For clarification purposes VBAG announces that due to the strategic corporate decision agreed by the Republic of Austria, the owners and VBAG to approve a cut in capital effective 31 December 2011 and to reduce the participation capital held by the Republic of Austria not more than 70 %, this cut in capital will as well affect the investors of other  participation capital issues of VBAG (ISIN AT0000755665, XS0359924643 and AT0000A018V0). These issues will be reduced by the same ratio as the participation capital held by the Republic of Austria.

Stock exchange listed issues of participation capital issued by Österreichische Volksbanken-Aktiengesellschaft:

ISIN:

AT0000755665 Österreichische Volksbanken-AG Partizipationsscheine
XS0359924643 EUR 500,000,000 Perpetual Non Cumulative Participation Capital
Certificates

The five biggest listed issues of Österreichische Volksbanken-Aktiengesellschaft in terms of issue volume:

ISIN:                 

XS0451759012   
XS0417722393   
XS0412533399   
XS0271095357   
AT000B053442

The issues of Österreichische Volksbanken-Aktiengesellschaft are admitted on the following stock exchanges:

Second Regulated market of Wiener Börse AG
Official trading of Wiener Börse AG
EUWAX segment of Baden-Württembergische Wertpapierbörse
Regulated market of Baden-Württembergische Wertpapierbörse
Regulated market of the Prague Stock Exchange
Regulated market of the Luxembourg Stock Exchange
Open Market of Berlin Stock Exchange
Open Market of Stuttgart Stock Exchange
Open Market of Frankfurt Stock Exchange

Österreichische Volksbanken-AG (VBAG), Deutsche Zentral-Genossenschaft, Ergo Versicherung AG, Raiffeisen Zentralbank AG, Österreichische Volksbanken Holding eGen, the Volksbanks and the Republic of Austria have concluded a joint agreement on the long-term stabilisation of VBAG.

The agreement contains the following key points:

• Investkredit is to be merged into VBAG retroactively as of 31 December 2011
• the creation of a joint liability scheme (Haftungsverbund) in accordance with the new section 30a of the Austrian Banking Act, which still has to be passed into law by the Austrian Parliament.
• DZ Bank, Ergo, RZB, Österreichischer Genossenschaftsverband and Volksbanken Holding will approve a cut in capital effective 31 December 2011 and ensure that the holding accounted for by the participation capital of the Republic of Austria is reduced to not more than 70%.
• This capital decrease will also entail a capital increase of around €480 million. The capital increase will be performed by the Republic of Austria in the amount of €250 million and the Austrian Volksbanks in the amount of at least €230 million. The Volksbanks will remain the majority owner of VBAG.
• Asset guarantee from the Republic of Austria for VBAG in the amount of €100 million with a fee of 10% from the time of a legally binding resolution by the Volksbanks to form a cooperative bank in accordance with section 30a BWG expiring 31 December 2017 at the latest.
• The Volksbanks undertake to ensure and pay the fee for the asset guarantee issued by the Republic of Austria for VBAG. Furthermore, the Volksbanks will ensure the repayment of the participation capital of the Republic of Austria from the 2009 issue after the capital reduction as at 31 December 2011.
• Presentation of a restructuring and reorganisation concept by the Management Board of VBAG.
• In order to strengthen VBAG’s capital ratios, RZB will ensure best efforts in order to assist VBAG in its disposal of RZB shares and in any case guarantees to implement adequate measures that will improve capital ratios and liquidity at VBAG. DZ Bank and ERGO undertake to leave all liquidity held in VBAG Group unchanged until further notice. In particular, this relates to the refinancing of VB Romania and VB Leasing International by DZ Bank. In addition, DZ Bank will assume a portfolio of the Frankfurt branch of Investkredit in the amount of €400 million. RWA.

