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The Austrian Republic is known for its developed financial sector. In addition, the country actively attracts foreign investments, which is also the reason why businessmen from all over the world decide to start financial activities in Austria. 

Recently, the Austrian authorities have implemented a number of financial support measures including public guarantees and subsidies, to cover the short-term liquidity needs of companies during the coronavirus pandemic.

This blog post is devoted to the peculiarities of the acquisition of banks in this jurisdiction.

No limitations

If you intend to acquire an Austrian company, please note that there are no restrictions on the type of legal entities and individuals that can own a controlling stake in a financial institution. However, all the eligibility criteria are to be met, otherwise, the local financial regulator FMA may prohibit the purchase.

In Austria, the following types of banking institution ownership are spread:

  1. Participation, that is direct or indirect ownership of 20% or more of voting rights or capital;
  2. Qualifying ownership is 10% or more of the capital or gives the right to influence;
  3. Control means the relationship between a parent company and a subsidiary or a similar relationship between any natural or legal person and a registered Austrian company;
  4. Participation in property or through third parties.

EU authorized banks

Foreign ownership of a bank registered in Austria is not prohibited or limited by law. However, foreign businessmen intending to establish a banking company in Austria should be aware of the fact that if the owner poses a risk to the prudent management of the credit institution, the regulator can take strict measures, which include:

  • ban on distribution of profits;
  • ban on operating activities;
  • sanctions against directors;
  • filing suspension of voting rights through the courts.

Certain transactions by a credit institution require unanimous approval from all managing directors. The consent of the supervisory board will also be required.

Foreign investment in Austria

If you are a resident of another country and wish to acquire a financial company in Austria, it is important to understand that there are no preferences for Austria residents in the acquisition process. Foreign buyers are in an equal position with the local ones. However, the regulator can still request additional documents from the prospective buyer who is not a resident of the EU.

Conducting licensable activities with respect to banking law in Austria without a license could trigger at least administrative fines and civil law sanctions. Criminal responsibility may, under certain circumstances, also be imposed. 

Final word

If you are interested in registering a banking company in Austria or establishing a branch in other EU countries, you can contact us for more information. Our legal experts are highly available and can consult on all aspects of banking and finance law including regulatory matters and then provide practical solutions.

To sign up for a personal consultation on financial regulation in Europe, please fill out the quick contact form on the website.