Banking, Austria updates

Limits set to client communication via e-banking
Graf & Pitkowitz Rechtsanwälte GmbH
  • Austria
  • December 15 2017

The Supreme Court recently rendered its first judgment on the admissibility of the use of electronic mailboxes, which are exclusively incorporated and only accessible via the e-banking system of a credit institution for serving client account notices and statements to consumers. This ruling will significantly affect Austrian banking practice.

Implementation of Fourth Anti-money Laundering Directive in Austria – what to expect
Graf & Pitkowitz Rechtsanwälte GmbH
  • Austria
  • October 27 2017

Following the Fourth Anti-money Laundering (AML) Directive coming into force, Austria transposed the directive into law through two major legislative acts. This update provides an overview of the effects and obligations arising from the implementation of the Fourth AML Directive – in particular, the due diligence that banks will have to undertake on prospective clients.

Supreme Court rules on negative interest rates
Graf & Pitkowitz Rechtsanwälte GmbH
  • Austria
  • June 23 2017

Following a period of legal uncertainty and controversy, the Supreme Court has provided answers to the question of whether, against the backdrop of negative reference interest rates, a bank can unilaterally floor an overall floating interest rate at 0.00001%. Although the Supreme Court's decision is disappointing, it held that a decision rendered on an individual basis may come to other conclusions. Thus, this decision is unlikely to be the final word on this issue.

Debt recovery made faster, cheaper and more efficient? EAPOs and their implementation in Austria
Graf & Pitkowitz Rechtsanwälte GmbH
  • Austria
  • February 24 2017

New almost EU-wide rules recently entered into force to support businesses in the recovery of debt from debtors in other EU countries. The regulation established a new procedure for creditors by providing common rules regarding jurisdiction and the procedure and conditions for freezing funds held by debtors in bank accounts located in the European Union. Austria has amended its Enforcement Code in order to provide the necessary framework for the procedures set out in the EU regulation.

Banking secrecy – made of glass for tax reasons?
Graf & Pitkowitz Rechtsanwälte GmbH
  • Austria
  • December 09 2016

Over the decades Austria has remained faithful to its banking secrecy by being a late adopter, if at all, of international standards for exchanging information regarding bank accounts. However, the recent amendments to the legal framework have put an end to this and led to a material softening of banking secrecy in Austria. Among other things, the legislature introduced new laws carefully tailored to remove legal obstacles based on banking secrecy that prevented – or at least impeded – tax collection.

Still no final clarification on victim's liability in banking phishing attacks
Graf & Pitkowitz Rechtsanwälte GmbH
  • Austria
  • August 19 2016

The Supreme Court recently dismissed a victim's claim to refund an unauthorised payment transaction against his bank and held that, among other things, a bank may offset its obligation to refund an unauthorised transaction with its claim for damages against the account holder. However, the court failed to provide long-awaited guidance on the criteria to be applied when assessing the various degrees of fault that potentially limit the liability of payment service users.

Supreme Court rules one-off loan processing fees are lawful
Graf & Pitkowitz Rechtsanwälte GmbH
  • Austria
  • June 10 2016

The Supreme Court recently held that one-off loan processing fees charged by banks are lawful. Based on a detailed assessment, and while outlining the material differences between Austrian and German law, the Supreme Court held that one-off loan processing fees qualify as contractually agreed principal performance obligations that are not subject to the control of unfair terms under Section 879(3) of the Civil Code.

Capital maintenance rules and voidance of third-party security
Graf & Pitkowitz Rechtsanwälte GmbH
  • Austria
  • March 11 2016

The Supreme Court recently dismissed a bank's claim for enforcement of a third-party mortgage initially given to secure loans granted to two corporate entities. The Supreme Court, irrespective of fierce (and mostly negative) discussions in legal literature, failed to question the nullity of the underlying loan further and thereby indirectly confirmed its previous decision on the 'overall planning' criterion.

Negative interest – who must take the risk?
Graf & Pitkowitz Rechtsanwälte GmbH
  • Austria
  • October 30 2015

Negative interest is normally approached from the depositor's perspective. However, as some reference rates for floating interest rates fall below zero, this topic is also of interest in relation to loan agreements. A recent regional court decision brought attention to some earlier legal jurisprudence on this topic. However, the main question remains undecided: which party must bear the risk of a negative reference interest rate?

Let's bail 'em in! Austria and its failing Hypo Alpe-Adria-Bank/HETA
Graf & Pitkowitz Rechtsanwälte GmbH
  • Austria
  • May 15 2015

Since the bail-in of Hypo Alpe-Adria-Bank International AG, the government has enacted legislation which fully implements the EU Bank Recovery and Resolution Directive, including the bail-in tool. In addition, the Financial Markets Authority – in its capacity as the resolution authority – recently issued an administrative ruling based on the act, imposing a moratorium on all liabilities owed by the wind-down entity HETA until May 2016.

Single euro payments area – have payers' rights been sacrificed for efficiency?
Graf & Pitkowitz Rechtsanwälte GmbH
  • Austria
  • March 06 2015

A recent Supreme Court case considered whether a recipient's bank was liable for damages arising from its execution of a payment order using an incorrect account number and bank sort code as unique identifiers, which caused the payment to be sent to an unknown third party. The court held that the payer bears the risk of a wrongful payment transaction due to an incorrect unique identifier.

Bank guarantees – abuse of rights when demanding payment?
Graf & Pitkowitz Rechtsanwälte GmbH
  • Austria
  • December 05 2014

The Supreme Court recently dealt with a case in which a claim secured by a bank guarantee became due after the guarantee period expired. It is crucial to have in-depth knowledge of the advantages and strategic use of abstract claims arising from bank guarantees, as well as an understanding of the pitfalls triggered by poorly drafted bank guarantees and underlying commercial agreements.

Hypo Alpe-Adria-Bank International AG – bail-in on shaky foundations?
Graf & Pitkowitz Rechtsanwälte GmbH
  • Austria
  • September 12 2014

In 2007 Carinthia sold Hypo Alpe-Adria-Bank International AG (HAA) to BayernLB. In 2009 the bank was nationalised as a result of the financial crisis. Both the sale and the nationalisation are subject to court proceedings. Since 2009, Austria has taken material measures to determine the best way to proceed with HAA, including the Federal Law on Remedial Measures for HAA and a proposed bail-in.

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