Opinion of the European Central Bank of 9 January 2015 on applications to operate as a run-off company (CON/2015/1)
Date: 2015-01-09
Institutions: European Central Bank
Subjects: Austria, aid for restructuring, credit institution, financial intervention, financial stability, investment company, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 9 January 2015 

on applications to operate as a run-off company 

(CON/2015/1) 

Introduction and legal basis 

On 21 November 2014 the European Central Bank (ECB) received a request from the Austrian Ministry of 

Finance for  an  opinion  on  a  draft federal law  on the  reorganisation and  winding up of credit  institutions 
(hereinafter the ‘draft law’)1, which transposes Directive 2014/59/EU of the European Parliament and the 
Council2 (hereinafter the ‘BRRD’) into Austrian 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  (TFEU)  and  on  the  sixth  indent  of  Article  2(1)  of  Council  Decision 
98/415/EC3, as the draft law relates to rules applicable to financial institutions insofar as they 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 Governing Council has adopted 

this opinion. 

1. 

Purpose of the draft law 

1.1  The overall objective of the draft law is to create a framework for recovery and resolution planning 

of  credit  institutions  and  investment  firms  (hereinafter  jointly  referred  to  as  ‘institutions’),  and  to 

provide  an  effective  mechanism  for  their  resolution,  minimising  risks  to  financial  stability  and  the 

cost  to  the  public  budget.  To  this  end,  the  draft  law  implements  the  BRRD  and  provides  for 
amendments  to  the  Law  on  Banking4,  the  Financial  Market  Supervisory  Authority  Act5,  the 
Insolvency Ordinance6, the Takeover Act7 and the Securities Supervision Act 20078. The draft law 

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Bundesgesetz über die Sanierung und Abwicklung von Banken, BGBl I Nr 98/2014. 
Directive 2014/59/EU of the European Parliament and the Council of 15 May 2014 establishing a framework for the recovery 
and  resolution  of  credit  institutions  and  investment  firms  and  amending  Council  Directive  82/891/EC,  and  Directives 
2001/24/EC,  2004/25/EC,  2005/56/EC,  2007/36/EC,  2011/35/EU,  2012/30/EU  and  2013/36/EU,  and  Regulations  (EU) 
No 1093/2010 and (EU) No 648/2012, of the European Parliament and the Council (OJ L 173, 12.6.2014, p. 190). 

Council  Decision  98/415/EC  of  29  June  1998  on  the  consultation  of  the  European  Central  Bank  by  national  authorities 
regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 

Bundesgesetz über das Bankwesen (Bankwesengesetz), BGBl 532/1993, as amended. 

Bundesgesetz  über  die  Errichtung  und  Organisation  der  Finanzmarktaufsichtsbehörde  (Finanzmarktaufsichtsbehördenge-
setz), BGBl I Nr 97/2001, as amended. 

Bundesgesetz über das Insolvenzverfahren (Insolvenzordnung), RGBl Nr 337/1914, as amended. 

Bundesgesetz betreffend Übernahmeangebote (Übernahmegesetz), BGBl I Nr 127/1998, as amended. 

Bundesgesetz  über  die  Beaufsichtigung  von  Wertpapierdienstleistungen  (Wertpapieraufsichtsgesetz  2007),  BGBl  I 
Nr 60/2007, as amended. 

 
 
 
 
                                                 
ECB-PUBLIC 

will replace the Banking Intervention and Restructuring Act9. 

1.2  The consultation request from the Austrian authorities focuses on one specific issue going beyond 

the  implementation  of  the  BRRD.  Section  162  of  the  draft  law  permits  institutions  to  apply  to 

operate  as  a  run-off  company  under  certain  conditions.  The  Austrian  Financial  Market  Authority 

(FMA) may approve such an application if the institution (a) is no longer active on the market or no 

longer conducts transactions with third parties, (b) does not take in any deposits or other repayable 

funds from the public, (c) has put in place processes to ensure that contractual counterparties from 

its  remaining  business  are  kept  up  to  date  with  information  regarding  the  run-off  process  and 

receive appropriate support, and (d) has been carrying out its business prior to 31 December 2014 

in  accordance  with  a  winding-up  or  restructuring  plan  approved  by  the  European  Commission 

under the State aid rules of the TFEU. These prerequisites must be confirmed by the institution’s 

auditor. The task of a run-off company is to manage its remaining assets and liabilities in order to 

ensure an orderly and optimal realisation of proceeds, in other words, portfolio liquidation.  

