Annual Financial Statements 2010 of Bank Austria

Annual Financial Statements 2010 

of Bank Austria

Contents 

I. Bank Austria 2 

Mission statement3 

Management Report of the Group *) 6 

The banking environment in 2010 6 

Bank Austria in 2010: strong operating performance helps cope 

with repercussions of crisis 10 

Adjustment measures and strategic projects in 2010 12 

Income statement for 2010 13 

Financial position and capital resources 20 

Financial and non-financial performance indicators 23 

Development of business segments 27 

Outlook 44 

Consolidated Financial Statements in accordance with IFRS *) 51 

Statement of comprehensive income 51 

Statement of income and expenses recognised directly in equity 52 

Statement of financial position (balance sheet) 53 

Statement of changes in equity 54 

Statement of cash flows 55 

Notes to the consolidated financial statements incl. risk report 59 

Concluding Remarks of the Management Board 150 

Report of the Auditors 151 

Statement by Management 155 

II. UniCredit Bank Austria AG 158 

Preliminary remarks on the financial statements 

of UniCredit Bank Austria AG for 2010 158 

Management Report of UniCredit Bank Austria AG 159 

Financial Statements of UniCredit Bank Austria AG for 2010 183 

Balance sheet of UniCredit Bank Austria AG as at 31 December 2010 183 

Items shown below the balance sheet 185 

Profit and loss account 2010 186 

Notes to the Financial Statements of UniCredit Bank Austria AG 188 

List of shares in group companies and equity interests 

of UniCredit Bank Austria AG 210 

Supervisory Board and Management Board of UniCredit Bank Austria AG 212 

Signatures of the Management Board 214 

Auditors’ Report 215 


Investor Relations, ratings, financial calendar, imprint 222 

*) Part of the consolidated financial statements in accordance with IFRS 

Bank Austria – Annual Financial Statements 2010 1

Bank Austria at a Glance 

Income statement figures 

(€ m) 2010 2009 +/– 

Net interest income 4,701 4,877 –3.6% 

Net fees and commissions 1,990 1,831 8.7% 

Net trading, hedging and fair value income 326 326 0.1% 

Operating income 7,208 7,245 –0.5% 

Operating expenses –3,766 –3,615 4.2% 

Operating profit 3,442 3,630 –5.2% 

Profit before tax 1,146 1,335 –14.2% 

Net profit without non-controlling interests 747 1,102 –32.2% 

Volume figures 

(€ m) 31 dec. 2010 31 dec. 2009 +/– 

Total assets 193,049 194,459 –0.7% 

Loans and receivables with customers 130,093 123,602 5.3% 

Primary funds 127,839 125,863 1.6% 

Equity 17,476 14,388 21.5% 

Risk-weighted assets (overall) 127,906 114,386 11.8% 

Key performance indicators 

2 2010 Annual Report · Bank Austria 

2010 2009 

Return on equity after tax (ROE) 4.5% 8.1% 

Cost/income ratio 52.3% 49.9% 

Risk/earnings ratio 39.1% 46.5% 

Provisioning charge/avg. lending volume (cost of risk) 1.44% 1.78% 

Marginal Economic Value Added € 194 m € 105 m 

Marginal RARORAC 2.28% 1.29% 

Total capital ratio (based on all risks, end of period) 12.13% 10.92% 

Tier 1 capital ratio 10.35% 8.68% 

Tier 1 capital ratio without hybrid capital (Core Tier 1 capital ratio) 10.04% 8.33% 

Staff *) 

31 dec. 2010 31 dec. 2009 +/– 

Bank Austria (full-time equivalent) 59,653 60,594 –1.6% 

Central Eastern Europe business segment 51,616 52,332 –1.4% 

Other business segments 8,037 8,262 –2.7% 

Austria 7,889 7,992 –1.3% 

*) Employees of companies accounted for under the proportionate consolidation method are included at 100%. 

Offices *) 

31 dec. 2010 31 dec. 2009 +/– 

Bank Austria 3,033 3,088 –1.8% 

Central Eastern Europe business segment 2,734 2,770 –1.3% 

Other business segments 299 318 –6.0% 

Austria 298 309 –3.6% 

*) Offices of companies accounted for under the proportionate consolidation method are included at 100%. 

Bank Austria - Annual Financial Statements 2010 2

Our mission 

We UniCredit people are committed to 

generating value for our customers. 

As a leading European bank, we are 

dedicated to the development of the 

communities in which we live, and to 

being a great place to work. 

We aim for excellence and we consistently 

strive to be easy to deal with. 

These commitments will allow us to create 

sustainable value for our shareholders. 

Bank Austria · 2010 Annual Report 

19

Management Report 

Consolidated Financial Statements: 

Management Report of the Group 6 

Consolidated Financial Statements 

in accordance with IFRS 51 

Statement of Comprehensive Income 

for the year ended 31 December 2010 51 

Statement of Financial Position 

at 31 December 2010 53 

Statement of changes in equity 54 

Statement of Cash Flows 55 

Notes to the consolidated financial 

statements incl. risk report 59 

Concluding Remarks of the 

Management Board 150 


Report of the Supervisory Board for 2010 153 




Management Report of Bank Austria for 2010 

The banking environment in 2010 34 

Bank Austria in 2010: strong operating performance 

helps cope with repercussions of crisis 38 

Adjustment measures and strategic projects in 2010 40 

Income statement of Bank Austria for 2010 

compared with the previous year 41 

Details of the income statement for 2010 43 

Financial position and capital resources 48 

Financial and non-financial performance indicators 51 

Development of business segments 55 

Outlook 72 

Bank Austria · Annual Financial Statements 2010 

5


Management Report (CONTINUED) 

The banking environment in 2010 

In 2010 the environment in which banks operate was determined by 

three major lines of development: 

� The global economy recovered much faster than expected from 

the sharp downturn seen in 2009. While economic performance varied 

considerably – among global regions, within Europe and among 

countries in Central and Eastern Europe – overall economic trends 

improved also in the markets in which Bank Austria operates. But the 

credit cycle, following economic developments with some time lag, 

continued to have a strong adverse impact with wide regional variations. 

� Financing activities remained under strong pressure: no sooner 

had the crisis of 2008/2009 in financial and banking markets been 

more or less overcome than the sustainability of public debt levels 

became the main topic of 2010 – not only in a few highly exposed 

countries on the periphery of the euro area but also in the core 

“benchmark” countries. Burdens from the enormous support programmes 

which were put in place in the past years combined with 

latent structural problems in connection with the demographic outlook 

to depress sentiment in financial markets. 

� Efforts to deal with the crisis revealed institutional deficits: 2010 

saw a profusion of reform initiatives and regulatory measures at global, 

regional and national levels which directly or indirectly affected 

the banking sector, forcing banks to take a proactive approach. 

� The global economy grew by about 4.75% in 2010, after contracting 

by 0.5% in the preceding year. This growth largely made up 

for the sharp reduction of world output, but it did not yet compensate 

for the shortfall in capacity utilisation in most economies. Following 

the anti-cyclical economic support programmes, world trade provided 

decisive impetus in 2010, with growth of 16% after a contraction of 

11% in 2009. Ultimately, this strong performance was driven by the 

rapid catching-up process in emerging markets, led by China, whose 

economy grew by over 10% and thus came close to overheating. 

Crisis: sub-prime sector – financial markets – global recession – public debt 

Financial market crisis 

Money market: Euribor/Eonia spread 

Crisis indicator 

(average for the time series shown, 

based on standard deviation 1) 

This time the drivers of the cyclical reversal were the emerging 

markets, whose combined output exceeded that of the industrialised 

countries for the first time in 2010. Among commodities, the strongest 

price increases were recorded for crude oil (+22%) and industrial 

metals (+20%). 

The US economy, which used to act as global pacemaker in previous 

years, also overcame recession and grew by 2.9% in 2010. 

But this growth came at a heavy price: massive budget deficits as a 

result of measures aimed at supporting the economy pushed the 

public debt ratio to 93% of GDP, with no thought being given to 

return to a consolidation path. Despite the expansionary fiscal policy, 

unemployment remained at an unusually high level of 9.4% and the 

real estate sector did not recover to any significant extent, either. 

Therefore the Federal Reserve went a step beyond the zero-rate policy 

by deciding, at the beginning of November, to purchase government 

bonds for a total of at least US$ 600 bn by the middle of 2011, 

in another round of quantitative easing. Even after this announcement, 

yields remained comparatively low, reflecting the US dollar’s 

role as a global reserve currency: yield levels fell to new lows in 

summer 2010 (2.33% p.a. on 10-year T-bonds on 8 October 2010) 

before rising by one percentage point in the period to year-end 2010 

(3.37%). 

Average growth of 1.7% in the euro area in 2010 (after a contraction 

of 4% in 2009) reflected huge differences: while the German 

economy expanded at a rate of 3.6% (after shrinking by 4.7%), output 

in Spain, Ireland and Greece continued to contract. The Austrian 

economy performed slightly better than the euro area as a whole 

in 2010, growing by 1.9% after contracting by 3.9% in 2009. 

In export-oriented economies with a globally competitive industrial 

sector, growth started to spread to the domestic economy as the year 

progressed. On the other hand, countries with weak economic 

growth and strongly rising public debt experienced a downward 

trend. The period from the end of April to the middle of May saw the 

Credit spreads 

(iTraxx crossover) 

CEE spreads 

(EMBI+spread) 

2007 2008 2009 2010 

Public debt crisis 

(Greece 5-year spread) 


6



outbreak of the debt crisis in the euro area’s peripheral countries: 

long-term Greek government bonds fell to 65% of their nominal 

value, with yields peaking at over 15% and 12% on 5-year and 

10-year bonds, respectively. The crisis continued to smoulder even 

after the EU and the IMF put in place the € 750 bn rescue scheme, 

after the European Financial Stability Facility (EFSF) was established, 

and although dramatic austerity programmes were initiated; sovereign 

ratings were reduced on several occasions. In November 2010, 

credit spreads for Ireland (because of the restructuring of the country’s 

banking sector), Portugal (in view of weak economic growth) 

and Hungary (which refused IMF support) were between 4.8% and 

6.0%. Although Ireland and Greece used aid and guarantees under 

the rescue scheme, which were provided against strict conditions, 

the situation did not ease. 

The European Central Bank (ECB) therefore adhered to its policy of 

low interest rates. In the course of the year, it absorbed excess 

liquidity as money market dealings among major international banks 

started to normalise. But the ECB continued to allot bids in full at the 

fixed rate and thus supplied liquidity to the banking systems of countries 

affected by the debt crisis. Unlike the US and the United Kingdom, 

the ECB handled its non-standard measures (purchases of 

government bonds and covered bonds) in a highly restrictive manner. 

Spot and forward rates in money markets rose slightly in the final 

months of 2010, thereby only moving a little closer to the key interest 

rate. 

� In the first nine months of 2010, financial markets focused on 

asset classes which are – rightly or unjustifiably – seen as having 

the best quality: benchmark bonds and gold. It was only in the final 

months of 2010 (and beyond the turn of the year) that risk tolerance 

rose again, as the economic upswing gathered momentum and 

became increasingly self-sustaining. The strong rise in (German) 

benchmark bonds of the euro area peaked at the end of August, 

when yields fell to an all-time low of 2.09%, corresponding to a 

year-to-date total return of 14%. Yields subsequently rose to 2.97%, 

in line with the development of US dollar bonds, giving an annual 

performance of 7.6%. These factors are the basis for the inclusion of 

credit spreads for corporate bonds, and also for covered bonds and 

emerging markets bonds, which hardly varied in the course of the 

year compared with their levels in previous years; year-on-year, they 

remained almost unchanged, also resulting in a strong increase in 

value. The world stock index (MSCI / local currency), which had 

recovered strongly in 2009 (+26.2%), moved sideways until late 

summer before advancing in the remaining part of the year (+8.3% 

in a comparison of year-end levels). With the exception of Chinese 

shares, which had fallen behind for a long time because of the country’s 

restrictive economic policy, equity markets in emerging economies 

outperformed those in other countries from August onwards as 

capital inflows resumed. Nevertheless, the EuroStoxx remained 

unchanged in a comparison of year-end levels, reflecting the mixed 

economic trends in Europe. The ATX advanced strongly (+16.4%), as 

did the DAX (+16.0%) and the CEE blue chips (CECE +15.7%). 

