Head of Euram Bank, Vienna

Following the decision of the FMA, lawyer and auditor Gerd Konezny was appointed as interim administrator of the board of directors of “Euram Bank” based at the Palais Schottenring in Vienna.

Early intervention measures

The appointment of a provisional administrator is a so-called early intervention measure that enables the FMA to respond to actual or potential regulatory breaches at the earliest opportunity, the Financial Markets Authority wrote in a press release.

The use of such administrators is based on the Bank Restructuring and Resolution Act (Basag). The interim administrator is tasked with exercising all powers conferred on him to move the resolution process forward to ensure compliance with regulatory laws.

Failure to submit annual financial statements

Why was this measure taken? According to The Standard, Euram did not submit its annual financial statements to the regulator by the end of June, as required by law. As a result, the FMA required the bank to do so by the end of July and imposed a mandatory fine of €10,000. On August 1, the next mandatory penalty for failure to submit material was imposed, this time for a fine of €30,000.

No new business

Euram Bank has other problems. Since the beginning of the year, the company has been banned from conducting any new business, which the FMA also ordered. The Federal Administrative Court must decide whether this measure will last. The report said the bank is owned by 12 shareholders, 11 of whom each hold nearly 10% of the shares.

This means they do not have to be scrutinized by regulators, as the corresponding requirements apply only to holdings of 10% or more. According to the newspaper, 9.9% of the shares indirectly belong to the business partner of Nemat Farrokhnia, one of the founders of the recently bankrupt real estate company Imfarr and one of the richest men in Bulgaria.

Bank managers must work with administrators

The FMA wrote that according to the decision, the bank manager must cooperate with the interim administrator, in particular by operationally including him in all agendas and powers in accordance with Eurom Bank AG’s rules of procedure. In addition, in the event of a significant commercial transaction, the board of directors must obtain the consent of the interim administrator before making a decision.

The administrator must also examine the bank’s statements and communications with regulators to ensure their conclusiveness and continually assess the bank’s financial condition.