Enjoying ad-free content?
Since July 1, 2024, we have disabled all ads to improve your reading experience.
This commitment costs us $10,000 a month. Your support can help us fill the gap.
Support us
Our journalism is banned in Russia. We need your help to keep providing you with the truth.

VBI to Help Volksbanken Meet Stress Test Target by Mid-2012

London — Austria's Volksbanken is set to escape onerous European capital targets by closing the sale of its Eastern European arm VBI to Sberbank within weeks, two sources close to the situation said.

Only one country in the region where VBI operates still needs to give regulatory approval for the deal, the sources said late on Wednesday, keeping it on track to close the transaction by the middle of February.

Volksbanken, which failed EU stress tests of big banks last year, has said it would struggle to hit the target set by the European Banking Authority, or EBA, for key banks to have core Tier 1 capital worth 9 percent of risk-weighted assets by mid-2012.

"With that [VBI sale] Volksbanken would fall under the threshold for being considered an international banking group and the 9 percent rule would not apply by June," one of the sources said on  condition of anonymity.

Volksbanken, Austria's fourth-largest bank, would need an extra 1.05 billion euros ($1.34 billion) in capital to reach the EBA goal. Its core Tier 1 ratio is now around 5.5 percent.

Ratings agency Fitch had said last month that it was "exceedingly likely that in order to meet the EBA target ... [Volksbanken] will require additional capital, either from within the Volksbanken sector or the Austrian government."

Sberbank clinched a deal in September to buy VBI for at least 585 million euros, gaining a springboard for expansion in the region.

But Sberbank has been seeking to push the purchase price below 500 million because the lender's results have been worse than expected as its units struggle with tough conditions, especially in Hungary.

The two sides have now agreed on a price, two sources close to the deal said. Final details were not immediately available.

Loss-making Volksbanken, which has been counting on asset sales to help boost its balance sheet, declined comment.

… we have a small favor to ask. As you may have heard, The Moscow Times, an independent news source for over 30 years, has been unjustly branded as a "foreign agent" by the Russian government. This blatant attempt to silence our voice is a direct assault on the integrity of journalism and the values we hold dear.

We, the journalists of The Moscow Times, refuse to be silenced. Our commitment to providing accurate and unbiased reporting on Russia remains unshaken. But we need your help to continue our critical mission.

Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and you can be confident that you're making a significant impact every month by supporting open, independent journalism. Thank you.

paiment methods
Not ready to support today?
Remind me later.

Read more