The public debt crisis flared up again and again, prompting support 

measures at short notice and discussions of fundamental reforms. All 

this failed to convince investors that the risk of debt rescheduling in 

European debtor countries was dispelled. Therefore gold continued 

its record-breaking run throughout the year, reaching an all-time high 

of US$ 1,431 per ounce on 7 December 2010. Although the Swiss 

central bank took temporary measures to contain the appreciation of 

the Swiss franc against the euro, its value rose by 19.6% to a peak 

of CHF 1.2397 per euro on 30 December 2010. The US dollar benefited 

significantly from European uncertainty until the middle of the 

year, rising by 20.6% to a USD/EUR exchange rate of 1.1875 on 

7 June 2010; later in the year it eased again to reach 1.3377 at the 

end of 2010, a year-on-year increase of 7.0%. This development 

may be seen in connection with differing assessments of the monetary 

policy, and associated risks, pursued by the Fed and the ECB, 

which are also reflected in short-term interest rate differentials. 

� Austria saw a stable economic recovery in 2010, with surprisingly 

strong growth. While GDP was up by 1.9% in real terms, this 

did not nearly compensate for the sharp downturn in the crisis year 

of 2009, in which the economy contracted by 3.9%. This means that 

Austria is among the countries experiencing the strongest growth in 

the euro area. It should be noted, however, that the recovery was 

more or less limited to the export sector in most of the year: net 

exports accounted for close to 90% of economic growth. Austrian 

industry benefited from the strong performance of the Asian and 

Latin American emerging markets, mainly via supplies to the globally 

oriented German economy. Demand from several countries in Central 

and Eastern Europe, the Czech Republic and Slovakia in particular, 

also picked up in response to the global recovery. In 2010, the Austrian 

manufacturing sector increased its output by 6.5%. Capacity 

utilisation in this sector consequently rose to over 83% by the end of 

2010, thus exceeding the multi-year average, a development which 

is unique in the euro area. It was only later in the year, and somewhat 

hesitantly, that the strong momentum of recovery spread to the 

domestic economy. The prevailing uncertainty kept investment activity 

at a low level for a long time; restraint on capital spending gradually 

disappeared only in the second half of 2010. Investment in 

equipment was still down by about 3% for 2010 as a whole. Private 

consumption held up well (down by only 1% in real terms) as developments 

in the labour market were comparatively favourable, with 

employment up by 0.7% and the unemployment rate declining from 

4.8% in 2009 to 4.4%). Retail sales accelerated towards the end of 

the year, but a slightly negative trend in real wages (less overtime 

work, more flexible employment arrangements) curbed growth in 

2010. As a result, all of the marked increase in the inflation rate to 

an average 1.9% for 2010 (2009: 0.5%) was due to external factors 

(rising prices for commodities). 


7



Credit demand in Austria remained weak in 2010. Adjusted for the 

translation effect associated with the strong Swiss franc, lending 

volume in Austria in 2010 declined slightly. Demand for housing 

loans was very weak, though somewhat higher than in the previous 

year. Repayments of consumer loans and SME loans exceeded new 

business, leading to a slight decrease in total volume. Loans to corporate 

customers remained constant until the middle of 2010 and 

increased in the course of the second half of the year, in parallel 

with the recovery in investment activity. Although lending rates and 

deposit rates rose slightly towards the end of the year, bank customers 

in Austria saw interest rate levels in 2010 which were 

among the lowest in history. These developments reflected low 

money market rates and the flat yield curve. Moreover, the average 

period for which interest rates are locked in has shortened significantly 

over the past years. 

Although the Austrian economy recovered strongly in the course 

of 2010, the repercussions of the sharp economic downturn in 

2008/2009 still had an impact on business insolvencies. While the 

total number of business insolvencies declined by about 8%, the 

total liabilities of insolvent businesses rose by 17%. Insolvencies of 

private individuals also increased in 2010, though not dramatically. 

As income trends were moderate and consumer demand was relatively 

robust, financial assets held by Austrian private households in 

the first nine months of 2010 increased at only half the growth rate 

seen in 2009. This development also reflects repayments of consumer 

loans. Deposits showed a particularly weak trend, hardly 

rising year-on-year. Somewhat stronger demand was again seen for 

mutual funds, but this did not yet compensate for the outflows in 

the period from mid-2007 to early 2009. New investments in 

Industry driving growth 

Monthly survey of purchasing managers in industry (PMI). 

64 

62 

60 

58 

56 

54 

52 

50 

48 

46 

44 

42 

40 

38 

36 

34 

32 

30 

Germany 

Austria 

Euro area 

50 = growth 

threshold 

2007 2008 

2009 2010 2011 

shares and bonds in 2010 were modest. The only sector which 

continued to record steady inflows was life assurance, not least 

thanks to long-term policies. 

� Economic activity also picked up in Central and Eastern 

Europe (CEE) in 2010, but progress varied significantly from region 

to region. In addition, nearly all countries had to address legacies 

and restore structural imbalances which were not so evident in the 

boom years before 2009. For these reasons, banking business in 

most CEE countries was impacted by weak credit demand and a 

persistently high proportion of loan losses. Countries such as Turkey 

and Russia, which showed an impressive performance, compared 

with countries at the other end of the scale where the banking sector 

is still being restructured (Kazakhstan, Ukraine). 

The CEE region’s combined GDP expanded by a real 3.6% in 2010, 

twice the rate of western Europe, after the region was severely hit 

by the recession in the previous year (2009: –5.9% including 

Poland / –6.9% without Poland). Developments in the individual 

countries and country groups varied considerably depending on a 

country’s size and degree of economic autonomy, the extent to 

which a country has opened its economy, and on factors such as 

production specialisation and the starting position before the onset 

of the crisis. While the catching-up process resumed by the CEE 

countries in 2010 still has significant potential, it is far from the 

momentum seen before the financial and economic crisis. The “CEE 

Development Model“ has changed: in the initial stages, inclusion in 

the industrial division of labour often involved the rapid development 

of externally financed key industries, while the strategic focus in the 

post-recession years has been on strengthening the domestic economy 

with the aim of reducing volatility, strengthening mass purchasing 

power, and achieving monetary stabilisation. 

In 2010, especially those countries which experienced a boom 

before the crisis had to focus on reducing their substantial external 

financing requirements (partly by curbing significant public deficits) 

to make themselves less crisis-prone in a nervous international 

climate. This was achieved with low wage rises, or in some cases 

even nominal wage reductions, austerity programmes, and subsequently 

a downturn in domestic economic growth. Thanks to the 

timely implementation of specific measures – partly supported by 

EU and IMF stand-by arrangements with conditions attached – and 

because of initially low public debt levels (which averaged less than 

40% of GDP) the CEE countries managed to emerge from the 

public debt crisis unscathed. This is reflected in the performance of 

share prices (MSCI Emerging Europe +16.3%), the stability of 

interest-rate spreads on government bonds (EMBI+ 270 bp at yearend 

2010 / 291 bp at year-end 2009), and especially exchange 

rate developments. The CEE currencies of countries in our perimeter 

of operations together (weighted by the operating profit of our local 

subsidiaries) appreciated against the euro by 3.2% compared with 

year-end 2009 and by 5.0% in average annual terms. This devel- 


8



opment was supported by countries which export raw materials: 

Russia (+9.6%), Ukraine (+6.4%) and Kazakhstan (+5.4%), whose 

currencies take their bearings from both the euro and the US dollar. 

The currencies of the remaining countries, notably Turkey (+8.3%) 

and the Czech Republic (+4.5%), also strengthened against the 

euro or remained unchanged; only Serbia’s currency depreciated 

more heavily (–8.2%). 

The recovery process was led by the large countries with a high 

degree of economic autonomy. Apart from Poland (growth rate of 

3.8%), the only country not to experience economic contraction 

during the crisis, Turkey’s economy has developed in a more or less 

independent manner: thanks to growth of 7.1%, GDP exceeded the 

pre-crisis level. Moreover, asset quality in the country has improved. 

Among Central Europe’s export-oriented countries, the Czech 

Republic (+2.3%) and Slovakia (+3.9%) were supported by the 

sound growth of their respective industrial sectors and a high level 

of domestic liquidity. Hungary (+1.2%) is something of an exception 

in view of the lengthy budget consolidation process and its unorthodox, 

going-it-alone economic policy. In Romania (–2.5%) the adjustment 

recession was still under way and loan losses (related to foreign-currency 

loans) increased. In Bulgaria (+0.1%) the business 

sector is heavily indebted and impacted by its business interests in 

Greece. Croatia (–1.5%) has more or less overcome the downturn; 

the upturn now depends on the progress made in negotiations for 

accession to the EU. The other countries, whether the Balkan region 

or the Baltic states, were in particular faced by problems arising 

from the high level of foreign currency-denominated debt. The large 

exporters of raw materials again recorded strong real growth (Kazakhstan 

+6.0%, Ukraine +4.0%, Russia +3.4%). 

The upturn in 2010 was supported much less than before by credit 

expansion. In 2008, lending volume in the Central European countries 

expanded at rates of over 15% (in local currency), in most 

other countries it increased by about 30%, and in Kazakhstan and 

Ukraine by over 50%. Overall growth of lending volume, on a 

weighted basis, in this group of countries was 32%. These times 

are now over, lending volume is likely to have expanded by no more 

than 11% in 2010. In some countries, the banking sector even 

experienced excess liquidity as a result of weak demand, a development 

also attributable to the adjustment measures taken by the 

banks themselves: while a high loan/deposit ratio was still a primary 

objective in 2009, some local banks ceased to engage in termsbased 

competition for deposits in 2010. Deleveraging continued to 

have priority only in countries with a particularly large local financing 

gap, such as the Baltic states. 

The credit risk cycle lagged behind the business cycle and mirrored 

the divergent trends. The first signs of a turnaround – which 

was again characterised by significant regional variations – were, as 

always, reflected in a lower charge for loan loss provisions and, with 

a time lag, in a decline in the proportion of non-performing loans 

(NPL ratio). Turkey was the first country where loan losses were past 

their peak by the end of 2009, and which not only recorded a 

decline in additions to, but also an absolute decrease in, non-performing 

loans. In most countries loan losses are likely to have 

peaked at the end of 2010/beginning of 2011; in Kazakhstan and 

Latvia the peak will probably occur later, in the second half of 2011. 

The equity capital ratios of banks in Central and South-East Europe 

were much higher than before the crisis as profits were retained, a 

requirement often imposed by local supervisors, and because 

expansion was unusually weak; the ratios were moreover well above 

the statutory minimum levels. In the former CIS countries – Russia, 

Kazakhstan and Ukraine – the capital buffers of state-controlled 

banks were increased through national capitalisation programmes. 

Overall, the challenges for CEE banks’ profitability in 2010 were 

more or less equal to those of 2009: while there was a slight 

improvement in the provisioning charge, the delayed upturn was 

responsible for lower revenue growth, funding costs were still high, 

and credit demand was slack (and limited to low-margin segments). 

� In the last two years, efforts to address the crisis drew attention 

to institutional and regulatory deficits. In 2010, a plethora of reform 

processes and regulatory measures was initiated at the global, 

regional and national levels which affected the banking sector 

directly or indirectly, already in the preparatory stages. Besides the 

reform of the European regulatory system with new institutions and 

more competencies especially with regard to international banking 

groups, the new set of rules of the Basel Committee on Banking 

Supervision, known as the Basel 3 package, already cast its shadows 

before, prompting banks to adjust their business models ahead 

of the implementation of Basel 3. The new rules call for measures 

such as a significant increase of the minimum capital ratios over the 

medium term and a more restrictive definition of Tier 1 capital 

(essentially now comprising only paid-up capital and reserves). 

A non-risk-weighted leverage ratio and regulatory standards for 

liquidity management (liquidity coverage ratio, net stable funding 

ratio) will be introduced in the next few years after a monitoring and 

calibration phase. The qualitative and quantitative capital requirements, 

in particular, started to have an impact in 2010, although the 

calibration process was not yet completed and the requirements are 

being phased in. The impact is reflected primarily in the level and 

structure of capital resources, medium-term funding, and in efforts 

to reduce leverage and to fund lending operations on a decentralised 

basis and largely through customer business. At the national 

level, governments took fiscal ad-hoc measures requiring the 

banking sector to participate in the costs of crisis management, 

such as the bank levy in Hungary, payable for the first time in 2010, 

or the bank levy in Austria (due in 2011). Similar measures are 

being discussed in other countries, and the EU is seeking to integrate 

such approaches in a crisis prevention framework. 


