VIENNA Aug 24 Austrian bank BAWAG P.S.K.,
owned by U.S. financier Cerberus Capital [CBS.UL], will get a
planned 550 million euros of state aid in October or November
but will have to accept strict conditions, state broadcaster
The bank said in April that the Austrian government was
prepared to inject the participation capital -- a form similar
to preference shares.
But ORF reported late on Monday that this will come with a
"conversion privilege." This means the bank could become partly
nationalised if it fails to pay interest on the money for two
years running, ORF said. It did not provide a source for the
Austria has set up one of the biggest bank stability
packages in Europe relative to the size of its economy,
offering 15 billion euros ($21 billion) in capital injections
and 75 billion in bond guarantees.
No one from BAWAG was immediately available for comment.
The bank said in April Cerberus would underwrite an
injection of 150 million euros in common stock and 55 million
euros in participation capital.
Cerberus bought BAWAG in 2006 from the Austrian Trade Union
Federation after a major banking scandal in which it emerged
BAWAG executives had been hiding billions of euros of losses
since the late 1990s.
BAWAG's net loss widened by 21 percent in 2008 to 548
million euros, which the bank blamed on an 870 million euro
valuation writedown on its structured credit portfolio that
mainly occurred in the fourth quarter of the year.
(Reporting by Sylvia Westall; Editing by Richard Chang)