Vienna, 28 February 2012 Austria ensures reorganisation and sustainable restructuring programme for ÖVAG

Vienna  – The Austrian Federal Ministry of Finance, the Federal Office of the Chancellor and ÖVAG and its shareholders have conducted negotiations in recent days on a model by which ÖVAG is to be restructured and converted to a sustainable Verbundbank (a bank providing central banking services to savings banks) under sec 30a Austrian Banking Act. At the same time, these measures are intended to preserve the overall stability of the domestic financial sector. Negotiations led to an agreement, concluded on 27 February and containing the following key features:

 
  • A Verbundbank under sec 30a Austrian Banking Act will be created.
  • DZ Bank, Ergo, RZB, Österreichischer Genossenschaftsverband and Volksbanken-Holding have agreed to a capital cut and will ensure that the Austrian federal government’s participation capital will not be reduced by more than 70%.
  • This capital reduction will be accompanied by a capital increase in the amount of EUR 480 million carried out at the same time, to which the federal government will contribute EUR 250 million, with the remainder to come from the Volksbanken sector.
  • The federal government will provide an asset guarantee of EUR 100 million in favour of ÖVAG and will receive a surety fee of 10% per year in exchange.
  • The federal government will have rights of nomination to ensure that the goals and purposes of the restructuring programme are achieved.
  • The new Verbundbank will be subject to a prohibition on distributions for so long as the claims of the federal government as a shareholder, participation capital holder or guarantor are not fully satisfied.
  • DZ Bank undertakes to leave existing lines of liquidity in jointly held subsidiaries intact in order to support the sale of those institutions to the greatest possible extent and agrees to assume portions of the business volume of Investkredit’s Frankfurt branch or to give an undertaking on the use of funds.
  • Ergo Versicherung AG shall leave its existing lines of liquidity with ÖVAG, promises not to allow the financial instruments held by Victoria Volksbanken Versicherungs AG to be sold and will support the sale of VB Romania and VBI Leasing to the best of its abilities.
  • RZB undertakes to take appropriate actions to provide positive equity capital effects of EUR 100 million to ÖVAG on a permanent basis and EUR 500 million liquidity by no later than 31 August 2012.

The federal government plans to finance the budgetary costs of supporting ÖVAG by means of a contribution from the banking sector.