Volksbanken Won’t Pay State Dividend, May Face Nationalization
2011-08-25 08:35:42.179 GMT
By Boris Groendahl
Aug. 25 (Bloomberg) -- Oesterreichische Volksbanken AG, the
Austrian lender that failed last month’s European stress test,
may face nationalization after missing a dividend payment on
state capital for the third time in as many years.
“Due to the difficult economic situation and the
implementation of the company strategy for 2015, a payment of
dividends” for non-equity participation shares can’t be met,
Austria’s fourth-biggest lender said in a statement today.
Volksbanken, which got 1 billion euros ($1.4 billion) of
government aid in 2009, isn’t allowed to pay dividends on the
state capital if it has a loss in terms of Austrian Accounting
Principles, according to the terms of the capital. It hasn’t
paid dividends since it received the bailout.
Austria has the right to get equity in Volksbanken if the
bank fails to pay dividends this year, said Harald Waiglein, a
spokesman for the Finance Ministry. “We will evaluate the
situation and choose the option that is best for the taxpayer,”
Waiglein said.
The Alpine republic has nationalized two banks since the
collapse of Lehman Brothers Holdings. It was forced to take over
Kommunalkredit Austria AG from Volksbanken and Dexia SA in
November 2008 and Hypo Alpe-Adria Bank International AG in
December 2009. It has since split Kommunalkredit into a “good”
and a “bad” bank, with one aimed for sale and the other
serving as a wind-down structure for its own assets.
Avert Collapse
Austria took over Hypo Alpe to avert the bank’s collapse
after bad debts increased and former owners, including
Bayerische Landesbank, withdrew their support. Austria, which
booked a 700-million euro writedown on the bank last year, also
plans to sell off Hypo Alpe in parts.
Volksbanken, which had been targeting net income of “more
than 100 million euros” this year, had a loss of 31 million
euros in the three months ended June 30 after a profit of 7
million euros a year earlier because of write downs on financial
investments, predominantly on Greek bonds, according to its
first-half report.
Austrian supervisors are “closely monitoring” Volksbanken
after it was one of eight companies to fail this year’s European
Union stress test. The lender’s core Tier 1 capital ratio, a
measure of financial strength, was 4.5 percent in the test’s
adverse scenario, missing the 5 percent minimum required by the
European Banking Authority.
Sale to Sberbank
The bank agreed July 14 on the “major terms” of a sale of
its eastern European business VBI to OAO Sberbank and reiterated
today that the deal should be closed in the second half. It is
also seeking to sell its 5 percent stake in Raiffeisen
Zentralbank Oesterreich AG before the end of the year to boost
its capital ratio.
Volksbanken, which is based in Vienna, expects the VBI sale
to reduce risk-weighted assets by 7 billion euros, about a
quarter of the total, according to the stress test data. The RZB
stake sale is expected to result in a book gain of 164 million
euros.
The lender last year sold the Europolis real estate unit
and also is seeking buyers for its leasing unit and VBI’s
Romania business.
The bank reiterated that Volksbanken’s main owners, a group
of regional cooperative Austrian banks, plan to buy back this
year a first tranche of the state aid Volksbanken received. That
would replace 300 million euros of the state capital by new
common stock.
Austria “stands ready” to provide more aid if needed and
has 6 billion euros left in its financial stability fund, the
Alpine republic’s finance ministry said last month.
Germany’s DZ Bank, Munich Re and Raiffeisen Zentralbank
Oesterreich AG hold minority stakes in Volksbanken.
