30. 01. 12. - 16:38

Sberbank keeps lowering VBI purchase price

The sum Volksbank AG (ÖVAG) could receive from Sberbank for Volksbank International (VBI) keeps decreasing.

The Russian finance sector giant agreed to pay 585 million Euros for all but one of the nine national VBI branches last year. Sberbank told ÖVAG bosses they were not interested in acquiring VBI’s struggling Romanian department. Now Sberbank informed shareholders that the purchase would cost it only 500 million Euros. A new brochure presented by the Moscow-based bank at the weekend included this controversial claim.

ÖVAG agreed with Sberbank about a takeover last September. The Viennese institute is desperately trying to get back in the black. Extensive restructuring proceedings should help ÖVAG to achieve this. The bank, which is headed by Gerald Wenzel, has received more than 1.1 billion Euros in participation capital from the Republic of Austria since 2008. This cash injection was issued to help it gear up for crisis effects.

ÖVAG was the only Austrian bank to fail the European Banking Authority’s (EBA) second stress check. The test was carried out in July. EBA experts tried to find out if and how Europe’s biggest banks would be affected by a further worsening of the economic climate. Apart from the Austrian financial institute, five Spanish banks and two Greek financial sector firms flopped as well in the test which considered 90 banks based in European Union (EU) member states and Norway.

Some analysts branded EBA’s stress check as a placebo and irrelevant but ÖVAG’s economic difficulties are evident. VBI sustained a loss of 21.8 million in 2010. ÖVAG’s Austrian department is struggling too. The bank revealed only a few weeks ago that it planned to dismiss around 250 employees of its domestic branches in the coming months. ÖVAG Austria’s workforce level would shrink by 20 per cent if the bank carries out the measure as planned. ÖVAG made a loss of 689 million Euros in the first nine months of last year, according to board members’ information for stakeholders.

Now Wenzel plans to drastically reorganise ÖVAG and pull out from operations which are not part of the bank’s core service competence. The aim is to cooperate more intensely with its 62 regional Austrian banks. At the same time, leasing and real estate business activities will soon be an anecdote of ÖVAG’s past.

Eduard Zehetner, who heads Immofinanz AG, reacted to the news instantly. The real estate industry tycoon said his firm would consider buying the bank’s property management affiliates if ÖVAG decided to put it up for sale. Immofinanz is one of the leading real estate developers in Central and Eastern Europe (CEE).

Meanwhile, another Austrian bank decided to rethink its strategy because of the crisis. Bank Austria (BA) announced not to pursue the plan of opening 300 further branches in Romania and Hungary. BA initially wanted to expand in the Eastern European (EE) member countries of the EU. BA – which is part of Italian banking business giant UniCredit – explained it would concentrate on increasing its market share in Turkey, Russia, Poland and the Czech Republic.