The Austrian Financial Market Authority (FMA) has published a new version of its Minimum Standards for the Risk Management and Granting of Foreign Currency Loans and Loans with Repayment Vehicles (FMA-FXTT-MS). Prepared in cooperation with the Oesterreichische Nationalbank (OeNB), the new version specifies more stringent guidelines for dealing with foreign currency loans. In particular it takes into account the recommendations made by the European Systemic Risk Board (ESRB) concerning the granting of foreign currency loans as well as previous experience with interpreting the Minimum Standards. Specifically, the information requirements previously applying to consumers have now been extended to include all borrowers, in other words businesses as well. The conditions have also been clearly defined for determining when a change of currency or a prolongation must be considered equal to granting a new foreign currency loan. Rules for pricing risk premiums and for internal capital allocation within the framework of provisions governing banking supervision are also detailed in a separate chapter. It is also stated clearly that credit institutions must not circumvent national legislation of other countries governing foreign currency loans by granting cross-border foreign currency loans.
The new Minimum Standards of 2 January 2013 replace the FMA Minimum Standards for Granting and Managing Foreign Currency Loans (FMA-FX-MS) and the FMA Minimum Standards for Granting and Managing Foreign Currency Loans and Loans with Repayment Vehicles (FMA-TT-MS) of 16 October 2003 as well as the Extension of 22 March 2010 (FMA-FXTT-EMS).
“The measures taken by the FMA in the wake of the global financial crisis to limit the risk to consumers and to banks that emanates from foreign currency loans are taking hold. Had we not succeeded in shrinking the market share accounted for by foreign currency loans, the exchange rate effect alone would have resulted in an additional burden of €6 to €7 billion,” FMA Executive Director Helmut Ettl observed. Fellow Executive Director Kurt Pribil added: “We need to consistently hold to the course of limiting the risk entailed and work hard towards eliminating the outstanding volume of foreign currency loans.”
Since the granting of such loans was stopped in autumn 2008, the outstanding volume of foreign currency loans has fallen by €13.9 billion (when adjusted for exchange rates).
The FMA-FXTT-MS is available on the FMA website at fma.gv.at/en/legal-framework/minimum-standards/banks.html
Journalists may address further enquiries to:
Klaus Grubelnik (FMA Media Spokesperson)
+43/(0)1/24959-5106
+43/(0)676/882 49 516