The FMA should promote plan testing as a routine business practice among, at least, the largest banks. Recovery planning is reaching maturity in the largest banks, where plans are integrated into overall strategic and risk management, and management is beginning to test elements of plan implementation.
Recovery planning requirements are comprehensive and well implemented. The FMA’s resolution function is adequately resourced, including supporting staff from within the OeNB. Ultimate decision making for supervisory and resolution matters in the FMA are unified, and the MOF and FMA should separate them to avoid potential conflicts of interest, or the appearance of conflicts. There is appropriate operational separation of supervisory and resolution functions within the FMA and good coordination between the functions, as well as between the FMA and the OeNB. Institutional arrangements are generally sound, and capacity is good. The following paragraphs elaborate on these and other matters. The authorities’ collective contingency planning for financial crisis and testing of plans should be intensified. The legal framework is sound, although additional flexibility could be provided in the bankruptcy regime. Key impediments to resolution have been identified and are being addressed, yet adequate means to ensure sufficient funding in resolution remains to be determined. Main findings: Recovery and resolution planning are well advanced. The authorities relevant to this note are the Ministry of Finance (MOF), the Financial Market Authority (FMA), and the Austrian National Bank (OeNB). The scope of the assessment includes the institutional arrangements for recovery, resolution, and crisis management the supervision of banks’ recovery plans the legal regime for bank bankruptcy and resolution resolution planning by the authorities and addressing impediments to resolution assuring funding to support resolution the two deposit guarantee schemes and the government authorities’ collective preparedness to deal with financial crisis. This note assesses and makes recommendations regarding bank resolution and crisis management arrangements. Key impediments to resolution have been identified and are being addressed, yet adequate means to ensure enough funding in resolution remains to be determined. Recovery and resolution planning are well advanced.
This technical note on Austria focuses on bank resolution and crisis management.
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