EUR 3000000000 debt issuance programme, 10 ... - Volksbank AG

In the advent of such insolvency proceedings taking place, Security Holders face the risk of a delay in the
settlement of any claims they might have against the Issuer or, not being secured creditors of the Issuer,
receiving, in respect of their claims, only what is left after the Issuer’s assets are realised and preferred and
secured creditors have been paid, with the result that they may not be able to retrieve their initial investment.
Regulatory risk
The activities of the Issuer and VBAG Group are subject to national and international laws and regulations
as well as to review and supervision by the respective national supervisory authorities in the jurisdictions in
which the Issuer and VBAG Group are active. Both the legislation and judicial and administrative practices
in these jurisdictions are subject to change in ways that could adversely affect the Issuer.
3.2 Specific Risk Factors relating to VBAG
General: relevance of VBAG to the Issuer
VBAG holds 100% of the Issuer’s shares. It is also intended that VBAG will be Obligor of the Main Compartment
Assets of a substantial number of Compartments of the Issuer, and, where this is not the case, sell
Main Compartment Assets to the Issuer. Further, VBAG will be the Derivative Counterparty to all Derivative
Agreements. Also, VBAG will (amongst other things) act as Arranger, Subscriber, Manager and Austrian
Paying Agent in respect of each Issuance (unless provided otherwise in the Final Terms). Although
VBAG will not be liable for the Issuer’s obligations in respect of any Securities, factors, which might adversely
affect VBAG, could impair VBAG’s ability to fulfil its obligations to the Issuer under its various
roles and, as a consequence, have a materially adverse effect on the Issuer and its ability to make payments
under the Securities.
VBAG is subject to credit risk, which means the risk of a partial or complete loss of interest and/or
redemption payments expected to be made by counterparty (credit risk).
VBAG is subject to credit risk, which means the risk of a partial or complete loss of interest and/or redemption
payments expected to be made by counterparty (credit risk). The credit risk comprises non-payment
risks, country risks and default risks. Any deterioration in the creditworthiness of a counterparty may lead
to an increase in the credit risk. The worse the credit standing of the counterparty, the higher the nonpayment
risk. Furthermore, it is possible that securities issued by the counterparty to cover the credit risk
will not be sufficient to settle the default in payments, for example due to a dramatic drop in the market
price or a default by the counterparty, including, in the light of the recent events, a default by large international
financial institutions.
The credit risk is the most important risk in connection with VBAG's business activities, since it applies to
both standard banking products, such as the credit, discount and guarantee business, as well as to certain
trade products, such as derivative contracts like financial futures, swaps and options or security pension
transactions and security lending.
The credit risk also encompasses the country risk, which is the risk that a foreign counterparty cannot make
scheduled interest and/or redemption payments despite its own solvency due to, for example, the lack of
foreign exchange reserves of the competent central bank ("economic risk") or due to political interference
by the respective government ("political risk"). The occurrence of any of these events or a combination
thereof could have a material adverse effect on VBAG.
VBAG is subject to risks relating to defaults by large international financial institutions
Defaults by large financial institutions, such as credit institutions or insurance undertakings, could adversely
affect the financial markets in general. The commercial soundness of many financial institutions
may be closely interrelated as a result of credit, trading, clearing or other relationships between the institutions.
As a result, concerns about, or a default by, one or more large financial institutions could lead to
significant marked-wide liquidity problems, losses or defaults by other financial institutions. The aforedescribed
risks are generally referred to as “systematic risk” and may adversely affect financial intermedi-
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