On January 17, the Austrian Financial Market Authority (FMA) was forced to clarify its controversial plans to reduce its commercial banks' lending to east European entities, following anger among authorities in Hungary and other eastern European companies.
Although the country is not likely to implement official limits on eastern exposures, Austria and its financial institutions are in a period of instability.
With seemingly rushed 2013 implementation of Basel III and frighteningly tight or even non-existent listing windows for smaller companies, both banks and corporates are facing uncertainty in the country.
But despite such turbulence, delegates at Binder Grösswang's Impulses event, 'Capital Markets – where are they going?' on November 29 were given as much clarity as possible in such a shifting environment.
Speakers included Peter Untersperger, CEO of the Austrian listed company Lenzing, Dirk Notheis, chairman of Morgan Stanley, Germany and Austria and Dr Raoul Hoffer, and Florian Khol, partners at Binder Grösswang. In front of a packed auditorium, they covered everything from the country's mooted debt break to dual tracks.
The uncertainty in the equity markets was clear. "We have seen transactions fail," said Untersperger, who listed Lenzing, his textiles and plastics company. "The Austrian government is not emotionally supporting the capital markets," he added. "Because of this we have incredibly short windows in which to list."
According to Untersperger, companies looking to launch an IPO have to make a decision when there is no window of opportunity in the markets. "For family-owned companies this is a crucial investment in advisory fees because you have no insurance when coming to market," he added.
Because of this, more family-owned companies are seeking dual tracks, hoping to find a buyer before listing. But running two processes concurrently requires even more advisors,. "And if you begin the [dual-track] preparation once the listing window has opened, it's too late," said Khol.
"Dual tracks are popular in the advisory business but they're a risk for smaller companies," he added.
Although there is a mid-market exchange for start-ups with slimmer publication and announcement requirements, it's not hugely popular. "Instead, issuing corporate bonds has taken its place." The limited disclosure and documentation – as long as the company issues in the country – has appealed to smaller cap companies.
Despite this uncertainty within the capital markets, the Austrian government is following aggressive policies in Europe – and even global – regulatory initiatives.
The country is implementing the Capital Requirements Directive IV ahead of schedule, for instance. "There are two tendencies," says Hoffer. "On the one hand everyone is trying to impose higher capital standards like Basel III, but banks are now arguing that Basel III should not be as strict due to the economic circumstances."
Although the deadline for Basel implementation is 2019, the National Bank of Austria, in collaboration with the FMA, said it plans to introduce a requirement to fully implement the standards as soon as they take effect on January 1 2013.