Tuesday, December 15, 2009

Business Cycle Scare Hits Austria: Wenzel Tries to Calm the Waters

Pull the "Nothing is confirmed until officially denied" file back out.

A day after Austria said it had nationalized Hypo Group Alpe Adria, rumors have started to circulate that Oesterreichische Volksbanken has been put on a watch list by Austria's central bank.

The report in the Austrian newspaper Die Presse said the country's fourth-largest financial institution was viewed as systemically important and had been asked to put forward a new strategy.

"Volksbank is in no way comparable to Hypo Group Alpe Adria. We expect a comfortable equity ratio at the end of this financial year," said Oesterreichische Volksbanken CEO Gerald Wenzel (No relation to EPJ's Wenzel).

The Austrian central bank also said that there is no watch list and that Volksbanken remains sufficiently capitalized, Dow Jones Newswires reported, citing a spokesman for the central bank.

However, panic-lite continues to be the emotion of the day, as most Austrian banks have significant loan exposure in Eastern Europe, in particular in Croatia, Bulgaria and Ukraine, where serious mortgage defaults are the order of the day.

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