Opinion of the European Central Bank of 16 July 2010 on the transfer of prudential supervision tasks to the Austrian Financial Market Authority (CON/2010/57) 
Date: 2010-07-16
Institutions: European Central Bank
Subjects: Austria, exchange of information, financial supervision, national law, statistics, supervisory power

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 16 July 2010 

on the transfer of prudential supervision tasks to 

the Austrian Financial Market Authority  

(CON/2010/57) 

Introduction and legal basis 

On  2  June  2010,  the  European  Central  Bank  (ECB)  received  a  request  from  the  Austrian  Ministry  of 

Finance  for  an  opinion  on  a  draft  Federal  law  amending  the  Law  on  banking,  securities  supervision, 

pensions for employees and the self-employed, and severance payments (hereinafter the ‘draft law’). 

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 

Functioning  of  the  European  Union  and  the  third  and  fourth  indents  of  Article  2(1)  of  Council 

Decision 98/415/EC  of  29  June  1998  on  the  consultation  of  the  European  Central  Bank  by  national 
authorities  regarding  draft  legislative  provisions1,  as  the  draft  law  contains  provisions  concerning  the 

Oesterreichische  Nationalbank  (OeNB)  and  relates  to  the  collection,  compilation  and  distribution  of 

financial  and  banking  statistics.  In  accordance  with  the  first  sentence  of  Article  17.5  of  the  Rules  of 

Procedure of the European Central Bank, the Governing Council has adopted this opinion. 

1. 

Purpose of the draft law 

1.1  The  draft  law  transposes  several  directives  into  Austrian  legislation2.  As  mentioned  in  the 

consultation request, the draft law also includes an amendment to the Law on banking that does not 

relate  to  the  transposition  of  directives.  In  line  with  Article  1(2)  of  Decision  98/415/EC,  this 

opinion only covers such amendment. 

1.2  The new Article 3(8) of the Law on banking transfers competences from the OeNB to the Austrian 

Financial  Market  Authority  (FMA)  as  regards  prudential  supervision  of  credit  institutions 

authorised  to  provide  only  investment,  real  estate  investment,  and  severance  and  retirement  fund 

business (‘special purpose banks’). Concretely, the draft law is intended to transfer to the FMA the 

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2 

OJ L 189, 3.7.1998, p. 42. 
Directive  2009/111/EC  of  the  European  Parliament  and  of  the  Council  of  16  September  2009  amending 
Directives 2006/48/EC, 2006/49/EC and 2007/64/EC as regards banks affiliated to central institutions, certain own funds 
items,  large  exposures,  supervisory  arrangements,  and  crisis  management  (OJ  L  302,  17.11.2009,  p.  97).  Commission 
Directive 2009/27/EC of 7 April 2009 amending certain Annexes to Directive 2006/49/EC of the European Parliament 
and of the Council as regards technical provisions concerning risk management (OJ L 94, 8.4.2009, p. 97). Commission 
Directive 2009/83/EC of 27 July 2009 amending certain Annexes to Directive 2006/48/EC of the European Parliament 
and of the Council as regards technical provisions concerning risk management (OJ L 196, 28.7.2009, p. 14). 

 
 
 
 
                                                            
OeNB’s  responsibility  for  providing  individual  bank  off-site  analysis  and  on-site  audits  in 

connection with such special purpose institutions.  

1.3  The  explanatory  memorandum  explains  the  reasons  for  the  transfer  of  prudential  supervisory 

competences  from  the  OeNB  to  the  FMA  as  follows.  The  OeNB’s  common  risk-based  analysis 

approach to be applied to the abovementioned special purpose banks would not deliver meaningful 

results due to a lack of comparability with full service banks. Furthermore, the memorandum states 

that the OeNB’s risk-based analysis approach would not be suited to the low balance sheet totals of 

special  purpose  banks.  According  to  the  memorandum,  without  the  draft  law  the  forthcoming 
implementation of Directive 2009/65/EC3 would also lead to an OeNB non-systemic cross-border 

competency with regard to on-site inspections at foreign undertakings for collective investment in 

transferable  securities,  which  are  non-banks.  Austrian  law  considers  investment  companies  as 

credit  institutions,  whereas  in other  Member  States  they  are  not  regarded  as  banks  in  accordance 
with Article 4(1) of Directive 2006/484. While the UCITS IV-Directive has to be transposed into 

Austrian legislation by 1 July 2011, the transfer of supervisory competences will already take effect 

on 1 January 2011 for organisational reasons.  

2.  General observations 

The appropriate time to consult the ECB 

2.1  The  ECB  points  out  that,  in  cases  of  particular  urgency  which  do  not  allow  for  a  normal 

consultation period, the consulting authority may indicate urgency in the consultation request and 

ask  for  a  shorter  deadline  for  the  ECB’s  opinion  to  be  adopted.  This  does  not  prejudice  the 

consulting authority’s duty under Articles 127(4) and 282(5) of the Treaty to consult the ECB on 

national draft legislative provisions falling within its fields of competence. The second sentence of 

Article 4 of Decision 98/415/EC provides that the ECB must be consulted ‘at an appropriate stage’. 

