Bloomberg News

Volksbanken Puts Most Assets in Wind-Down Unit, Cuts 20% of Jobs

December 15, 2011

Dec. 15 (Bloomberg) -- Oesterreichische Volksbanken AG, an Austrian bank that failed Europe’s bank stress tests twice this year, is putting more than half of its assets into a unit charged with selling them or running them off.

Volksbanken also said it will cut about 20 percent of its staff, or 250 jobs, over the next two years. It created a “non- core business” division to hold its Romanian lender, its leasing unit in eastern Europe and a Malta-based business, according to a statement that followed a supervisory board meeting in Vienna today. The assets “will be wound down in the medium term in order to strengthen capitalization,” it said.

The bank’s assets totaled 43.6 billion euros ($56.7 billion) at the end of September, according to its quarterly report. The wind-down unit will contain between half and two- thirds of that sum, Walter Groeblinger, a spokesman for the bank, said by phone.

Volksbanken, which escaped collapse in 2008 because Austria bailed out its Kommunalkredit unit, is restructuring after the European Banking Authority said the lender is 1.05 billion euros short of the required capital ratio of 9 percent of risk- weighted assets.

The lender, which is controlled by 62 cooperative banks, plans to set up a cross-guarantee accord with those banks to boost its capital ratio. It has also agreed to sell its eastern European business outside Romania to Russia’s OAO Sberbank.

--Editors: Keith Campbell, Steve Bailey

To contact the reporters on this story: Zoe Schneeweiss in Vienna at zschneeweiss@bloomberg.net; Boris Groendahl in Vienna at bgroendahl@bloomberg.net

To contact the editors responsible for this story: Frank Connelly at fconnelly@bloomberg.net; Angela Cullen at acullen8@bloomberg.net


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