Reuters: Private Equity: UPDATE 1-Austria's BAWAG bank says no thanks to Volksbanken tie-up

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UPDATE 1-Austria's BAWAG bank says no thanks to Volksbanken tie-up Mar 16th 2012, 11:34 Fri Mar 16, 2012 7:34am EDT * 2011 net profit flat, pretax rises 13 percent as risk costs fall * No interest for now in Volksbanken AG stake (Adds comments from news conference) VIENNA, March 16 (Reuters) - Austrian bank BAWAG P.S.K. said it was not interested in reviving merger talks with Volksbanken AG, a headache for the state which has now lost a potential suitor as it seeks to sell a stake of up to 49 percent in the ailing lender. BAWAG chief executive Byron Haynes, who pulled the plug on merger talks in 2010 after Volksbanken's regional bank owners declined to become part of the discussions, told a news conference on Friday that Volksbanken was not on his agenda now. "There have been no discussions over the last 18 months and there are no discussions now," he said. "There is plenty to do in our current business model and we will continue to focus on...growing that for the time being." Volksbanken, once the country's fourth-biggest bank, had to be bailed out by the Austrian government after losses on Greek debt and bad loans in eastern Europe brought it to its knees. The bank failed last year's European stress tests. Austria hopes the stake sale will allow it to have exited Volksbanken by 2017 as required by EU law. Haynes declined to speculate on whether a deal by 2017 might be possible once Volksbanken gets back on its feet. Earlier on Friday BAWAG reported that it had boosted 2011 profit before tax and bank levies 13 percent to 156 million euros ($203.9 million) as revenues rose while loan-loss provisions and impairments fell nearly a quarter. Net profit at the bank owned by Cerberus Capital Management LP was flat at 122.5 million euros after it paid 20.2 million for an Austrian bank levy introduced last year. It is paying a coupon of 51.2 million euros on the 550 million euros in non-voting capital it got from Austria during the 2008/09 financial crisis. Haynes reiterated the bank was in no rush to repay the state aid given the uncertainty in the financial sector. "You can certainly read into that it won't be 2012 and won't be 2013. Beyond that we'll wait and see," he said. Cerberus, which bought BAWAG from the Austrian Trade Union Federation in 2007 after a banking scandal, "have got no intention to sell the bank at this point in time," Haynes said. BAWAG's tier 1 capital ratio rose to 9.6 percent of risk-weighted assets at the end of last year from 8.9 percent a year earlier. The bank said it was already in compliance with Basel III bank capital rules that will take effect in 2013. BAWAG made a 105 million euro gain by repurchasing hybrid debt at a discount, Haynes said, which will be booked in 2012 and improve its core tier 1 equity ratio by 40-50 basis points. BAWAG booked a 58 million euro 2011 impairment on its stake in Hungarian bank MKB. Its MKB stake has fallen to 4.6 percent and is up for sale if it can find a buyer, officials said. It said it expected Europe's sovereign debt crisis to have scant impact this year after its exposure to Greece and Spain fell to a fair value of 23 million euros at the end of 2011. The bank contributed all its nominal 53 million euros in Greek debt to the country's bond swap this month. It had written down its Greek debt by 80 percent before the move. ($1 = 0.7651 euros) (Reporting by Michael Shields; Editing by Helen Massy-Beresford and Sophie Walker) Link this Share this Digg this Email Reprints

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