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ÖVAG does not want to stay solo

Published: June 25, 2010; 00:00 · (Vindobona)

The enthusiasm of authorities, central bank and the federal government is limited for the decision of the ÖVAG owner to continue without a partner and to merge Investkredit and ÖVAG.

ÖVAG does not want to stay solo / Picture: © Vindobona.org

The Cooperative Group will cut costs and seek more partners

The enthusiasm of authorities, central bank and the federal government is limited for the decision of the ÖVAG owner to continue without a partner and to merge Investkredit and ÖVAG. It had been neither "anticipated or communicated, but rather the last resort”, they say. And: "This solution is far from permanent.”

Background: A solo attempt of Volksbanken is unlikely to be successful, and FMA central bank had insisted on a partner solution. The government will have to be explained the details of the proposed merger. Should the government reach the conclusion that ÖVAG consciously seeks risk-increasing measures, the bank is subject to a penalty that could amount to about €10m ($12.4m).

Open for negotiations with buyers

The termination of negotiations with Bawag is due to differences on the topic of access to the "small" Volksbanken branches. These Bawag owner Cerberus was insisting on this point. For the Bawag ÖVAG deal would possibly mean relief for their restructuring plans set by the EU, which (in return for state aid) demanded compensatory measures, because the ÖVAG Bawag merger was welcomed by the Commission as structural improvements in the banking market.

For ÖVAG CEO Gerald Wenzel is open to negotiations "whenever that is." With the planned merger with Investkredit, ÖVAG wants to save costs from 2011; annual overall savings of at least €80m ($99m).

Further job cuts

In current structural plans, the group intends to save €60m ($74m) of costs. Even more employees will be reduced. A number was not yet announced. The recent corporate job reduction program (900 fewer jobs by the end of 2010) is almost ready to be implemented.

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