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Austria Unites On Bank Restructuring And Intervention Law

by Ulrika Lomas,, Brussels

15 November 2012

During a recent conference in Laxenburg, Austria’s coalition government united on plans for a bank restructuring and intervention law as well as on plans for the creation of an accounting police, to strengthen the country’s financial sector.

In light of the international banking and financial crisis of the past few years, the government adopted plans to stabilize the financial market via a so-called bank restructuring and intervention law, designed to ensure that regulatory steps will be taken at an earlier stage in the event of problems and appropriate measures introduced to avert the threat of bank insolvency.

The intention is also to ensure in future as far as possible that any contribution of taxpayer funds is not required if banks get into difficulty. The Austrian Financial Market Authority (FMA) will be provided with early intervention instruments to ensure that high-risk situations can be countered through regulation at an early stage.

Furthermore, the banks must generate restructuring and liquidation plans (“bank wills”) in order to prevent a disorderly collapse and avoid any burden to the public purse.

The government has also adopted an Accounting Control Act, which will guarantee that in future the accuracy of financial reporting of stock market listed companies is more strictly regulated via an accounting police.

According to the Austrian finance ministry, the aim of the “enforcement procedure” to be established is to check accounting data. The enforcement procedure is to be carried out by both the FMA and a newly formed audit agency. Inaccuracies in the preparation of company financial statements and reports are thereby to be countered on a preventative basis and capital market information will be assured through the publication of identified errors.

Commenting on the government’s plans to strengthen control of the country’s banking sector, Austria’s Chancellor Werner Faymann insisted that the new bank restructuring and intervention law will make sure that early controls are carried out and will guarantee accelerated intervention. Pointing out that a great deal of taxpayers’ money has already been invested in this sector, Faymann underlined the importance of ensuring that the financial markets are better regulated in future. Austria expects tighter regulation both at European and international level, Faymann stressed.

TAGS: law | accounting | banking | audit | enforcement | Austria | financial reporting | regulation

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