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Austria's BAWAG eyes 9 pct capital ratio by year-end
November 13, 2013 / 9:50 AM / 4 years ago

Austria's BAWAG eyes 9 pct capital ratio by year-end

VIENNA, Nov 13 (Reuters) - BAWAG PSK, the Austrian bank majority owned by Cerberus Capital Management , expects to have a capital ratio of at least 9 percent of risk-weighted assets under Basel III standards by the end of the year, it said on Wednesday.

BAWAG, one of six Austrian banks to come under direct supervision of the European Central Bank next year, raised 300 million euros ($403 million) in tier 2 capital last month via a placement with institutional investors, it said in a statement.

It also sold the last parts of its structured credit portfolio last month, improving its capital ratios.

The ECB will ask the euro zone’s top banks in an upcoming balance sheet review for an 8 percent capital buffer, sources familiar with the matter told Reuters last month. This includes the 7 percent common equity tier 1 (CET1) ratio plus a 1 percent surcharge for systemically relevant banks.

“We anticipate a fully-loaded Basel III CET I ratio of at least 9.0 percent by year-end 2013 for BAWAG P.S.K. based on our current forecast,” Chief Executive Byron Haynes said.

A 9 percent CET1 ratio under Basel III equates to a ratio above 14 percent under Basel 2.5 standards introduced in 2009 as a stopgap, it said. BAWAG had reported a 12.3 percent ratio under these rules as of mid-2013.

Basel III roughly triples how much capital banks must hold compared with before the 2007-09 financial crisis, when many undercapitalised lenders had to be rescued by taxpayers.

It tells banks to have a core capital buffer equivalent to at least 7 percent of their risk-weighted assets by January 2019, plus hold separate buffers of cash and government debt to survive unaided market shocks of up to a month.

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