Bank scandal - expert opinion: Control bodies have failed at Commerzialbank

Should the Malversations of Commerzialbank Mattersburg have been discovered much earlier? Yes, it says in a new report that the Viennese law firm Brandl & Talos commissioned for its clients from the university professors Ewald Aschauer and Roman Rohatschek. The paper therefore certifies that the auditors have failed, as can be seen from a report by the Austria Press Agency (APA). Among other things, it comes to the conclusion that an analysis of publicly available data from the Burgenland bank should have set off the alarm bells for the supervisory authorities.

The firm represents one saver and one saver who lost around 88.000 and 426.000 euros respectively in the course of the institute's bankruptcy last summer. They have sued for damages, whereby their suits are directed not only against the province of Burgenland, where lawyer Ernst Brandl locates a breach of duty as an auditing association, but also against the republic. The corresponding legal proceedings in Eisenstadt and Vienna will start soon.

High interest rates

For the report, the university professors examined whether there were any abnormalities in the Commerzialbank's key figures. This was done on the basis of the publicly available annual financial statements in comparison to other regional banks. Even at this top level of the available information, “considerable abnormalities” became apparent, as quoted by APA Aschauer, one of the two authors of the report. The Financial Market Authority and the National Bank (OeNB) would have much more and more in-depth data available. “One thing is clear: there were 'Red Flags'. Every auditor should have been alarmed, ”said Aschauer, referring to the supervisory board or the auditor and generally to control institutions.

When examining a bank, a risk-oriented view is required, and even typical balance sheet figures show that these are sometimes well outside the average at the commercial bank, as Aschauer explains. "Every auditor has to get to the bottom of this and set further audit procedures."

What was striking, for example, was the high interest rate that the bank granted its customers compared to other regional banks. While the interest rates for deposits at the benchmark banks hardly differed, that of the Commerzialbank was 565 percent of the median (plus 0,7 percentage points). The high lending rates that the institute charged customers are even more critical. These are also well above the median - a maximum of 202 basis points above the median of the benchmark banks. From this, according to Aschauer, it can be deduced that the Commerzialbank's loans must have been exposed to a much higher risk.

Blatant deviations

For attorney Brandl, the report shows that the banking supervisory authority collects data, but apparently does not analyze it. In his opinion, even an analysis of the publicly available information should have led to the conclusion that something is wrong with the Commerzialbank. Because the bank deviated dramatically in the majority of the verified identification data.

It is known, however, from the banking supervisory authority based in the OeNB, which ultimately uncovered the malversations, that they discovered serious deficiencies as early as 2015 - following whistleblower tips - and also had suspicions. According to reports, it was initially not possible for her to prove this suspicion with the means at her disposal. Apparently the information was not specific enough and the criminal energy was too high.

At the beginning of February, OeNB Vice Gottfried Haber had declared in the Commerzialbank-U-Committee of the Burgenland Landtag that this case was a criminal case and “not a failure of the banking supervision”. The OeNB has no authority to obtain and control balance confirmations as part of its on-site audits. They also do not have the opportunity to question third parties or to carry out house searches. In this context, Haber had stated that banking supervision was not geared towards uncovering criminal activities. (small)