How to Obtain a Financial License in Austria

Austria has a stable financial system, a balanced budget, an efficient economy, and a high level of wealth.

The state and regulatory policy of the country in the banking sector is aimed primarily at maintaining a high level of confidence in the banking system, which is considered the foundation for the uninterrupted and efficient provision of banking services.

To this end, the system is organized in such a way that the financial market must strictly observe strict rules.

Further in this article, we will provide a brief overview of the main features of banking regulation in Austria.

Key regulators

The Austrian credit and financial system is led by the Oesterreichische Nationalbank (Austrian National Bank), the state central issuing credit bank. The Bank has branches in the main cities of all federal states, as well as in the city of Villach (Carinthia). Head office in Vienna.

Half of the capital stock of the Austrian National Bank belongs directly to the state, the rest of the shares are distributed between institutions and individuals.

The functions of the Austrian National Bank include regulation of monetary circulation and credit, monitoring the activities of Austrian commercial banks, operations with foreign currency, etc.

In order to regulate monetary circulation and credit, the Austrian National Bank was granted the right to issue loans, mainly to commercial banks, to establish and change interest rates on its accounting and other operations, as well as the norms of required reserves of commercial banks, to carry out operations on the open securities market. Moreover, lending to the country's economy is carried out through other banks.

Obtaining a financial license in Austria 

To obtain a financial license, a financial institution must meet the requirements:

• at least 4.5% of the capital of CET 1;
• at least 6% of tier 1 capital;
• share of equity in the total risk amounting to 8%.

In recent years, provisions regarding professional qualifications and experience in credit institutions have been tightened. The European Central Bank and the European Securities and Markets Authority have issued joint guidance on assessing the suitability of board members and key function holders to ensure better performance of financial institutions and customers’ safety.

So, if you are planning to establish a bank in Austria, first you should care about is the HR issue so that the most qualified managers are appointed to lead your financial institution and comply with the standards of both European regulators.

Bank registration in Austria: managerial responsibility

Managers and members of the supervisory board are subject to a system of responsibility of general civil and corporate law. In the event of a bankruptcy of a credit institution, the managing director or members of the supervisory board may be held liable if they acted intentionally.

Regulators should be regularly and timely notified of the activities of a financial institution. If the manager ignores this provision, then he can be punished with an administrative fine of up to EUR 5 million (if illegal activity is proved).

Conclusion