FITCH AFFIRMS VOLKSBANKEN VERBUND AND OEVAG ON ANNOUNCED VBI SALE

FITCH AFFIRMS VOLKSBANKEN VERBUND AND OEVAG ON 

ANNOUNCED VBI SALE 

Fitch Ratings-London-19 July 2011: Fitch Ratings has affirmed Oesterreichische Volksbanken 

Aktiengesellschaft's (OeVAG) Long-term Issuer Default Rating (IDR) at 'A' with a Stable Outlook, 

Short-term IDR at 'F1', Support Rating at '1' and Support Rating Floor (SRF) at 'A'. Volksbanken 

Verbund's (VB-Verbund) ratings have also been affirmed at Long-term IDR 'A' with a Stable 

Outlook, Short-term IDR at 'F1', Individual Rating at 'C/D', Support Rating at '1'and SRF at 'A'. A 

full list of rating actions is at the end of this comment. 

The rating actions follow the announcement on 14 July 2011 that OeVAG's owners have agreed to 

sell OeVAG's 51% stake in its Central and Eastern European (CEE) subsidiary, Volksbank 

International AG (VBI), to Sberbank of Russia (Sberbank; 'BBB'/Stable). VBI's sizeable Romanian 

subsidiary is excluded from the transaction. While the agreed terms of the sale are not legally 

binding, both parties have stated that they intend to close the transaction before end-2011. 

Sberbank's ratings remain unaffected by this announcement. 

VB-Verbund's and OeVAG's IDRs continue to be based on Fitch's view of sovereign support given 

VB-Verbund's sizeable domestic market share and its importance for the Austrian economy. In 

Fitch's view, VB-Verbund's domestic market share remains unaffected by the announced sale of 

VBI and the sale therefore will not have an impact on VB-Verbund's systemic importance. 

However, should the Austrian government's propensity to support the bank weaken or become 

constrained by legislative changes, then this would result in a downgrade of the bank's ratings. 

In affirming VB-Verbund's Individual Rating, Fitch has taken into account various capital 

strengthening measures currently being considered by the group, including the VBI sale. The result 

of the European Banking Authority (EBA) EU-wide stress test, published on 15 July 2011, 

confirms Fitch's view that OeVAG's core capital position is weak. 

Should VB-Verbund's core capital not be strengthened as a result of the measures or should 

OeVAG's liquidity position deteriorate, VB-Verbund's Individual Rating will come under pressure. 

Apart from the announced VBI sale, other capital raising measures include the sale of a significant 

equity stake in Raiffeisen Zentralbank Oesterreich AG (RZB AG) and a reverse merger with its 

corporate lending subsidiary, Investkredit AG, planned for Q311. 

Under the EBA's worst case scenario, under which OeVAG's core Tier 1 ratio would fall to 4.5% at 

end-2012 (unstressed core Tier 1 ratio of 6.4% at end-2010), represents a capital shortfall of 

EUR160m. Fitch expects this to be addressed by OeVAG's capital strengthening measures, which 

were not considered by the EBA for the purpose of the stress test. These measures will increase 

OeVAG's core Tier 1 ratio - according to management - to 6.6% at end-2012, which Fitch would 

consider just acceptable. 

The agency understands that OeVAG had anticipated an unfavourable EBA stress test result and 

has strengthened its liquidity and funding position in the run up to the publication of the stress test 

results. While OeVAG has some wholesale funding requirements, partly relating to VBI, its funding 

profile benefits from a large extent from its role as central institution for deposit-rich VB-Verbund 

member banks and from committed funding from VBI's minority shareholders. As a result, 

commercial interbank funding is limited and covered by OeVAG's recently increased liquidity 

buffer. 

VB-Verbund, which is not a legal entity itself but a cooperative grouping of member banks, is 

Austria's fourth-largest banking group (second-largest cooperative banking group). OeVAG is the 

central institution of VB-Verbund. As such, Fitch has assigned OeVAG "group" ratings under

Fitch's rating criteria for banking structures backed by mutual support mechanisms. Fitch does not 

assign an Individual Rating to OeVAG. 

The rating actions are as follows: 

VB-Verbund 

Long-term IDR affirmed at 'A', Outlook Stable 

Short-term IDR affirmed at 'F1' 

Support Rating affirmed at '1' 

Support Rating Floor affirmed at 'A' 

Individual Rating affirmed at 'C/D' 

OeVAG 

Long-term IDR affirmed at 'A', Outlook Stable 

Short-term IDR affirmed at 'F1' 

Support Rating affirmed at '1' 

Support Rating Floor affirmed at 'A' 

Government guaranteed bonds affirmed at 'AAA' 

Market Linked Securities affirmed at 'Aemr' 

Senior unsecured debt affirmed at 'A' 

Short-term notes affirmed at 'F1' 

The ratings of the other VB-Verbund member banks have been affirmed at Long-term IDR 'A' with 

Stable Outlook and Short-term IDR 'F1'. The full list of VB-Verbund member banks (in addition to 

OeVAG) is as follows: 

Bank fuer Aerzte und freie Berufe AG 

Volksbank Weinviertel e.Gen. 