9



Bank Austria in 2010: strong operating performance helps cope with repercussions of crisis 

Overview 

After the peak of the financial market crisis in 2008 and global 

recession in 2009, the year 2010 was marked by stabilisation and 

steady improvement for Bank Austria. The upswing in operating activities 

is clearly reflected in quarterly trends, which show that the second 

half of 2009 marked the lowest point, followed by a recovery of 

current business with customers from quarter to quarter. The fullyear 

figures also indicate that in line with the economic environment, 

underlying business returned to a path of moderate expansion 

in 2010. 

The difficult years before 2010 still had repercussions which 

Bank Austria had to deal with. It is true that net writedowns of loans 

and provisions for guarantees and commitments declined significantly, 

following the general economic trend with a considerable time 

lag. Given the persistently difficult situation in the banking sector of a 

few countries, however, the provisioning charge remained high, continuing 

to absorb a large proportion of operating profit. Moreover, 

as in 2008, impairment losses on goodwill related to subsidiaries 

impacted the bank’s profits, which were therefore lower than in 

previous years despite a better operating performance. 

Results for 2010 compared with previous years 

2006 pf 2007 2008 2009 2010 

Volume trends (€ bn) 

Risk-weighted assets (RWAs) 79.8 104.5 129.3 119.9 122.9 

Income statement (€ m) 

“Sustainable“ income 

components 1) 4,687 5,447 5,999 5,893 6,226 

Other income 2) 1,138 968 1,231 1,353 982 

Operating income 5,825 6,414 7,231 7,245 7,208 

Operating profit 2,428 3,063 3,296 3,630 3,442 

Net writedowns of loans –715 –483 –1,012 –2,267 –1,839 

Sub-total 1,713 2,580 2,284 1,363 1,602 

Non-operating items 3) –315 160 –779 –29 –456 

Profit before tax 1,398 2,740 1,505 1,335 1,146 

Net profit attributable to 

the owners of the parent 

company 1,053 2,254 1,144 1,102 747 

2006pf = pro forma, i.e. adjusted to the consolidation perimeter of 2007, after the takeover 

of the CEE subsidiaries of UniCredit and the transfer of BPH, Poland. / 1) Net interest and 

net fees and commissions without trading-induced interest income (net interest income of 

CAIB and of the CIB/Counterparts product line, respectively), which is included in “other 

income”. / 2) Dividend income, net trading income, net other expenses/income plus tradinginduced 

interest income generated by CAIB before 2009 and subsequently by the CIB/ 

Counterparts product line. / 3) In 2008 and 2010, primarily impairment losses on goodwill; 

other components varied significantly: net income from investments, provisions for risks and 

charges, and restructuring costs. 

A multi-year comparison (see table above) shows that the key indicators 

of operating performance again developed along the lines seen 

before the crisis – even though the strong growth momentum 

achieved in the past is out of reach in the foreseeable future. 

� Volume (measured by risk-weighted assets) was expanded by an 

annual average of 2.4% in 2010, after a strong reduction in 2009; 

RWAs were 5.0% below the 2008 level, but 17.6% higher than in 

2007. The trend in (unweighted) loans and receivables with customers 

was similar. 

� The sustainable components of income – i.e. net interest and 

net fees and commissions without trading-induced interest income 

(net interest income of UniCredit CAIB and, from 2009, of the CIB/ 

Counterparts product line) developed very favourably: after the 2% 

decrease in 2009, these income components rose by 6% in 2010 to 

reach € 6.2 bn, thus significantly exceeding the 2008 level (+3.8%). 

The other components of operating income reflected the ups and 

downs of net trading income and valuation results which are to be 

seen in connection with capital market developments: while the net 

trading result for 2008 was negative because of the impact of markto-market 

valuation losses, 2009 saw a strong trading performance 

supported by the contribution from CEE operations. Net interest 

income for the first few months of 2009 was exceptionally high, driven 

by a significant trading-induced component; for this reason, the 2010 

figure compares with a high level of net trading income for 2009 as a 

whole. At € 7.2 bn, total operating income in 2010 more or less 

matched the levels of 2009 and 2008 (down by just under one half of 

a percentage point) while significantly exceeding the 2007 figure 

(+12.4%). Operating profit also showed little change compared with 

the two preceding years, thanks to a stable trend in costs: in 2010 it 

reached € 3.4 bn after € 3.6 bn and € 3.2 bn in 2009 and 2008, 

respectively. In light of the fundamental changes in the operating 

environment, this is a respectable performance. 

� This means that the disruptions seen in the past years had no major 

impact on results from current operations – at least the effects balanced 

out over time or across the various regions. The financial and 

economic crisis, especially the strong macroeconomic adjustment 

involving a sharp reduction of external and internal financing deficits in 

CEE, mainly impacted the bank’s income statement in the form of net 

writedowns of loans and provisions for guarantees and commitments. 

The combined provisioning charge for the years 2008 to 2010 

absorbed about 50% (or exactly 49.4%) of operating profit. After peaking 

at € 2.3 bn in 2009, net writedowns of loans and provisions for 

guarantees and commitments were almost 20% lower in 2010. The 

CEE business segment accounted for 79% of the total figure, with a 

focus on just a few countries. When deducting the provisioning charge 

(which is closely associated with operating activities) from operating 

profit, one can see an improvement of 18%, from € 1.4 bn to € 1.6 bn 

in 2010, while there is a shortfall of 30% compared with 2008. 

� The favourable effect of lower (though still high) net writedowns of 

loans and provisions for guarantees and commitments in 2010 was 

more than offset by a strong increase in charges resulting from 

other non-operating items: in 2010 the bank recognised a further 

€ 378 m in impairment losses on goodwill. At the end of 2008, shortly 


10



after the Lehman Brothers collapse, impairment losses of over one 

billion euros (€ 1,027 m) on goodwill related to equity interests 

impacted Bank Austria’s income statement. Value adjustments of 

goodwill, carried out several times, largely related to ATF Bank in 

Kazakhstan, the bank which we acquired most recently. The recognition 

of impairment losses reflects the adjustment of valuations then 

prevailing in the market to the current long-term scenarios; this has 

little to do with current business operations. As a result of these oneoff 

effects, profit before tax (2010: € 1,146 m) continued to decline, 

despite the stable operating performance and the lower provisioning 

charge in 2010. Consolidated profit (net profit attributable to the owners 

of Bank Austria) for 2010, at € 747 m, declined to a level well 

below one billion euros. 

� A multi-year analysis of business segments and regions confirms 

that the commitment to the CEE region has been successful and Austria-based 

customer business has developed in a balanced manner. 

The analysis also shows that the wide diversification of the business 

portfolio balanced the varying impact of external influences on the 

regions. Bank Austria’s CEE Division achieved exponential growth in 

its profit before tax. In 2008, profit before tax peaked at over € 2 bn, 

while the former Markets & Investment Banking Division was hit hardest 

by the financial market crisis in the same year, weighing down 

results from Austrian business. Also in 2008, the Corporate Center for 

Operations in both core markets profitable despite 

financial market crisis and recession (Profit before tax in € m) 

2,000 

1,500 

1,000 

500 

0 

–500 

–1,000 

394 

148 

– 38 

CEE business segment 

(respective perimeter) 

1,041 

Austrian business 

911 

segments 684 

635 

554 

477 

366 

680 

151 

20 

– 61 

– 68 

Corporate Center 

914 915 

1,064 

3) 

3) 792 

2006 5) 

2005 5) 

2) – 710 

2002 2003 2004 

2007 

– 987 

2008 2009 2010 

Austrian business segments 

CEE business segment (respective perimeter) 


– 77 

1,342 

357 

473 

2,019 

1) Large writedowns in the former Markets & Investment Banking Division 

2) Substantial impairment losses on CEE goodwill in the Corporate Center 

3) CEE results weighed down by net writedowns of loans 

4) Corporate Center includes significant liquidity/funding costs 

5) 2005 and 2006 adjusted for one-off effects 

1) 

4) 

– 494 

2) 

the first time had to absorb the impairment losses on goodwill mentioned 

above. In 2009, profit before tax generated by the Austrian 

business segments and by the CEE Division reached more or less the 

same high level (€ 914 m and € 916 m, respectively) although net 

writedowns of loans and provisions for guarantees and commitments 

peaked in that year. Finally, in 2010, profit before tax in the CEE business 

segment again improved to a level well above one billion euros, 

while the Corporate Center again had to absorb a goodwill impairment 

charge (see chart). 

➔ Against the background of the previous years, which were characterised 

by the financial and economic crisis, Bank Austria’s development 

in the 2010 financial year may be briefly described as follows: 

operating performance proved resistant to external shocks and was 

strong enough to absorb high temporary risks. 

� During the crisis years, Bank Austria made structural adjustments. 

Over the past few years we have further improved the structure 

of the bank’s income statement and financial position; they now 

exclusively reflect commercial banking business and the related overall 

bank functions. In the income statement, as mentioned above, the 

“sustainable” income components have shown a steady upward trend 

while cost growth has been moderate. In the statement of financial 

position, the step-by-step restructuring of trading and investment 

banking activities within UniCredit Group in the past three years has 

led to a decline in trading-related financial assets and financial liabilities, 

with a strong reduction in the related interbank business (see the 

“Financial position” section on page 48). Loans and receivables with 

customers as a proportion of total assets rose from 59% at year-end 

2008 to 67% at the end of 2010; primary funds (the sum total of 

deposits from customers and debt securities in issue) rose from 57% 

to 66% of total liabilities and equity – this is a clear indicator of the 

predominant position of customer business. The (basic) leverage ratio 

(total assets /equity) declined from 15.6 (2008) to 10.7 (at the end 

of 2010); if intangible assets are excluded from the calculation, the 

leverage ratio declined from 21.9 to 13.8. 

Over the past years, we have significantly strengthened the bank’s 

equity capital base. IFRS equity rose from € 14.4 bn (2008) to 

€ 17.5 bn at the end of 2010. This favourable development was due 

to profit retention and, above all, to the € 2 bn capital increase in 

March 2010 through funds provided by our parent company UniCredit. 

As a result, Bank Austria’s capital resources as defined in the Austrian 

Banking Act improved substantially: the Tier 1 capital ratio based on 

all risks under Basel 2 rose from 6.82% (2008) to 8.68% (2009) and 

most recently to 10.35% (year-end 2010); the total capital ratio 

increased from 9.19% to 10.92% and most recently to 12.14%. 

We thereby strengthened the capital buffers for unexpected risk at 

an early stage, and without taking advantage of government support 

programmes. Bank Austria is thus well placed for further targeted 

business expansion, primarily in CEE, and for meeting the forthcoming 

stricter regulatory requirements (Basel 3). 


11



Adjustment measures and strategic projects in 2010 

� In 2010, UniCredit Bank Austria AG concentrated on more swiftly 

implementing the enhanced UniCredit business model in response 

to changes in the banking environment. The key features of the business 

model were, and are: greater customer centricity, a stronger 

focus on regional business, a simplification of the range of products 

offered to customers, and sustainable development by giving priority 

to commercial business. This includes increasing the efficiency of 

back-office operations through the cross-regional bundling of production 

and settlement activities in specialised units or service units 

for the purpose of achieving cross-regional synergies. The measurement 

of customer satisfaction and the subsequent alignment of our 

services had a positive impact on day-to-day business with customers. 

In 2010, we took steps to maintain reputation levels and regain 

public confidence in banks which was eroded by the financial market 

crisis: we simplified the range of products, aligned our internal sales 

and performance incentives more closely with sustainability objectives, 

and revised the way the bank presents itself to the public. 

Bank Austria underlined its intention to show solidarity in society by 

launching a number of initiatives and a new programme for sponsorbased 

projects. In the area of personnel management we had 

adjusted our performance-based incentive system before the implementation 

of the relevant EU Directive, and placed greater emphasis 

on (constantly measured) customer satisfaction and other sustainable 

success criteria. The incentive system at top management level was 

realigned with long-term performance criteria, on the basis of 

deferred payments with the possibility of making downward adjustments. 

