AUSTRIA Law and Practice Contributed by: Markus Fellner, Stefan Sallat and Florian Henöckl, Fellner Wratzfeld & Partner Rechtsanwälte GmbH
1. Loan Market Overview 1.1 The Regulatory Environment and Economic Background
On 17 March 2025, the Kreditdienstleister- und Kredit- käufergesetz (Credit Service Provider and Credit Pur- chaser Act; KKG) came into force in Austria, imple- menting the Non-Performing Loans Directive (Directive (EU) 2021/2167). The KKG is aimed at supporting the development of secondary markets for non-perform- ing loans in Austria and the European Union by remov- ing obstacles to the transfer of non-performing loans from credit institutions to credit purchasers, putting in place appropriate safeguards and, at the same time, protecting borrowers’ rights. 1.2 Impact of Global Conflicts Fuelled by increasingly expensive energy and the resulting high inflation in the wake of the Ukraine war, consumer prices in Austria rose significantly. In the EU, inflation is currently close to the European Central Bank (ECB) Governing Council’s medium-term target of 2%.Therefore, the ECB significantly reduced key interest rates in the last few months. The deposit rate, which is important for banks and savers, now stands at 2.0%, while the main refinancing rate is 2.15%. Hamas’ attack on Israel and the following Middle East conflict have further exacerbated global tensions. Together with Russia’s war against Ukraine, this fur- ther armed conflict has the potential to have a sub- stantial impact on the financial markets, increasing risks in many areas and, as a result, the vulnerability of the financial system is still ongoing. 1.3 The High-Yield Market The Austrian marketplace (Vienna Stock Exchange) has not developed a high-yield market as active as those in other jurisdictions. Predominantly, new issues of bonds admitted to trad - ing on the Vienna Stock Exchange comprise issu- ance programmes of credit institutions. There is also a limited number of mid-cap issuers and numerous foreign issuers, largely aiming at admission of their instruments to the (non-regulated) multilateral trad- ing facility (Vienna MTF), which does not require the approval and publication of a prospectus in line with the Prospectus Regulation. There is, nevertheless, a solid share of classic corpo- rate bonds which are largely issued by listed blue chip
Credit institutions must comply with the applicable capital requirements (Basel III). As with everywhere in Europe, the regulatory framework (in particular, the determination of risk-weighted assets and of own funds) has had a significant impact on overall strat- egy in the banking sector, which increasingly aims at deleveraging banks’ balance sheets (in particular, by way of disposal of non-core assets). The geopolitical and global economic situation remains extremely uncertain. The weak economic outlook, high inflation and the massive rise in interest rates are impacting the ability of private households, companies and governments to pay their debts. Tight- er financing conditions make it more difficult for bor- rowers to obtain a loan. In 2022, the Austrian Financial Market Authority (FMA) issued a regulation that defines sustainable lending standards for the financing of residential real estate ( Verordnung für nachhaltige Vergabestandards bei der Finanzierung von Wohnimmobilien , KIM-VO) which made the granting of private real estate loans even more difficult. The aim of this regulation was to limit the systematic risks to financial market stability in case of debt financing for residential real estate and to prevent potentially difficult situations in the real estate market. Since coming into force the KIM-VO and the upper limits for the granting of residential property financing have been the subject of controversial debate. The KIM-VO expired on 1 July 2025. However, the restrictions on the granting of residential real estate financing remain in place in a different form. The FMA issued a circular on the sound granting of private resi- dential real estate loans (“WIK Circular”). In this circu- lar, the FMA upholds the requirements of the KIM-VO as recommendations to the banks. The WIK Circular expressly does not constitute a regulation. It reflects legal opinions and the FMA’s recommendations for conduct derived from them.
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