VOLKSBANK OBERES WALDVIERTEL rGmbH 

Gaertnerbank, rGmbH 

Volksbank Tullnerfeld eG 

Volksbank Bad Goisern eingetragene Genossenschaft 

Volksbank Osttirol rGmbH 

Volksbank Oetscherland eG 

Volksbank Fels am Wagram e.Gen. 

Volksbank Krems-Zwettl AG 

Volksbank Laa eGen 

Volksbank Marchfeld e.Gen. 

Volksbank, Gewerbe- und Handelsbank Kaernten AG 

VOLKSBANK fuer den Bezirk Weiz rGmbH 

Volksbank Tirol Innsbruck-Schwaz AG 

Volksbank Altheim-Braunau rGmbH 

Volksbank Feldkirchen, rGmbH 

Volksbank Schaerding eG 

Volksbank Steirisches Salzkammergut, rGmbH 

VOLKSBANK BADEN e.Gen. 

VOLKSBANK OBERKAERNTEN rGmbH 

VOLKSBANK VOECKLABRUCK-GMUNDEN e.Gen. 

Volksbank Wien AG 

Volksbank Enns- und Paltental rGmbH 

Volksbank Bad Hall e.Gen. 

Volksbank Linz-Wels-Muehlviertel AG 

Volksbank Gmuend eingetragene Genossenschaft 

Allgemeine Bausparkasse rGmbH 

Volksbank Alpenvorland e.Gen. 

Waldviertler Volksbank Horn rGmbH 

Volksbank Ost rGmbH 

Volksbank Kufstein eG 

Volksbank Ried im Innkreis eG

Volksbank Enns-St. Valentin eG 

Volksbank Friedburg rGmbH 

Oesterreichische Apothekerbank eG 

Volksbank Voecklamarkt-Mondsee rGmbH 

Volksbank Gailtal eG 

Volksbank Niederoesterreich Sued eG 

Volksbank Oberndorf rGmbH 

Volksbank Obersdorf-Wolkdersdorf-Deutsch-Wagram e.Gen. 

VOLKSBANK GRAZ-BRUCK e.Gen. 

Volksbank Muerztal-Leoben e.Gen 

Volksbank Eferding-Grieskirchen rGmbH 

Volksbank fuer die Sued- und Weststeiermark rGmbH 

Volksbank Donau-Weinland rGmbH 

Wiener Spar- und Kreditinstitut rGmbH 

Volksbank Salzburg eG 

Volksbank Almtal e.Gen. 

VOLKSBANK VORARLBERG e.Gen. 

VOLKSBANK LANDECK eG 

Volksbank Aichfeld-Murboden rGmbH 

SPARDA-BANK VILLACH/INNSBRUCK rGmbH 

Volksbank Kaernten Sued e.Gen. 

IMMO-BANK AG 

Volksbank Niederoesterreich-Mitte e.G. 

Volksbank Sued-Oststeiermark e.Gen. 

Volksbank Suedburgenland rGmbH 

SPARDA-BANK LINZ rGmbH 

VB Factoring Bank AG 

Volksbank-Quadrat Bank AG 

Contact: 

Primary Analyst 

Anna Deineko ACCA 

Analyst 

+44 20 3530 1538 

Fitch Ratings Limited 

30 North Colonnade 

London E14 5GN 

Secondary Analyst 

Christian Kuendig 

Director 

+44 20 3530 1399 

Primary Analyst for Sberbank of Russia 

Vladimir Markelov 

Director 

+7 495 956 7063 

Fitch Ratings CIS Limited 

6 Gasheka Street 

Moscow, 125047, Russia 

Committee Chairperson 

Claudia Nelson 

Senior Director 

+ 44 203530 1191 

Media Relations: Hannah Huntly, London, Tel: +44 20 3530 1153, Email: 

hannah.huntly@fitchratings.com.

Additional information is available at www.fitchratings.com. 

Applicable criteria, 'Global Financial Institutions Rating Criteria', dated 16 August 2010, 

'Short-Term Ratings Criteria for Corporate Finance', dated 2 November 2010 and 'Rating Criteria 

for Banking Structures backed by Mutual Support Mechanisms', dated 11 April 2011 are available 

at www.fitchratings.com. 

Applicable Criteria and Related Research: 

Global Financial Institutions Rating Criteria 

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=547685 

Short-Term Ratings Criteria for Corporate Finance 


Rating Criteria for Banking Structures Backed by Mutual Support Mechanisms 


Volksbanken Verbund 


Volksbanken Verbund 


Oesterreichische Volksbanken Aktiengesellschaft 


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DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY 

FOLLOWING THIS LINK: 

HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, 

RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE 

ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED 

RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT 

ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF 

INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES 

AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION 

OF THIS SITE.

FITCH AFFIRMS VOLKSBANKEN VERBUND AND OEVAG ON ANNOUNCED VBI SALE

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