� The “One4C” (One for Clients) project was the strategic guideline 

for the entire UniCredit Group in 2010, and therefore also for Bank 

Austria. In line with this project, we streamlined the organisational 

structure with a number of individual projects and more closely 

defined the sub-segments of our sales operations according to customer 

centricity, simplicity and specific customer needs. In 2009 we 

had combined customer-related capital markets business and ongoing 

commercial business with corporate customers, which resulted 

in the creation of the Corporate & Investment Banking Division 

(CIB), and we started to bundle the entire target group comprising 

the top segment of private customers within the Private Banking 

Division; the necessary transfer of customers from other business 

segments has been completed. Priority in 2010 was given to creating 

specialised units for small and medium-sized companies (SMEs). We 

developed a separate service model for SMEs (according to qualitative 

criteria and/or turnover between € 3 m and € 50 m) with a 

decentralised sales network. This was implemented step by step at 

selected branches and became fully operational at the beginning of 

2011, when the SME sub-segment was transferred from the CIB 

Division to what was still known as the Retail Division, but which was 

subsequently renamed Family & SME Banking Division (F&SME) 

to reflect the larger size of this business segment. In Central and 

Eastern Europe (CEE) we continued to press ahead with the divisionalisation 

process in selected countries, based on local market 

potential. In this context we gave greater attention to a pragmatic, 

selective approach and enlarged the branch network only in countries 

where this was warranted upon reaching a certain size threshold and 

with a foreseeable market outlook. This was primarily the case in 

Turkey, Romania, Russia, Bulgaria, Serbia, Hungary and Croatia. As 

we also focussed on high-growth regions within individual countries, 

the growth initiative involved branch office closures in areas with an 

excessively dense branch network and a slight reduction in the total 

number of branches. Business policy in CEE was geared to funding 

lending business on a local basis, notwithstanding the pursuit of a 

cross-regional approach. 

� The most far-reaching changes in 2010 concerned investment 

banking operations, which – across the entire UniCredit Group – 

were made to focus on customer-driven business and on the related 

trading activities. As was agreed at the time of the business combination 

which resulted in the creation of UniCredit Group in 2005, 

UniCredit Bank AG (the former Bayerische Hypo- und Vereinsbank), 

Munich, is responsible for this cross-regional competence centre, 

which conducts business from a number of different locations. For this 

reason, we sold UniCredit CAIB AG to UniCredit Bank AG in June 2010. 

This banking subsidiary was made to concentrate on trading activities 

not related to customer business in the period preceding its sale. 

Customer-driven investment banking activities were reintegrated in 

Bank Austria, which was also assigned responsibility for the further 

conduct of the bank’s Treasury operations and liquidity management. 

This also involved a reintegration of staff. The sale of UniCredit CAIB AG 

and its subsidiary UniCredit CAIB Securities UK Ltd. to UniCredit Bank AG, 

Munich, is a transfer of business interests under common control, 

and not a business combination for which IFRS 3 would be applied. 

UniCredit CAIB UK Ltd. was liquidated as of 31 May 2010. According 

to the extensive contractual documentation of this restructuring 

measure, Bank Austria now uses the products and services of 

UniCredit Bank AG (the former Bayerische Hypo- und Vereinsbank), 

Munich, instead of those of CAIB. As in the case of other intra-group 

transfers, continuity is assured by Bank Austria’s participation in 

profits of the “Markets” global product line of UniCredit’s CIB Division 

for a period of five years. Claims to future revenues constitute a 

derivative for accounting purposes and the valuation results are recognised 

in net trading, hedging and fair value income. The reorganisation 

and new division of labour is based on one of the cornerstones 

of the UniCredit business model: the cross-regional bundling of production 

while continuing to focus on local customer centricity. In this 

way Bank Austria meets the size threshold for participation in international 

financial markets and enhances its competitive abilities, 

while maintaining the principle of “one face to the customer”, i.e. 

offering local integrated customer services from a single source. 


12



Income statement of Bank Austria for 2010 compared with the previous year 

Bank Austria’s income statement for 2010 reflects the underlying 

pattern of economic trends: 

� Operating performance shows a moderate upswing of commercial 

banking business (with wide regional variations in Central and Eastern 

Europe). The effects of the sale of UniCredit CAIB have a discernible 

influence on the overall picture. 

� The repercussions of the crisis years are tapering off: this led to a 

significant decline in net writedowns of loans and provisions for guarantees 

and commitments in 2010. However, charges for non-operating 

items remained high, especially in light of credit risk trends in 

several highly exposed countries, which are lagging the business 

cycle. 

� In 2010, valuation adjustments entailing the recognition of impairment 

losses on goodwill in the Corporate Center prevented an 

improvement in profits. 

Profit before tax for 2010 reached € 1,146 m after € 1,335 m in 

2009. The decrease of € 189 m or 14% compared with the previous 

year resulted from the € 360 m increase in impairment losses on 

goodwill. The goodwill impairment charge recognised in the income 

statement for 2010 was € 378 m, of which € 359 m related to JSC 

ATF Bank, Kazakhstan. A low charge for goodwill impairment was 

accounted for by the local bank in Latvia. In 2009, the total impairment 

loss on goodwill amounted to € 19 m. Without the goodwill 

impairment charge, profit before tax would have improved by 13%. 

The higher charge for income tax translated into an even more pronounced 

decline of € 355 m or 32% in consolidated profit (net 

profit attributable to the owners of Bank Austria) to € 747 m for 

2010. 

The combined effects of the above factors are shown in the table 

and chart below: operating income (€ 7,208 m) was only 1% lower 

than in the previous year. In this context one should note the base 

effect resulting from significant trading-induced interest income gen- 

Profit before tax for 2010 compared with 2009 

2009 AS 

PUBlIShEd 

erated in the first quarter of 2009 (and to a lesser extent, also in 

the second quarter of 2009). The trading activities of the former 

UniCredit CAIB, which are now included in the “Counterparts” product 

line following organisational changes, reduced net interest 

income by € 364 m compared with the previous year. Excluding this 

negative special effect, net interest income – from commercial 

banking operations – rose by 4%. The participation (recognised in 

the Corporate Center) in the profits of the UniCredit Markets product 

line is also connected with the UniCredit CAIB transaction, representing 

compensation for the disposal of these business activities. 

If this positive special effect is also excluded from the comparison 

with the previous year, the resulting revenue growth of 3% indicates 

a – moderate – increase in the performance from customer business. 

Based on unadjusted figures, operating profit was down by 

5% to € 3,442 m. The € 189 m decrease resulted from the above 

special effects, which totalled minus € 288 m; on an adjusted 

basis, operating profit grew slightly, by 3% to € 3,729 m. 

Net writedowns of loans and provisions for guarantees and 

commitments in 2010 were down by € 428 m or 19% from the 

previous year; at € 1.8 bn they were still exceptionally high. The 

total of provisions for risks and charges, restructuring costs and net 

income from investments – i.e. other “non-operating” items – was 

down by a net € 68 m. This resulted in an increase of € 360 m in 

the combined figure for the items between operating profit and 

profit before tax compared with the previous year. This improvement 

was offset by impairment losses on goodwill and other non-operating 

expenses in 2010, which were up by exactly the same amount, 

€ 428 m, on the previous year. This means that the € 458 m 

improvement (adjusted, i.e. generated in commercial banking operations) 

was more than offset by a net charge of € 647 m reflecting 

the combined special effects. On the basis of adjusted figures, 

profit before tax would have increased by 34% instead of falling 

by 14%. 

UNdErlyINg ChANgE 

2010 

ONE-OFFS tOtAl ChANgE 

€ M % AdjUStEd 

€ M € M % 

2010 AS 

PUBlIShEd 

Net interest income 4,877 +188 +4% 5,065 –364 1) –176 –4% 4,701 

Net non-interest income 2,369 +62 +3% 2,431 +76 2) +139 +6% 2,507 

Operating income 7,245 +250 +3% 7,495 –288 –38 –1% 7,208 

Operating expenses –3,615 –151 +4% –3,766 +0 –151 +4% –3,766 

Operating profit 3,630 +99 +3% 3,729 –288 –189 –5% 3,442 

Net writedowns of loans –2,267 +428 –19% –1,839 +0 +428 –19% –1,839 

Other non-operating items –29 –68 >100% – 97 –360 3) –428 >100% –456 

Profit before tax 1,335 +458 +34% 1,793 –647 –189 –14% 1,146 

1) Decrease in trading-induced interest income (which mirrors the restructuring of UniCredit CAIB and the exceptional interest rate environment at the beginning of 2009). / 2) Participation in 

profits of the Markets product line of UniCredit (compensation for the sale of UniCredit CAIB) – 1) and 2) are related to proprietary trading, which has been concentrated in a specialised UniCredit 

competence centre. / 3) Increase in impairment losses on goodwill. 


13



Moderate upswing since the middle of 2009 

2,500 

2,400 

130 

2,300 

2,200 

120 

2,100 

2,000 

Operating income 

(as published) 

110 

1,900 

1,800 

100 

1,700 

1,600 

1,500 

1,400 

1,300 

Sustainable income components3) Operating income 

adjusted1) € m € bn 

Volume 

Risk-weighted 

assets (RWAs) 

2) 

1,200 

2007 2008 

2009 


1) Adjusted for one-off effects: Q4 2008: deduction of € 415 m special dividend in connection with 

the sale of profit-sharing rights in B&C; trading-induced interest income (roughly corresponding 

to net interest income of UniCredit CAIB and CIB/Counterparts product line, respectively). / 

2) Q4 2008: large net trading loss. / 3) Net interest (without trading-induced net interest income of 

CAIB and Counterparts, respectively) plus net fees and commissions 

Regardless of the special effects referred to above, quarterly trends 

more clearly reflect the upswing of business in 2010 than a comparison 

of annual results, or a comparison of annual average volume 

(RWAs), because volume and revenues reached a turning point in the 

second half of 2009. The U-shaped quarterly trend in 2009/2010 

was the main reason why the major income items and profits – on 

an unadjusted basis – were still lower than in the previous year 

although they improved strongly in the course of recent quarters 

(see chart). Risk-weighted assets rose by an annual average of 2.4% 

from 2009 to 2010, in Q4 2010 they were 11% up on Q4 2009 and 

on Q3 2009. Loans and receivables with customers rose by 4% from 

Q4 2009 to Q4 2010, while annual average growth reached 1%. 

Revenues developed in a similar fashion: operating income improved 

since the middle of 2009, the Q4 2010 level was up by 4% on the 

comparable period of the previous year (and 7% higher than in 

Q3 2009). A comparison of (unadjusted) year-end figures shows that 

the level at the end 2010 more or less matched the year-end 2009 

figure (down by 0.5%). Adjusted for the above-mentioned special 

effects, operating income rose by 9% from Q4 2009 to Q4 2010; 

the increase based on unadjusted figures was 4%. 

Condensed income statement of Bank Austria *) (€ m) 

ChANgE 

2010 2009 € M IN % 

Net interest 4,543 4,733 –190 –4.0% 

Dividend income 31 54 –23 –43.0% 

Other income from equity investments 126 89 +37 +41.2% 

Net interest income 4,701 4,877 –176 –3.6% 

Net fees and commissions 1,990 1,831 +159 +8.7% 

Net trading, hedging and fair value income 326 326 +0 +0.1% 

Net other expenses/income 191 211 –20 – 9.7% 

Net non-interest income 2,507 2,369 +139 +5.9% 

OPErAtINg INCOME 7,208 7,245 –38 –0.5% 

Payroll costs –1,931 –1,894 –37 +1.9% 

Other administrative expenses –1,527 –1,389 –137 +9.9% 

Recovery of expenses 2 2 –0 – 9.2% 

Amortisation, depreciation and impairment losses on tangible and intangible assets –310 –333 +23 –6.9% 

OPErAtINg EXPENSES –3,766 –3,615 –151 +4.2% 

OPErAtINg PrOFIt 3,442 3,630 –189 –5.2% 

Goodwill impairment –378 –19 –360 >100% 

Provisions for risks and charges –136 –114 –22 +19.5% 

Restructuring costs –4 –9 +5 –54.5% 

Net writedowns of loans and provisions for guarantees and commitments –1,839 –2,267 +428 –18.9% 

Net income from investments 62 113 –51 –44.9% 

PrOFIt BEFOrE tAX 1,146 1,335 –189 –14.2% 

Income tax –348 –182 –166 +91.0% 

NEt PrOFIt 798 1,152 –355 –30.8% 

Net profit attributable to the owners of the parent company 747 1,102 –355 –32.2% 

Non-controlling interests 51 51 –0 –0.2% 

n.m. = not meaningful 

*) Bank Austria’s income statement as presented in this table is a reclassified format corresponding to the format used for segment reporting. 

