* BAWAG PSK repaying 350 million euros in Austrian state aid
* CEO says no sale process under way despite rumours
* Cerberus, GoldenTree inject more equity into bank
* Net profit in 2013 more than doubles to 229 mln euros
By Michael Shields
VIENNA, March 13 Austrian lender BAWAG PSK
is repaying all its state aid after strengthening
its balance sheet and more than doubling 2013 profits,
beautifying the bank for a potential sale that Chief Executive
Byron Haynes insisted was not imminent.
BAWAG, owned by U.S. investor Cerberus Capital Management
, is one of six Austrian banks to come under direct
European Central Bank supervision after stress tests this year,
a review the Vienna-based lender said it was eagerly awaiting.
As a sign of confidence, the bank will repay on Friday the
remaining 350 million euros ($487 million) in non-voting capital
it got from the state to ride out the financial crisis, it said
on Thursday. It had repaid 200 million last year.
Its balance sheet was beefed up last year by a 200 million
euro share issue that gave U.S. asset manager GoldenTree a stake
of nearly 40 percent. Shareholders injected another 125 million
euros this week, BAWAG said.
Haynes told reporters that was a sign of faith by its two
big shareholders, who he said contributed equally to the capital
increase. He dismissed persistent speculation that Cerberus was
readying to exit the BAWAG investment it made in 2007.
"Those are only rumours. There is no sales process out there
and our shareholders continue to be very supportive to this
institution," he said.
BAWAG is embroiled in a legal fight with the Austrian city
of Linz over a swap transaction from 2007. It reiterated it
expected to win the case but said it was open to a settlement
and would pursue the case through legal appeals if needed.
BAWAG had a fully-loaded Basel III core equity tier 1 ratio
of 9.4 percent of risk-weighted assets at the end of 2013 -
easily surpassing minimum requirements and its own 9 percent
goal - and said it aimed to boost that above 10 percent in 2014.
BAWAG has slashed its balance sheet in a drive to cut risk
and non-core assets while boosting capital efficiency. Total
assets have fallen 11 percent since 2011 to 36.4 billion at
Despite higher restructuring expenses, 2013 net profit more
than doubled to 229 million euros thanks to sharp gains on
financial instruments, a 5.1 percent drop in core operating
expenses and a decline in risk costs of more than a third.
Its non-performing loan ratio fell to 3.4 percent last year.
BAWAG targeted a return on equity above 10 percent this
year, a rise in its Austrian retail lending market share to
above 8.5 percent from 8 in 2013, and a cut in core operating
expenses to below 500 million euros from 574 million in 2013.
BAWAG's partnership with Austrian Post gives it a
network of 477 branches across the country to complement its
Unlike rivals such as Erste Group, Raiffeisen Bank
International and UniCredit Bank Austria,
BAWAG is exiting central and eastern Europe to focus on stabler
economies in Austria, Germany, Britain and western Europe.
"We look west, they look east," new finance chief Anas
Abuzaakouk said, saying the macroeconomic environment in western
Europe made it more attractive than emerging markets to the east
that Austrian rivals see as offering more growth potential.
BAWAG's CEE loan book has shrunk to 700 million euros, less
than 2 percent of total assets, and is headed even lower.