Stock exchange listed issues of participation capital issued by Österreichische Volksbanken-Aktiengesellschaft:

ISIN:

AT0000755665 Österreichische Volksbanken-AG Partizipationsscheine
XS0359924643 EUR 500,000,000 Perpetual Non Cumulative Participation Capital
Certificates

The five biggest listed issues of Österreichische Volksbanken-Aktiengesellschaft in terms of issue volume:

ISIN:                  

XS0451759012   
XS0417722393   
XS0412533399   
XS0271095357   
AT000B053442

The issues of Österreichische Volksbanken-Aktiengesellschaft are admitted on the following stock exchanges:

Second Regulated market of Wiener Börse AG
Official trading of Wiener Börse AG
EUWAX segment of Baden-Württembergische Wertpapierbörse
Regulated market of Baden-Württembergische Wertpapierbörse
Regulated market of the Prague Stock Exchange
Regulated market of the Luxembourg Stock Exchange
Open Market of Berlin Stock Exchange
Open Market of Stuttgart Stock Exchange
Open Market of Frankfurt Stock Exchange

The total capital buffer shortfall as calculated by the EBA for Österreichische Volksbanken-Aktiengesellschaft VBAG is 972 mn. EUR. This is a preliminary and indicative figure which is subject to change on the basis of end September data and will be reviewed by banks and supervisory authorities.  It is the revised, latter figure that will form the basis for any plans required to increase levels of capitalisation in the period to June 2012. Furthermore EBA in its press release yesterday takes into account the current restructuring process at VBAG and its withdrawal from the CEE area which has been set in motion with the sale of Volksbank International already. The board of directors of VBAG with these and further measures is undertaking all efforts in order to realise the required capital buffer per June 30, 2012.

Stock exchange listed issues of participation capital issued by Österreichische Volksbanken-Aktiengesellschaft:

ISIN:
AT0000755665 Österreichische Volksbanken-AG Partizipationsscheine
XS0359924643 EUR 500,000,000 Perpetual Non Cumulative Participation Capital
Certificates

The five biggest listed issues of Österreichische Volksbanken-Aktiengesellschaft in terms of issue volume:

ISIN:
XS0451759012   
XS0417722393   
XS0412533399   
XS0271095357   
AT000B053442

The issues of Österreichische Volksbanken-Aktiengesellschaft are admitted on the following stock exchanges:

Second Regulated market of Wiener Börse AG
Official trading of Wiener Börse AG
EUWAX segment of Baden-Württembergische Wertpapierbörse
Regulated market of Baden-Württembergische Wertpapierbörse
Regulated market of the Prague Stock Exchange
Regulated market of the Luxembourg Stock Exchange
Open Market of Berlin Stock Exchange
Open Market of Stuttgart Stock Exchange
Open Market of Frankfurt Stock Exchange

Since last year, Oesterreichische Volksbanken-Aktiengesellschaft (VBAG) has focused on the redesign of its business model and has evaluated strategic options. In particular, the major deterioration of the market environment for banks, the severe crisis on international financial markets as well as extraordinary impairment requirements on country risks, on participations, and from the sale of participations are expected to significantly affect VBAG’s results as well as its planned measures:

• Annual loss (according to guidance) in the VBAG single entity financial statements is expected to amount to approximately EUR 900 million (+/- EUR 150 million depending on the development of the markets. We expect a loss ranging from EUR 500 million to EUR 750 million on the consolidated group level (IFRS). The main drivers are significant write-downs in the amount of EUR 700 million on the book value of the participations in Investkredit Bank AG and Volksbank Romania S.A. in the single entity accounts of VBAG.
• The planned combination of VBAG and Investkredit Bank AG will not take place this year.
• Currently no repayment of EUR 300 million participation capital held by the Republic of Austria.
• Despite of the expected loss, capital ratios according to pillar I are clearly exceeding regulatory requirements. In addition, VBAG Group strengthened capital ratios through the sale of Volksbank International to Sberbank, resulting in an expected increase of the core capital ratio to 10.4% and a rise of the equity ratio to 13.7% by year end 2011.

Currently the board of directors and the core shareholders of VBAG are discussing measures to strengthen VBAG’s capitalization. Part of these discussions is the modification of the Schultze-Delitzsch Genossenschaftsverbund in the form of a cooperation under Article 3 of the directive 2006/48/EC (part of the European application of Basel II) or the Article 9 of the CCR I draft (Capital Requirements Regulation I, which is the directly applicable regulatory part of the Basel III execution on the European level). A resolution to implement such modification was adopted today.

