* Nine-month loss 689 mln eur vs 0.3 mln profit year ago
* Says 2011 group loss to be 10 pct wider than forecast last
* Says will exceed regulatory capital requirements at year
* Says hitting 9 pct core capital ratio by mid-2012 would be
(Adds details and background)
By Michael Shields
VIENNA, Nov 25 Oesterreichische
Volksbanken AG (VBAG), the Austrian bank that failed
this year's European stress test, will post a loss this year
which is at least 10 percent more than forecast last month, it
said on Friday.
The country's fourth-biggest bank blamed volatile markets
and poor economic conditions in some countries for the latest
In the first nine months of the year it said it made a loss
of 689 million euros ($918 million) but said its capital
adequacy ratios would still exceed regulatory requirements by
the end of the year.
It did not say how much capital it would need to meet the
new 9 percent core capital ratio which the European Banking
Authority (EBA) wants banks to have.
A bank spokesman said it was still unclear whether
regulators would require Volksbanken to reach that level given
that it is in the midst of a sweeping revamp that aims to shrink
it back to financial health.
The capital shortfall was 972 million euros based on
"The EBA has already stated that the amount of VBAG's
capital requirement is to be understood as a pro forma
calculation, as VBAG is in the middle of a restructuring
programme," it said in a statement.
"However, it will be a challenge for VBAG should it be
obligated to achieve the temporary capital cushion of 9 percent
by June 2012. In order to keep the additional equity requirement
as low as possible, we are working on reducing risk-weighted
assets as quickly as possible."
Its own internal calculation of ratios according to EBA
methodology show a core capital ratio of 5.5 percent, it said.
Its illiquid participation certificates did not trade by
VBI SALE ON TRACK
Vienna-based Volksbanken is in the process of forming a
mutual liability association with its main regional bank
shareholders to shore up its balance sheet and allow it to
avoid more state aid.
It got 1 billion euros in non-voting state capital during the
financial crisis and has been unable to repay a 300 million-euro
tranche due this year.
That gives Austria the right to convert aid into equity and
nationalise a third bank, a step Finance Minister Maria Fekter
has said she would prefer not to take.
Volksbanken said last month it expected a 2011 consolidated
loss of 500-750 million euros under IFRS accounting standards.
"The range announced on 13 October for the loss in the
consolidated financial statements under IFRS will increase by at
least 10 percent," it said on Friday.
It cited economic developments in Romania and Hungary as
well as the measures adopted by the European Union to stabilise
the situation in Greece as having a negative impact on results.
Volksbanken has been trying to use asset sales to shore up
its balance sheet and comply with Basel III capital adequacy
But it received less than it wanted for selling its VBI
Eastern European arm to Russia's Sberbank and has
been unable so far to sell its minority stake in peer Raiffeisen
Zentralbank as planned.
The spokesman said Volksbanken still expected the sale of
VBI to Sberbank to close by the end of the year and at the
agreed price of at least 585 million euros.
Sberbank has sought to push the price down, a source close
to the situation said, which could force Volksbanken to clean up
some of VBI's problem spots to get the full price.
Volksbanken's quarterly report showed a nine-month loss of
62.6 million euros from "the disposal group", which primarily
represents VBI, the spokesman said.
Regional banks own 60.8 percent of Volksbanken. Germany's DZ
Bank Group owns 23.4 percent, Victoria Group 9.4
percent and Raiffeisen Zentralbank 5.7 percent.
(Editing by Greg Mahlich)