EN 
 
 
                                                          OPINION OF THE EUROPEAN CENTRAL BANK 
of 5 November 2007 
at the request of the Austrian Ministry of Finance  
on a draft law amending the Law on banking, the Law on savings banks, the Law on the Financial 
Market Supervisory Authority and the Law on the Oesterreichische Nationalbank 
(CON/2007/33) 
 
Introduction and legal basis  
On 8 October 2007, the European Central Bank (ECB) received a request from the Austrian Ministry of 
Finance for an opinion on a draft law amending the Law on banking, the Law on savings banks, the Law 
on the Financial Market Supervisory Authority and the Law on the Oesterreichische Nationalbank 
(Bundesgesetz zur Reform der Finanzmarktaufsicht – hereinafter the ‘draft law’). 
The ECB’s competence to deliver an opinion is b ased on Article 105(4) of the Treaty establishing the 
European Community and the third, fourth and si xth indents of Article 2(1) of Council Decision 
98/415/EC of 29 June 1998 on the cons ultation of the European Central Bank by national authorities 
regarding draft legislative provisions1, as the draft law contains provisions concerning the 
Oesterreichische Nationalbank (OeNB), the collection,  compilation and distribution of banking statistics 
and rules applicable to financial institutions whic h materially influence the stability of financial 
institutions and markets. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of 
the European Central Bank, the Govern ing Council has adopted this opinion. 
 
1. Purpose of the draft law 
1.1 The draft law is intended to further improve the supervisory system set up in 2001 and to 
strengthen the position of Austria as a financial centr e through financial market supervision that is 
as effective and efficient as possible. Whilst the stat ement of reasons explains that the supervisory 
instruments of the Financial Market Authority (FMA) have been extended since the establishment 
of the FMA, the consulting authority stresses the need for a stronger network of individual bank 
and credit institution group supervision a nd macroeconomic analysis by the OeNB2. 
 
1  OJ L 189, 3.7.1998, p. 42. 
2  See page 1 of the statement of reasons. 
1.2 The draft law is intended to optim ise financial m arket supervision of banking and to clarify  the 
allocation of tasks between the FMA and the OeNB . In so doing, the OeNB's technical com petence 
and experience in banking supervisi on, particularly  regarding on-site inspections and analy ses are 
intended to be used to a greater extent, which also m akes it possible for both institutions to use 
their resources m ore efficiently3.  
1.3 The draft law will transfer the responsibility  for all on-site bank inspections to the OeNB. These 
inspections will take place on the basis of an inspection plan agreed between the two institutions, as 
well as on a request from  the FMA. In addition, th e OeNB m ay carry  out on-site inspections in 
cases of m acroeconom ic necessity  without a request from  the FMA4. However, the FMA remains 
the com petent authority  for banking supervision. 
1.4 The draft law also expressly  regulates, for the first time, the OeNB’ s responsibilities for banking 
analy sis and a jointly  fed and used FMA/OeNB  database to ensure the availability  of a 
comprehensive, com plete and uniform  level of inform ation at any  time5.  
1.5 Furtherm ore, the proposal provides for express le gislative recognition of the OeNB’ s form al 
responsibility  for contributing to financial st ability  by monitoring and assessing the financial 
system  in Austria as a whole, and for reporting to  the FMA and the Ministry  of Finance thereon6.  
1.6 Finally , the draft law is intended to enhan ce corporate governance requirem ents for credit 
institutions, including qualitative requirem ents for the supervisory  boards of credit institutions7, 
and provides for the establishm ent of an auditing committee to control and inspect accounting, the 
annual accounts and auditing am ong others things8. 
 
2. Financial stability and the prudential role of a central bank  
2.1 General observations 
2.1.1 Article 105(5) of the Treaty  assigns to the European Sy stem  of Central Banks the task of 
contributing to the sm ooth conduct of policies pursu ed by  the com petent authorities relating to the 
prudential supervision of credit institutions and the stability  of the financial sy stem .  
2.1.2 In line with this Article, the ECB has consisten tly stated the following when consulted on draft 
national legislation reform ing the institutional fra mework for prudential supervision in Mem ber 
States: (i) central banks have traditionally  been closely  involved in the prudential supervision of 
credit institutions due to their pivotal role in th e financial sy stem , in particular regarding the 
                                                           
