CEO of Oesterreichische Volksbanken-AG Wenzel comments „result of EBA stress test is rather unsatisfactory, but at the same time it confirms that we are on the right track“

According to EBA´s publication, Oesterreichische Volksbanken-AG achieves a positive stress test result when measures that are currently being implemented are taken into account

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. This simulation, however, only factors in measures to strengthen capitalization which already were in effect by 30 April 2011
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 banking law are also fully factored in, the tier I ratio is 9.8%

Oesterreichische Volksbanken-AG is well capitalized and complies with all requirements according to the Austrian banking law. The tier I ratio has increased continuously since 2009: it was 9.2% as of 31 December 2009, 9.5% as of 31 December 2010 (excluding Europolis) and 9.7% at the end of the first quarter of 2011.

CEO Gerald Wenzel comments: “The result of the stress test is rather unsatisfactory and we are taking it seriously. However, taking into account measures being currently implemented, the result is 9.8%, as published by EBA. This shows that we are on the right track. The managing board adopted a clear plan to strengthen capital ratios last year and introduced appropriate measures. These measures include the sale of Volksbank International (a term sheet was signed with Sberbank on 14 July 2011), sale of the equity stake in RZB as well as the downstream merger of Oesterreichische Volksbanken-AG with Investkredit which is under way. The EBA stress test did not take these measures into account in its main result. In this respect, the timing of the stress test was unfavorable for us. Nevertheless, we will consistently continue on the course we have adopted.” On top of the restructuring measures that are currently being implemented, VBAG´s majority owners, the 62 regional Volksbanks, decided on additional capital measures. Participation capital will be transformed into Basel III eligible core tier I capital which will strengthen the core tier I ratio even when Basel III is fully effective in 2018.

The EU-wide stress test seeks to assess the resilience of European banks to severe shocks and their specific solvency to hypothetical stress events under certain restrictive conditions. Current EBA capital stresses correspond to a large extent to Basel III criteria which will not be fully applicable before the year 2018. Furthermore, the test assumes that the portfolio structures of participating banks will be static until the year 2012. Therefore, the test neither reflects VBAG´s current strategy which strives to re-dimension the banks’ balance sheet (sale of participations, reduction of risk-weighted assets and downsizing of portfolios) nor the associated dynamic change process.

Results of the EBA stress test

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Volksbank International: term sheet signed by Sberbank (14 July 2011)

Oesterreichische Volksbanken-AG today reached a commercial understanding with Sberbank on the major terms of the sale of Volksbank International. Oesterreichische Volksbanken-AG holds a 51% stake in Volksbank International. A term sheet for the transaction was signed by all shareholders of Volksbank International (VBAG, BPCE, DZ BANK und WGZ BANK) and Sberbank today, 14 July 2011, in Vienna. Both parties announce that they aim to close the deal by the end of this year. VB Romania is not part of the envisaged transaction.

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Q1 2011 preliminary results (19 May 2011)

Download here the Q1 2011 preliminary results

download preliminary results

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Announcement of de-merger (16 April 2011)

Find here the Announcement as pdf download.

download announcement

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Profit for Investkredit Bank AG (01 February 2011)

Investkredit Bank AG

Investkredit will achieve a profit in its single entity accounts for 2010 and thus make payments on its supplementary capital and hybrid capital instruments in 2011 (Investkredit did not issue participation capital).
The calculation of accrued interest on these instruments will resume with immediate effect.

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