Bank Austria plays down emerging market concerns
VIENNA, Sept 16
VIENNA, Sept 16 (Reuters) - UniCredit Bank Austria said its business was largely unaffected by market turmoil in Turkey and Slovenia as investors fled from high-yield assets in anticipation of the U.S. Federal Reserve scaling back its stimulus package.
Turkey, which relies on foreign capital to give it the hard currency it needs to buy oil and other imports, has been hit particularly hard in recent weeks as investors began to withdraw much of the cheap dollar funding poured into the U.S. banking system by the Fed.
Gianni Franco Papa, boss for central and eastern Europe at the region's biggest lender, said its Turkey business was faring well.
"So far, so good," he told reporters in Prague on Friday in remarks for release on Monday. "So far we do not see any particular impact on our accounts," adding that much depended on the regional security situation, given the problems in Syria.
In Hungary, where Prime Minister Viktor Orban's government has been leaning on banks to help borrowers whose foreign-currency loans became expensive as the forint fell, it was hard to tell where talks with the government stood, Papa said.
Bank Austria has only around 500 million euros ($662.97 million) worth of such FX loans, far less than rivals Erste Group and Raiffeisen Bank International. "We will be affected but not as much as other banks", Papa said.
He said the one thing that could solve the woes in Hungary would be for the economy to pick up, as it seemed to be doing.
Papa called for a solution in which the impact of relieving pressure on borrowers is spread over years, not in one go.
"If it is going to be smoothed out throughout many years, I think this will be manageable for banks, companies, individuals, governments and central bankers," he said.
Slovenia's central bank said last month that stress tests would be expanded to include 10 lenders, including UniCredit, and the results should be released by year end.
"Overall the outcome of the asset quality review (is that) for us we do not expect to have any impact," Chief Risk Officer Juergen Kullnigg said. Bank Austria held some Slovenian bank bonds but they had state guarantees.
Papa and Kullnigg were upbeat on the quality of Bank Austria's loan book in the region, especially as investor interest in paying fair prices for assets picks up again.
They showed no signs of concern about what a ECB-led review of big banks' balance sheets would turn up before the European Central Bank takes on supervision responsibilities.
"I am actually looking forward to the discussions in the asset quality review because I think this will give us the chance to clear the air a little bit," Kullnigg said, saying perceptions that southeastern Europe was "dead" were untrue.
"I'm actually way more optimistic that I should be in my profession, and I'm a doom-sayer by nature," he added.
Bank Austria Chief Executive Willibald Cernko said the group was going to start a pilot programme in Germany of the successful franchise model it has in the Czech Republic to let local entrepreneurs sell products in some small markets. ($1 = 0.7542 euros) (Editing by Louise Heavens)
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