VIENNA May 7 Austrian regulators have confirmed
the minimum 13.6 percent equity ratio target set for the
Volksbanken group, the bank said, reiterating it may
need "capital measures" at some stage to stay above that level.
Austria became loss-making Volksbanken AG's second-biggest
shareholder with a stake of 43 percent in 2012 and has so far
ploughed 1.35 billion euros ($1.88 billion) of state aid into
the bank to keep it afloat.
It is one of six Austrian lenders due to come under direct
supervision of the European Central Bank this year.
The Association of Volksbanks, which comprises the flagship
Volksbanken AG (VBAG) and dozens of regional banks that own a
majority, had an overall equity ratio of 14.6 percent under
Basel III rules at the end of last year.
But it said last month the ratio would inevitably fall in
the years ahead as it repays 300 million euros in non-voting
capital it acquired from the state and takes a hit from applying
Basel III rules. It also faced "substantial" risks from winding
down more of its portfolio under an EU-mandated revamp.
"VBAG's managing board is therefore in the process of
examining possible capital measures," it said in a statement
late on Tuesday.
Volksbanken has said it may use bonds issued by its regional
savings bank owners to help fill any capital gap that emerges.
Volksbanken has enough capital to pass a European-wide
health check this year without needing more state aid as it
presses ahead with radical restructuring, it said last month.
Getting Volksbanken - which failed a similar stress test in
2011 - back onto solid ground would be a relief for Austria as
it grapples with nationalised bank Hypo Alpe Adria,
whose chronic need for capital will sharply inflate state debt
and the budget deficit this year.
($1 = 0.7177 euro)
(Reporting by Michael Shields; Editing by Dale Hudson)