“The global financial crisis spread to the real economy in 2009 and took a stronger hold on Austria along with our other important markets in Central, Eastern and South-Eastern Europe,” Financial Market Authority FMA Executive Directors Helmut Ettl und Kurt Pribil summarised at the presentation of the 2009 FMA Annual Report. The dwindling economic performance of leading industrial nations additionally caused the business volumes of Austrian financial service providers to shrink or stagnate at most. “The packages to encourage financial market stability and aid banks, adopted still in 2008, have proven themselves in this trying situation, and global crisis management has been functioning well for the most part since the Lehman shock. It was possible to solve or absorb problem cases without grave repercussions for the financial markets,” Pribil stated. At the presentation of the Annual Report, Pribil’s Executive Board colleague Helmut Ettl described how the FMA had succeeded, “in spite of this difficult environment, in significantly intensifying supervisory activities as a consequence of the 2008 reform: within the last three years we were able to more than double the number of on-site inspections, sanctions have been imposed against misconduct in more than three times as many instances, and more than three times as many reports have been made to the public prosecutor’s office as well.”
With a staff of 275 and a budget of €33 million, the FMA supervised some 1,200 licensed companies in addition to all transactions in listed securities in 2009. The costs of supervision were funded by the lump sum of €3.5 million which the federal government is required by law to contribute, from €3.5 million in fees and other revenues and by the sum, amounting to about €26 million, which the supervised institutions are required to contribute. Of the share contributed by supervised institutions, about 46% is contributed by banks, 24% by insurance companies, slightly more than 3% by Pensionskassen and about 27% by the securities sector.
The reform of banking supervision, which entered into force on 1 January 2008, resulted in a clear and efficient division of labour between the FMA and the Oesterreichische Nationalbank (OeNB). The reform has also allowed the resources deployed in the Austrian supervisory system to be substantially stepped up, resulting in significant intensification of supervisory activities:
- The number of on-site inspections rose from 84 in 2007 to 223 in 2009, with the greatest increases recorded for insurance companies (from 13 to 47), investment firms and investment service providers (from 5 to 32), for the fight against unauthorised business operations (from 1 to 31) and for compliance supervision (from 2 to 24).
- Commensurate with the significantly greater on-site presence among supervised institutions, there was also an increase in the number of sanctions imposed in cases where misconduct was ascertained, from 161 in 2007 to 454 in 2009 (314 penal orders, 131 penal decisions and nine admonitions).
- There was a similarly sharp increase in the number of cases where statements of the facts were submitted to the public prosecutor’s office, rising from 27 in 2007 to 86 in 2009.
- Another example for the significant intensification of supervisory activities is the fight against unauthorised business operations: in 2009, investigations were instigated in 360 cases (2007: 116), 31 on-site inspections conducted (2007: 6), 31 administrative penalties imposed (2007: 2), 28 offences reported (2007: 16) and 40 national investor warnings published (2007: 17).
“These figures and examples are impressive proof of how the FMA, in line with our motto of ‘competence – control – consistency’, is making effective and efficient use of additional competence and resources,” FMA Executive Director Helmut Ettl summarised, adding: “The intensification of supervisory activities is making a significant contribution towards bolstering confidence in the Austrian financial market.” His Executive Board colleague Kurt Pribil recounted that, since its establishment, the FMA had been given additional responsibility for the supervision of corporate provision funds, financial conglomerates and payment institutions, and for prospect supervision, as well as for the fight against unauthorised business operations. Additional responsibilities are expected in the near future, including supervision of rating agencies and hedge funds (AIFM), as well as more extensive anti-money laundering competencies. “We are ready”, Ettl and Pribil agreed, and continued: “Nevertheless we urgently require additional supervisory instruments, such as the establishment as soon as possible of a European supervisory architecture modelled on the ESCB, special insolvency laws for financial institutions, as well as a ‘balance-sheet police’ or enforcement office for accounting standards that is independent of the affected institutions. We have already demonstrated our ability to employ and implement such instruments with competence, control and consistency.”
For further information please contact
Klaus Grubelnik (FMA Media Spokesperson)
+43/(0)1/24959-5106
+43/(0676)/882 49 516