See section D.2 on page 142 in the notes to the consolidated financial statements. 


14



Details of the income statement for 2010 

� Operating performance in 2010 reflected generally weak 

demand, the recovery in the course of the year started from a low 

level and lost momentum towards the end of the year. This is 

reflected in volume trends in loans and deposits and in high market 

liquidity. Investors continued to take a defensive attitude. Both business 

and private customers preferred to consolidate their financial 

position and tended to reduce debt (deleveraging) rather than pursuing 

expansion. A major factor for success was the continued low 

interest rate environment. Interest rates declined further to very 

low levels until autumn 2010. In a number of CEE countries, interest 

rate convergence resumed after the interruption seen in the first half 

of 2009, i.e. credit spreads continued to narrow. There were wide 

regional variations, with interest rates recently again rising in prospering 

countries. This trend and euro exchange rate fluctuations led 

to currency appreciation which is to be taken into account when 

analysing the income statement. On an annual average, which is 

used for translating items in the income statement, the strongest 

appreciation against the euro was seen in the currencies of major 

commodity-exporting countries, i.e. Russia (+9.6%), Ukraine (5.6%) 

and Kazakhstan (5.5%), and the currencies of Turkey (8.3%) and the 

Czech Republic (4.6%). With the exception of Kazakhstan and 

Ukraine, those were the countries where banking operations showed 

above-average performance also in local currency terms. The special 

factors referred to above in connection with the restructuring of 

investment banking activities and the exceptional market situation at 

the beginning of 2009 are also factors to be taken into account in 

the overall analysis. 

The following comments on the income statement at Bank Austria 

level are based on the condensed income statement format which 

is also used for segment reporting (see table on page 42 and tables 

on pages 144 to 147 of this report and the related reconciliation in 

table D.1 on pages 140 and 141 of the notes to the consolidated 

financial statements). For the purposes of comparison with the previous 

year, the contributions from the business segments are adjusted 

for the changes in the group of consolidated companies (see notes 

to segment reporting in section D.2 on page 142). The totals thus 

obtained show restatement differences compared with the figures in 

the income statement for the bank as a whole. 

Net interest income in 2010 declined by 4% or € 176 m to 

€ 4,701 m. This item also includes dividends and similar income as 

well as other income from equity investments; in 2010, the latter 

components of net interest income were higher than in the previous 

year, thanks to the stabilisation of the financial sector, including the 

positive turnaround of real estate investment management companies 

in which we hold interests. The amount of net interest in a 

narrower sense was down by € 190 m or 4% to € 4,543 m. 

The segment reporting figures reflect widely varying developments. 

Net interest generated by the CEE business segment improved 

strongly, by 9% or € 258 m, to € 3,245 m, accounting for 67% of 

the figure for the bank as a whole (without the Corporate Center). 

Interest expenses recognised in the Corporate Center (primarily funding 

costs relating to equity interests, liquidity costs, asset/liability 

management) were significantly reduced (+ € 234 m) as the situation 

in money and financial markets stabilised. 

Net interest in the three Austrian customer business segments – 

Family & SME (F&SME), Private Banking (PB) and Corporate & 

Investment Banking (CIB) – totalled € 1,585 m, down by 23% or 

€ 466 m from the previous year. The year-on-year comparison again 

reflects the base effect which does not show the performance from 

commercial banking business alone: given the exceptional market 

conditions around the turn of the year 2009 – when market interest 

rates fell rapidly as a result of the expansionary monetary policy, and 

the interest rate position rose in value – the first quarter of 2009 (and 

to a lesser extent, also the second quarter of 2009) was characterised 

by exceptionally large trading-induced interest income generated by 

what is today the Counterparts product line of the CIB Division; this 

compares with significantly lower net interest in the reporting period 

as markets returned to normal and structural changes took place in 

business in the meantime. These developments resulted in a shortfall 

of € 364 m compared with the previous year. The remaining part of 

net interest in the Austrian customer business (without CIB/Counterparts) 

declined by 7% or € 102 m to € 1,277 m. The main reason 

for this decrease in Austrian customer business were narrower interest 

margins while business volume was more or less maintained. 

On the deposit side, volume declined and margins fell significantly, 

reflecting declining market interest rates and continued margin compression. 

In the lending business, volume and spreads held up well, 

mainly in the medium-term to long-term sector, with little change in 

margins. 

The increase in net interest (+9%) in the Central Eastern Europe 

(CEE) business segment was due in equal measure to higher volume 

(average volume of loans up by 3.4%) and an improvement in interest 

margins. Major contributions to growth came from our banking 

subsidiaries in Russia, Croatia, Romania and Hungary (a combined 

increase of € 385 m). This success was diminished mainly by the 

impact from Turkey, where volume rose strongly but margin compression 

was unusually pronounced, and from Kazakhstan and 

Ukraine, for similar reasons. The same applies if the analysis is 

based on figures adjusted for exchange rate movements (net interest 

in CEE up by 4.6%), overall and for individual countries. 

The most remarkable success achieved in 2010 was the 9% 

increase in net fees and commissions to € 1,990 m, although the 

revival of fee-based commercial banking business is still at an early 

stage in the cycle and securities business as well as payment 

transactions are still adversely affected. Net fees and commissions 

generated in Austrian customer business were 9% higher than in 

the previous year, with growth supported by all business segments. 

In the F&SME Division (+4%) securities business started to pick up, 

though not in the form of turnover on safe-custody accounts but in 


15



connection with the successful placement of capital-guaranteed 

investment products and standard issues. In the CIB business segment 

(+14%), commitment fees (in business with large corporates 

and for project finance) and fees generated by Group Transaction 

Banking (GTB), including foreign payments, cash management and 

custody, more than offset the continued moderate level of fee and 

commission income from derivatives business. Private Banking 

(+9%) also recorded growth although developments in summer 

2010 were very weak for seasonal reasons and investors continued 

to adopt a wait-and-see attitude. The fourth quarter compensated for 

the seasonal lull in summer. In Central and Eastern Europe, net fees 

and commissions were 12% up on the previous year (or 9% if 

adjusted for exchange rate movements). The Turkish unit in which 

Bank Austria has a shareholding interest once again made a significant 

contribution to growth (+17%), mainly through the credit card 

business, and net fees and commissions rose at double-digit rates 

also in Russia, the Czech Republic, Slovakia and Croatia. In the bank 

as a whole, net fees and commissions accounted for 28% of operating 

income in 2010, which is still a low level compared with onethird 

in the five years before 2009 (average for the period from 2004 

to 2008: 33.5%) as securities business remained weak. 

Net trading, hedging and fair value income amounted to € 326 m 

in 2010, exactly matching the previous year’s level. This reflects 

developments which moved in opposite directions: the net trading 

performance in CEE declined to less than 30% of the – exceptionally 

high – level recorded in 2009. The sharp decline of € 351 m was 

offset by other business segments. The CIB Division achieved a 

strong turnaround (+ € 114 m) from a net loss on trading activities 

to net income in 2010 although trading and investment banking 

activities were reorganised. And net trading, hedging and fair value 

income in the Corporate Center improved (+ € 94 m), partly as a 

result of Bank Austria’s participation, for the first time, in profits of 

Markets, a global product line of the UniCredit CIB Division (pursuant 

to the terms and conditions of the sale of CAIB). The fact that overall 

net trading income remained at the same level shows that the strategic 

reorientation in favour of customer-driven trading activities need 

not result in a profit downturn. Bank Austria – more specifically, the 

CIB business segment – continues to offer its corporate customers 

all products and capital market-related services. For this purpose it 

uses the portal function of UniCredit’s cross-regional units, in which 

proprietary trading activities have also been combined, and the 

former UniCredit CAIB, now a branch of UniCredit Bank AG (the 

former Bayerische Hypo- und Vereinsbank AG) in Vienna. The structure 

of revenues, financial position and risk-weighted assets has thus 

continued to shift towards commercial banking business without 

changing the range of products and services. 

The sharp decline in net trading income in Central and Eastern 

Europe reflects the exceptionally large trading profit generated in the 

first few months of the previous year. Trading performance reached a 

peak in 2009, at € 496 m, of which € 359 m was recorded in the 

first two quarters. In the early part of 2009, in an environment characterised 

by temporary uncertainty about CEE, strong demand for hedging 

transactions led to high turnover in currency and money market 

trading. Together with technical effects in connection with temporary 

currency depreciation, this resulted in large trading profits. In the 

meantime, the monetary situation and the external environment have 

stabilised, and net trading performance in CEE has returned to a normal 

level of € 145 m. It should be noted in this context that asset/ 

liability management in some countries involves the extensive use of 

interest-rate/currency swaps to reduce the bank’s own foreign currency 

positions. In CEE, customer business in money market and foreign 

exchange trading intensified again in the course of the year, due 

to increased volatility, i.e. stronger demand for hedging transactions, 

in the non-euro sector. In 2009, the net trading result of the Corporate 

& Investment Banking Division was negative (– € 78 m), reflecting the 

repercussions of the financial market crisis (valuation result of synthetic 

ABSs in the second quarter of 2009); the developments outlined 

above resulted in a positive swing of € 114 m, to net income of 

€ 35 m in 2010. 

➔ The balance of other operating income and expenses was 

€ 191 m (2009: € 211 m). Thus Bank Austria’s operating income in 

2010 totalled € 7,208 m, more or less matching the previous year’s 

level (–0.5%). This may be seen as a good performance in view of 

the high comparative figure – based on the exceptionally large net 

interest income and the strong CEE trading profit in the early part of 

2009 – and an environment which was only slightly better and the 

structural adjustment of the business structure. 

Operating income (€ m) 

2010 2009 ChANgE 

Austrian customer business 2,525 2,779 –253 –9% 

… of which.: CIB/Counterparts 361 573 –213 –37% 

Central Eastern Europe 4,649 4,620 +29 +1% 

Corporate Center 34 –244 +278 n.m. 

Operating income 1) 7,208 7,245 –38 –1% 

(adjusted for special effects 2) 7,495 7,245 +249 +3%) 

1) Differences between totals (– € 91 m in the previous year and in changes) are due to the 

adjustment of segment reporting for 2009 to the current consolidation perimeter, see section 

D.2 in the notes to the consolidated financial statements on page 142). / 2) For the adjustment 

see the text and table on page 41. 


Operating expenses amounted to € 3,766 m. Cost growth compared 

with the previous year was low, at € 151 m or 4%, more or less 

matching revenue growth, adjusted for special effects, of € 249 m or 

3%. Based on slightly lower operating income (not adjusted), the 

cost/income ratio rose from 49.9% to 52.3%. Staff costs increased 

at a disproportionately low rate of 2% in 2010 as the average number 

of employees in terms of full-time equivalents in the Group declined 

by 3.8%. Other costs (mainly non-staff expenses) were up by 7% on 

the previous year. In the three segments of Austrian customer business, 

administrative expenses – in the same consolidation perimeter 


16



according to restated figures – grew by only € 38 m or 3%. In CEE, 

operating expenses rose by € 177 m or 9%; at constant exchange 

rates, the increase was 5.5%. Cost trends in CEE reflect the targeted 

expansion of sales channels and the cross-regional bundling of 

product development and back-office functions. Initiatives in mobile 

banking services and the opening of new branches frequently involve 

eliminating inefficiencies and restructuring branch networks which 

have grown over many years, e.g. in Russia, and redimensioning 

administrative structures which are too large, e.g. in Kazakhstan and 

Ukraine. Operating expenses in Turkey rose by 15% in euro terms or 

6% in local currency; this cost increase is justified because the operations 

in Turkey achieved the strongest business expansion (average 

risk-weighted assets up by 19% in euro terms/up by 10% in local 

currency) and it also reflects investment in expanding the branch 

network, for which the bank has to pay a tax on branches. Hungary 

is a special case with cost growth of 29%. Without the local levy on 

banks, which is included in other administrative expenses, costs 

would have increased by 5.4%, or by 3.5% in local currency. 