This  implies  that  the  consultation  should  take  place  at  a  point  which  affords  the  ECB  sufficient 

time  to  examine  the  draft  legislative  provisions  and  to  adopt  its  opinion  in  all  required  language 

versions,  and  which  also  enables  the  relevant  national  authorities  to  take  the  ECB’s  opinion  into 

consideration  before  the  provisions  are  adopted.  Article  3(4)  of  Decision  98/415/EC  also  obliges 

Member States to suspend the adoption process for draft legislative provisions, pending receipt of 

the ECB’s opinion. The Ministry of Finance’s consultation request on 2 June 2010 did not indicate 

any urgency and also did not set a deadline for the opinion, which in accordance with Article 3(1) 

of Decision 98/415/EC may not be less than one month. Notwithstanding this, the National Council 
adopted the draft law within less than one month and before this ECB opinion has been adopted5. 

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5  

Directive  2009/65/EC  of  the  European  Parliament  and  of  the  Council  of  13  July  2009  on  the  coordination  of  laws, 
regulations  and  administrative  provisions  relating  to  undertakings  for  collective  investment  in  transferable  securities 
(UCITS) (OJ L 302, 17.11.2009, p. 32). 
Directive  2006/48/EC  of  the  European  Parliament  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). 
See Austrian Parliament’s press release, 01/07.07.2010/Nr. 585. 

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2.2  The  opportunity  to  adopt  an  opinion  on  a  draft  law  allows  the  ECB  to  express  its  views  on  the 

substance of the proposed legislation, including considerations such as the importance that the ECB 

may  attach  to  a  particular  legislative  proposal  and  its  potential  impact  on  the  Eurosystem. 

Therefore,  the  ECB  reiterates  its  position  that  even  cases  of  particular  urgency  do  not  relieve 

national authorities from their duty to consult it and to allow sufficient time to take into account its 

views  in  accordance  with  Decision  98/415/EC.  With  respect  to  the  ongoing  consultation,  the 

process  of  adoption  of  the  draft  law  should  have  been  suspended.  The  ECB’s  comments  on  the 

consulted provisions do not eliminate the breach of the obligation to consult the ECB. Even though 

the Austrian National Council already adopted the draft law on 7 July 2010, the ECB considers that 

its comments are important for its application and interpretation and any future amendments. The 

ECB would appreciate the Ministry of Finance giving due consideration to the above observations 

by  honouring  its  obligation  to  consult  the  ECB  in  the  future,  in  accordance  with  Decision 

98/415/EC. 

Transfer of supervisory competences 

2.3  Article  127(5)  of  the  Treaty  assigns  to  the  Eurosystem  the  task  of  contributing  to  the  smooth 

conduct of policies pursued by the competent authorities relating to the prudential supervision of 

credit  institutions  and  the stability of  the  financial  system.  In  line  with  this  Article,  the  ECB  has 

consistently  stated  that  maintaining  a  close  involvement  of  national  central  banks  in  prudential 

supervision  is  a  condition  for  the  Eurosystem  to  contribute  adequately  to  monitoring  the  risks  to 
financial  stability  in  the  euro  area6.  The  ECB  notes  that  the  OeNB’s  broad  role  in  the  field  of 

prudential  supervision  will  –  subject  to  the  ECB’s  observations  in  paragraph  3.1  and  3.2  –  not 

substantially diminish as a result of the adoption of the draft law, since the supervisory tasks to be 

transferred only apply to companies not regarded as credit institutions according to Article 49 of 

Directive  2006/48/EC.  The  ECB  understands  that,  without  the  draft  law,  the  OeNB  would  be 

responsible  for  conducting  on-site  audits  at  branches  of  foreign  investment  companies  in 

accordance with Article 101(4) of Directive 2009/65/EC, whereby the competent authorities of one 

Member State may request the cooperation of the competent authorities of another Member State in 

a supervisory activity or for an on-the-spot verification or in an investigation on the territory of the 

latter  within  the  framework  of  their  powers  pursuant  to  this  Directive,  although  the  national 

competent authority to supervise UCITS is and will continue to be the FMA.  

Information-sharing between the OeNB and the FMA 

3. 
3.1  As  emphasised  in  previous  ECB  opinions7,  central  bank  access  to  prudential  information  and 

cooperation  between  financial  supervisory  authorities  and  central  banks  are  essential  to  macro-

prudential  monitoring,  the  oversight  of  payment  systems  and  the  safeguarding  of  other  market 

infrastructures,  which  are  in  turn  indispensable  for  the  smooth  conduct  of  monetary  policy  and 

conducive to reducing the prudential reporting burden imposed on institutions. In particular, from a 

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7 

See ‘The role of central banks in prudential supervision’, published on the ECB’s website at www.ecb.europa.eu; also see 
ECB Opinion CON/2001/10. All ECB opinions are available on the ECB’s website.  
See, e.g. paragraph 2.4 of ECB Opinion CON/2007/33 or paragraph 9 of ECB Opinion CON/2001/10. 