Stock exchange listed issues of participation capital issued by Österreichische Volksbanken-Aktiengesellschaft:

ISIN:
AT0000755665 Österreichische Volksbanken-AG Partizipationsscheine
XS0359924643 EUR 500,000,000 Perpetual Non Cumulative Participation Capital
Certificates

The five biggest listed issues of Österreichische Volksbanken-Aktiengesellschaft in terms of issue volume:

ISIN:
XS0451759012   
XS0417722393   
XS0412533399   
XS0271095357   
AT000B053442

The issues of Österreichische Volksbanken-Aktiengesellschaft are admitted on the following stock exchanges:

Second Regulated market of Wiener Börse AG
Official trading of Wiener Börse AG
EUWAX segment of Baden-Württembergische Wertpapierbörse
Regulated market of Baden-Württembergische Wertpapierbörse
Regulated market of the Prague Stock Exchange
Regulated market of the Luxembourg Stock Exchange
Open Market of Berlin Stock Exchange
Open Market of Stuttgart Stock Exchange
Open Market of Frankfurt Stock Exchange

The board of directors of Investkredit Bank AG announced today, that the planned transfer of the banking business of Österreichische Volksbanken-Aktiengesellschaft to Investkredit Bank AG by way of demerger (announced on April 15, 2011) will not be effected in 2011. Regarding a possible future combination of both companies no statement can be made at present.

The following issues are the five largest issues of Investkredit Bank AG according to volume:

ISIN:
XS0220043367
AT0000322458
AT0000322722
AT0000165873
AT0000479027

Issues of Investkredit Bank AG are listed on the following stock exchanges:

Geregelter Freiverkehr der Wiener Börse AG
Amtlicher Handel der Wiener Börse AG
Geregelter Mart der Luxemburger Börse
Open Market der Börse Frankfurt

The management board of Österreichische Volksbanken AG (VBAG) announces that due to the increasingly difficult economic environment a payment on profit-related instruments (shares, participation capital, hybrid capital and supplementary capital) in 2012 for the 2011 business year is unlikely from today´s viewpoint.                                                        
According to a current forecast the main reasons for the profit warning are an increasingly difficult economic environment which negatively affected the valuation of participations (VB Romania), the sale of participations as well as an earnings forecast impacted by potential additional financial burdens (e.g. measures by the Hungarian government with respect to foreign currency loans).

Stock exchange listed issues of participation capital issued by Österreichische Volksbanken-Aktiengesellschaft:
ISIN:
AT0000755665 Österreichische Volksbanken-AG Partizipationsscheine
XS0359924643 EUR 500,000,000 Perpetual Non Cumulative Participation Capital Certificates

The five biggest listed issues of Österreichische Volksbanken-Aktiengesellschaft in terms of issue volume:
ISIN:
XS0451759012
XS0417722393
XS0412533399
XS0271095357
AT000B053442

The issues of Österreichische Volksbanken-Aktiengesellschaft are admitted on the following stock exchanges:
Regulated unofficial market of Wiener Börse AG
Official trading of Wiener Börse AG
EUWAX segment of Baden-Württembergische Wertpapierbörse
Regulated market of Baden-Württembergische Wertpapierbörse
Regulated market of the Prague Stock Exchange
Regulated market of the Luxembourg Stock Exchange
Open Market of Berlin Stock Exchange
Open Market of Stuttgart Stock Exchange
Open Market of Frankfurt Stock Exchange

The owners of Volksbank International AG (VBI) and the representatives of the Sberbank of Russia (Sberbank) signed an agreement relating to the acquisition of the VBI Group today in Vienna. Until now, Österreichische Volksbanken-AG (VBAG) has held a 51% shareholding in VBI, whereas the German banking groups DZ BANK AG / WGZ BANK AG and the French BPCE S.A. have each held a 24.5% stake in VBI. With the signing of the agreement, Sberbank agreed to acquire a 100% stake in Volksbank International AG. VB Romania is not included in the transaction. The deal price will be 1.0x VBI equity (excluding VB Romania) ranging from EUR 585 million to EUR 645 million depending on business performance of VBI in 2011. In addition to the sales price, Sberbank will assume financings provided by the current owners in an amount of almost EUR 2.5 billion. Also at closing, VBAG or a group of banks led by VBAG will provide Sberbank with five-year funding in an amount of EUR 500 million. Closing of the transaction is expected by the end of the year – after certain conditions precedent are fulfilled.