In Russia, currency appreciation was the main factor (+16%, in 

rouble terms +6%). In Ukraine (+13%/+7%) training costs related 

to IT modernisation were a significant item, and costs in Kazakhstan 

(+9% / +3%) also reflected special effects resulting from the 

reform of the deposit guarantee scheme. The expansion of the CEE 

sub-holding functions and Vienna-based divisional head offices for 

the CEE subsidiaries (+9%) had no significant impact on costs. The 

cost/income ratio in CEE (45.8%) continued to be below the average 

for the bank as a whole. In the Corporate Center, which also comprises 

services for Global Banking Services and internal administrative 

expenses as well as settlement of accounts with near-shoring 

service providers, operating expenses were reduced by 7%. 

Operating expenses (€ m) 


Breakdown by segment: 

Austrian customer business 1,334 1,296 +38 +3% 

Cost/income ratio 52.8 46.6 

Central Eastern Europe 2,128 1,951 +177 +9% 


Corporate Center 305 327 -23 -7% 

Operating expenses 3,766 3,615 +151 +4% 


Breakdown by type of costs: 

Staff costs 1,931 1,894 +37 +2% 

Other, mainly administrative, 

expenses *) 1,835 1,721 +114 +7% 

*) Other administrative expenses (2010: € 1,527 m), recovery of expenses, amortisation, 

depreciation and impairment losses on tangible and intangible assets. 

➔ In 2010, operating profit was € 189 m or 5% below the figure 

for the previous year (adjusted for one-off effects, operating profit 

rose by 3%). As mentioned before, in Austria this reflects the decline 

from the good performance in 2009 (operating profit generated by 

Austrian customer business segments down by € 291 m or 20%, of 

which CIB down by € 245 m or 21%). The year-on-year decrease of 

€ 148 m or 6% in operating profit in the CEE business segment is 

explained by the fact that net trading income in CEE returned to a 

more normal level (down by € 351 m or 71% compared with 2009). 

� Current customer business has been recovering since the second 

half of 2009, while the situation in net writedowns of loans and 

provisions for guarantees and commitments only started to improve 

a year later. As the time lag is due to the logical phase shift of the 

credit risk cycle to the business cycle, this development was characterised 

by strong regional variations. 

After rising sharply in 2009, net writedowns of loans and provisions 

for guarantees and commitments declined by € 428 m or 

19% compared with the previous year. In some countries and for 

various industries, loan loss provisions were released in the reporting 

year. But the income statement was still impacted by a high provisioning 

charge which totalled € 1,839 m: in 2010, net writedowns of 

loans and provisions for guarantees and commitments (i.e. additions 

to and releases from loan loss provisions, and direct write-offs less 

recoveries of loans previously written off) still absorbed 53% of the 

operating profit, after 62% in the previous year. The cost of risk (provisioning 

charge measured as a proportion of average loans to customers) 

declined from 178 basis points (bp) to 144 bp. 

Net writedowns of loans and provisions for 

guarantees and commitments 

(Charge, minus denotes improvement) 2010 2009 ChANgE 


(€ m) 

Bank Austria as a whole 1,839 2,267 –428 –19% 

… Austrian customer business 384 549 –166 –30% 

… CEE 1,454 1,718 –264 –15% 

Cost of risk (in basis points) *) 

Bank Austria as a whole 144 bp 178 bp –34 bp 

… Austrian customer business 58 bp 81 bp –23 bp 

… CEE 235 bp 287bp –52 bp 

*) Provisioning charge/average loans to customers (net) 

The Austrian business segments coped with the credit cycle better 

than expected. In the reporting period, net writedowns of loans and 

provisions for guarantees and commitments totalled € 384 m, after 

an amount of € 549 m in 2009; this represents a decline of 30%. 

Measured as a proportion of average loans to customers (net, based 

on the figure in the statement of financial position), the cost of risk 

fell from 81 bp to 58 bp. In the Family & SME Banking Division 

(F&SME), where loan loss rates are fairly high across the cycle for 

structural reasons, net writedowns of loans and provisions for guarantees 

and commitments declined by 12% to € 212 m; the cost of 

risk was 108 bp in 2010, much lower than in the previous year 

(129 bp). Fears that rising unemployment would, with a time lag, lead 

to a wave of loan losses in business with private customers were fortunately 

not realised. Moreover, there was a shift in the portfolio 

17



Increase in impaired loans levelling off 

€ m 

8,000 

7,000 

6,000 

5,000 

4,000 

3,517 

3,000 

2,000 

1,000 

0 

Impaired loans as a percentage 

of loans to customers (gross) 

5.4 % 

5.8 % 

3,887 

6.5 % 

4,310 

313 370 423 

7.3 % 

4,878 

568 

7.6 % 

5,310 

Net addition to 

specific writedowns 

Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 

2009 2010 

structure towards real estate loans with a high level of collateralisation. 

The provisioning charge in the Small Businesses sub-segment 

declined by one half. In the Corporate & Investment Banking Division 

(CIB), domestic demand remained weak, affecting smaller companies 

in the corporate banking sector; a big difference compared with previous 

cycles is the fact that the bank has so far not been affected by 

major insolvencies. Efforts to restore companies to a sound footing 

were very successful. Additions to impaired loans decreased significantly 

in 2010. Moreover, provisions for a large-volume risk position 

in Markets were released in the second quarter of 2010. The provisioning 

charge in the CIB Division declined by almost one half, from 

€ 306 m to € 169 m, and the cost of risk was reduced from 63 bp 

to 37 bp. 

Central and Eastern Europe (CEE) accounted for almost four-fifths 

(79%), or about € 1.5 billion, of the provisioning charge. It should be 

noted, however, that this business segment achieved an operating 

profit of € 2.5 bn, more than double the figure generated in Austria. 

While there were wide regional variations, the overall situation 

improved in 2010: net writedowns of loans and provisions for guarantees 

and commitments in CEE were down by € 264 m or 15% 

from the 2009 level, a substantial positive effect reflected in the 

income statement. The lower provisioning charge in CEE is mainly 

a result of the additions to loan loss provisions made in the second 

half of 2009; the decline relates to countries which are ahead in the 

credit cycle. Turkey, where net writedowns of loans and provisions 

for guarantees and commitments fell by € 234 m from € 299 m to 

€ 65 m, accounted for most of the overall decrease. Following particularly 

large additions to loan loss provisions in Turkey in 2009, asset 

quality in the country improved faster than expected in 2010, reflect- 

432 

8.7 % 

5,786 

476 

9.0 % 

5,901 

9.1% 

6,040 

Specific writedowns 

115 139 

ing the strong economic upswing. Successful debt collection efforts 

enabled the bank in Turkey to release loan loss provisions made in 

previous years. A securitisation transaction in the retail banking sector 

had an additional positive effect. In Russia, too, the provisioning 

charge declined significantly (by € 69 m to € 138 m), after an 

extended period in which the local bank dealt with negative impacts 

of the credit boom. The situation in South-East Europe deteriorated, 

especially in Romania (provisioning charge up by € 73 m to € 134 m) 

and also in Bulgaria (+ € 32 m to € 95 m) and Croatia (+ € 34 m to 

€ 112 m). These countries are somewhat behind in the credit cycle 

and are also impacted by efforts to reduce external and internal 

financing deficits. 

Even in those countries where the banking sector is still in the process 

of being restructured – i.e. Kazakhstan and, to a lesser extent, 

Ukraine and the Baltic states – net writedowns of loans and provisions 

for guarantees and commitments declined by a combined 

€ 100.5 m (including the cost of guarantees booked in the Viennabased 

CEE headquarters). Nevertheless, the repercussions of the 

crisis in this region should not be underestimated: in Kazakhstan, 

the real estate sector and the construction industry remained under 

pressure, and in Ukraine the difficult political climate was also a significant 

factor. In the Baltic states, the provisioning charge continued 

to rise until recently. 

In the CEE business segment as a whole, the cost of risk averaged 

235 bp in 2010 (after 287 bp in the previous year). There are wide 

geographical variations in terms of exposure and risk: in Kazakhstan, 

Ukraine and in the three Baltic countries – and, for the first time, also 

in Romania, because of the large additions to loan loss provisions 

made in that country in 2010 – the cost of risk was between 450 bp 

and close to 500 bp; this group accounted for 16% of (net) lending 

volume in CEE. At the other end of the rating scale are four countries 

– Turkey and three countries in Central Europe: the Czech Republic, 

Slovakia and Slovenia – where the cost of risk is 100 bp or lower 

and which account for 36% of the loan portfolio. The other countries 

with a below-average risk profile account for 24% of total lending 

volume. (For further information on the loan portfolio and the cost of 

risk by country, see the CEE segment report). 

Asset quality (€ bn or %) 

ENd OF PErIOd 

dEC. 


dEC. 

2009 


dEC. 

2008 

Loans to customers (gross) 137.0 129.3 135.8 

Writedowns (incl. portfolio adjustments) 6.9 5.7 3.9 

Impaired loans 12.5 9.4 6.5 

as a percentage of loans to customers 9.1% 7.3% 4.8% 

… covered by specific writedowns 48.4% 51.9% 49.4% 

of which: non-performing loans 6.4 4.5 3.3 

as a percentage of loans to customers (NPL ratio) 4.6% 3.5% 2.4% 

… covered by specific writedowns 62.6% 69.8% 63.5% 

18



Asset quality in the bank as a whole has not yet improved to any 

significant extent, but the pace of deterioration slowed in the course 

of the past few quarters. Expressed as a percentage of the gross 

volume of loans to customers, impaired loans rose from 4.8% at the 

end of 2008 to 7.3% at the end of 2009 and 8.7% in the middle of 

2010. In the last two quarters of 2010, the impaired loans ratio did 

not rise as strongly, reaching 9.0% and 9.1%, respectively. Additions 

to impaired loans are tapering off. Moreover, the increase in impaired 

loans was seen in the “relatively better” risk categories (past-due, 

restructured and doubtful exposures). Having become impaired more 

recently, writedowns on such loans represent a lower proportion of 

the gross amount than for “old” impaired loans and non-performing 

loans. Moreover, restructuring activities made good progress and 

some writedowns were thereby avoided. As a result of this structural 

effect, the coverage ratio of total impaired loans declined from 

51.9% at the end of 2009 to 48.4% at the end of 2010. The NPL 

ratio, i.e. non-performing loans as a percentage of loans to customers, 

was 4.6% at the end of December 2010, higher than a year 

earlier (3.5%), but only slightly above the ratio at the end of June 

2010 (4.1%). Continued net additions to loan loss provisions resulted 

in 62.6% of NPLs (without taking collateral into account) being covered 

by specific writedowns most recently (compared with 69.8% at 

the end of 2009). It is not unusual for the coverage ratio to decline in 

a post-crisis period, this indicates that the situation will improve. 

The other “non-operating” items between operating profit and 

profit before tax reflect the strong impact of valuation adjustments in 

Results for 2010 compared with 2009 

Impairment losses on goodwill offset strong profit improvement (€ m) 

Profit before tax 2009 = 1,335 

–364 

Net interest income – Counterparts 

+188 

Other net interest income 

+139 

Net non-interest income 

–151 

Cost increase 

+428 

Lower provisioning charge 

*) Goodwill impairment, provisions for risks and charges, restructuring costs, 

net income from investments 

Other non-operating items *) 

–428 *) 

of which: –360 

for goodwill 

impairment 

Profit before tax 2010 = 1,146 

2010: impairment losses on goodwill totalled € 378 m (in 2009: 

€ 19 m), of which € 359 m related to our banking subsidiary in 

Kazakhstan. (For more details see “Accounting policies” in the notes 

to the consolidated financial statements, section A.6 Impairment test, 

on page 104.) 

Net income from investments in 2010 was positive, at € 62 m, but 

significantly lower than in the previous year (€ 113 m) due to the 

expiry of Bank Austria’s participation in current profits of the Polish 

UniCredit banking subsidiary at the end of 2009 (income from this 

item amounted to € 106 m in 2009). Allocations to provisions for 

risks and charges in 2010 were € 136 m after € 114 m in the previous 

year. 

