Austrian Business & Finance

News | Vienna Review | November 2008

Austrian Bank Seeks Government Aid  

 Kommunalkredit began talks this Sunday with Austria’s Finance Ministry, asking for aid during the current financial crisis. The Vienna based bank has thus become the first Austrian bank to ask for financial help from the government.

In a brief statement, the bank told reporters that talks have begun to discuss "measures to strengthen the bank and the banks liquidity."  However, the spokeswoman declined to go into further detail.

The bank balance sheet total of 34.8 billion Euros makes Kommunalkredit the eighth biggest lender in Austria.  With only three percent of its assets in customer deposits, Kommunalkredit depends heavily on wholesale refinancing, a market that has shrunk considerably in the past weeks.

The aid is expected to come from the 100 billion Euro package designed to protect the financial district that was passed by Austrian parliament in October.

Austrian Airlines Extends Sale Negotiations

The government controlled Austrian Airlines is extending the deadline for its sale by two months following the insistence of potential buyers that the government take on a portion of the airline’s debt.

The date was pushed back to Dec. 31, covering a period in which airline profits are expected to fall even further, due to a lack of commercial travel caused by the current financial crisis.  Compounding the problem, businesses have begun to find alternate, cheaper means of travel for employees.

OeIAG, the company selling its portion of the airline, is to begin a discussion with the government, the EU and the two remaining bidders, Germany’s Lufthansa and Russia’s S7, on how to deal with the 900 million euro debt that AUA has acquired.

Lufthansa has demanded that OeIAG absorb half the debt for a nominal fee.  OeIAG hopes to sell its entire holding while preserving all current jobs and Vienna as the airline’s hub.

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