Stock exchange listed issues of participation capital issued by Österreichische Volksbanken-Aktiengesellschaft:
ISIN:
AT0000755665 Österreichische Volksbanken-AG Partizipationsscheine
XS0359924643 EUR 500,000,000 Perpetual Non Cumulative Participation Capital
Certificates

The five biggest listed issues of Österreichische Volksbanken-Aktiengesellschaft in terms of issue volume:
ISIN:                  
XS0451759012   
XS0417722393   
XS0412533399   
XS0271095357   
AT000B053442

The issues of Österreichische Volksbanken-Aktiengesellschaft are admitted on the following stock exchanges:
Regulated unofficial market of Wiener Börse AG
Official trading of Wiener Börse AG
EUWAX segment of Baden-Württembergische Wertpapierbörse
Regulated market of Baden-Württembergische Wertpapierbörse
Regulated market of the Prague Stock Exchange
Regulated market of the Luxembourg Stock Exchange
Open Market of Berlin Stock Exchange
Open Market of Stuttgart Stock Exchange
Open Market of Frankfurt Stock Exchange

Österreichische Volksbanken Aktiengesellschaft – Profit warning

VBAG result half year 2011: Group result declining as a result of write downs on sovereign risk.
The management board of Österreichische Volksbanken AG (VBAG) announces, that group operating result for the half year 2011 amounted to euro 199 mio. Write downs on sovereign risk led to a group result before taxes of euro 11 mio.
As a result of the difficult economic environment and of the current degree of implementation of VBAG´s “Strategy 2015” a payment or a full payment on dividend-carrying securities (shares and participation capital) in 2012 for the 2011 business year is unlikely from today´s viewpoint.

Stock exchange listed issues of participation capital issued by Österreichische Volksbanken-Aktiengesellschaft:
ISIN:
AT0000755665 Österreichische Volksbanken-AG Partizipationsscheine
XS0359924643 EUR 500,000,000 Perpetual Non Cumulative Participation Capital Certificates

The five biggest listed issues of Österreichische Volksbanken-Aktiengesellschaft in terms of issue volume:
ISIN:   
XS0451759012 
XS0417722393 
XS0412533399 
XS0271095357 
AT000B053442

The issues of Österreichische Volksbanken-Aktiengesellschaft are admitted on the following stock exchanges:
Regulated unofficial market of Wiener Börse AG
Official trading of Wiener Börse AG
EUWAX segment of Baden-Württembergische Wertpapierbörse
Regulated market of Baden-Württembergische Wertpapierbörse
Regulated market of the Prague Stock Exchange
Regulated market of the Luxembourg Stock Exchange
Open Market of Berlin Stock Exchange
Open Market of Stuttgart Stock Exchange
Open Market of Frankfurt Stock Exchange

Oesterreichische Volksbanken-AG publishes result of EBA stress test

Oesterreichische Volksbanken-AG (VBAG) participated in the EU-wide bank stress test conducted by the European Banking Authority (EBA). VBAG´s unstressed, baseline core tier I ratio as of 31 December 2010 is 6.4%. In the simulated worst case scenario the core tier I ratio would be 4.5% as of 31 December 2012 which is 0.5 percentage points below the benchmark defined by EBA. Taking into account the measures that are currently being implemented, the core tier I ratio as of 31.12.2012 is 6.6%. When capital instruments which are loss-absorbing according to the Austrian banking law are also fully factored in, the stressed tier I ratio is 9.8%.

