August 28, 2014 / 1:15 PM / 3 years ago

Ukraine, Russia pose problem for Austrian banks - watchdog

2 Min Read

ALPBACH, Austria, Aug 28 (Reuters) - Ukraine's political crisis and a Russian economic downturn pose major risks for some Austrian banks with big exposure there, the country's Financial Market Authority (FMA) watchdog said on Thursday.

"Ukraine, Russia - that is a serious problem," FMA co-head Helmut Ettl told reporters, adding the supervisor was keeping a close eye on the situation because Russia was a "fundamental source of profit for one or two groups in Austria".

He did not name them, but Raiffeisen Bank International and UniCredit Bank Austria rely heavily on income from Russia, which is locked in a political standoff with Ukraine over a separatist revolt Kiev is trying to quash.

"If economic developments in Russia worsen, it is to be expected that additional risks arise at our big banks that are active there and that the earnings power of these groups active there falls massively," fellow FMA co-head Klaus Kumpfmueller added.

Ettl also dismissed suggestions that Austrian banks that get in trouble could rely on more state support.

"I think there is a government consensus that no more state aid will be paid," he said, after lender Volksbanken said it was working on ways to plug any capital holes that emerge. (Reporting by Michael Shields; Editing by Mark Potter)

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