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Austrian Credit Institutions: Licencing and Underwriting Requirements

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In Austria, credit institutions are subject to various licencing requirements to operate in the financial sector. This article provides an overview of the different types of licences available, as well as the application process and requirements for obtaining a licence.

Types of Licences

Credit institutions can apply for limited licences that cover specific banking transactions, such as:

  • Building savings and loans
  • Investment funds
  • Real estate investment funds
  • Capital financing
  • Factoring
  • Money brokering transactions on the interbank market
  • Brokerage transactions relating to banking deposits, lending, guarantees, and foreign exchange

Licensed credit institutions are also authorised to render specified financial services, including:

  • Underwriting insurance contracts
  • Providing investment advice
  • Managing investment portfolios

However, these activities may require additional licences or authorisations.

Application Process

The application process for a credit institution licence in Austria is conducted by the Financial Market Authority (FMA). For CRR credit institutions, the European Central Bank (ECB) also verifies that the requirements under Austrian law are fulfilled.

To apply for a licence, credit institutions must enclose specific information and documents with their applications, including:

  • Place of establishment and legal form of business organisation
  • Articles of association
  • Business plan for the first three years together with a budget calculation
  • Initial capital
  • Identity and amount contributed by shareholders with a qualifying participation in the credit institution

Requirements

The FMA will issue a licence to a credit institution if it meets certain requirements, including:

  • The undertaking is a joint-stock company (including Societas Europea), co-operative society, or savings bank
  • Articles of association do not contain any provisions that fail to ensure the security of assets and proper execution of transactions under the Banking Act
  • Capital, liquidity, and solvency of the institution will prospectively be sufficient
  • Internal organisation (risk management, compliance, audit) is compliant

The FMA must also be satisfied that:

  • The persons holding qualifying participations meet prudent requirements and are “suitable shareholders”
  • The institution’s internal organisation does not prevent the FMA from fulfilling its supervisory duties
  • The laws, regulations, or administrative provisions of a third country do not interfere with the FMA’s supervisory demands

In addition, directors and key function holders must be financially sound and fit to operate the institution. The centre of at least one director’s interests must also be in Austria.

Conclusion

Obtaining a licence as a credit institution in Austria requires meeting specific requirements and submitting the required documentation to the FMA. Credit institutions must ensure that they comply with all applicable laws and regulations to maintain their licence and operate successfully in the Austrian financial sector.