Ettl and Eduard Müller, remarked during today’s presentation of the 2019 Annual Report with regard to the currently ongoing COVID-19 crisis. Since the Global Financial Crisis, banks have doubled their Common Equity Tier 1 Capital from around 8% to about 16%, while it has been possible to reduce the volume of non-performing loans (NPLs) from 14% at their peak to around 2%. Insurance undertakings currently have an average Solvency Capital Ratio (SCR) of more than 230%, and therefore have more than double the amount of financial means necessary for the fulfilment of their contractual obligations.
COVID-19 Crisis: financial markets are not the problem, but form part of the solution
“We have learned the lessons from the Global Financial Crisis and implemented them consistently, closing regulatory gaps, strengthening the quality and quantity of the capital base, and addressing exposures in a sustainable manner,” remarked Ettl and Müller in summarising the Annual Report. “We are convinced that the financial economy is able to master the massive challenges presented by the Covid-19 crisis, and will be a pillar of strength for the real economy in these difficult times. During the Global Financial Crisis of 2008, the financial markets were part of the problem, whereas in the Covid-19 crisis they are instead part of the solution to the crisis!” The supervisor today has all necessary tools at its disposal to be able to react flexibly, quickly and effectively to the challenges faced. The FMA’s Executive Board listed a few examples of the tools at its disposal: the capital buffer regime for banks, the additional interest provision in life insurance, the instruments for impeding speculative short selling, as well as effective regulation of market infrastructures.
The Most Modern Supervisory Authority in Europe
“As the integrated supervisory authority for the whole of Austria’s financial market, we extract all possible synergies in terms of know-how and costs as well as constantly improving the efficiency and effectiveness of supervision. By strengthening the principle of proportionality in regulation, using the risk-based and preventive supervisory approach, and also streamlining and accelerating procedures, we have managed despite having extra duties conferred upon us to master the challenges with the same staffing levels for a fifth consecutive year,” remarked Ettl and Müller, recapping the additional duties such as supervision of deposit guarantee schemes, data provision services, market monitoring and product intervention, AML supervision of financial agents as certain cryptoasset service providers that have been conferred on the FMA. “The slight increase in total costs primarily arises from our massive investment in digitalisation. Our objective is and remains to be the most modern supervisory authority in Europe,” the FMA’s Executive Directors remarked.
In 2019, the FMA’s total budget stood at approx. € 72.3 million (+3.8%), of which € 10.7 million were collected as transitory items for the Oesterreichische Nationalbank (OeNB) for the partial reimbursement of the services it provided. The Federal Government covers € 4 million in costs, with € 5.9 million being covered by fees and other income, with the remaining amount being borne on a usage-related basis by the supervised entities. The breakdown of costs is as follows: banks 57.4%; securities supervision 23.2%; insurance undertakings 17.6% and Pensionskassen 1.8%.
The FMA as an expertise-based organisation – an attractive employer
“As the supervisory authority, the FMA is an expertise-based organisation; and can only be as good as the employees that sustain it,” remarked Ettl and Müller: “We are able to be justifiably proud of how qualified and dedicated our colleagues are.” 80 % of employees hold a degree, 40% hold an additional qualification such as the professional examinations as lawyers, auditors and tax advisors, or a second or postgraduate degree. We invest approx. € 2,000 per employee annually in training and education. FMA staff members also speak over 40 foreign languages. “We are also an attractive employer,” remarked Ettl and Müller, “as all the employee satisfaction ranking lists demonstrate. We attach a great deal of importance to the compatibility of career and family, and therefore place particular value on innovative working time models.”
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FMA-Jahresbericht 2019Format: pdf