➔ The items between operating profit and profit before tax (“nonoperating 

items”) were a net charge of € 2,296 m, exactly the 

same amount as in 2009. This means that the positive effect of the 

€ 428 m decline in net writedowns of loans and provisions for guarantees 

and commitments in 2010 was offset by an additional charge 

resulting from the other items. 

Profit before tax by business segment (€ m) 


… Austrian customer business 792 867 –75 –9% 

of which: CIB/Counterparts 329 490 –161 –33% 

… Central Eastern Europe 1,064 916 +148 +16% 

… Corporate Center –710 –496 –215 +43% 

Bank Austria as a whole 1,146 1,335 –189 –14% 

� Profit before tax for 2010 was € 1,146 m, down by € 189 m or 

14% from 2009 (see table). The decrease resulted from the Corporate 

Center (– € 215 m), whose segment result was impacted by 

impairment losses on goodwill. Profit before tax generated by the 

three divisions of Austrian customer business was down by 9% to 

€ 792 m. The decline was not related to commercial banking business 

but resulted from an exceptional shift in trading and investment 

banking activities. The CEE business segment achieved a 16% 

increase in its profit before tax, to a level exceeding one billion euros 

(€ 1,064 m), thus confirming its role as an important contributor to 

growth and revenue. Income tax on profit before tax for 2010 was 

€ 348 m. The effective tax rate rose from 13.7% in 2009 to 30.4% 

in the reporting year. Among the reasons were higher non-deductible 

expenses (including impairment losses on goodwill) and a swing in 

tax-exempt income from a positive to a negative figure. 

Net profit amounted to € 798 m, a decrease of 31% from the 

previous year. Of the total figure, an unchanged amount of € 51 m 

was attributable to non-controlling interests (previously: minority 

interests). Consolidated profit (net profit attributable to the owners 

of Bank Austria) was € 747 m, down by 32% from the previous year 

(€ 1,102 m). 


19



Financial position and capital resources 

Financial position 

� Bank Austria’s total assets showed little change in 2010 after 

declining significantly in 2009. At € 193.0 bn as at 31 December 

2010, total assets (–0.7%) almost matched the year-end 2009 level. 

The most important structural change in the reporting year – the 

deconsolidation of UniCredit CAIB – was offset by an expansion of 

other items in the statement of financial position. At year-end 2009, 

UniCredit CAIB was contained in the items “Non-current assets and 

disposal groups classified as held for sale” and “Liabilities included in 

disposal groups classified as held for sale” (€ 13.2 bn and 

€ 10.5 bn, respectively). Adjusted for this effect, total assets would 

have risen by 6.5% in 2010. 

Customer-based lending and deposit business grew much more 

slowly than in the years before the financial and economic crisis, 

partly due to the more moderate pace in CEE. The structure of the 

bank’s financial position nevertheless improved in several ways 

since year-end 2009, and a longer-term perspective shows even 

stronger improvement: the proportion of business with customers 

increased, interbank business was reduced in line with the trend in 

the banking sector, and equity capital expanded, especially as a 

result of the capital increase in March 2010. Both the assets side 

and the liabilities side therefore contributed to a further improvement 

of the leverage ratio (total assets/equity, without intangible assets). 

� The sale of UniCredit CAIB as part of the bundling of trading 

activities in UniCredit Group via UniCredit Bank (the former Bayerische 

Hypo- und Vereinsbank AG), Munich, was prepared long before 

the transaction took place. To this end, in 2009, the business activi- 

Multi-year trend in total assets, by quarter (€ bn) 

240 

220 

200 

180 154 

160 

Total assets 

209 

203 

196 

191 

140 

120 

Loans to customers 

100 

80 

60 

40 

20 

221 229 230 222 

214 

208 204 201 

194 

200 

191 193 

22 

20 

18 

16 

Leverage ratio 

(without intangible assets) 

14 

12 

0 

D M J S D M J S D M J S D M J S D 

2007 2008 2009 2010 

10 

ties of UniCredit CAIB were largely scaled down to proprietary trading 

and position-keeping. Bank Austria, in several steps, assumed 

responsibility for the remaining customer-driven business and Treasury-related 

financial markets business until the sale of CAIB. In the 

statement of financial position as at 31 December 2009, and for the 

last time as at 31 March 2010, UniCredit CAIB AG and the brokerage 

firm UniCredit CAIB Securities UK Ltd. were contained in the items 

“Non-current assets and disposal groups classified as held for sale” 

and “Liabilities included in disposal groups classified as held for sale” 

in accordance with IFRS 5 (€ 13.2 bn and € 10.5 bn, respectively). 

Before its sale, UniCredit CAIB’s business volume consisted almost 

entirely of trading-related items on the assets side (– € 11.6 bn), and 

on the liabilities side together with marking-to-market liabilities 

(€ 8.7 bn); see the table on page 49, column on the far right. 

The deconsolidation of UniCredit CAIB and its London-based subsidiary 

did not however result in the strong reduction of total assets 

which may have been expected. This is explained by the expansion of 

customer business and technical effects: the former UniCredit CAIB 

is now a branch of UniCredit Bank AG (the former Bayerische Hypo- 

und Vereinsbank AG), Munich. With the sale of these companies, 

receivables and liabilities between Bank Austria units and UniCredit 

CAIB, which were previously offset as intercompany items for consolidation 

purposes, became external receivables and liabilities. This is 

why a number of asset and liability items rose strongly as a result of 

the transaction in the middle of the year – and therefore also in a 

comparison of 31 December 2010 with 31 December 2009. The 

increase was particularly pronounced in the area of hedging derivatives 

(+€ 2.3 bn on the assets side and +€ 2.7 bn on the liabilities 

side) which are used to hedge risk positions in customer business or 

in Treasury operations. The trading-related items on the assets side 

and the liabilities side, loans and receivables with banks, and deposits 

from banks remained stable due to the nature of the functions 

taken over from UniCredit CAIB. 

� On the assets side, the combined rise in loans and receivables 

with customers (+€ 6.5 bn) and in financial market instruments 

(+€ 6.2 bn) – these instruments comprise financial assets at fair 

value through profit or loss, available-for-sale financial assets, and 

held-to-maturity investments – in 2010 was almost as strong as 

the decline of non-current assets and disposal groups classified 

as held for sale (– € 13.2 bn) as a result of the completed sale of 

UniCredit CAIB. 

Cash and cash balances declined due to a decrease in funds held 

with central banks (– € 184 m/–5.7% to € 3.0 bn) as money markets 

normalised. There was little change in financial assets held for 

trading, which amounted to € 4.3 bn (+€ 167 m/+4%); the inclusion 

of the relevant positions classified as held for sale at the end of 

2009 in the comparative figure would result in a decline of almost 

three-quarters or € 11.3 bn. Financial market instruments totalled 

€ 22.3 bn, with available-for-sale financial assets rising sharply, by 


20



€ 6.7 bn or 62%, to € 17.5 bn; the increase resulted primarily from 

purchases of fixed-income securities for the purpose of maintaining 

adequate liquidity levels and from trading activities of the banking 

subsidiaries in CEE. 

As in 2008 and 2009, loans and receivables with banks continued 

to decline: in a comparison of year-end 2010 with year-end 

2009, they contracted by € 3.3 bn or 14.4% to € 19.7 bn and 

accounted for only 10.2% of total assets (31 Dec. 2009: 11.9%, 

31 Dec. 2008: 14.1%, 31 Dec. 2007: 18.2%). The decline reflects 

the lower trading volume in financial market instruments and the 

general restraint on money markets. 

loans and receivables with customers were up by € 6.5 bn or 

5.3% net of loan loss provisions (in gross terms they increased by 

€ 7.7 bn or 6.0%). Customer loans thus totalled € 130.1 bn as at 

year-end 2010 and accounted for more than two-thirds (67.4%) of 

total assets (2009: 63.6%, 2008: 60.7%). In Austria, lending volume 

stagnated at the previous year’s level (–0.5%), reflecting a decline in 

the CIB Division (–2.3%). In CEE, the growth of loans to customers 

accelerated again (+11.5%) after a lacklustre performance in 2009. 

This was supported primarily by credit growth in the large countries, 

most particularly in Turkey and Russia, as well as in Croatia and the 

Czech Republic. These countries accounted for 57% of total volume, 

and for 90% of the rise compared with the previous year, which saw 

customer loans expand by 19.5%. While one-quarter of the improvement 

in CEE is attributable to the appreciation of a number of CEE 

currencies compared with 31 December 2009, customer loans 

recorded impressive growth of over 9% after adjustments for 

exchange rate effects. 

Among the other items on the assets side, goodwill declined by 

€ 190 m or 5.5% to € 3.2 bn. Impairment losses on goodwill relating 

to our banking subsidiaries in Kazakhstan and the Baltic region 

(€ 378 m) were offset by positive exchange rate effects to the extent 

of about one-half. 

� On the liabilities side, interbank business, at € 33.1 bn 

(–0.7%), remained almost unchanged in 2010, unlike developments 

on the assets side. This is explained by a variety of factors: a sharp 

decline in deposits from central banks (– € 3.6 bn) was accompanied 

by an increase in deposits from commercial banks of almost the 

same magnitude. This shift is in line with the normalisation in money 

markets: a reduction of central bank clearing operations which were 

very prevalent in the crisis/slow revival of interbank relationships. 

Financial liabilities held for trading increased by € 1.4 bn to 

Major items in the statement of financial position – comparison of year-end figures (€ m) 

31 dEC. 2010 Percentage 

share 

31 dEC. 2009 Percentage 

share 

Change 31 dEC. 2009 31 dEC. 2009 

€ m in % “Held for sale” 

reintegrated 1) 

Held-for-sale 

items 2) 

ASSEtS 

Financial assets held for trading 4,304 2.2% 4,137 2.1% +167 +4.0% 15,694 11,557 

Hedging derivatives 2,449 1.3% 151 0.1% +2,297 >100% 151 0 

Other financial assets 3) 22,294 11.5% 16,128 8.3% +6,167 +38.2% 16,412 285 

Loans and receivables with banks 19,749 10.2% 23,076 11.9% –3,327 –14.4% 23,087 11 

Loans and receivables with customers 130,093 67.4% 123,602 63.6% +6,491 +5.3% 123,602 0 

Non-current assets and disposal groups 

classified as held for sale 2 0.0% 13,210 6.8% –13,209 –100.0% 0 0 

… other asset items 14,158 7.3% 14,155 7.3% +3 +0.0% 15,512 1,357 

total assets 193,049 100.0% 194,459 100.0% –1,410 –0.7% 194,459 13,210 

lIABIlItIES ANd EqUIty 

Liabilities held for trading and financial liablities 

at fair value through profit or loss 4,099 2.1% 2,882 1.5% +1,217 +42.2% 11,580 8,698 

Hedging derivatives 2,909 1.5% 219 0.1% +2,690 >100% 219 0 

Deposits from banks 33,130 17.2% 33,362 17.2% –232 –0.7% 33,362 0 

Primary funds 127,839 66.2% 125,863 64.7% +1,976 +1.6% 125,863 0 

Liabilities included in disposal groups classified 

as held for sale 0 0.0% 10,492 5.4% –10,492 –100.0% 0 0 

Equity 17,475 9.1% 14,388 7.4% +3,087 +21.5% 14,388 0 

… other liability items 7,598 3.9% 7,253 3.7% +344 +4.7% 9,047 1,794 

total liabilities and equity 193,049 100.0% 194,459 100.0% –1,410 –0.7% 194,459 10,492 

1) For analytical purposes, Non-current assets and disposal groups classified as held for sale, and Liabilities included in disposal groups classified as held for sale, were again assigned to the 

original items in the statement of financial position from which they originated. / 2) At the end of 2009, the item “Non-current assets and disposal groups classified as held for sale” included assets 

of UniCredit CAIB AG (€ 13,164 m) and specific other assets classified as held for sale (€ 46 m), mainly items of property, plant and equipment. / 3) Financial assets at fair value through profit or 

loss + available-for-sale financial assets + held-to-maturity investments. 


21



€ 2.4 bn, in parallel with developments on the assets side. hedging 

derivatives used for hedging customer business and the bank’s 

own positions developed in similar fashion on both the assets side 

(+€ 2.3 bn) and the liabilities side (+€ 2.7 bn) to reach comparable 

levels – an effect resulting from the assumption of functions previously 

performed by CAIB; on the liabilities side they amounted to 

€ 2.9 bn. 

deposits from customers were up € 3.2 bn or 3.3% to € 100 bn. 

