FMA may be able to force third-country banks to operate via…

The Financial Market Authority (FMA) may in the future require foreign credit institutions operating in Austria via a branch to instead establish a subsidiary with its registered office in Austria and apply for a license for this purpose. The basis is the amendment BGBl. I No. 93/2026, published in the Federal Law Gazette on October 29, 2026, which supplements the Banking Act (BWG) with a new Section IIIa for branches of foreign credit institutions. The central provisions of §§ 19a to 19e as well as § 19g enter into force on January 11, 2027.

A Bundle of Eight Laws

The legislative package passed by the National Council amends eight areas: the Banking Act, the Financial Market Authority Act, the Savings Bank Act, the Investment Firm Act (WPFG), the Credit Service Provider and Credit Buyer Act, the Investment Funds Act 2011, the Securities Supervision Act 2018 (WAG 2018), and the Deposit Guarantee and Investor Compensation Act. This implements Directive (EU) 2024/1619 and Directive (EU) 2024/2994; the gazette also refers to CELEX numbers 32024L1619, 32024L2994, and 32026L0374. Most other provisions enter into force on the day following the announcement, i.e., on October 30, 2026. The law is signed by Federal President Alexander Van der Bellen and Federal Chancellor Christian Stocker.

The Thresholds for Mandatory Subsidiary Formation

§ 19d BWG empowers the FMA to order the mandatory formation of a subsidiary if at least one of three cases applies:

The branch carries out or has carried out activities according to Art. 47 Para. 1 of Directive 2013/36/EU with customers or counterparties in other Member States.
The branch meets the indicators for systemic relevance according to Art. 131 Para. 3 of the Directive or is assessed as systemically relevant according to § 19e and represents significant risks to financial stability in Austria or in the Union.
The total amount of assets of all branches of the same third-country group in the Union amounts to at least 40 billion euros, or the Austrian branch itself holds at least 10 billion euros.

The authority may only exercise this power after applying milder measures, in particular pursuant to § 19e as well as the supervisory instruments of §§ 70, 70b, 70c, and 70d BWG. Prior to this, the European Banking Authority (EBA) and the authorities of those Member States in which the third-country group maintains further branches or subsidiaries must be consulted. The assessment of systemic relevance pursuant to § 19e applies if the branches of a third-country group in the Union hold 40 billion euros in assets on average over the three preceding reporting periods or in at least three out of five reporting periods; central bank transactions with the ESCB are excluded from this.

Own books, own reports

§ 19c BWG obliges domestic branches of foreign credit institutions to maintain a register that records all assets and liabilities booked or initiated within the federal territory and enables autonomous administration. The accounting principles must be documented and approved by the management body of the parent company; an independent, written reasoned statement on compliance must be submitted to the FMA on a regular basis. Pursuant to § 19f BWG, extensive reporting obligations are added, such as those regarding risk concentrations, internal transactions with the parent company, recovery plans, and business strategy. Class 1 branches report at least twice annually, while Class 2 branches report at least once annually. The classification pursuant to § 19a BWG is based on the threshold of 5 billion euros in booked or initiated assets and liabilities, as well as retail deposits exceeding 50 million euros or at least 5 percent of total liabilities.

Authorization requirement for investment firms

For investment firms and investment service companies, § 7a WAG 2018 creates a new authorization requirement from the FMA. This applies, among other things, to:

any merger or union of investment firms with each other or with investment service companies,
any change in legal form,
the establishment of branches in a third country,
demergers according to the SpaltG or GenSpaltG as well as cross-border demergers,
mergers with companies that are not investment firms, provided they are not subsidiaries.

Such authorizations may only be entered into the company register if the legally binding notices are available in the original or as a certified copy; the competent court must also deliver orders and resolutions regarding such entries to the FMA. In parallel, the BWG is expanded by a second subsection on prudentially relevant transactions: Sections 20k to 20p regulate mergers and splits of credit institutions and financial holding companies, including notification, assessment, assessment criteria, cooperation between authorities, and measures in the event of implementation without authorization.

What this means for the business location

For third-country banks operating in Austria, the branch thus changes from a mere representative office to a unit with its own accounting, its own reporting channels, and a possible conversion into a subsidiary. This affects institutions whose groups reach the 40-billion-euro threshold across the Union or whose Vienna branch reaches the 10-billion-euro mark. The decision on the subsidiary requirement lies with the FMA, which must cooperate with the EBA and the authorities of other member states; the Oesterreichische Nationalbank will be consulted on the technical minimum requirements for reporting. For investment firms, the new authorization requirement means that mergers and splits will be subject to supervisory review prior to completion in the future.

Source: Federal Law Gazette for the Republic of Austria, BGBl. I No. 93/2026 of October 29, 2026, Part I, pp. 1–48 (official reference: BGBl. I No. 93/2026).