Moody’s Investors Service said it sees “high execution risks” at Oesterreichische Volksbanken AG (VBPS), as the Austrian lender tries to restructure following its partially nationalized.
“We are seeing how far the cross-guarantee system will stabilize the bank’s rating,” Mathias Kuelpmann, an analyst at Moody’s, said in a telephone interview today. Moody’s put Volksbanken on review to downgrade in February and may cut its Baa2 rating by one level to the lowest investment grade, he said.
Austria agreed to take a 43 percent in the lender this year in Volksbanken’s third bailout since 2008, while a group of 62 regional banks still own its majority. The cross-guarantee pact would combine Volksbanken’s and the regional lenders’ capital and liabilities and is part of that bailout. Volksbanken, which already sold its east Europe business to OAO Sberbank, is also trying to shed “non-core” assets.
“We have to examine what the situation at Volksbanken looks like after the revamp,” Kuelpmann said. “Because of the big restructuring need, we see high execution risks.”
While Moody’s normally tries to complete a review within three months, Volksbanken’s reorganization is delaying this process, Kuelpmann said, without saying when it may be completed.
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