AUSTRIA Law and Practice Contributed by: Markus Fellner, Stefan Sallat and Florian Henöckl, Fellner Wratzfeld & Partner Rechtsanwälte GmbH
1.5 Banking and Finance Techniques In terms of banking and finance techniques, Austrian borrowers rely primarily on local banks (to a signifi- cant degree on their respective “house bank”) for their financing. In those cases, the complexity of the loan and security documentation as well as reporting obli- gations and (financial) governance are fairly limited (and frequently rely on in-house standard documen- tation). In addition, the Austrian lending market has seen an influx of both foreign lenders and Austrian banks seek- ing to provide financing as a syndicate in a club deal, or aiming at syndication of their relevant loans to inter- national banks; in those scenarios, significantly more complex and voluminous loan documentation (based on the standards made available by the Loan Market Association adapted for Austrian needs) has become more common. 1.6 ESG/Sustainability-Linked Lending Regarding ESG (environment, social and governance), four core regulations are to be observed. • Under Regulation (EU) No 573/2013 (Capital Requirements Regulation (CRR)), large institutions that have issued securities admitted to trading on a regulated market of an EU member state are required to disclose information on sustainability risks. In addition, far-reaching requirements for the inclusion of sustainability risks in the risk manage- ment and supervision of institutions have already come into force. • Regulation (EU) 2019/2088 (Disclosure Regulation) obliges financial market participants to disclose, on the one hand, their concepts for integrating sus- tainability risks into their investment decision-mak- ing process and, on the other hand, the adverse effects of investment decisions on certain sustain- ability factors. These extended information and transparency obligations, thus also provide for an expansion of sustainability-relevant accounting. • Regulation (EU) 2016/1011 (Benchmark Regulation) ensures better information on the “carbon foot- print” of an investment portfolio. • Regulation (EU) 2020/852 (Taxonomy Regulation) undoubtedly forms the “core” of the EU’s Sustain-
companies, which do not constitute a true alternative to bank loans for the larger market. 1.4 Alternative Credit Providers Traditionally, the Austrian lending market has been dominated by credit institutions licensed in Austria. Alternative credit providers such as insurance compa- nies are not regularly seen as original lenders in trans- actions, but rather rely on acquiring existing exposure from credit institutions which handle the origination. Austria is a strongly regulated banking market where a banking licence is required both for commercial lend- ing as well as the commercial acquisition of receiva- bles (factoring). The latter will only be fully exempted from the licence requirement if, and to the extent effected for, the purpose of that acquisition is secu- ritisation to special purpose securitisation vehicles (ie, companies specialising in acquiring loan expo- sure and transferring it to their financing providers, frequently in the form of bond issues). Limited exceptions apply in the context of small-cat- egory financings, such as crowdfunding. In addition, the Austrian regulator ( Finanzmarktaufsicht or FMA) has developed a practice according to which the offering of certain very limited alternative structures to classic loan agreements (subordinated loans, sale and lease-back structures, etc) does not require a banking licence. Non-Bank Lenders Other than that, Austrian banking legislation will (with only a few exceptions, for example, where applicable with regards to banking secrecy) not apply to certain companies rendering banking services if and to the extent that these pertain to their original and permit- ted operations; these include insurance companies, pension funds, non-profit organisations, societies, certain non-EU securities firms as well as alternative investment funds. In market practice, these exceptions have not led to significant competition for banks. Rather, in specific areas (eg, where insurance companies wish to act as lenders for investment purposes), credit institutions are involved for purposes of origination and pass-on loan portfolios.
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