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Austria's Volksbanken may need more equity - Der Standard paper
July 30, 2014 / 4:37 PM / in 3 years

Austria's Volksbanken may need more equity - Der Standard paper

VIENNA, July 30 (Reuters) - Austria’s Volksbanken AG may need an extra 500 million to 1 billion euros ($1.34 billion) in capital to meet minimum levels under an adverse stress test scenario, Der Standard newspaper reported, citing unnamed supervisory sources.

The bank - one of six Austrian lenders taking part in ECB-led assessments of major euro zone lenders before the European Central Bank begins supervising them in November - could fall below the 5.5 percent minimum in this tough scenario, the paper said on Wednesday, citing estimates from the central bank.

It said the bank had handled “very well” the initial stage of the health checks - maintaining an 8 percent capital ratio under the asset quality review (AQR) now under way.

Volksbanken responded in a statement that forecasting results of the AQR and stress tests was “completely speculative and premature”.

It reiterated that it may need more capital as it implements a drastic revamp ordered by the European Commission, but noted it had already launched a project to boost earnings, cut costs and improve the group’s ability to tap capital markets.

The central bank declined comment.

Austria became Volksbanken’s second-biggest shareholder with a stake of 43 percent in 2012 and has so far ploughed 1.35 billion euros of state aid into the bank to keep it afloat.

Owned by dozens of regional savings banks, Volksbanken has enough capital to pass a European-wide health check this year without needing more state aid, it said in April. ($1 = 0.7477 Euros) (Reporting by Michael Shields; Editing by Elaine Hardcastle)

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