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FMA presents its 2017 Annual Report: ten years after the failure of Lehman Bros. Austria’s financial institutions are now set up in a stable and shock-resistant way.

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“The financial services provider supervised by the Austrian Financial Market Authority (FMA) are now much stronger, much more stable and much more shock resistant than was the case prior to the Global Financial Crisis”, remarked the FMA’s Executive Directors, Helmut Ettl und Klaus Kumpfmüller at the presentation of the FMA’s 2017 Annual Report, in summarising the work conducted since the collapse of Lehman Brothers in 2008. “We have managed the crisis well, have learned the correct lessons, have closed regulatory loopholes in a consistent manner, and have intensified supervision, both in terms of its breadth and depth.” The Tier 1 capital ratio of banks has more than doubled during this period from 7.0% to 15.1%, with the Solvency Ratio of insurance companies standing at an all-time high of 279% in 2017, while banks have halved the level of non-performing loans from 8.7% of all loans at their peak to 4.3%, while the market capitalisation of the Vienna Stock Exchange (Wiener Börse) has almost doubled from 18.5% of Gross Domestic Product to 33.5%.

“Today we find ourselves on a firm regulatory and supervisory footing. The integrated approach to supervision allows us to realise synergies as well as to optimise efficiency and effectiveness. The Europeanisation of cross-border supervision is a massive step forwards. And the new European regime for the orderly resolution of failed institutions has already proven its self in the cases of Heta, immigon and KA-Finanz”, Ettl and Kumpfmüller highlight as success stories. In addition they advise about the consistent addressing of national challenges, such as the high level of exposures in loans denominated in foreign currencies, as well as the exposures of Austrian banks and insurance companies in the markets of the CESEE region.

Prevention, Prevention, Prevention

Having by and large finished the clearing up of the legacy issues from the crisis, attention is now turned to focusing on strengthening the prevention side of supervision. “During the upturn of the cycle, mistakes are made that cause tomorrow’s problems and crises”, the FMA’s Executive Board members remark in warning against reverting to too lax and euphoric business practices: “We will also continue to push for steadfast risk management, in particular addressing cyber risks and IT risks, as well as orderly governance structures and a risk-oriented business policy”, commented the FMS’s Executive Board. The FMA is currently critically analysing the standards for the granting of credit by Austrian banks, and is using all instruments that the new regulations on collective consumer protection places at its disposal. “Our integrated supervision concept for the distribution of financial products makes an important contribution towards information transparency as well as competent and fair advice,” remarked Ettl and Kumpfmüller: “Sound regulation and consistent supervision of the financial market create confidence and are an important success factor for Austria as a financial centre.”

The FMA’s supervisory strategy to act in a preventive manner and to consistently punish breaches committed is also proving effective. While the number of reprimands issued in the past year (2017) rose to 119, the number of penal orders for severe breaches for the same period (2017) fell to 80.

FMA: Facts and Figures

In 2017 the FMA, with 380 employees and a financial budget of € 66.4 million, supervised a total of 892 licenced companies, with total assets under management of € 1,335 billion, as well as supervising around 34.4 million transactions in listed securities over the course of the year. In Austria alone, these companies employ around 120,000 employees, and generate € 15.2 billion in value added per year.

The supervised entities pay approximately 94 % of the FMA’s costs, while the Federal Government makes a lump sum contribution of EUR 4.0 million. EUR 4.8 million comes from fees and other income. The FMA is required to collect EUR 10.4 million in transitory items to partially cover the services rendered by the Oesterreichische Nationalbank (OeNB). The banks contribute EUR 36.8 million (55.5%), while insurance undertakings contribute EUR 11.6 million (17.5%), the Pensionskassen EUR 1.3 million (1.9%) and securities supervision EUR 16.7 million (25.2%).

“We are proud that we have managed to intensify our supervisory activities and take on new duties for the fourth year in a row now, while the number of budgeted positions has remained the same – at 392. We are exploiting the synergies from our integrated supervisory approach, and are consistency rationalising and improving our efficiency and effectiveness,” commented the FMA’s Executive Board members. When the FMA was established 17 supervisory laws and the respective associated supervisory fields were entrusted it, today there are now 37 such laws and supervisory areas, remarked Ettl and Kumpfmüller.

The 2017 Annual Report is available for download on the FMA’s website at https://www.fma.gv.at/en/publications/fma-annual-report/.

Journalists may address further enquiries to:

Klaus Grubelnik (FMA Media Spokesperson)

+43/(0)1/24959-6006

+43/(0)676/882 49 516

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