Austria’s Chancellor Alfred Gusenbauer and Vice-Chancellor and Finance Minister Wilhelm Molterer on the Austrian package of measures for achieving financial stability:

"There is no immediate necessity for intervention in the Austrian financial system. However, in view of the international developments, it is necessary to give small bank depositors a sense of security, as well as local stability.

On the basis of yesterday’s resolutions of the Heads of State and Government in the Euro countries as well as the resolution of the Austrian Council of Ministers on October 8, 2008, in which it has already been decided to take measures in the context of the present developments on the international financial markets, Austria has compiled a comprehensive and sustainable package of measures for protecting small depositors and for strengthening the banks. The resolutions will now be urgently implemented with a specific legislative proposal.

The central aspects of the Austrian package of measures include instruments for providing the required liquidity to the financial sector, the preparation of possible measures for strengthening the equity capital of banks, securing the deposits of natural persons retrospectively from 1 October as well as the prohibition of speculative short sales of bonds and securities.

Instruments for providing the required liquidity for the financial sector. The Interbank Market Revival Act aims at reviving the Interbank market that is currently functioning only to a limited extent. For this purpose, the banks will form a separate company as a “Clearing House”, through which they will carry out their business and in which insurance companies can also participate.

This company, apart from reasonable equity capital resources, will also have a Federal guarantee, to prevent it from itself coming under pressure from possible bad debts. The “Clearing House" will pass on the funds that it holds to those banks that show a need for liquidity and will receive appropriate securities for this funding. In order for the Clearing House to float loans to create liquidity for itself, the Federation can undertake a liability on these loans. Federal liabilities are also envisaged for simplifying bond issues of the financial institutions.

Measures for equity capital strengthening for banks: The Financial Market Stability Act makes it possible for the Federal Minister for Finance to administer equity capital in the form of a participation in capital increases. Basically, the suggested legislation envisages employing all forms of permissible equity capital measures for the purpose. The provision of equity capital can be linked to corresponding, appropriate conditions; for special cases, in the interest of the relevant financial institution, an intervention in the ownership structure can also take place. The flexibility of the legal frame conditions also makes it possible to bring into play, for specific measures, a company that is owned by the Federation, such as a subsidiary company to be formed by the ÖIAG. Further, the Act envisages that investments of the Federation that have been made in the context of the measures described above will be transferred back to the private owners when the measures have achieved their goals and the capital market situation permits this to be done.

Securing the deposits of natural persons: Deposits of natural persons will be protected in their entirety with effect from 1 October. This will benefit small depositors, ensure confidence in Austrian banks and avoid location-related handicaps as compared to other countries, especially Germany.

Prohibition of speculative short-selling of securities: Speculative short-selling of securities in large measure can have an additional negative effect on the stock markets and companies in times of crises. Therefore, a change in the Stock Exchange Act of the FMA is proposed to create the option to decree the corresponding bans if required and to sanction violations with the maximum possible severity.

The Parliamentary proceedings will be initiated immediately after the adoption of the resolution by the Council of Ministers. “