25. 06. 10. - 16:00

OeNB boss brands stress tests a 'passing fashion trend'

Austrian National Bank (OeNB) Governor Ewald Nowotny warned of overestimating the outcome of the upcoming bank stress tests.

The former BAWAG head said today (Fri) the test procedures – which European Union (EU) leaders plan to introduce later this year or in 2011 – were nothing but a "temporary fashion trend" coming from the United States.

He warned of overestimating the procedures’ meaning and outcomes, claiming that their interpretation was "risky".

Nowotny meanwhile spoke out in favour of an extension of the Austrian bank state aid programme.

The OeNB chief revealed he was in support of continuing the scheme – set to end this year – for another 12 months.

The Austrian government – formed by the Social Democrats (SPÖ) and the People’s Party (ÖVP) – agreed to subsidise the country’s leading banks with an overall six billion Euros last year. SPÖ Chancellor Werner Faymann and ÖVP Finance Minister Josef Pröll claimed this was an "essential step" to ensure the institutions get through the economic crisis.

Asked for how much longer the state aid scheme should run, Nowotny said today: "I think it should be continued at least for another year."

The OeNB boss claimed it would be "good to be on the safe side" considering the tense situation on the international financial market.

Hannes Androsch – who holds interest in several Austrian firms and bank houses – spoke out in favour of an extension of the programme only a few days ago. The former SPÖ Finance Minister said he was optimistic most banks will be able to pay back the received subsidies without any delays. He especially praised Erste Bank and Raiffeisen for the good position they were in at the moment.

The debate over confronting Austrian banks with new taxes meanwhile continues.

SPÖ and ÖVP announced recently they agreed that a "bank solidarity tax" will come into force next year.

Faymann explained the plan was to make an extra 500 million Euros per year. The chancellor has been criticised for remaining tight-lipped over in which way banks will be charged and which of their business figures will matter.

A committee of financial experts, coalition representatives and bank officials has held talks over the past few weeks to debate the details of the new tax.

Some independent fiscal experts and several high-profile bankers have warned bank institutes will most likely burden their customers with additional fees as soon as the bank tax comes into force.