bia06
Listen other's viewpoint avoid conflicts & wars.
ÖVAG Finance (Jersey) Limited: XS0201306288 Securities: redemption at zero to be expected (14. Jänner 2015)
ÖVAG Finance (Jersey) Limited invested the proceeds of its EUR 32.629 million Fixed/Floating Rate Non-cumulative Non-voting Preferred Securities in supplementary capital (upper tier 2 capital) issued by Österreichische Volksbanken-AG (VBAG).
Upper tier 2 capital is loss-absorbing according to section 23 (7) of the Austrian Banking Act (version before entry into force of federal law BGBI. I Nr. 184/2013 on 01 January 2014) and can be redeemed at maturity before liquidation of the bank only after deduction of net losses allocated on a pro-rata basis over the life of the securities.
Net losses are the negative sum of annual results after taxes (profits or losses) before changes in reserves on the single entity level of the bank incurred over the life of the securities. Yearly results are allocated on a pro rata basis, the amount of profit or loss allocated to a specific upper tier 2 security is determined by the volume of the respective issue in relation to the total volume of loss-absorbing instruments (upper tier 2 securities, participation capital, share capital) then outstanding. When redeeming an upper tier 2 security, the results allocated over its life are summed up and in case of net losses these have to be deducted from the redemption amount.
VBAG’s current demerger plan envisages that supplementary capital of VBAG together with other equity capital instruments will remain in the future wind-down unit after completion of the demerger. The amount of net losses currently allocated to the supplementary capital of VBAG, held by ÖVAG Finance (Jersey) Limited, exceeds the amount of the securities’ nominal value and as no future profits are to be expected in the wind-down unit there is no potential to decrease allocated net losses through theoretical future profits. Therefore a redemption value of zero should be expected for VBAG’s supplementary capital. Consequently the management of ÖVAG Finance (Jersey) Limited expects that the redemption value of the Preferred Securities issued could as well be zero.
ÖVAG Finance (Jersey) Limited invested the proceeds of its EUR 32.629 million Fixed/Floating Rate Non-cumulative Non-voting Preferred Securities in supplementary capital (upper tier 2 capital) issued by Österreichische Volksbanken-AG (VBAG).
Upper tier 2 capital is loss-absorbing according to section 23 (7) of the Austrian Banking Act (version before entry into force of federal law BGBI. I Nr. 184/2013 on 01 January 2014) and can be redeemed at maturity before liquidation of the bank only after deduction of net losses allocated on a pro-rata basis over the life of the securities.
Net losses are the negative sum of annual results after taxes (profits or losses) before changes in reserves on the single entity level of the bank incurred over the life of the securities. Yearly results are allocated on a pro rata basis, the amount of profit or loss allocated to a specific upper tier 2 security is determined by the volume of the respective issue in relation to the total volume of loss-absorbing instruments (upper tier 2 securities, participation capital, share capital) then outstanding. When redeeming an upper tier 2 security, the results allocated over its life are summed up and in case of net losses these have to be deducted from the redemption amount.
VBAG’s current demerger plan envisages that supplementary capital of VBAG together with other equity capital instruments will remain in the future wind-down unit after completion of the demerger. The amount of net losses currently allocated to the supplementary capital of VBAG, held by ÖVAG Finance (Jersey) Limited, exceeds the amount of the securities’ nominal value and as no future profits are to be expected in the wind-down unit there is no potential to decrease allocated net losses through theoretical future profits. Therefore a redemption value of zero should be expected for VBAG’s supplementary capital. Consequently the management of ÖVAG Finance (Jersey) Limited expects that the redemption value of the Preferred Securities issued could as well be zero.
).
