08. 07. 10. - 15:00

Erste and RZB face stress test

Two Austrian banks will be among the 91 institutes undergoing a stress test by a European financial market watchdog later this month.

Committee of European Banking Supervisors (CEBS) officials said today (Thurs) they will examine the state of Erste Group and Raiffeisen Zentralbank (RZB) as well as Bank Austria’s (BA) Italian owner UniCredit.

The body announced a further 88 bank institutes’ conditions will be checked, adding that results of the check-ups will be presented on 23 July.

The test series is part of European leaders’ attempts to raise people’s trust in banks and reduce risks of a breakdown of the continent’s financial system because of a bank’s attempts to disguise its dire condition.

Austrian National Bank (OeNB) Governor Ewald Nowotny already made it clear earlier this year that he will not reveal precise findings of the affected Austrian institutes.

Nowotny caused some controversy by labelling the stress test scheme a "temporary fashion trend coming from the United States" last month.

He warned of overestimating the procedures’ meaning and outcomes, claiming that their interpretation was "risky".

Erste Bank and RZB meanwhile expressed concerns about the Hungarian government’s plans of a bank tax.

Fidesz National Economy Minister György Matolcsy stressed recently he was adamant to take 0.45 per cent of the total annual assets of banking institutes operating in the country from next year.

Austrian banks are among the major investors in Eastern Europe (EE). They have often been criticised for the alleged risks they were taking by focusing on the EE region.

A discussion group called the "Vienna Initiative" – formed by Erste Bank, RZB, UniCredit and other institutes – is currently holding talks with the Hungarian government.

The group pointed out that Sweden had asked banks to hand over just 0.036 per cent of their annual assets, while Austria planned to take 0.07 per cent from 2011.

Hungarian Fidesz Prime Minister Viktor Orban tried to put bank chiefs’ minds at rest by pointing out that the final decision will not be made before autumn.

The planned bank tax is part of the new Hungarian government’s recently presented strategic paper which was set up to save the struggling European Union (EU) member state from ruin.