3  See page 1 of the s tatem ent of reas ons. 
4  Draft amendments to Article 70 of the Law on banking. 
5  Draft amendments to Article 79 of the Law on banking. 
6  New Article 44b of the Law on the OeNB. 
7  New Article 28a of the Law on banking. 
8  Draft amendment to Article 63a of the Law on banking.  
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implem entation of m onetary  policy  and ensuri ng the proper functioning of pay ment sy stem s9; and 
(ii) the m aintenance of a close involvem ent of national central banks (NCBs) in prudential 
supervision is an im portant condition for allowing the Eurosy stem  to contribute adequately  – also 
through the availability  of relevant statistics on fi nancial institutions - to m onitoring the risks to 
financial stability  in the euro area10, in accordance with Article 105(5) of the Treaty , and to 
safeguarding a sm ooth coordination between the central banking functions exercised at the 
Eurosy stem ’s level and the supervisory  functions carried out at national level11. 
2.2 Legislative recognition of the central bank’s financial stability role  
2.2.1 In keeping with the position taken by  the ECB in  previous opinions on draft national legislation 
proposing supervisory  reform s, including the ECB opinion on the 2001 reform  of the Austrian 
financial supervision fram ework12, the ECB considers that central banks are in general in the best 
position to take on responsibility  for financial stability , given their insight into m oney  and financial 
market developm ents and their involvem ent in payment sy stem s and m onetary  policy  operations. 
This applies both to the norm al conduct of business and in crisis situations13. The central banks’  
remit on sy stem ic stability  means that they  concentrate on the potential im pact of macroeconom ic 
shocks or disturbances and other factors influenc ing the stability  of financial sy stem  as a whole14. 
Therefore, the ECB welcom es the express legislative recognition of the OeNB’ s form al 
responsibility  for contributing to financial st ability  by monitoring and assessing the financial 
system  in Austria and reporting to the FMA and the Ministry  of Finance, as a separate function 
from  hands-on supervision and fina ncial regulation, as provided for in the new Article 44b(1) of 
the Law on the OeNB. In this respect, the adequate  access of central banks to inform ation and data 
on prudential and financial stability , and cooperation between financ ial supervisory  authorities and 
central banks, are essential for the accom plishm ent of their respective m issions and conducive to 
reducing the prudential and statistical reporting burden im posed on institutions.  
2.3 Operational involvement of the OeNB in prudential supervision  
2.3.1 The ECB welcom es the fact that the proposed am endm ents to Articles 70 and 70a of the Law on 
banking are intended to give the OeNB the sole responsibility  for conducting on-site inspections of 
the banking sector as part of the ongoing banking supervision in Austria, while at present the FMA 
is obliged to m andate the OeNB only  concerning cr edit and m arket risk. According to the draft law 
                                                           
9  See, e.g. paragraph 6 of ECB Opini on CON/2003/23 of 24 October 2003 at the request  of the Ministry  of Finance of the 
Netherlands on a draft law on provisions concerning the me rger of De Nederlandsche Bank and the Pensions and 
Insurance Supervisory  Authority  Foundation.  
10  See, e.g. paragraph 4 of ECB Opin ion CON/2001/10 of 25 May  2001 at the request of the Austrian Ministry  of Finance 
on a draft law establishing and organising the financia l market supervisory  authority  [title shortened] . 
11  See, e.g. paragraph 5 of ECB Opin ion CON/2001/35 of 8 November 2001 at the request of the German Ministry  of 
Finance on a draft law establishing an inte grated financial services supervision. 
12  See, e.g. paragraph 7 of ECB Opinion CON/2001/10. 
13  See, e.g. paragraph 7 of ECB Opinion CON/2001/10. 
14  See, e.g. paragraph 10 of ECB Opinion CON/2004/31 of 22 September 2004 at th e request of Národná banka Slovenska 
on a draft law on supervision of the financial market and on am endm ents to certain laws . 
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the scope of the OeNB’s on-site exam ination pow ers will cover all relevant risks, including in 
particular operational risks15. These new tasks also encom pass the verification of credit institutions’  
compliance with m oney  laundering obligations a nd following up on-site inspections of credit 
institutions. This will allow the OeNB to better c ontribute to supervisory  activities and lead to a 
more efficient use of resources with positive c onsequences for the efficacy  of the Austrian 
supervisory  system . Moreover, the ECB welcom es the proposed am endm ents to Articles 21, 21d 
and 77a of the Law on banking, which further strengthen cooperation between the FMA and the 
OeNB in relation to banking supervision16. 
2.3.2 Pursuant to the new paragraph 4b of Article  79 of the Law on banking in connection with 
Articles 18 and 19 of the Law on the Financial Mark et Supervisory  Authority  (FMABG), the direct 
costs incurred by the OeNB for on-site inspec tions and m icroeconom ic analy ses of banks will 
ultim ately  be borne – up to a cap, the exact level of which has not been indicated in the draft law 
received by  the ECB – by  the supervised entities (w hile the charges are coll ected by  the FMA). The 
OeNB, and ultim ately  the Governm ent via the OeNB’s  results, would have to bear out of its own 
budget any  OeNB costs which exceed the cap or are not directly  related to the OeNB’ s banking 
supervisory  tasks. In the statem ent of reasons, it is explained that this cap is necessary  to prevent 
the supervised entities having to bear an unreasona ble share of the costs incurred by  the FMA and 
the OeNB in the execution of their banking supervisory  tasks. In this respect, the ECB notes that 
the OeNB has specific nom ination rights in relati on to the appointm ent of m embers of the FMA’s 
Executive Board and Supervisory  Board (Articl es 5 and 8 of the FMABG), providing the OeNB 
with influence over the organisation and managem ent of the FMA. Nevertheless, if there is a wish 
to expose the OeNB to part of the costs for on-site inspections conducted for reasons other than 
financial stability  (in particular, if the cap is set at a level not reflecting the costs incurred for those 
inspections), i t must be ensured that the OeNB has suffi cient financial resources to carry  out its 
Eurosy stem  tasks under Article 105(5) of the Treat y. Finally , the ECB notes that, according to the 
draft Article 26(b) of the FMABG, the costs of banking supervisory  tasks borne by  the OeNB for 
2008 will be refunded in 2010.  
2.3.3 First, the ECB notes that, in principle, the OeNB m ay conduct on-site inspections only  at the 
request of the FMA. In general, on-site inspec tions are to be conducted in line with an annual 
inspection plan to be agreed between the FMA a nd the OeNB (new paragraph 1b of Article 70 of 
the Law on banking). The ECB understands that the tw o institutions will draw up a plan that takes 
into account priorities and resources available, without prejudice to the fulfilm ent of their 
supervisory  mandates, and that the FMA would de viate from  that plan and request additional on-
site inspections from  the OeNB only  to the extent necessary . 
2.3.4 Second, the ECB welcom es the proposed introduction of paragraph 1c into Article 70 of the Law 
on banking pursuant to which the OeNB m ay conduct on-site inspections of credit institutions on 
                                                           
