Banks are institutions which are entitled, under special federal regulations, to carry out banking transactions. These include classical banking activities, such as deposit and lending business, as well as giro business (a bank´s transactions dealing with payments by cheque or credit transfer, and settlement of accounts), foreign exchange business, dealing in foreign notes and coin, issuing of securities and a number of other activities, to the extent that they are carried out as commercial activities.
The interests of the Austrian credit institutions are represented by the Austrian Economic Chamber (finance, credit and insurance division), and, depending on their field of activity, by one of the professional associations of credit institutions, the Association of Austrian Banks and Bankers (Verband oesterreichischer Banken und Bankiers) the Austrian Savings Banks Association (Oesterreichischer Sparkassenverband), the Austrian Co-operatives Association (Oesterreichischer Genossenschaftsverband), the Austrian Raiffeisen Association (Oesterreichischer Raiffeisenverband) and the Association of Austrian Provincial Mortgage Banks (Verband der oesterreichischen Landes-Hypothekenbanken).
Austrian credit institutions are regulated in the Banking Law and, depending on the specific sphere of business, in other relevant laws, such as the unit trust law, the capital market law and the mortgage bond law. Savings banks (Sparkassen) and state-regulated building societies (Bausparkassen) are, for instance, not only regulated by the Banking Law, but also by the Savings Bank Law and the Building Society Law, respectively. The Postal Savings Bank Postsparkasse has a specific legal basis, and its sphere of business is for the most part regulated by the Postsparkasse law.
The beginnings of the Austrian banking system can be traced back to the 18th century. In 1762, the Wiener Stadtbank (Vienna City Bank) was conferred the right to issue the first Austrian bank notes. After the national bankruptcy in 1811, the "Privileged Austrian National Bank" was founded in 1816 as a private institute to administer the national debt. Changing economic and regional requirements in the 19th century led to the development of varied types of financial and credit institutions, such as joint-stock banks, real-estate credit institutions, mortgage banks and credit co-operatives. The beginning of the 19th century also saw the development of a number of private banks and the foundation of the first Sparkassen (savings banks) (e.g. Erste oesterreichische Spar-Casse, 1819). The Creditanstalt fuer Handel und Gewerbe/Credit Institution for Commerce and Trades ( Creditanstalt-Bankverein AG) was founded in 1855, the k. k. privileged Oesterreichische Laenderbank in 1880 and the K. k. Postsparkassenamt in 1883. Various Agricultural Cooperatives, which later became Consumer Cooperatives were set up in the late 19th century. Professional associations were founded toward the end of the 19th century, first by the agricultural co-operatives, and later on by various consumer co-operatives.
The dissolution of the Danube (Habsburg) Monarchy and World War I caused a decline in banking (for example, the collapse the Allgemeine Oesterreichische Bodencreditanstalt in 1929). Many banks had to close down, and in 1938 the number of joint stock-banks and bankers had shrunk to some 70.
The time between the two World Wars saw the creation of Austria´s leading modern multistage financial institutes, such as the Zentralkasse der Volksbanken (Central Institution of People´s Banks) (which is now the Oesterreichische Volksbanken-AG), the Girozentrale of the Oesterreichischen Genossenschaften (today the Raiffeisen Zentralbank Oesterreich AG, Central Institution of the Raiffeisen Banking Group and the Giro-Zentrale and Bank of the oesterreichische Sparkasse AG (from 1992-97 the GiroCredit Bank AG, since 1997 Erste Bank der oesterreichischen Sparkassen AG). Following Austria´s occupation by German troops in 1938, Austria´s big banks were put under the control of the Deutsche Bank and the Dresdner Bank.
After World War II, the First Nationalisation Act of July 26, 1946 ( Nationalisation), provided for the nationalisation of Austria´s three biggest credit institutions (Creditanstalt-Bankverein, Oesterreichische Laenderbank and Oesterreichisches Credit-Institut), which were to be organised as joint-stock banks. The 1955 Reconstruction Act enabled banks to adjust their balance sheets by the end of the 1954 business year. The banks, which had been unable to draw up and publish their balance sheets since 1945, were now able to conduct their business as usual, and disclosure of business data was fully restored. From 1956 to 1957, Austria´s then Minister of Finance, R. Kamitz, provided for a partial privatisation of the two largest banks, Creditanstalt-Bankverein and Oesterreichische Laenderbank by the issuance of ordinary shares and non-voting preference shares totalling 40 per cent of the banks´ basic capital. In addition, new specialised banks were created after World War II. Among these were the Oesterreichische Kontrollbank AG, 1946, the Oesterreichische Investitions Kredit AG, 1957 and the Oesterreichische Kommunal Kredit AG, 1958. During the 1960s and 1970s a number of foreign banks established branches in Austria (City Bank Austria, Bank of America, Chase Manhattan Bank, Centro Internationale Handelsbank AG and others).
Historical differences and peculiarities lost their importance with the establishment of universal banking by the Banking Law of 1979, which also made banking transactions contingent upon licence. The security of money entrusted to credit institutions is guaranteed by a number of administrative regulations, such as rules on sufficient own funds, on credit transactions and bank supervision. In addition, bank customers are protected by mechanisms safeguarding depositor´s accounts.
European Union legal standards were implemented when Austria joined the European Economic Area. This meant that credit institutions from within the European Economic Area were granted the freedom to provide services and the freedom of establishment. The greatest efforts, however, had to be undertaken in adjusting norms of administrative rules: Provision of own funds was made dependent on the individual risk of the debtor, and own funds had to be broken down into core and supplementary capital.
Bank Austria AG, Bank fuer Arbeit und Wirtschaft AG, Bank fuer Kaernten und Steiermark AG, Bank fuer Tirol und Vorarlberg AG, Landes-Hypothekenbanken, Oberbank AG, Raiffeisenkassen, Sparkassen.
Literature#K. Ausch, Als die Banken fielen, 1968; K. Socher et al. (eds.), Finanzplatz Oesterreich, 1990; H. Kernbauer, Waehrungspolitik in der Zwischenkriegszeit, 1991; S. Augustin (editor), Bankwesengesetz, 1994; H. Lexa et al. (eds.), Die Herausforderung der Kreditinstitute in einem grossen europaeischen Markt, 1994; M. Eiselsberg (ed.), Bundesgesetz ueber das Bankwesen, 21997; R. Borns, Das oesterreichische Bankrecht, 1999.