Banks should keep more of ABSs on books: Austria's Nowotny

VIENNA (Reuters) - Banks should retain more than 5 percent of asset-backed securities they issue on their own books to create a "feeling of responsibility," Austrian central bank Governor Ewald Nowotny was quoted as saying on Sunday.

The European Parliament on May 6 approved a law under which banks will required to retain 5 percent of securitized products they originate and sell -- and top up capital against it -- to ensure they have properly assessed the risks.

But Nowotny said this was not enough.

"We need a significantly higher percentage to make sure there is a feeling of responsibility," he was quoted as saying in Austrian magazine Profil.

The European Union is the first major body to mandate retention of securitized products, a step that the International Organization of Securities Commissions, a global regulatory grouping, recommended earlier this month.

The retention rate of 5 percent will be reviewed later this year to see if a higher percentage is needed.

(Reporting by Boris Groendahl; Editing by Steve Orlofsky)