Against the backdrop of the sovereign-debt crisis, the European Banking Authority (EBA) has identified for 71 systemically relevant European banks the amounts by which banks will need to increase their core tier-1 capital buffers by mid-2012. The exercise is meant to re-establish market confidence in the banking system.
The three participating Austrian banks – Erste Group Bank AG, Raiffeisen Zentralbank AG and Österreichische Volksbanken AG – will need to raise EUR 3.9 billion altogether by end-June 2012 to meet the new threshold for core tier-1 equity capital of 9%. The results for the three Austrian banks tested by the EBA in cooperation with the Austrian Financial Market Authority (FMA) and the Oesterreichische Nationalbank (OeNB), based on end-September 2011 figures, match expectations. The results exceed the capital requirements established in October (EUR 2.9 billion, based on end-June 2011 figures) by EUR 1 billion because of weaker underlying banking results for the third quarter of 2011.
At the same time, the results signal that the exposure of the Austrian banking sector to the risk of sovereign default remains limited as the additional capital need resulting from the evaluation of the sovereign exposure at market prices adds up to only EUR 112 million.
While the need to raise more capital will be a challenge for the banks in question, the FMA and the OeNB consider the banks sound enough to be able to meet the additional requirements without restricting lending to the economy. According to the EBA, the results for Österreichische Volksbanken AG (ÖVAG) are to be seen as pro-forma, since ÖVAG is currently under deep restructuring and evaluation of its business model after which Österreichische Volksbank AG shall end up in a regional active bank. The supervisors stress that speedy implementation of this process is of the essence.
All three banks tested have been asked to submit by January 20, 2012, to the FMA and the OeNB plans outlining how they intend to reach a core tier-1 capital ratio of 9% by mid-June 2012. These plans will be evaluated by the authorities. The FMA and the OeNB confirm that the stronger capital ratio with which the three banks will emerge from this process will contribute significantly to strengthening the Austrian banking sector.
Journalists may address further enquiries to:
Klaus Grubelnik (FMA)
+43/(0)1/24959-5106
+43/(0)676/882 49 516
Dr. Christian Gutlederer (OeNB)
+43/(0)1/404 20-6609
+43/(0)664/515 36 18