October 2, 2018 / 7:40 AM / in 18 days

ONB's Nowotny warns against taking bank supervision away from central bank

VIENNA, Oct 2 (Reuters) - Austrian central bank governor Ewald Nowotny warned against taking away banking supervision responsibilities from the ONB, telling ORF radio on Tuesday such a move would be unique in Europe and increase risks in case of a new crisis.

Austria’s finance ministry is currently reviewing the structure of the country’s banking supervision, partly due to the court of auditors’ criticism of overlapping approaches.

The supervision of banks operating in Austria is, within the European Central Bank’s banking watchdog SSM, shared by the ECB, the Financial Market Authority (FMA) and the ONB.

The national bank is in charge of fact finding. It undertakes on-site inspections, analyzes information, drafts reports and processes data reporting. The FMA monitors compliance with the relevant rules and is also the Austrian resolution authority.

The finance ministry has said that a complete transfer of competencies to the FMA was one option being discussed.

“This would be... unique in Europe. In virtually all European states, the central bank is closely involved in banking supervision,” Nowotny, who is also a member of the ECB’s governing council, said.

Taking banking supervision tasks from the ONB would be a “dangerous path” that could hit the banks and the Austrian economy, he said. As a central bank is involved in bank rescue operations in the event of a crisis, it was important to have first hand information and to share information with the other European central banks.

“In the event of a crisis, the central bank could not react as quickly as it does now because it would be cut off from the complete and concrete knowledge of the situation of the individual banks.” (Reporting by Kirsti Knolle, Editing by William Maclean)

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