Memoranda of understanding - Austria

The BMF and the CNB express, through this Memorandum of Understanding (hereinafter referred to as the "Memorandum"), their willingness to co-operate with each other on the basis of mutual trust and understanding in the supervision of cross-border establishments of credit institutions and banking organisations incorporated in Austria and in the Czech Republic.

The general framework of this Memorandum is the Core Principles for Effective Banking Supervision issued by the Basle Committee on Banking Supervision in September 1997 and the provisions of Directive 2000/12/EC of the European Parliament and of the Council of 20 March 2000.

The purpose of this Memorandum is

• to establish bilateral co-operation in banking supervision;
• to achieve mutual understanding on issues relating to banking regulations and supervisory practices;
• to promote exchange of information on banking supervisory matters including, but not limited to, licensing, cross-border mergers and acquisitions and ongoing supervision of cross-border establishments incorporated in the other country and jurisdiction.

1. In Austria, the competent authority for banking supervision and the granting of licences and authorisations is the BMF. In this task, the Oesterreichische Nationalbank (OeNB) supports the BMF in data processing, administering the reporting systém, executing on-site inspections for and on behalf of the BMF and in some other areas mentioned in the Austrian Banking Act (Bankwesengesetz). The BMF and the OeNB are hereinafter referred to as "Austrian Banking Supervision". The provincial governor (Landeshauptman) as supervisory authority of first instance has limited responsibilities within the framework of specific regulations of the Saving Bank Act.
2. In the Czech Republic, in accordance with Act No. 6/1993 Coll., on the Czech National Bank, as amended, and Act No. 21/1992 Coll., on Banks, as amended (hereinafter referred to as the "Act on Banks"), the CNB supervises the activities of banks, foreign bank branches and consolidated entities which include a bank having its registered office in the Czech Republic; the CNB also sees to the sound operation and purposeful development of the banking system in the Czech Republic.

1. The Czech and Austrian Authorities intend to co-operate in the supervision of cross-border establishments of banks incorporated in the Czech Republic (Austria) within their jurisdiction upon conditions set in this Memorandum to the extent allowed under the law. For the purposes of this Memorandum, the following definitions shall apply:
   a) cross-border establishment:
   a branch or a subsidiary authorised in the Czech Republic (Austria) of a (parent) credit institution which is authorised in Austria (Czech Republic);
2. 1. cross-border establishment:
      a branch or a subsidiary authorised in the Czech Republic (Austria) of a (parent) credit institution which is authorised in Austria (Czech Republic);
   2. branch office:
      the organisational unit of a credit institution (head office) incorporated in the Czech Republic (Austria) which has been granted a licence in Austria (the Czech Republic);
   3. subsidiary
      a credit institution incorporated in the Czech Republic (Austria) which is controlled by a (parent) credit institution incorporated in Austria (the Czech Republic);
   4. credit institution:
      - a legal entity founded as a joint-stock company with its registered office in the Czech Republic which has been granted a banking licence pursuant to the Act on Banks, - a legal entity registered in Austria which has been granted a banking licence pursuant to the Austrian Banking Act;
   5. home country supervisor:
      the authority supervising
      (a) in the case of a branch office the head office credit institution, or
      (b) in the case of a subsidiary the parent credit institution;
   6. host country supervisor:
      the authority supervising a branch office or a subsidiary.

1. Compliance with the obligation of professional secrecy by all officials who receive information from the other state in the course of their activities is a necessary condition for successful co-operation between the CNB and the Austrian Banking Supervision. The CNB and the Austrian Banking Supervision shall ensure compliance with the letter and spirit of Article 30 of Directive 2000/12/EC.
2. Except for the exchange of information between the BMF and the OeNB, pursuant to the Austrian Banking Act, the CNB and the Austrian Banking Supervision may not disclose any confidential information to third parties without the prior written consent of the party that has provided this confidential information. If the disclosure of confidential information to a government agency is required by law, the CNB and the Austrian Banking Supervision shall promptly notify the party that has provided this confidential information. This does not pertain to cases in which conveyance of information would interfere with the confidentiality clause of legal provisions in Austria and in the Czech Republic.
3. The obligation of the CNB and the Austrian Banking Supervision to maintain professional secrecy in compliance with paragraphs (1) and (2) shall remain in effect even in case of the termination of this Memorandum.

