Stephan Koren has reportedly agreed to take the hot seat at Volksbank AG (ÖVAG).
The ex-BAWAG PSK (BAWAG) manager has been rumoured to replace Gerald Wenzel as ÖVAG CEO for some time. Now People’s Party (ÖVP) Finance Minister Maria Fekter announced Koren signalised interest in the position. Fekter said yesterday (Weds) the banker was ready to take over at the struggling financial institute. The former interior minister added that only a few details had to be discussed.
Koren previously acted as vice chairman of Viennese finance institute BAWAG. He left the bank in 2011 when it achieved a profit of 122.5 million Euros. Koren’s father Stephan sen., who passed away in 1988, served as Austrian finance minister for the ÖVP. Koren has close ties to the ÖVP. There were speculations that he could succeed Josef Pröll as finance minister. Pröll resigned following health problems in April 2011. He also stepped down as ÖVP boss and vice chancellor. Fekter took over at the finance ministry a few weeks later.
Gertrude Tumpel-Gugerell is tipped to become new head of ÖVAG’s supervisory board. The former European Central Bank (ECB) executive board member is on good terms with the Social Democrats (SPÖ) which form a federal government coalition with the ÖVP. The possible assignments of Koren and Tumpel-Gugerell would be another example for the rock-solid connection of political power brokers and economic leaders in the small alpine country.
Wenzel was assigned three years ago – despite a lack of experience in international banking. He failed to steer ÖVAG back in the black. The Vienna-based bank, which was established in 1922, suffered a loss of 1.34 billion Euros last year – which followed losses of around 1.2 billion Euros in 2010. ÖVP and its government coalition partner, the Austrian Social Democratic Party (SPÖ), decided to partially nationalise ÖVAG in February. The move will be finalised later this month. This means that the state will soon hold more than 40 per cent of ÖVAG shares.
ÖVAG received hundreds of millions of Euros from the Republic of Austria during the crisis. Taxpayers will never see any of the money ever again, according to financial market expert Franz Hahn. Hahn – who researches for the Institute for Economic Research (WIFO) – said that declining chances to make profits on the domestic financial sector would turn ÖVAG and Austria’s other nationalised banks into a little attractive option for foreign investors. A directive by the European Commission (EC) says that the state must sell ÖVAG, Hypo Group Alpe Adria (HGAA) and Kommunalkredit within the coming years.
Several rivals of ÖVAG also received financial support from the Republic of Austria to fend off negative effects of the crisis. Oberbank bosses never felt urged to ask the state for help. The Linz-based bank managed to increase its net profit by 13.1 per cent to 111.2 million Euros in 2011. “Depending on (the state’s) help would give me a feeling of having failed,” Oberbank general director Franz Gasselsberger said in a recent newspaper interview.