11. 05. 12. - 15:54

BA almost takes €400mn profit hurdle

Bank Austria (BA) has achieved a profit of almost 400 million Euros in the first quarter of 2012.

The bank said yesterday (Thurs) it made a net profit of 399 million Euros between January and March. The finance institute – which manages the Eastern European (EE) operations of Italian bank UniCredit – said it had to spend 24 million Euros on bank taxes in Austria, Slovenia and Slovakia in the first three months of the current year.

The Austrian government of Social Democrats (SPÖ) and the conservative People’s Party (ÖVP) plans to increase the domestic solidarity bank levy in the coming months. ÖVP Finance Minister Maria Fekter said she hoped to increase revenue from the taxation measure from 500 million Euros in 2011 to 625 million Euros this year.

The measure – which has been branded populist and counterproductive by many bankers – is supposed to help the government coalition to recapitalise Volksbank AG (ÖVAG). The bank, which was partially nationalised earlier this year, sustained a loss of 1.34 billion Euros in 2011.

BA boss Willibald Cernko said he appreciated the government’s decision to create stricter and more precise bank bankruptcy regulations – but also said that the case of ÖVAG was "not a glorious chapter". Cernko said he had not been contacted by government officials at any stage before and during the partial nationalisation of ÖVAG under which the state increased its stake to more than 40 per cent.

BA has 14 foreign affiliates. Cernko and other top-tier managers of the Viennese institute rejected speculations that UniCredit planned to rename the bank. UniCredit head Federico Ghizzoni rubbished reports about such intentions as well. UniCredit suffered a record loss of 9.2 billion Euros last year while BA made a profit of 209 million Euros.

Cernko said he was "proud" about BA’s performance in 2011. He stressed that the bank did not suffer any annual losses since the dramatic collapse of US American investment bank Lehman Brothers in September 2008. BA had a core tier 1 capital ratio of 10.5 per cent in the first quarter of 2012, according to Cernko.

Cernko emphasised that BA had no plans to pull out from operating in EE despite uncertainties concerning the region’s economy. BA’s performance report shows that especially the bank’s subsidiary firms in Turkey and Russia do well.

Meanwhile, Russia’s biggest bank revealed its intention to invest 300 million Euros on Volksbank International (VBI). Sberbank paid 505 million Euros to ÖVAG for its former EE business network in February. The deal included the purchase of all foreign affiliates of the struggling bank except VBI Romania.

The number of employees working at VBI’s office in Vienna already rose by 40 to 100 in the past three months, according to Sberbank. The finance institute said it wanted to hire another 50 staff for the office in the Austrian capital throughout this year.

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