Association of Volksbanks restructuring

Overview:

• Austrian regional banking group, the Association of Volksbanks, is undertaking a restructuring after failing European Central Bank (ECB) stress tests in 2014, which found the group had a capital shortfall of €856 million. 
• More than 40% nationalised having received around €1.35 billion in state bail-outs, the bank began the restructuring after the government refused to commit any more public funds to the group.  
• The restructuring, which is using legislation implemented in 2014 - Austrian Bank Intervention and Restructuring Act (BaSAG) - involved spinning off Österreichische Volksbanken (Övag), the central organisation in the Association of Volksbanks and transferring its responsibilities Volksbank Wien Baden.  
• OVAG has been converted into a bad bank, operating as Immigon portfolioabbau, which will - under terms of the deal agreed with the EU - run down a portfolio of around €7 billion) by the end of 2017. 
• In August 2015, Austrian lender Bawag PSK acquired VB Leasing - Volksbank's former from lease finance arm - from Immigon portfolioabbau for an undisclosed fee.  

Ben Naylor - Regional editor