Vienna, 10.03.2016 European Commission attests to stability of Austrian banking sector Results of in-depth analysis published

In the same manner as the Estonian banking sector, Austria‘s banking sector has for the first time undergone a thorough in-depth analysis by the European Commission. The result shows that there exist no macroeconomic imbalances in Austria. The European Commission (EC) comes to this conclusion at the end of the country audit which it commenced in November 2015. Eighteen Member States were appraised in terms of possible imbalances. Six of the countries audited, including Austria, were proven to be sound in this regard; they were attested as having no macroeconomic imbalances, as is evident from the published decision of the European Commission. 

The reduction in risk positions adopted by banks, measures to increase capital coverage and reduce risk in order to strengthen the lending capacity of banks, as well as progress achieved in the restructuring of financial institutions, have reinforced the European Commission in its positive evaluation. In addition, the increased resilience of the domestic banking sector through regulatory measures was deemed satisfactory. The local financing basis, as well as the quality of assets of foreign subsidiaries, have improved. Although restructuring of the banks placed a burden on public finances, nevertheless, the increase in government debt during the crisis was significantly lower than in most other countries of the Eurozone. 

“The measures taken in the banking sector, the consistent reduction in inherited debts arising from banking resolution, or indeed the restructuring of financial institutions, were necessary and ultimately achieved their purpose,” declared Finance Minister Hans Jörg Schelling, expressing his satisfaction with the Commission’s appraisal, adding, “Only if we continue consistently doing our homework in key areas will we be able to further improve Austria’s position among the top performers.” 

The investigation:
As a result of the financial and economic crisis, the development of the macroeconomic imbalances investigated became a focus of European debate as a contributory factor to the crisis. This means a significant imbalance between the imports and exports of a country in terms of goods, services and capital. If, in this context, certain ratios are exceeded, negative effects may swiftly arise. Thus, for instance, asset bubbles may arise due to sudden price increases.

For Member States of the Eurozone, if a so-called Excessive Imbalance Procedure (EIP) becomes necessary as a result of the investigation undertaken, this may ultimately lead to a penalty payment of up to 0.1% of GDP.
Twelve of the Member States investigated were revealed to have imbalances or excessive imbalances.
In the case of Belgium, Hungary, Romania, Estonia and the United Kingdom, no imbalances were found.