AUSTRIA Trends and Developments Contributed by: Jasna Zwitter-Tehovnik and Martin Navara, DLA Piper Weiss-Tessbach
TCBs are also subject to comprehensive disclo - sure and reporting obligations, to facilitate FMA oversight. Implications for foreign banks operating in Austria For third-country banks, these requirements translate into substantial compliance invest - ments. Notably, foreign banks must ensure they are able to meet Austria’s expectations on capi - tal adequacy, which includes maintaining capi - tal buffers that may exceed the EU’s minimum requirements depending on the branch’s risk profile. TCBs should also anticipate close moni - toring from the FMA regarding their liquidity and funding structures. Austria’s regulatory emphasis on financial stability necessitates robust liquid - ity management practices to safeguard against potential market disruptions. Licensing and reverse solicitation Austria has historically been cautious about foreign banks conducting cross-border activi - ties within its jurisdiction. The FMA requires all banks engaging in active client solicitation within Austria to obtain the appropriate licences, even if these activities are conducted digitally or through reverse solicitation. Austria’s stance on reverse solicitation – wherein clients initiate contact with foreign banks without any direct marketing or solicitation – has been shaped by recent regu - latory clarifications at the EU level, which have aimed to restrict the breadth of activities that may fall under this exemption. Austrian regulators have adopted a narrow inter - pretation of reverse solicitation, requiring that any outreach by a bank to Austrian clients is either unsolicited or accompanied by licensing. For instance, if a foreign bank provides market - ing material or facilitates the onboarding process for Austrian clients, it may be deemed to have
engaged in solicitation, thereby necessitating a licence. This conservative approach reflects Austria’s aim to protect local investors and ensure that foreign financial institutions operate under similar regulatory standards as domestic banks. Foreign banks must exercise caution when considering reverse solicitation as a means of accessing the Austrian market. The FMA’s strict interpretation implies that even minor interac - tions could trigger licensing obligations, result - ing in administrative penalties if a bank is found to be non-compliant. Consequently, banks inter - ested in serving Austrian clients should assess their activities carefully and consider alternative routes, such as establishing a licensed branch or subsidiary, to avoid potential regulatory com - plications. Austria’s capital adequacy standards for banks Austria’s banking regulations enforce capital adequacy standards in line with CRD VI, with additional requirements for TCBs. These stand - ards are designed to ensure that banks maintain sufficient capital reserves to absorb potential losses and withstand market fluctuations. TCBs in Austria are subject to capital buffer mandates, which may include the counter-cyclical capital buffer and systemic risk buffer, depending on their level of market exposure and the FMA’s assessment of their risk profiles. Liquidity requirements for third-country branches In addition to capital adequacy, liquidity require - ments are a focal point in Austria’s regulatory framework. TCBs must demonstrate that they can maintain adequate liquidity coverage ratios (LCRs) and net stable funding ratios (NSFRs) to support their operations during stressed mar - ket conditions. The FMA mandates that these
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