Austrian Regulator Sees Domestic Banks Selling Non-Core Assets

Austrian Financial Markets Regulator FMA expects banks in the Alpine republic selling non-core assets to boost capital reserves.

“There’s a clear reallocation of asset portfolios,” Helmut Ettl, the co-head of Austria’s banking regulator, Finanzmarktaufsicht, told reporters in Alpbach, Austria today. “Banks in the past have amassed portfolios of assets that aren’t part of their core business and those are being shed,” he said. “Lenders are trying to optimize their capital.”

Oesterreichische Volksbanken AG (VBPS), partially nationalized this year, has sold assets including its east Europe business, while Bawag PSK Bank AG, the Austrian lender controlled by Cerberus Capital Management, may sell its leasing unit, according to people familiar with the plans.

Bawag, Erste Group Bank AG (EBS) and Raiffeisen Bank International AG (RBI) all hold so-called participation capital, for which they pay the state interest.

Ettl said he was confident the banks would be able to repay the participation capital when the time comes.

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