Heta shows why bailouts are easier than bail-ins 4 Oct 2016 Austria has a deal to hit creditors of failed former lender Hypo Alpe Adria after two years of wrangling. Theoretically, a bail-in could, if needed, raise capital at much-bigger Deutsche Bank. But Heta’s tortuous saga is one reason Berlin might favour a taxpayer bailout.
Raiffeisen yet to wean itself off European sprawl 18 Aug 2016 The Austrian lender upped its capital position in the second quarter after EU stress tests branded it a laggard. But Raiffeisen still aims to be in over a dozen countries, and bad loans are 10.4 pct of its book. Falling interest income and high-risk growth make for an uneasy mix.
Austria’s far-right surge should spur reform 23 May 2016 The country may elect Europe’s first fiercely anti-immigration president. Though the role is largely ceremonial, such an outcome would be a triumph for a party with an ugly past. To halt its rise, Vienna needs to fix fears over asylum seekers and flawed welfare and tax policies.
Heta bail-in mess nears suitably ugly endgame 18 May 2016 Austria has met creditors halfway over the rump of lender Hypo Alpe Adria. Senior bondholders can receive a bond today worth about 90 pct of their original investment, up from an 82 pct offer in March. With some holdouts remaining, it won’t fully salvage a poorly handled affair.
Raiffeisen’s untangling gets off to a bad start 11 May 2016 The Austrian bank may merge its foreign-focused listed subsidiary with its unlisted domestic business. But considering this has been necessary for some time, the bank has given precious little detail. The uncertainty isn’t great for a group with a thin capital ratio.
Austria warrants a less sanguine market reaction 9 May 2016 Chancellor Werner Faymann has quit amid populist gains and shrinking regard for his grand centrist coalition. Yet the spread of Austrian debt over German bunds narrowed. The migrant crisis may push Vienna further right. If Poland and Hungary are guides, business could suffer.
Austria may have to accept painful hit on Heta 9 Mar 2016 Bondholders of bust bank Heta rejected a payback offer from Austria. Heta’s guarantor, a province, faces ruin. In an ideal world, bank creditors are held to account and governments ensure insolvency is predictable and fair. But this is Austria, where two wrongs can make a right.
Time for European bank weirdos to simplify 3 Feb 2016 Austria’s Raiffeisen Bank International would give its regional-banking parent a capital bump if the pair merged, its boss reckons. Streamlining the ownership of France’s Credit Agricole also would improve its balance sheet. Neither has made a good case for convoluted structures.
Raiffeisen’s bonus plan is a capital idea 20 Aug 2015 The Austrian bank’s listed arm will only pay bonuses if its balance sheet position improves. That safety-first policy befits its considerable exposure to Russian borrowers. Over-reliance on any single target for setting pay can be risky, but this is a step in a helpful direction.
Austria pricked by court in Heta bail-in tangle 28 Jul 2015 A law which wiped out guaranteed creditors of bust bank Heta has been thrown out. The sums are small, but the court’s decision may embolden creditors in a bigger fight, over 10 bln euros of other state-backed debt. The verdict hurts Austria, but the legal logic is hard to fault.
Heta deal puts EU bank bail-ins back on track 7 Jul 2015 Austria has offered 1.2 bln euros to Bavaria to compensate for state bank BayernLB’s investment in the remains of Hypo Alpe Adria. Given Heta is a test case for rescuing banks without taxpayer cash, that’s just as well. It implies not all bail-ins need to end in court.
Rio, BHP will show market trumps Aussie politics 19 May 2015 Prime Minister Tony Abbott might want to do something about the fiscal pain caused by slumping iron ore prices. But he won’t get far. He can’t tell the big miners to abandon their “saturate and dominate” strategy. The tactics are bang in line with Australia’s free-market ethos.
Vienna gives bank bail-ins a political twist 17 Mar 2015 Austria’s resolution of its Heta bad bank means German and domestic lenders face losses. Investors should have seen the use of new EU bail-in rules coming. They may not have twigged that Vienna could cannily use the same laws to stop the Carinthia region getting its just deserts.
Raiffeisen’s capital-raising has further to go 10 Feb 2015 The Austrian lender plans to sell its Polish arm and cut back in Russia to achieve a 12 pct core capital ratio by 2017. But its new European regulator has yet to factor in the Russian slowdown and Swiss franc turmoil. Raiffeisen may need to repeat 2014’s rights issue.
Swiss franc shock will shake up Polish banking 16 Jan 2015 Austria’s Raiffeisen has 2.9 bln euros of Swiss franc loans in central Europe’s biggest market. It’s also under pressure in Russia and Ukraine, and relatively undercapitalised. If Raiffeisen retreated, other foreign operators like BNP Paribas and UniCredit could benefit.
Vienna offers a model for stable foreign policy 31 Dec 2014 The 1815 Congress of Vienna ended the Napoleonic Wars, and its participants worked together over the next decade to prevent destabilizing regime change. This principle could have reversed many bad intervention decisions over the last 40 years. Its lessons are worth studying.
Erste first to show risks in new bank hybrids 10 Dec 2014 The Austrian lender’s bonds have slumped after it cancelled coupons on its debt. It’s an oddity of local accounting, but shows the dangers in new bail-inable hybrid bonds where coupons can be stopped after one-off losses. The market is struggling to digest the risks.
Edward Hadas: Robots can be our best friends 30 Oct 2014 If the cult of economic efficiency is not abandoned, then machines which can emulate and sometimes surpass human thinking are likely to bring lower wages and more unemployment. But robots provide a wonderful opportunity to combine low labour productivity with high prosperity.
Raiffeisen capital hike #2 is more when than if 23 Sep 2014 The Austrian lender’s shares are off 10 pct after another hit in Hungary and big provisions in Ukraine. After a rights issue earlier this year, it may have enough capital to deal with EU stress tests. It may not have enough to handle further bad news from the east.
Austrian banks haunted by Europe’s timid bail-ins 14 Aug 2014 Raiffeisen and Erste’s subordinated credit default swaps have rocketed in the last 10 days, as fears over Russia and Hungary spiral. But their senior CDS hasn’t followed. Creditors think that, like BES senior bondholders, they won’t be bailed in.