Annual Report 2004

of the European Parliament to inform
them especially on SME-relevant aspects
of Basel II. The EUÕs goal is that
the European Parliament gives its
consent to the new directive in its
plenary sessions of May or September
2005.Atthecurrentstateofnegotiations,
the EU Member States will be
able to implement both the standardized
approach and the foundation
internal ratings-based (IRB) approach
by 2007. However, banks may postpone
shifting to the Basel II regime
until 2008, at which point it will
become mandatory (the advanced
IRB approach will also be available
from then on).
Preparations to transpose the EU
directive into Austrian law started in
2005, and the OeNB will play an
active role in the process. At the same
time, the OeNB will also continue to
exchange information with the Members
of the European Parliament and
those of the Austrian Nationalrat. A
study commissioned by the OeNB in
2004 and conducted by the Austrian
Institute for Empirical Social Research
(IFES) underscores the importance
of an intensified information
campaign on Basel II, reporting that
Austrian enterprises in almost all economic
sectors require more information
on Basel II: Seven out of ten
SMEs have heard of Basel II, but
merely 16% of SMEs have started taking
action to meet this challenge.
This is why the OeNB decided to
launch an information campaign on
Basel II (see ÒThe OeNBÕs Information
Policy: Conveying Stability and
SecurityÒ for further details).
The OeNB Organizes a
Wide Range of Activities
to Promote Financial
Stability
Numerous OeNB activities were targeted
at promoting the stability of
The OeNB as a Competent Partner in
Ensuring Financial Stability
the Austrian financial market: The
Financial Stability Report, asemiannual
OeNB publication which is presented
to the public at special press
conferences, helps monitor the development
of potential risk factors in the
financial markets on a regular basis.
Moreover, a comprehensive series of
lectures on stability-related topics addressed,
inter alia, the issue of foreign
currency loans. Since the OeNB plays
an active role in the evaluation of financial
market legislation, it ensures
that financial stability considerations
are taken into account in the design
of new financial market legislation.
Given AustriaÕs high banking density,
on-site examinations of a single
bank cannot be conducted frequently.
This is why off-site analyses play an
important role in supervisory procedures
in Austria. The OeNB, the
FMA and the University of Vienna
therefore launched a project to expand
the existing analysis procedures
by new risk-based off-site analysis
models. In the course of this project,
two statistical and one structural
model were developed after a review
of numerous modeling approaches.
A full report presenting the
model results for all Austrian banks
in a well-structured manner and establishing
three risk categories
(Òproblem banks,Ó Òinstitutions re-
OeNB introduces
state-of-the-art
procedures of riskbased
banking analysis
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