1. The scope of co-operation encompasses licensing (issuance, change, revocation) as well as ongoing supervision of cross-border establishments, including exchange of information and on-site inspections pursuant to the conditions stated in Article 7, paragraph (3).
2. The CNB and the Austrian Banking Supervision endorse a broad principle of exchange of information between the home and host country supervisor to support and facilitate their respective supervisory tasks. The supervisory authorities of the Czech Republic and Austria underline their willingness to share information on events concerning cross-border establishments, subsidiaries and branches, as well as their parent credit institutions regulated by the Austrian Banking Supervision and the CNB.
3. In broad terms this means that there will be contact, in writing or orally, whenever the home or host country supervisor considers this useful or necessary on the basis of relevant facts or developments for his own or each other's supervisory purposes. The host country supervisor and the home country supervisor shall alert each other in good time of any event concerning a branch or subsidiary which might jeopardise the stability of the credit institution as a whole. They shall inform each other of administrative penalties imposed or other actions taken on a branch or subsidiary or a credit institution as a whole, in so far as they are aware and the penalty or other actions can be deemed to be of material importance.
4. In addition, there will be communication between them regarding any substantial changes in their respective domestic supervisory regulations and policies.

1. If a credit institution authorised in Austria (the Czech Republic) applies to the host country supervisor to establish a branch or a subsidiary, the host country supervisor shall inform the home country supervisor without delay and shall consult with it before granting a licence to a cross-border establishment of the credit institution.
2. If a credit institution authorised in Austria (the Czech Republic) intends to acquire, directly or indirectly, a qualifying holding in a credit institution in the jurisdiction of the host country supervisor, the host country supervisor shall consult with the home country supervisor before consenting to the acquisition.
3. The home country supervisor shall provide the host country supervisor upon written request with the following information on the applying credit institution:
   1. the amount of own funds and the solvency ratio (if applicable both on a solo and on a consolidated basis);
   2. the credit institution's shareholder structure, including but not limited to shareholders with a significant participation of 10 % or more in the share capital or the voting rights, as well as significant changes thereto which indicate a change in control thereafter;
   3. whether the credit institution is fully subject to and complies with the domestic banking regulations;
   4. whether the credit institution's management is deemed to be fit and proper; and
   5. whether the legal entity or natural person registered or domiciled in Austria (the Czech Republic) applying for a licence to establish a credit institution or intending to acquire share capital in a credit institution in the other jurisdiction gives rise to doubts that the prospective owners of this credit institution are fit and proper.
4. If a natural person or legal entity (non-bank) with its domicile or registered office in Austria (the Czech Republic) applies to the host country supervisor for a banking licence or intends to acquire, directly or indirectly, a qualifying holding in a credit institution in the jurisdiction of the host country supervisor, the host country supervisor shall consult with the home country supervisor to the extent possible before granting the banking licence or consenting to the acquisition.

1. The CNB and the BMF shall inform each other, in good time and to a reasonable extent, about any event which has the potential to endanger the stability of credit institutions having cross-border establishments in the other country. That is, in particular: an incipient crisis, any serious violation of the laws and regulations of prudential banking, a decline in capital adequacy to under the minimum limit set by the authorities on a solo and consolidated basis, the carrying on of business in a way that impairs the interests of the depositors of the credit institution or endangers the safety and soundness of the banking system, or other information of a serious nature.
2. The CNB and the BMF shall also notify each other of administrative penalties of material importance which they have imposed or of any other action which they have taken against a cross-border establishment as host country supervisor or against a parent credit institution as home country supervisor, if the information in their judgement is possibly important to the Austrian and the Czech authorities, in particular: limiting or cancelling any activities stated in the licence, requesting changes in the managing or supervisory board of the credit institution, imposing conservatorship or revoking its licence.
3. The CNB and the BMF shall also notify each other of the events and information stated in paragraphs 1 and 2 without request, in writing (if not agreed otherwise) and without undue delay, by way of the authorised persons stated in Article 9.
4. The CNB and the Austrian Banking Supervision shall discuss between each other any significant information on banks having cross-border establishments in the Czech Republic or in Austria. Representatives of the CNB and of the Austrian Banking Supervision shall convene ad-hoc meetings to promote the resolution of supervisory problems concerning cross-border establishments in the Czech Republic or in Austria whenever one party deems this necessary.

