Measures by the Austrian Regulatory Authorities in Response to the Financial Market Crisis

The financial crisis has severely hit the Austrian banks and the financial market as a whole. Austrian banks sold 'Lehman-products' to a disproportionate extent, banks invested far too high amounts in Iceland, and finally and most importantly, Austrian banks did and are doing their main business in CEE countries, which have been heavily affected by the crisis. The Austrian government and parliament have reacted by taking different measures to support the near-collapsing banks. Apart from granting guarantees and promoting interbank business through different measures, the main instrument has been to improve the capital ratio by issuing so-called participation capital subscribed for by the government. Although generally the holders of participation capital do not have membership rights, the state is entitled to exercise control rights via a special company.