3 

                                                            
financial stability perspective, a central bank would inevitably need to be involved in the event of 

any financial market crisis. In that context, the availability of relevant information and the ability to 

interpret  it  are  crucial.  Directive  2006/48/EC  provides  that,  subject  to  confidentiality  and 

professional secrecy requirements, information may be shared between supervisory authorities and 

central banks and vice versa, for the purposes of the exercise of their respective tasks. Therefore the 

legislation  of  virtually  all  Member  States  that  have  adopted  supervisory  models  based  on  an 

independent financial supervisory authority authorises the exchange of information between central 
banks and supervisory authorities8. 

3.2  Against this background, the ECB notes that as a consequence of this draft law the OeNB would no 

longer  be  authorised  to  evaluate  individual  special  purpose  bank  analysis  data  in  light  of  the 

individual  and  overall  economic  situation,  especially  for  the  purpose  of  performing  its  duties  in 

connection with financial stability. This follows from the provision by the draft law that only the 

first  to  third  and  last  sentences  of  Article  79(4a)  of  the  Law  on  banking  will  apply  to  special 

purpose banks. Accordingly, the FMA must share all relevant information arising from its banking 

supervision activities in the joint database for banking supervision analysis. Relevant information 

includes data pursuant to Article 77(4), banking supervision data pursuant to Article 14 of the Law 

on  financial  conglomerates,  reports  from  State  Commissioners,  the  results  of  investigations  and 

other  observations  regarding  specific  institutions  within  the  FMA’s  area  of  responsibility. 

Furthermore, information available to both institutions is to be stored in the database by the OeNB. 

The  OeNB  is  also  permitted  to  perform  statistical  evaluations  of  the  data  with  the  objective  of 

generating results which are not related to specific persons. However, according to the draft law, 

the eighth sentence of Article 79(4a), which currently authorises the OeNB to evaluate individual 

special purpose bank analysis data for the purpose of its financial stability duties, would no longer 

apply  to  special  purpose  banks.  Taking  into  account  the  importance  of  central  bank  access  to 

prudential  information,  the  ECB  considers  essential  the  OeNB’s  continued  access  for  macro-

prudential  monitoring  to all  available  prudential  information,  including  special  purpose  banks,  as 

far as this access is needed in the course of its respective duties. Provided the eighth sentence of 

Article  79(4a)  of  the  Law  on  banking  is  retained,  this  problem  will  not  arise.  Otherwise,  such 

access  in  case  of  need  should  be  explicitly  provided.  Furthermore,  according  to  Article  3  of  the 
Commission  proposal  for  a  regulation  establishing  the  European  Systemic  Risk  Board  (ESRB)9, 

this institution will be responsible for the macro-prudential oversight of the financial system within 

the  Union  to  prevent  or  mitigate  systemic  risks  within  the  financial  system,  to  avoid  episodes  of 

widespread financial distress, contribute to a smooth functioning of the internal market and ensure 

a  sustainable  contribution  of  the  financial  sector  to  economic  growth.  Therefore,  the  OeNB  will 

need  continued  access  to  evaluate  individual  special  purpose  bank  analysis  data  for  financial 

stability.  

8 
9  

See the examples stated in footnote 19 of ECB Opinion CON/2007/33. 
Proposal for a regulation of the European Parliament and of the Council on Community macro prudential oversight of the 
financial system and establishing a European Systemic Risk Board, COM (2009) final, 23.9.2009. 

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3.3  The ECB welcomes that the OeNB will continue to perform statistical evaluations of supervisory 

analysis  data  regarding  UCITS,  real  estate  investment  funds  and  severance  and  retirement  funds. 

The ECB also notes that the draft law does not affect the statistical reporting obligations of special 
purpose banks to the OeNB on the activity of the funds they manage10. 

4. 

Specific issues 

The ECB supports legislation that clearly and explicitly assigns competences to the respective supervisory 

authorities.  However,  while  the  draft  law  specifically  transfers  the  on-site  inspection  responsibility,  it 

does not confer on the FMA the responsibility for individual bank analysis. Instead, the draft law merely 

suggests that certain provisions of Article 79(4a), including the fourth sentence empowering the OeNB to 

conduct off-site analysis, will no longer apply to special purpose banks. The draft law does not provide 

that the FMA will  assume this responsibility in the future. This  could imply that conducting individual 

bank  analysis  is  no  longer  required  for  special  purpose  banks  The  ECB  understands  that  this  is  not 

intended.  Accordingly,  for  reasons  of  legal  clarity,  the  ECB  recommends  expressly  conferring  on  the 

FMA  the  responsibility  of  comprehensively  evaluating  special  purpose  banks  on  an  ongoing  basis 

(individual off-site bank analysis). 

This opinion will be published on the ECB’s website. 

Done at Frankfurt am Main, 16 July 2010. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

10  

These include among other reporting obligations under Regulation ECB/2007/8 of 27 July 2007 concerning statistics on 
the assets and liabilities of investment funds (OJ L 211, 14.8.2007, p. 8). 

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