Contact for queries:
Österreichische Volksbanken-AG
Petra Roth
Tel.: +43 664 6129223
E-mail: petra.roth@volksbank.com

Stock exchange listed issues of participation capital issued by Österreichische Volksbanken-Aktiengesellschaft:

ISIN:
AT0000755665 Österreichische Volksbanken-AG
PartizipationsscheineXS0359924643 EUR 500,000,000 Perpetual Non Cumulative Participation Capital Certificates

The five biggest listed issues of Österreichische Volksbanken-Aktiengesellschaft in terms of issue volume:

ISIN:  
XS0451759012
XS0417722393
XS0412533399
XS0271095357
AT000B053442

The issues of Österreichische Volksbanken-Aktiengesellschaft are admitted on the following stock exchanges:

Regulated unofficial market of Wiener Börse AG
Official trading of Wiener Börse AG
EUWAX segment of Baden-Württembergische Wertpapierbörse
Regulated market of Baden-Württembergische Wertpapierbörse
Regulated market of the Prague Stock Exchange
Regulated market of the Luxembourg Stock Exchange
Open Market of Berlin Stock Exchange
Open Market of Stuttgart Stock Exchange
Open Market of Frankfurt Stock Exchange

It is planned that in the General Assembly on 19 May 2011 a resolution will be passed on the transfer of VBAG´s banking business to Investkredit Bank AG by means of a proportional de-merger. The draft of the de-merger agreement stipulates (as set forth in detail in the agreement) that VBAG as transferor company intends to transfer its banking business to Investkredit Bank AG as assuming company by way of an universal succession. The remaining EUR 700 million of the state participation capital will be transferred to Investkredit Bank AG. The company name of the unified bank will be changed to Österreichische Volksbanken-AG. The de-merger is subject to approval by the General Assemblies of both companies involved and by the FMA (Austrian Financial Market Authority).The de-merger will be legally effective when registered in the commercial register at the Vienna Commercial Court which is expected to take place in the second half of 2011.

A separate notice will be published pursuant to the Austrian De-Merger Act regarding the disclosure of the de-merger agreement as required by law.

The core shareholders of VBAG made the fundamental decision on 15 April 2011 to acquire in 2011 part of the participation capital of the Republic of Austria in an amount of  EUR 300 million. This decision is subject to final approval by the General Assembly in 2011 May.

The five biggest listed issues of Investkredit Bank AG in terms of issue volume:

ISIN:
XS0220043367
AT0000322458
AT0000322722
AT0000165873
AT0000479027

The issues of Investkredit Bank AG are admitted on the following stock exchanges:

Regulated unofficial market of Wiener Börse AG
Official trading of Wiener Börse AG
EUWAX segment of Baden-Württembergische Wertpapierbörse
Regulated market of Baden-Württembergische Wertpapierbörse
Regulated market of the Prague Stock Exchange
Regulated market of the Luxembourg Stock Exchange
Open Market of Berlin Stock Exchange
Open Market of Stuttgart Stock Exchange
Open Market of Frankfurt Stock Exchange

As part of new strategy VBAG evaluates sale of participations and issues guidance

In accordance with its “Strategy 2015”, Österreichische Volksbanken-AG (VBAG) will be focusing on its core business. This includes VBAG’s function as the central institution of the Volksbank sector, the corporate business and the real estate activities. Austria and its neighbouring countries constitute the core regions for these activities. For business activities and participations which are not part of VBAG´s core business, various options are currently being evaluated. In this context, the Management Board resolved at today's meeting to review the possible sale of the stakes in Volksbank International AG and VB-Leasing International Holding GmbH and to initiate the respective process. The corresponding steps, which will take place over the course of the next few months and are to be supported by the mandated consultants, could result in the sale of these stakes.

Guidance
Based on its new strategy, the group plans to reach the following targets (according to IFRS) by 2015*:
- Increase return on equity (RoE) to at least 10%
- Maintain the tier 1 ratio (credit risk) at about 10%
- Increase pre-tax earnings to at least EUR 125 million per year
- Maintain the already significantly improved cost-income ratio at approximately 55%

* Assumption: payments on the participation capital issued in 2008 are presented as dividend payments (as under Austrian GAAP).

It is expected that dividend payments on the participation capital held by the Republic of Austria and all other profit-related instruments will be made from 2012 onwards (i.e. for the fiscal years 2011 onwards). The government participation capital is expected to be redeemed starting in 2011 as stipulated by the agreement.

