Bureaucracy brake: Supervisors promise banks to reduce “unnecessary complexity”

“There is a very good chance that we will succeed in something,” says the OeNB governor Martin Kocher. The time to clear out the bureaucratic jungle is ideal. Years after the global financial crisis, practice shows “what works well and where there is unnecessary complexity”.

The National Bank wants two million euros in the area of ​​the next year Banking supervision save. So far the annual costs here have been 66 million euros.

An important approach to de-bureaucratization for Austria is the “Proportionality“, i.e. reduced obligations for smaller, non-complex banks up to a balance sheet total of five billion euros. Only in Germany are there more of these “Less Significant Institutions” in the Eurozone (1,153) than in Austria (327).

Here, on-site inspections should be simpler and risk-oriented. They should be focused on individual, possibly more sensitive topics, instead of the auditors going through everything and always requesting all the data. Instead of various equity ratios, a single debt ratio as the sole capital requirement could make more complex calculations by banks unnecessary.

For all banks, large and small, should also Notification and reporting obligations be simplified in order to avoid double and triple reports to the financial market supervisors in the future. This particularly applies to banks that operate across borders.

The required fit and proper tests should also be simplified for the banks’ management boards and supervisory boards, for example if it is only a matter of reappointing a board member.

Stop bureaucracy

According to Kocher, simplifying the current set of rules is necessary because digital currencies or new business models in the financial sector constantly create a need for new rules. “But it can’t be the case that new rules are always added on top,” says Kocher. Of course, the primary goal must always remain maintaining financial market stability. This is also why there will not be a reduction in capital requirements in Europe, as US President Donald Trump promised the major US banks. “Simplification is not deregulation,” said Kocher.

Given the many institutions involved in Europe, some banks have expressed fears that there is a risk of more bureaucracy instead of the intended reduction in bureaucracy.

When asked, OeNB director Thomas Steiner said: “The many chefs have to coordinate well, otherwise the menu will not be good and the waiter (the EU legislator, note) may not want to serve it in the end.”