15  See paragraph 10 of ECB Opinion CON/2001/10. 
16  See paragraph 8 of ECB Opinion CON/2001/10. 
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its own initiative if it considers them  necessary  for macroeconom ic reasons. However, according to 
the wording of the draft law, the OeNB would only be able to carry  out on-site inspections without 
a request from  the FMA ‘if the inspections in the inspection program me under paragraph 1b or 
other FMA inspection requests are not affected’. In view of the OeNB’s overall responsibility  for 
contributing to the stability  of the financial sy stem  in Austria, the ECB considers it crucial that the 
OeNB should be able to give priority  to c onducting on-site inspections for financial stability  
reasons, irrespective of other ongoing or planned in spections that m ay be requested by the FMA. 
Therefore the proposed new paragraph 1c of Ar ticle 70 of the Law on ba nking should be amended 
accordingly .  
2.3.5 Third, the ECB notes that, for the extension of  the initial scope of an inspection as deem ed 
necessary  by the OeNB, the procedure provided for by Article 70 of the Law on banking requires a 
request to be m ade to the FMA. In this respect, the ECB  recom mends that the OeNB should be able 
to extend inspections without requesting the author isation of the FMA, where this is justified on 
financial stability  grounds. Such an extension m ight also be critical for the successful completion 
of an on-site inspection.  
2.4 Information-sharing between the OeNB and the FM A 
2.4.1 As em phasised in previous ECB opinions17, central bank access to prudential inform ation and 
cooperation between financial s upervisory  authorities and central banks are essential for the 
conduct of m acro-prudential m onitoring, the oversi ght of payment system s and the safeguarding of 
other m arket infrastructures, which are in turn essential for the sm ooth conduct of m onetary  policy . 
In particular, from  a financial stability  perspectiv e, a central bank would inevitably  need to be 
involved in the event of any  crisis in financial markets. In that context, the ready  availability  of 
relevant inform ation and the ability  to interpret it are crucial. The Consolidated Banking Directive 
provides that, subject to confidentiality  and prof essional secrecy  requirem ents, inform ation m ay be 
shared between supervisory  authorities and central  banks and vice versa, for the purposes of the 
exercise of their respective tasks18. Therefore the legislation of virtually  all Mem ber States that 
have adopted supervisory  models based on an inde pendent financial superv isory  authority  include 
provisions authorising the exchange of inform ation between central banks and supervisory  
authorities19. 
                                                           