1.3  When  the FMA’s approval  decision  enters into  force, the institution’s license to  carry out  banking 

transactions  expires  and  it  thereafter  operates  as  a  run-off  company.  A  run-off  company  must 

liquidate  its  portfolio  pursuant  to  a  run-off  plan.  The  management  must  submit  annual  reports  on 

the  progress  of  the  company’s  asset  realisation  to  its  supervisory  board  and  to  the  resolution 

authority. Furthermore, a run-off company may not receive funds from the public, provide securities 

services  or  conduct  investment  activities.  However,  transactions  conducted  on  the  run-off 

company’s  own  account  using  financial  instruments  with  the  aim  of  hedging  interest  rate,  foreign 

exchange, credit or liquidity risks in connection with its run-off are permitted, unless associated with 

market  making  activities  or  granting  third  parties  access  to  trading  systems  (section  84(4)  of  the 

draft law). 

1.4  As  section  162  of  the  draft  law  only  applies  to  institutions  that  have  been  operating  under  a 

liquidation or  restructuring plan approved by the European Commission under the State aid rules 

prior  to  31  December  2014,  i.e.  prior  to  the  main  deadline  for  implementation  of  the  BRRD,  it 

should  be  regarded  as  a  transitional  rule.  It  establishes  a  run-off  scenario  similar  to  a  specific 

measure  made  available  under  Article  42  of  the  BRRD,  namely  the  operation  of  an  asset 

management vehicle under the asset separation tool. According to the explanatory memorandum 

accompanying  the  draft  law,  run-off  companies  will  not  be  subject  to  the  other,  more  general, 

provisions of the draft law. The difference between the regime put in place by the draft law and that 

of the BRRD is that under the draft law the institution itself applies to operate as a run-off company, 

while under the BRRD it is the authorities that must determine whether a bank is failing or likely to 

fail and take appropriate steps. 

2. 

General observations 

In accordance with Article 1(2) of Decision 98/415/EC, this opinion only addresses issues that go 

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Bankeninterventions- und -restrukturierungsgesetz, BGBl I Nr 160/2013, as amended. See Opinion CON/2013/26 on crisis 
planning  and  early  intervention  for  credit  institutions.  All  ECB  opinions  are  published  on  the  ECB’s  website  at 
www.ecb.europa.eu.  

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beyond the mere transposition of the BRRD into Austrian law. 

ECB-PUBLIC 

3. 

Specific observations 

3.1  The ECB welcomes the clarification contained in section 3(10) of the draft law, which provides that 

the FMA may only carry out the tasks, powers and duties assigned to it under the draft law to the 

extent  that  the  competence  to  do  so  is  not  granted  to  the  ECB  under  Council  Regulation  (EU) 
No 1024/201310. 

3.2  The ECB notes that section 162 of the draft law should be interpreted in a way that avoids conflict 

with the ECB’s exclusive competence to withdraw the authorisation of credit institutions pursuant to 

Article 4(1)(a) of Regulation (EU) No 1024/2013, as upon the entry into force of an FMA approval 

under that section the institution’s original authorisation is terminated. Therefore, given the ECB’s 

exclusive  competence  to  withdraw  an  authorisation  and  the  limitation  on  the  FMA’s  powers 

contained in section 3(10) of the draft law, the ECB must be involved in any decision of the FMA to 

approve an application under section 162 of the draft law. 

3.3  Section 84(9) of the draft law requires a run-off company to pass a resolution for winding-up once it 

has  fully  liquidated  its  portfolio.  In  order  to  avoid  any  misunderstanding,  the  ECB  recommends 

making it clear that the provision concerns a resolution for winding-up under the relevant provision 
of  Austrian  company  law,  such  as  section  84  of  the  Law  on  limited  liability  companies11  or 
section 203 of the Stock Corporation Act12.  

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

Done at Frankfurt am Main, 9 January 2015. 

[signed] 

The President of the ECB 

Mario DRAGHI 

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Council  Regulation  (EU)  No  1024/2013  of  15  October  2013  conferring  specific  tasks  on  the  European  Central  Bank  con-
cerning policies relating to the prudential supervision of credit institutions (OJ L 287, 29.10.2013, p. 63). 

Gesetz über Gesellschaften mit beschränkter Haftung (GmbH-Gesetz), RGBl Nr 58/1906, as amended. 

Bundesgesetz über Aktiengesellschaften (Aktiengesetz), BGBl Nr 98/1965, as amended. 

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