AUSTRIA Trends and Developments Contributed by: Markus Fellner, Stefan Sallat and Florian Henöckl, Fellner Wratzfeld & Partner Rechtsanwälte GmbH
Fellner Wratzfeld & Partner Rechtsanwälte GmbH Schottenring 12
A-1010 Vienna Austria Tel: +43 1 537 700 Fax: +43 1 537 7070 Email: office@fwp.at Web: www.fwp.at
Non-Performing Loans and the Regulatory Environment in Austrian Banking and Finance Introduction Austria experienced a long but mild recession between the third quarter of 2022 and the fourth quarter of 2024. At the beginning of 2025, the Austrian economy returned to positive GDP growth for the first time. This marked the end of the longest recession in the his- tory of the so-called Second Republic. According to the Austrian National Bank (OeNB) forecast from June 2025, the economy will almost return to its pre-crisis level by the end of 2027. With a share of total assets of more than 50% (Q4 2024), banks dominate the Austrian financial system (as of end-2024: EUR2.4 trillion). The size of the bank- ing sector relative to GDP is above the EU average. Central, Eastern, and Southeastern Europe (CESEE) is an important market for Austria’s banking system: 35 subsidiary banks in 14 CESEE countries had total assets of EUR299 billion at the end of 2024. The earn- ings situation of Austrian banks has improved stead- ily in recent years, mainly thanks to higher interest income. With annual earnings of EUR11.5 billion, 2024 saw the second-highest result in the history of the Austrian banking system, following the record result in 2023. The cost/income ratio of Austrian banks was again below 50% at the end of 2024. The capital adequacy of the Austrian banking sector has improved signifi- cantly since the financial crisis of 2008–2009. Com- pared with capitalisation levels prior to 2008, capital adequacy has more than doubled in line with higher
regulatory requirements. At the end of 2024, the con- solidated Common Equity Tier 1 (CET1) ratio for the entire Austrian banking sector stood at 17.5%, above the EU average of 16.6%. Non-performing loans (Kreditdienstleister- und Kreditkäufergesetz) 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. The KKG establishes a common framework and requirements for the following: • credit service providers acting on behalf of a credit purchaser with respect to the claims of a credi- tor arising from a non-performing loan agreement granted by a credit institution established in the European Union or from the non-performing loan agreement itself; and • credit purchasers who acquire a lender’s claims arising from a non-performing loan agreement granted by a credit institution established in the European Union, or the non-performing loan agree- ment itself (Section 1 of the KKG).
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