17  See, e.g. paragraph 9 of ECB Opinion CON/2001/10. 
18  Article 49 of Directive 2006/48/EC of the European Parliame nt and of the Council of 14 June 2006 relating to the taking 
up and pursuit of the business of  credit institutions (recast) ( OJ L 177, 30.6.2006, p. 1).
19  See, e.g. Belgium : Article 56 of the Statute of the Nationale Ba nk van België/Banque Nationale de Belgique;  Article 35 
of the Law of 22 February  1998 establishing the Organic Stat ute of the Nationale Bank van België/Banque Nationale de 
Belgique; Article 74 of the Law of 2 August 2002 on the superv ision of the financial sector and on financial services; 
Denmark : Article 354(5) of the Law on financial services; Artic le 22 of the Law on deposit guarantees and investors; 
Article 20 of the Law on Danmarks Nationalbank; Estonia : Section 2(5) of the Law on Eesti Pank; Sections 48(2), 54(2) 
of the Law on the Financial Supervision Authority ; Ireland : Sections 33C(1)(c) and 33C(8) of the Central Bank Act 
1942; Latvia : Article 6 of the Law on Latvijas Banka; Article 10 of the Law on the Financial and Capital Market 
Commission; Luxembourg : Article 33(2) of the Law of 23 Decem ber 1998 concerning m onetary  status and the Banque 
centrale du Luxem bourg; Article 16, third paragraph of  the Law of 23 Decem ber 1998 on the establishm ent of a 
commission for the supervision of the financial sector; Hungary : Article 44 of Law No LVIII of 2001 on the Magy ar 
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2.4.2 Against this background, the ECB welcom es the propo sed introduction of paragr aph 4a into Article 
79 of the Law on banking and the new Article 44b of  the Law on the OeNB. Pursuant to paragraph 
4a, the FMA has to enter all relevant inform ation on credit institutions which it collects in the 
course of its banking supervisory  work in a central database operated by , and fully  accessible to, 
the OeNB. The OeNB will be able to use these data  for the preparation of analy ses in relation to 
specific credit institutions and m acroeconom ic analy ses and for its financial stability  
responsibilities, as the statem ent of reasons e xpressly  recognises. However, the ECB does not see 
any valid reason for lim iting the inform ation the FMA has to feed into the database to inform ation 
relevant to on-site inspections and the analy tical tasks of the OeNB, as the statem ent of reasons 
suggests. Such a lim itation would increase the risk  of im pedim ents to an efficient flow of 
inform ation between the FMA and the OeNB, whic h the statem ent of reasons indicates is a key 
objective of the reform  of the financial m arket supervision. Instead, all inform ation on the banking 
sector within the FMA’ s control should be shar ed with the OeNB on an ongoing basis via that 
database. 
2.4.3 Pursuant to the new Article 44b of the Law on th e OeNB, the FMA has to provide all inform ation 
on entities in the financial sector and pension funds  to the OeNB at the latter’ s request, provided 
that the inform ation is relevant to financial stab ility in Austria. Given that the traditional borders 
between the banking, securities and insurance sectors of the financial m arket are becom ing 
increasingly  blurred, and given the risks that this developm ent entails, the ECB welcom es the 
extension of the OeNB’s right to inform ation. However, the autom atic insertion of all relevant 
inform ation into the database by  the FMA, possibly  by linking any FMA databases containing 
relevant inform ation with the new shared datab ase (without prejudice to applicable data protection 
law), and thus without the need for a specific request  by the OeNB, m ight reduce the risk of gaps in 
the inform ation flow and avoid unnecessary  adm inistrative procedures between the FMA and the 
OeNB.  
 
3. Specific issues 
3.1 Strengthening the corporate governance of credit institutions  
The ECB welcom es the enhanced corporate govern ance requirem ents for the appointm ent of the 
chair to the supervisory  boards of credit institu tions. In particular, the ECB welcom es: (i) the 
cooling-off period of two y ears if a person has previously  served as a m ember of the managem ent 
board – ‘ Geschäftsleiter ’ – before that person may be appointed as chair; (ii) the stricter ‘fit and 
proper’ requirem ents – (new Article 28a of the Law on banking); (iii) the strengthening of credit 
institutions’ internal audit func tion (am ended Article 42(3) of th e Law on banking); and (iv) the 
mandatory  installation of an audit com mittee for cr edit institutions of particular relevance to the 
                                                                                                                                                                                           
Nemzeti Bank; Malta : Section 38A of the Central Bank of Malta Act; Section 18 of the Malta Financial Services Act; 
Austria : Articles 79 to 80 of the Law on banking; Finland : Section 26 of the Law on Suomen Pankki, No 214/1998.  
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financial m arket (new paragraph 4 of  Article 63a of the Law on banking). 
 
This opinion will be published on the ECB’s website. 
 
 
Done at Frankfurt am  Main, 5 Novem ber 2007. 
 
[signed ] 
 
The President of the ECB 
Jean-Claude TRICHET 
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