The increasing geopolitical tensions and uncertainties caused by Russia’s attack on Ukraine “pose major challenges for the European economy and politics,” said the Executive Board members of the FMA, Helmut Ettl and Eduard Müller on Tuesday.
In the medium term, until 2025, the FMA sees further uncertainties in connection with Covid. Interest rates, which have been low for a long time, are changing the behavior of market participants and calling into question some financial services and their providers. But even an “abrupt turnaround in interest rates” due to inflation would pose major challenges for financial markets and their participants. In addition, there is the restructuring of the economy due to climate change and digitization as well as the increasing overload of many consumers as a result of these developments. The FMA also warns that negligence in the fight against money laundering causes massive reputational damage and costs.
Tier 1 capital of banks has shrunk slightly
The banks’ common equity Tier 1 capital fell slightly from 16.1 percent to 15.7 percent in 2021, but that is still the second-best value in history. The number of non-performing loans fell. Nevertheless, “we have to urge a particularly prudent and forward-looking distribution policy so that no trend reversal manifests itself here and thus stability and crisis resilience are undermined,” said the FMA Executive Board.
The insurance companies have more than twice as much funds as “needed to fulfill their contractual obligations, even in a dramatically deteriorated economic environment,” notes the FMA. The additional interest provision in life insurance is so high at over 1.5 billion euros that “guaranteed interest rates appear secure even in the high-interest phase”. Investment funds, pension funds and company provision funds have also made up for the stock market slumps of 2020 and closed 2021 with new highs in assets under management. And the Vienna Stock Exchange, which was hit hard by the corona crisis, reached pre-crisis values again in 2021.
The FMA also highlights the rapid growth of sustainable funds. A third of the assets are now managed according to sustainability criteria. However, 93 percent of them are only “light green”, which means that sustainability is taken into account but not expressly striven for. The FMA consistently monitors compliance with sustainability standards (ESG), assures the supervisory authority.
What is the Financial Market Authority (FMA)?
The Financial Market Authority (FMA), which has been active since 2002, monitors 938 companies with a total of around 1.38 trillion euros in assets with 390 employees. Its budget for 2021 was 74.6 million. Euro. Of these, 10.7 million went. euros as a transit item to the Oesterreichische Nationalbank (OeNB). 60.8 million. The supervised parties paid themselves EUR 4.5 million. came from the federal government, 9.3 million. from fees and other sources.
In the beginning, the FMA monitored compliance with 16 financial market laws, now there are 38. The FMA is no longer a purely national supervisory authority, but part of the financial market supervisory authority of the European Union and the uniform bank supervisory and resolution mechanism of the eurozone.
In 2021 there were 194 on-site inspections, i.e. at a fifth of all companies. There were 141 criminal complaints with the public prosecutor’s office, more than half of which related to suspicion of criminal activities involving cryptoassets. There were also 112 warnings that financial services were being provided without permission or with fraudulent intent.
Source: Nachrichten
