Koren rumoured to succeed Wenzel

A former BAWAG PSK (BAWAG) manager could take over at Volksbank AG (ÖVAG), according to reports.

Business dailies claim today (Weds) that ex-BAWAG vice chief Stephan Koren – whose late father Stephan sen. served as Austrian People’s Party (ÖVP) finance minister between 1968 and 1970 – could be asked by the state to succeed Gerald Wenzel as ÖVAG CEO. Wenzel is unlikely to stay at the bank which was nationalised last month. Wenzel was assigned three years ago. His attempts to achieve a turnaround failed.

ÖVAG received one billion Euros of participation capital from the Republic of Austria during the crisis. The bank has been unable to pay back the money. Its losses rose sharply at the same time. The Viennese finance institute sustained a loss of nearly 1.1 billion Euros in 2009 before it achieved a profit of 55 million Euros in 2010. It plunged back in the red last year when it suffered losses of 1.2 billion Euros.

ÖVAG tried to recover and avoid a nationalisation by selling most of its foreign affiliates to Russian banking industry giant Sberbank. ÖVAG managers were optimistic about raking in nearly one billion Euros for the eight Volksbank International (VBI) departments. They had to accept Sberbank’s offer of just 505 million Euros in the end since no other competitor showed interested in VBI’s Eastern European (EE) representations.

Koren – who left BAWAG last year – did not comment on the speculations concerning his possible joining of ÖVAG which is also set to become a new supervisory board. Neither ÖVAG nor BAWAG, which managed to make a profit of 122.5 million Euros last year, are obliged to fulfil the European Banking Authority’s (EBA) stricter rules on banks’ equity ratio. The organisation ordered all of the Europe’s 70 biggest finance institutes which currently do not have a core tier capital ratio of nine per cent to ensure such a rate by June.

Erste Bank Group AG (Erste Bank) might have suffered a throwback in meeting EBA’s more stringent standards. Austria’s biggest bank was informed by the authority that the private participation capital it received during the credit crunch cannot not be held accountable when it comes to creating a nine per cent equity ratio. Thirteen of 25 eligible EBA experts voted against the bank headed by Andreas Treichl in this concern.

A spokeswoman for Erste Bank reacted to the news by stressing that the financial institute would not have difficulties in meeting the stricter EBA restrictions nevertheless. She criticised that the institution initially welcomed banks’ decision to offer participation capital to private investors in the economic downturn.

Erste Bank, BAWAG and other Austrian finance institutes will soon have to pay higher bank taxes to the state. People’s Party (ÖVP) Finance Minister Maria Fekter and Social Democratic (SPÖ) State Secretary Andreas Schieder plan to rake in 625 million Euros in this way in 2012 after having generated 500 million Euros in 2010.

The government wants to compensate the costs of the partial nationalisation of ÖVAG – in which the state will soon hold a stake of up to 49 per cent – this way. Treichl said the decision to jack up the levy “is a rather logical step” considering the financial industry’s rather bad public image. “It was clear that many people would applaud this move,” the Erste Bank boss said.