Stock exchange listed issues of participation capital issued by Österreichische Volksbanken-Aktiengesellschaft:
ISIN:
AT0000755665 Österreichische Volksbanken-AG
PartizipationsscheineXS0359924643 EUR 500,000,000 Perpetual Non Cumulative Participation Capital Certificates

The five biggest listed issues of Österreichische Volksbanken-Aktiengesellschaft in terms of issue volume:
ISIN:
XS0451759012 
XS0417722393 
XS0412533399 
XS0271095357 
AT000B053442

The issues of Österreichische Volksbanken-Aktiengesellschaft are admitted on the following stock exchanges:
Regulated unofficial market of Wiener Börse AG
Official trading of Wiener Börse AG
EUWAX segment of Baden-Württembergische Wertpapierbörse
Regulated market of Baden-Württembergische Wertpapierbörse
Regulated market of the Prague Stock Exchange
Regulated market of the Luxembourg Stock Exchange
Open Market of Berlin Stock Exchange
Open Market of Stuttgart Stock Exchange
Open Market of Frankfurt Stock Exchange

Österreichische Volksbanken-Aktiengesellschaft (VBAG) and CA Immo AG have agreed on the sale of 100% of shares in the VBAG subsidiary Europolis AG to CA Immo. The Management Board and Supervisory Board of ÖVAG approved the sale in their meetings today. CA Immo AG will pay € 272 million for all shares in Europolis AG. Among other things, the sale is subject to the suspensive conditions of approval by the responsible authorities and the implementation of internal restructuring measures agreed within the Group.

To further streamline the Group’s structure, the Management Board and Supervisory Board of VBAG today resolved to combine the banking operations of VBAG and those of Investkredit Bank AG. Details of the combination will be analysed and drawn up in the coming weeks. Legal implementation will occur in the first half of 2011.

The implementation of these strategic options will serve to further strengthen the business model of VBAG.

ISIN:
AT0000755665 Österreichische Volksbanken-AG Partizipationsscheine
XS0359924643 EUR 500,000,000 Perpetual Non Cumulative Participation Capital Certificates (issued on a fiduciary basis by Banque de Luxembourg)

ISIN:
XS0451759012
XS0417722393
XS0412533399
XS0271095357
AT000B053442

Regulated unofficial market of Wiener Börse AG
Official trading of Wiener Börse AG
EUWAX segment of Baden-Württembergische Wertpapierbörse
Regulated market of Baden-Württembergische Wertpapierbörse
Regulated market of the Prague Stock Exchange
Regulated market of the Luxembourg Stock Exchange
Open Market of Berlin Stock Exchange
Open Market of Stuttgart Stock Exchange
Open Market of Frankfurt Stock Exchange

During the business year 2009, Österreichische Volksbanken-AG (VBAG) has introduced comprehensive restructuring measures. One of these was the sale of the retail subsidiaries VB Wien, Immobank, Ärztebank and VB Linz-Mühlviertel to the Volksbank sector which has been put on track successfully.

During the Group´s repositioning in 2010 VBAG continues with the implementation of further measures. A formal process to evaluate all strategic options including strategic partnerships was established. Lazard & Co GmbH was mandated to accompany VBAG in this evaluation process.

In the course of today’s Managing Board meeting and Supervisory Board meeting respectively, the boards passed the resolution to sell 3 subsidiaries of Österreichische Volksbanken-AG (Volksbank Wien-AG, Bank für Ärzte und freie Berufe-AG, Immobank-AG) unless otherwise provided in the pending agreement to be given by the Austrian Financial Market Authority by the end of 2009.

Unless otherwise provided in the pending agreement to be given by the Austrian Financial Market Authority (FMA) a majority stake in Volksbank Linz Mühlviertel reg. Gen. mbH, will be sold as well.

This sale is expected to generate sales proceeds in total of some EUR 210 million.

With a view to the semi-annual report of Österreichische Volksbanken-AG currently being drawn up and following notification of the rating of Baa1/E+ released by Moody´s on 24 July 2009, we can no longer expect a positive result for 2009.

Our subsidiary Investkredit Bank AG likewise does not expect to post any profit for 2009.

As a result, the dividends and coupons for the 2009 business year which are due for payment in 2010 for all profit-related securities of both institutions (equities, participation capital, hybrid capital, supplementary capital) will almost certainly not be paid out.

