AUSTRIA Trends and Developments Contributed by: Jasna Zwitter-Tehovnik and Martin Navara, DLA Piper Weiss-Tessbach
DLA Piper Weiss-Tessbach Rechtsanwälte GmbH Schottenring 2-6 1010 Vienna Austria Tel: +43 153 178 1042 Fax: +43 1 533 52 52 Email: jasna.zwitter-tehovnik@dlapiper.com Web: www.dlapiper.com
Trends and Developments in EU Banking Regulation: An Austrian Perspective Introduction The banking regulatory landscape in the Euro - pean Union (EU) is complex, with the aim of establishing a very secure, harmonised market, fostering financial stability. Austrian banking and financial services laws largely align with the standards set by the European legislator. Some of the most interesting recent developments include the evaluation of the widely discussed Credit Institutions Real Estate Financing Meas - ures Regulation (KIM-Regulation), the upcom - ing implementation of the sixth Capital Require - ments Directive 2024/1619 (CRD VI) and, on the national level, the adoption of accompanying measures for current EU acts and the imple - mentation of Directive (EU) 2023/2225 on credit agreements for consumers. Commercial real estate risk buffer In late 2024, due to the considerable risks of commercial real estate lending for the bank - ing sector, the Financial Market Stability Board (FMSB) recommended introducing a sectoral systemic risk buffer of 1% for commercial real estate loans, to be applied at both the consoli - dated and unconsolidated levels for all banks.
This buffer will also cover commercial residential construction but will exempt non-profit housing. The risk-weighted exposure amounts of these loans will serve as the basis for calculating the buffer. This stands in contrast to the expiration of the KIM Regulation at the end of June 2025. This regulation, effective since August 2022, limits the systemic risks associated with leveraged financing of residential properties. The regula - tion applies to newly agreed private residential property financing. It sets a maximum loan-to- value ratio of 90%, a debt-service-to-income ratio of 40%, and a maximum loan term of 35 years, with exception quotas of 20%, 10% and 5%, respectively. The banking division is critical of the sectoral systemic risk buffer, as it has a pro-cyclical effect and forces banks to tie up more equity for exist - ing exposures, thereby restricting lending. In addition, risks from commercial real estate are already addressed through Pillar 2 capital sur - charges. With the introduction of Basel IV under the revised EU Capital Requirements Regulation (CRR III), capital requirements for commercial and residential real estate will increase signifi -
27
CHAMBERS.COM
Powered by FlippingBook