Oesterreichische Kontrollbank AG is among bidders for Kommunalkredit Austria AG, a lender whose bailout cost Austrian taxpayers more than 2 billion euros ($2.7 billion), said four people with knowledge of the situation.
OeKB, a Vienna-based specialist lender owned by Austrian banks that operates with a government guarantee, and private- equity investor Apollo Global Management LLC (APO:US), based in New York, are among those who analyzed Kommunalkredit’s books and are still in talks with the Fimbag state agency charged with selling the company, said the people, who asked not to be identified because the process is private.
Fimbag Chief Executive Officer Klaus Liebscher declined to comment in an e-mailed response to questions from Bloomberg News. OeKB spokesman Peter Gumpinger, Apollo spokesman Parke Chapman and Kommunalkredit CEO Alois Steinbichler also declined to comment.
Kommunalkredit, previously owned by Oesterreichische Volksbanken AG and Dexia SA, was nationalized in November 2008 to avoid a collapse when liquidity dried up. It was split into Kommunalkredit, which continues as a lender to municipalities with a revamped business model, and KA Finanz AG, a “bad bank” that’s winding down securities, loans and credit-default swaps that aren’t part of Kommunalkredit’s main business.
Together, Kommunalkredit and KA Finanz have cost taxpayers 2.6 billion euros of equity-like capital so far. About 6.4 billion euros are additionally at risk because of government guarantees for the lenders’ assets and bonds.
Kommunalkredit posted 12.3 million euros of net income in the first half of last year, according to its most recent figures, and said it expects to be profitable in the full year. Steinbichler has revamped the lender to focus on more profitable business by offering municipalities advice and consulting in addition to extending credit. The bank, which has 16.7 billion euros of assets, is largely wholesale-funded, and its equity stood at 259 million euros at the end of June.
Fimbag has to sell the bank by the end of June under European Union conditions of the bailout. The agency has asked the EU to extend this deadline, Liebscher said.
OeKB, whose biggest shareholders are UniCredit Bank Austria AG, Erste Group Bank AG and Raiffeisen Zentralbank Oesterreich AG, lends to exporters and gives export guarantees on behalf of the Austrian government. It’s also Austria’s central securities depository, and performs clearing and settlements for the stock exchange.
Most of OeKB’s shareholders have their own units that lend to municipalities and finance infrastructure projects. That has spurred speculation as to what OeKB would do with Kommunalkredit after a purchase, given it’s unlikely to enter a business competing with its owners, two of the people said.
Leon Black’s Apollo is among private-equity investors that are targeting European financial assets as banks on the continent deleverage. It agreed to buy Aviva Plc’s U.S. life unit for $1.8 billion in December.
Hypo Alpe-Adria-Bank International AG, another nationalized Austrian lender, is selling its Austrian, Italian and south-east European units.
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