Austria Sees Banks Succeed on Basel III as EBA Target Met

Austria’s Central Bank said it expects the nation’s lenders to meet capital rules set by the Basel Committee on Banking Supervision after Erste Group Bank AG and Raiffeisen Zentralbank Oesterreich AG beat targets set by the European Banking Authority.

“The Austrian banks have shown that they can quickly strengthen their capital base significantly without restricting the supply of credit,” Central Bank Director Andreas Ittner said in a statement today. “This supports my expectation that the Austrian banking sector also will succeed in additional capital strengthening related to Basel III.”

Erste had a capital ratio of 9.9 percent according to the EBA definition at the end of June, while RZB’s ratio was 10 percent, the banks said in separate statements. That means they both exceeded the EBA’s target of 9 percent of risk-weighted assets.

Erste previously had a shortfall of 743 million euros ($960 million) and RZB of 2.13 billion euros, according to an EBA stress test looking at third-quarter numbers in 2011.

Erste filled the gap mostly with retained earnings, while RZB predominately sold assets and converted capital into forms accepted by the EBA.

The new Basel rules, known as Basel III, are scheduled to be phased in by 2019.

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