Faymann Opposes Volksbanken’s Wind-Down Unit, Standard Reports

Austrian Chancellor Werner Faymann’s office opposes Oesterreichische Volksbanken AG (VBPS)’s plan to create a “non-core business” unit for assets it wants to wind down or sell, Der Standard reported, citing “well informed people” it didn’t identify.

Faymann’s office is concerned that the bad bank may be a step toward a third nationalized lender after Kommunalkredit Austria AG and Hypo Alpe-Adria-Bank International AG, the Vienna-based newspaper said. Government representatives want to avoid that the state has to cover the risk of the unit, according to the paper.

In a plan which “isn’t met with enthusiasm” by Volksbanken’s owners, the lender wants its shareholders to assist in financing the wind-down unit, Standard said, citing nobody. The lender is majority owned by 62 cooperative banks, with German cooperative lender DZ Bank, a Munich Re (MUV2) unit and Raiffeisen Zentralbank Oesterreich AG holding minority stakes.

In a separate interview with Standard, Faymann was cited as saying that Volksbanken and Hypo Alpe were speaking with the government regarding potential refinancing difficulties.

To contact the editor responsible for this story: Zoe Schneeweiss at zschneeweiss@bloomberg.net