The Managing Board of Österreichische Volksbanken-Aktiengesellschaft announced on 6 November 2009 that ÖVAG Group generated operating income of euro 307 million in the first three quarters of 2009.

However, risk provisions and corrections in the valuation of participations drove down consolidated net income to euro - 607 million before tax as of 30 September 2009.

Despite the negative result in the third quarter, ÖVAG on a Group basis has a core capital ratio of 8.5 %, which exceed the statutory minimum and an equity ratio of 11 %.

For the fourth quarter, further effects are expected from the valuation of participations and the increase in risk provisions, but to a lesser extent than in the third quarter.

Due to the continuing difficult economic environment, a distribution in 2011 for the 2010 fiscal year on profit-related securities is unlikely from today’s viewpoint.
Publication of the final 2009 results is planned for April 2010.

Date: 6 November 2009
Address: Österreichische Volksbanken-AG, Kolingasse 19, 1090 Vienna, Austria

ISIN:
XS0451759012
XS0417722393
XS0412533399
XS0271095357
AT000B053442

• Regulated unofficial market of Wiener Börse AG
• Official trading of Wiener Börse AG
• EUWAX segment of Baden-Württembergische Wertpapierbörse
• Regulated market of Baden-Württembergische Wertpapierbörse
• Regulated market of the Prague Stock Exchange
• EURONEXT of the Amsterdam Stock Exchange
• Regulated market of the Luxembourg Stock Exchange

After a week of intensive negotiations, a decision was made today regarding the future of Kommunalkredit Austria AG. Volksbank AG will surrender all of its shares (50.78%) in Kommunalkredit. These will be taken over by the Republic of Austria.

“This solution ensures that Kommunalkredit Austria will be sustainably stabilised and will also have sufficient liquidity and capital strength during the further course of the financial crisis, in order to continue successfully financing Austrian municipalities and other institutions governed by public law”, commented Franz Pinkl, Chief Executive of Volksbank AG, on the result of the negotiations. “With this step, the Republic of Austria is following the approach of other European states with public financiers".

The negotiations between the Ministry of Finance, Kommunalkredit and their owners, Dexia Crédit Local, Volksbank AG and the Austrian Association of Municipalities [Gemeindebund] have provided the following results, in detail:

• The shares held by Dexia and VBAG in Kommunalkredit are to be transferred to the federal government for a total consideration of EUR 2. With this, the federal government will hold 99.78 percent of Kommunalkredit in the future. Until further notice, the Austrian Association of Municipalities will remain a shareholder, with 0.22 percent of the shares.

• Dexia and VBAG will be obligated to strengthen the capital of Kommunalkredit and underwrite participation capital, as an owners’ contribution.  For VBAG, this means a share of EUR 173 million. A share of EUR 200 million in participation capital is attributable to Dexia. The participation capital is to be furnished with a dividend of 8 percent and is to be granted for a term of at least 5 years. Through these measures and additional equity capital from the federal government, the core capital ratio of Kommunalkredit will be increased to 8 to 9 percent. VBAG and Dexia will issue guarantees for possible future losses in Kommunalkredit. Confidentiality has been agreed regarding the amount of the respective guarantees.

• The Kommunalkredit shares of 49.16 percent in Dexia Kommunalkredit Bank (DKB) will be transferred to Dexia for EUR 1. No further liability obligations will arise from the surrender of DKB for KA.

• The Republic of Austria will ensure that Kommunalkredit has sufficient liquidity by guaranteeing future issues of Kommunalkredit.

At today’s Supervisory Board meeting it was resolved to strengthen the capital base of Volksbank AG. This will increase the core capital ratio to at least 9%. This value has established itself internationally as a benchmark for banks. The existing shareholders of Volksbank AG will participate in the capital increase to the necessary extent, and the utilisation of a government package is also being reviewed.
“With the upcoming measures to strengthen capital we are sustainably strengthening our position in national and international competition, in a market environment that is known to be difficult. Surrendering the shares in Kommunalkredit Austria AG relieves VBAG’s financial situation. It means we can further expand our position as a reliable financing partner for private and corporate customers”, says the Supervisory Board of Volksbank AG.