Austria’s VBI Had Loss on Hungary Before Sberbank Takeover
Stock Chart for Sberbank of Russia (SBER)
Volksbank International AG, the Austrian lender bought by Russia’s OAO Sberbank (SBER) this year, swung to a 160.4 million-euro loss ($201 million) under its previous owners as it wrote down its Hungarian unit due to bad loans.
VBI, which owns nine banks in eight eastern European countries, wrote down Hungary’s Magyarorszagi Volksbank Zrt and units in Serbia and the Serbian part of Bosnia and Herzegovina by 158.6 million euros, it said in its annual report, published in Austria’s official gazette today. That compares with a 15.1 million-euro profit a year earlier.
Sberbank lowered its bid for the company twice in the course of takeover talks that started last year with the previous owners, which were led by Oesterreichische Volksbanken AG. (VBPS) Russia’s biggest lender also demanded that the previous owners replenished VBI’s reserves, depleted by the losses in Hungary, and that they carve out the money-losing Romanian business, which Sberbank didn’t want to buy.
In the end, Sberbank paid 505 million euros for the bank, which it plans to use as a springboard for expansion in eastern Europe and Turkey.
Today’s VBI annual report is for the Vienna-based holding company and follows Austrian accounting standards. Under those rules, subsidiaries’ assets, revenues and earnings aren’t consolidated, as they are under international accounting standards.
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