Austria: Publication of Financial Sector Assessment Program Documentation-Technical Note on Financial Stability Analysis, Stress Testing, and Interconnectedness

International Monetary Fund

No 2020/066, IMF Staff Country Reports from International Monetary Fund

Abstract: This technical note on Austria presents the Financial Stability analysis, stress testing, and interconnectedness. Austria’s banking sector presents unique structural vulnerabilities. Private credit growth has supported the cyclical boom without jeopardizing household and corporate indebtedness. Profits of Austrian subsidiaries in Central, Eastern, and South-eastern Europe have increased recently; however, the cycle is turning and the ability of the sector to maintain a solid net interest margin may be further challenged. The Austrian authorities have targeted vulnerabilities related to interconnectedness by imposing Other Systemically Important Institution buffers also at the unconsolidated level. Institutional cooperation arrangements are shown to act as a shock absorber for idiosyncratic shocks, but holdings among participating members of respective IPSs may lead to substantial inward stability risks in a systemic event. Under favorable economic conditions inverse ownership contributes strongly to their capital generation by allowing partial redistribution of profits higher tier banks in the Raiffeisen sector earn on their more profitable international business.

Keywords: ISCR; CR; cash flow; OSII bank; equity stake; balance sheet; bank default; funding rollover; interest rate; sensitivity analysis; credit risk; financial system; liquidity profile; cash-flow liquidity analysis toolkit; fair value; banks' liquidity profile; Stress testing; Commercial banks; Liquidity; Solvency stress testing; Financial Sector Assessment Program; Europe; Global (search for similar items in EconPapers)
Pages: 92
Date: 2020-03-02
New Economics Papers: this item is included in nep-mac
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