Cerberus’s Bawag Names Ally’s Hobbs Chairman as Aid Is Repaid
Bawag PSK Bank AG, the Austrian lender controlled by Cerberus Capital Management LP, named Franklin Hobbs chairman of its supervisory board as the lender gets ready to repay state aid.
Hobbs, who also serves as the chairman of U.S. government- controlled Ally Financial Inc. (ALLY), will succeed Cees Maas on March 12, the company said today after reporting a 2012 drop in profit. The total number of board members will rise to 12 from nine and include a representative from GoldenTree Asset Management LP, which bought a 39 percent stake in the Vienna- based lender last year.
“Having two American shareholders, it is important that the chairman can liaise and link with them,” Bawag Chief Executive Officer Byron Haynes said at a news conference today. “We have a lot of perspective in Austria, but we need to make sure we get perspective internationally.”
Cerberus bought Bawag, the country’s fourth-biggest lender, from a federation of Austrian trade unions in 2006. The government gave a 550 million euro bailout to Bawag three years later in response to the financial crisis. Cerberus and GoldenTree injected another 200 million euros into the bank last year.
Bawag’s 2012 full-year net income fell 12 percent to 107.3 million euros after restructuring charges more than doubled and record low interest rates cut lending revenue, the bank said today. The core Tier 1 capital ratio rose to 11 percent from 7.8 percent at the end of 2011.
Job Cuts Ahead
Restructuring charges at the bank were 43.2 million euros in 2012, compared to 20.3 million euros a year earlier, according to the company.
Bawag reiterated that it will repay 50 million euros of the state aid by the end of June. The two majority shareholders have no intentions to sell the bank in the near-term, Haynes said.
Cerberus, which owns 52 percent of Bawag, was also a majority shareholder in GMAC Inc. before the U.S. government took control of the auto lender in 2008 and changed its name to Ally. Ally’s Hobbs, 66, is a Harvard Business School graduate and former CEO of Dillon Read & Co., the investment bank that was acquired by UBS AG.
Bawag will continue to cut jobs this year and focus on developing the Austrian retail market, said Haynes, who declined to say how many positions would be eliminated.
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