VIENNA, Aug 24 (Reuters) - Austrian bank BAWAG P.S.K., owned by U.S. financier Cerberus Capital [CBS.UL], will get a planned 550 million euros of state aid in October or November but will have to accept strict conditions, state broadcaster ORF reported.
The bank said in April that the Austrian government was prepared to inject the participation capital -- a form similar to preference shares.
But ORF reported late on Monday that this will come with a “conversion privilege.” This means the bank could become partly nationalised if it fails to pay interest on the money for two years running, ORF said. It did not provide a source for the information.
Austria has set up one of the biggest bank stability packages in Europe relative to the size of its economy, offering 15 billion euros ($21 billion) in capital injections and 75 billion in bond guarantees.
No one from BAWAG was immediately available for comment.
The bank said in April Cerberus would underwrite an injection of 150 million euros in common stock and 55 million euros in participation capital.
Cerberus bought BAWAG in 2006 from the Austrian Trade Union Federation after a major banking scandal in which it emerged BAWAG executives had been hiding billions of euros of losses since the late 1990s.
BAWAG’s net loss widened by 21 percent in 2008 to 548 million euros, which the bank blamed on an 870 million euro valuation writedown on its structured credit portfolio that mainly occurred in the fourth quarter of the year.
Reporting by Sylvia Westall; Editing by Richard Chang