* Unconsolidated loss 1.35 bln eur, group loss 959 mln
* Debt crisis, writedowns hammer results
* Including recapitalisation steps, loss 53.5 mln euros
* Ex-ECB official Tumpel-Gugerell set to join board-source
(Adds source on Tumpel-Gugerell)
By Michael Shields
VIENNA, April 5 Ailing Austrian lender
Volksbanken AG lost 1.35 billion euros ($1.8 billion)
last year, it said on Thursday, its last annual results before a
state-led rescue ushers in new leadership.
Impairments on businesses in eastern Europe, losses on Greek
debt and other bad loans hammered Volksbanken, once Austria's
fourth-biggest bank, which failed last year's European stress
The looming loss and slow pace of restructuring prompted
Austria in February to launch a bailout that will cost the state
more than 1 billion euros in writedowns, fresh capital and
The bank had warned in November it would lose at least 10
percent more than the 900 million to 1.05 billion euros it had
forecast only a month before. A financial source told Reuters
last month the unconsolidated loss under Austrian accounting
rules would approach 1.4 billion euros.
Including the recapitalisation measures set to be agreed by
shareholders at their annual meeting on April 26, the loss for
the year was 53.5 million euros, Volksbanken said in a
statement, adding the bailout meant it remained well
Its participation certificates did not trade by 1130 GMT.
Regional banks will remain majority owners of Volksbanken
under the scheme, which calls for the state to inject 250
million euros and the regional banks at least 230 million euros.
That will give the state a stake of over 40 percent and the
right to name four supervisory board members. The most prominent
of these will be Gertrude Tumpel-Gugerell, the former European
Central Bank executive board member, one financial source said.
Austrian media have named former BAWAG PSK executive Stephan
Koren as a potential successor for Volksbanken Chief Executive
Gerald Wenzel, whose contract ends this month.
MORE BILLS TO PAY
The government has annoyed the financial sector by raising
the special tax that all banks have to pay by 25 percent until
2017 to help finance the rescue, which entails cutting
shareholders' equity by 70 percent.
That hit minority shareholders including DZ Bank Group
, Ergo and Raiffeisen Zentralbank.
Ratings agencies have cited Austria's relatively large
financial sector as a risk to its sovereign debt rating.
Standard & Poor's has already stripped Austria of its AAA rating
and Moody's has warned it might do the same.
Finance Minister Maria Fekter had repeatedly said she would
rather not nationalise a third bank after the state had to take
over Volksbanken's Kommunalkredit unit and Hypo Group Alpe Adria
as the financial crisis raged, but in the end had to act.
Volksbanken, which sold its eastern European arm VBI to
Russia's Sberbank in a move to shrink back to health, is in the
process of forming a mutual liability association with its
regional bank shareholders.
The plan - modelled on Dutch lending cooperative Rabobank -
would let it consolidate the regional banks' capital while
keeping them as separate entities.
Austria faces another bank bill for KA Finanz, the "bad
bank" split off from Kommunalkredit, to help absorb the impact
of Greek debt and credit default swaps it held.
(Editing by Greg Mahlich)