1. Recognising the importance of consolidated supervision, the CNB and BMF agree that their co-operation is particularly useful in assisting each other in carrying out on-site inspections of cross-border establishments. They shall, therefore, allow each other to inspect branches and subsidiaries of their respective credit institutions on site. They shall do so in their capacity as home country supervisor and upon advance notification of the purpose of the inspection, its expected duration, the institution to be inspected, and details of the persons performing the inspection.
2. The host country supervisor has the right to have a representative accompany any such on-site inspection. As agreed, the host country supervisor shall be kept informed of the results of such an on-site inspection to a reasonable extent and in a timely manner.
3. The procedures pursuant to paragraphs (1) and (2) may not be applied in the Czech Republic until a legal regulation relating to on-site inspection pursuant to paragraphs (1) and (2) enters into force. The CNB shall inform the BMF and the OeNB in writing and in a timely manner about the legal regulation stated in preceding clause.

1. The CNB and BMF shall notify each other of any major change in the domestic rules and regulations within their jurisdiction, in particular of those changes which have a significant bearing on the activities of cross-border establishments and on the operation of laws and regulations that concern the banking sector or the financial sector in the prudential conduct of credit institutions, and information about banking sector developments in the Czech Republic and in Austria.
2. Information shall be exchanged between the CNB and BMF in writing or orally, without request or upon request, as well as during consultation sessions between the authorities' management and other designated staff.
3. The CNB and the BMF agree that there should be regular meetings to discuss matters relating to prudential supervision of credit institutions established in both countries and on developments within their regulatory and supervising systems.

1. This Memorandum shall enter into force on the day of its signing by the CNB and BMF, except for paragraphs (1) and (2) of Article 7(On-site inspection), which shall enter into force on the day the CNB informs the BMF of the facts stated in paragraph (3) of Article 7.
2. For the purposes of this Memorandum, the BMF and the CNB shall use the lists of the licensed credit institutions within their jurisdictions published on their respective Internet websites, The CNB website address is http://www.cnb.cz/. The BMF website address is http://www.bmf.gv.at/. The OeNB website address is http://www.oenb.at.
3. Within 30 days of the day this agreement enters into force, the CNB and the BMF shall exchange lists of the persons authorised to request and provide information on behalf of the CNB and on behalf of the BMF pursuant to this Memorandum. The list shall contain the following contact data: the first name and surname, position (function), e-mail address and telephone and fax numbers of the authorised persons. Owning to the OeNB's duties relating to the supervision of credit institutions, the list of the BMF's authorised persons may contain employees of the OeNB as well. On behalf of the CNB and BMF, persons other than those specified in the manner stated in the preceding clauses may request or provide information of a general nature or information that has been officially disclosed. The CNB and the BMF shall inform each other of any modifications to the list of authorised persons without undue delay.
4. Co-operation and assistance in accordance with this Memorandum shall continue until the expiration of 30 days after the CNB (BMF) gives written notice to the BMF (CNB) of its intention to discontinue co-operation and assistance. If the Czech or Austrian Authority gives such notice, co-operation and assistance in accordance with this Memorandum shall continue with respect to all requests for assistance that were made before the effective date of notification until the requesting Czech or Austrian Authority withdraws the matter for which assistance was requested.
5. Any amendment to this Memorandum shall be made in writing only. Any such amendment to the Memorandum shall enter into force when signed by the CNB and BMF.
6. Where the CNB (BMF) gives the BMF (CNB) notice of withdrawal from this Memorandum, the Memorandum shall terminate on the thirtieth day following receipt of the notice of withdrawal by the BMF (CNB), unless agreed otherwise.

For the Bundesministerium für Finanzen, 12 October 2001
Alfred Lejsek, General Director

For the Czech National Bank, 12 October 2001
Pavel Racocha, Member of the Bank Board
Věra Mašindová, Executive Director