The Republic of Austria has decided that no further capital injection should be provided for Heta.
On the basis of the Republic of Austria’s decision, as well as the notification by the Board of Management of Heta to the FMA, the FMA as the new resolution authority checked for and determined the existence of conditions for resolution of Heta in accordance with the new “Federal Act on the Recovery and Resolution of Banks” (BaSAG).
Consequently, the FMA, in its capacity as the designated Austrian resolution authority, issued an administrative ruling on 01/03/2015 in accordance with the Federal Act on the Recovery and Resolution of Banks (BaSAG) in accordance with the new European resolution regime for banks initiating the resolution of Heta.
For this purpose, far-reaching duties and powers have been conferred upon the FMA. On the one hand it has to draft and create preventive resolution plans, and on the other hand, in the event of resolution has to implement this plan by applying the far-reaching tools placed at its disposal.
The following defined resolution tools are placed at the FMA’s disposal:
- The sale of business tool
- The tool to establish a bridge institution (Bridge bank)
- The tool for the separation of asset positions (asset separation)
The resolution authority is therefore making a considerable contribution, among other things, towards ensuring in the future that in the event of a bank falling into financial difficulties, that the government, and thereby the taxpayers, are not required to provide assistance, but that the bank’s owners and creditors can be called upon in such an event.
The FMA has checked the existence of legal conditions to be able to apply BaSAG. The following conditions for resolution were ascertained:
- the threat of insolvency
- no alternative measures being available in the private sector, which would be able to avert the risk of failure within a reasonable period of time
- the necessity to take resolution actions in the public interest, in particular the existence of public interests with regard to the resolution objectives
- ensuring the continuity of critical functions;
- the avoidance der considerable negative effects on financial stability
- the protection of public funds
The initiation of actions without delay in accordance with BaSAG has prevented there being preferential treatment of creditors and the opening of insolvency proceedings on the assets of Heta has been immediately averted.
This means that the date when Heta’s eligible liabilities become payable has been changed accordingly, that they their becoming payable has been suspended until 31.05.2016, and therefore that these exposures may not be serviced until the end of 31.05.2016.
The respective edict in accordance with BaSAG was published immediately on the FMA Website.
The objective is to conduct the orderly resolution of Heta in accordance with the provisions set out in the new European supervisory regime, in particular to enable the orderly winding-down of assets.