The increase took place in the area of short-term customer deposits 

and was heavily dependent on the interest rate environment in our 

markets. Deposits in Austrian-based customer business contracted by 

5.6% – partly on account of high interest rate sensitivity. This compared 

with growth of € 6.1 bn or 12.8% in Bank Austria’s CEE Division. 

Based on a breakdown of countries, the rise in deposits was 

more broadly spread across the CEE region than that of loans. It was 

again Turkey and Russia which accounted for most of the increase, 

not only by virtue of their prominent role in the region, but also 

because these countries achieved the strongest growth rates both in 

euro and in local currency terms. The appreciation of the respective 

local currencies accounted for about one-half of the increase in 

deposits in CEE. In 2010, debt securities in issue (€ 27.6 bn) were 

somewhat below the level of year-end 2009 (– € 1.3 bn/–4.4%). 

The decline is explained by the redemption of issues before maturity 

in business with large corporate customers. As of 31 December 2010, 

primary funds – i.e. deposits from customers and debt securities in 

issue – totalled € 127.8 bn, 1.6% above the level of year-end 2009, 

which represented two-thirds (66.2%) of the balance sheet total. This 

means that loans and receivables with customers are almost entirely 

covered by primary funds. The ratio of customer loans to primary 

funds, based on a comparison of year-end 2010 with year-end 2009, 

again increased slightly (102% after 98% in 2009). This is due to 

developments in CEE, where, after a number of years characterised by 

deleveraging and intense competition for deposits, 2010 again saw a 

more expansive approach in lending business. 

As at 31 December 2010, equity amounted to € 17.5 bn, a € 3.1 bn 

(+21.5%) increase over the level at year-end 2009. Measured as a 

proportion of total liabilities and equity, it rose from 7.4% to 9.1%. 

The € 3,087 m growth in equity was achieved partly by a € 2,000 m 

capital increase, which was made available in March 2010 by our 

parent company UniCredit from funds generated by its capital 

increase. The remaining amount of the increase in equity resulted 

from income and expenses recognised in equity, which were a net 

amount of € 1,147 m, including the net profit (€ 798 m). In 2010, 

UniCredit Bank Austria AG did not pay any dividends for the 2009 

financial year. As at 31 December 2010, shareholders’ equity excluding 

minority interests was € 16.9 bn, up by € 3.1 bn or 22.2% on 

year-end 2009. 

Capital resources pursuant 

to the Austrian Banking Act 

Risk-weighted assets (RWAs) as at the end of December 2010 were 

€ 127.9 bn, up by € 13.5 bn or 11.8% on year-end 2009. Of the 

total increase, € 7.3 bn related to the portfolios maintained under the 

internal ratings-based (IRB) approach and € 4.4 bn to loans and 

receivables measured pursuant to the standardised approach. 

The overall increase resulted from an adjustment of risk parameters 

required in view of economic developments and from the higher 

exchange rates of most CEE currencies as at 31 December 2010. 

As a result of higher RWAs, the capital requirement for credit risk 

increased to € 9.1 bn (+11.5%) and the capital requirement for all 

types of risk rose to € 10.2 bn (+11.8%). 

Net capital resources as at the end of the reporting period were 

€ 15.5 bn, up by € 3.0 bn or 24.2%. The increase resulted mainly 

from the capital increase of € 2.0 bn at UniCredit Bank Austria AG in 

the first quarter of 2010, and partly from adjustments of the carrying 

amount of equity interests and from exchange rate movements. 

Capital ratios as at 31 December 2010 improved significantly compared 

with the end of 2009. The Core Tier 1 capital ratio (Tier 1 capital 

ratio without hybrid capital) based on all risks rose from 8.33% to 

10.04%. The Core Tier 1 capital ratio based on credit risk increased 

from 9.37% to 11.33%. 

Capital ratios 

31 dEC. 2010 31 dEC. 2009 

based on all risks 1) 


... without hybrid capital (Core Tier 1 capital ratio) 10.04% 8.33% 

Total capital ratio 12.13% 10.92% 

based on credit risk 2) 


... without hybrid capital (Core Tier 1 capital ratio) 11.33% 9.37% 

Total capital ratio 12.67% 11.29% 

1) Credit risk, operational risk, position risk and settlement risk. / 2) Capital resources less 

requirement for the trading book and for commodities risk, exchange rate risk and operational 

risk as a percentage of the risk-weighted assessment basis for credit risk. 


22



Financial and non-financial performance indicators 

Volume and profitability 

� Average loans and receivables with customers (net of loan loss 

provisions, stated at € 127.5 m in the statement of financial position), 

were only slightly above the level of 2009 (+0.3%) despite a 

vigorous upturn from quarter to quarter (Q4 2010/Q4 2009 +4.1%). 

The development in Austria and CEE reflects the U-shaped trend 

already referred to in this report. In Austria, lending volume almost 

matched the previous year’s figure in a comparison of Q4 2010 with 

Q4 2009 (–0.9%), but the average figure for 2010 as a whole was 

still 2.8% lower than in 2009. In CEE (supported by the appreciation 

of CEE currencies in recent months), lending volume expanded from 

quarter to quarter (Q4 2010/Q4 2009 +9.6%) to exceed the previous 

year’s level in annual average terms (+3.4%). The bank’s 

unweighted lending volume is of more or less equal significance in 

both of its key regions, Austria and CEE. 

Resources and profitability in 2010 

BANk 

AUStrIA AUStrIA 1) CEE 

relative size 

Average loans to customers (€ bn) 127.5 66.0 61.8 

Change over previous year +0.3% –2.8% +3.4% 

Average RWAs under Basel 2 (€ bn) 122.9 43.4 74.3 

Change over previous year +2.9% +1.0% +4.7% 

Operating income (€ m) 7,208 2,525 4,649 

Change over previous year +0.8% – 9.1% +0.6% 

Profitability and value creation 

ROE before tax 2) 6.7% 18.1% 9.6% 

marginal EVA, € m 3) 194 276 12 

marginal RARORAC 2.28% 8.96% 0.17% 

Equity 

Average equity (€ bn) 4) 17.0 4.4 11.1 

Change over previous year +20.0% +15.9% +11.4% 

1) Family & SME Banking (F&SME), Private Banking (PB) and Corporate & Investment Banking (CIB) 

Divisions; the difference of the total amount is shown in the Corporate Center (see section D.2 on 

segment reporting in the notes to the consolidated financial statements on page 142 of this report / 

2) ROE = profit before tax/institutional capital. / 3) Calculated on the basis of capital allocated under 

Basel 2. / 4) Subsidiaries are included at actual IFRS capital. 

Average risk-weighted assets (€ 122.9 bn, RWAs under Basel 2) 

showed a similar trend from quarter to quarter. The U-shaped trend 

was more pronounced: in the fourth quarter of 2010, risk-weighted 

assets in Austria and CEE exceeded the previous year’s level by 

13.4% and 11.3%, respectively. In average terms for the year, they 

were 1.0% (Austria) and 4.7% (CEE) above the levels seen in 2009. 

A factor to be noted in this context is the restructuring of investment 

banking activities: in Austria, market risk declined by 56%, and in the 

bank overall, including CEE, it decreased from € 4.3 bn to € 2.8 bn 

(–35%). Risk-weighted lending volume increased by an average 

4.1% in the three Austrian customer business segments (this was 

influenced by a special effect induced by the appreciation of the 

Swiss franc; see the Family & SME Banking segment report). In CEE, 

average RWAs rose by 4.7%. In terms of absolute size, the RWAs 

of the CEE business segment are about 1.7 times those of Austriabased 

business, reflecting the different level of risk associated with 

more or less equally large loan exposures in both regions. 

Average equity rose by 20.0% to € 17.0 bn in the reporting year, 

largely as a result of the capital increase in March 2010, and of 

profit generated in 2010. return on equity (ROE before tax) was 

6.7%, once again lower than for 2009 as a whole (9.1%) and 

also below long-term averages (2005 –2009: 14.0%). The decline 

was due to the increase in equity and to the weak profit performance 

reflecting the high non-operating items to be deducted from operating 

profit. 

Economic Value Added (EVA), a key indicator of the bank which is 

also used for customer business below the divisional level, measures 

value creation beyond the cost of capital. In more precise terms, EVA 

is defined as net operating profit after tax, adjusted for one-off 

effects, less minimum return required by the market on equity capital 

employed; marginal refers to the exclusion of goodwill. Under the 

new methodology, the equity capital which is expected to generate a 

return is no longer defined as IFRS equity but as capital derived from 

average risk-weighted assets by using the target Tier 1 capital ratio. 

For this reason the risk-adjusted return may be higher than return on 

equity, which is based on institutional capital. Inter-segment relations 

and differences in the total compared with the EVA for the bank as a 

whole, which is calculated separately, are reflected in the Corporate 

Center. 

In 2010, Bank Austria generated an EVA of € 194 m, significantly 

more than in 2009 (€ 105 m), despite increases in average riskweighted 

assets and equity capital expected to generate a return 

(calculation based on a Tier 1 capital ratio of 7.2% and a cost of 

capital of 10.18%). Marginal rArOrAC was 2.28% (2009: 1.29%), 

significantly below the bank’s target. EVA in Austrian customer 

business was € 276 m, in CEE € 12 m. In both parts of the bank’s 

operations, EVA declined as risk-weighted assets and equity capital 

employed rose and the cost of capital increased. EVA in the Corporate 

Center remained negative, though improving strongly. 

� The number of employees (in terms of full-time equivalents – 

FTEs) declined slightly, from 60,437 at the end of 2009 (restated) 

to 59,653 FTEs at the end of December 2010 (down by 784 FTEs, 

–1.3%). In Austrian customer business, staffing levels rose by 

124 FtEs (+2.2%). Staff numbers in the F&SME and PB business 

segments increased by 81 FTEs and 33 FTEs, respectively. This was 

partly due to consolidation effects, and mostly to our “Best Start” 

youth initiative and in increases in the number of customer relation- 


23



ship managers and portfolio analysts. At the end of 2010, the CIB 

Division employed more staff (+10 FTEs) than at the end of 2009, 

despite the sale of UniCredit CAIB AG in the middle of the year. This 

illustrates once more that, in economic terms, the sale of UniCredit 

CAIB AG involved a restructuring of business and that a number of 

trading activities continue to be conducted in Bank Austria. In the Corporate 

Center, staffing levels were down by 136 FTEs or 6% from the 

previous year, with Group Banking Services accounting for a decrease 

of 229 FTEs, mainly as a result of the separation of IT-Austria. Lower 

staffing levels in CEE (down by 772 FTEs or 1.5%) are explained by 

the centralisation of the administrative network in Kazakhstan and the 

sale of a pension fund in that country (together –524 FTEs). The 

reduction of 420 FTEs in Ukraine, too, is a result of organisational 

alignment with the Group structure. In most CEE countries, additions 

to and reductions of staff numbers took place simultaneously, reflecting 

efforts to optimise the branch network. The Vienna-based CEE 

headquarters was expanded as planned. Together with employees in 

affiliated companies (including Administration Services, UGIS, Pioneer 

Investments, UniCredit Leasing, CAIB …) UniCredit Group had 10,908 

employees (FTEs) in Austria at the end of 2010. 

At the end of 2010, the number of Bank Austria’s branches totalled 

3,033, down by 55 from year-end 2009. The number of branches in 

the Austrian business segments was 299. The reduction of 19 units 

during the year resulted from the sale of UniCredit CAIB AG and from 

the transfer of CAIB subsidiaries to management responsibility of the 

CEE business segment. Two branches were closed and their business 

was transferred to branches in their vicinity. The expansion of specialised 

SME service centres in the various Austrian regions does not 

constitute the establishment of branches because these are – in 

legal terms – integrated and are accommodated in existing F&SME 

branches. In CEE, the number of branches declined by 36 to 2,734 

as 65 new offices were opened and 101 branches were closed. (In 

2009, 98 branches were opened and 152 were closed). Parallel 

measures that reflected streamlining (in urban centres where the 

bank maintains a multiple presence) and targeted expansion in 

growth regions were implemented in all countries; in Turkey, for 

example, 42 branches were opened and 16 were closed. 

BANk 

AUStrIA AUStrIA 1) CEE 

gBS+ 

COrPOrAtE 

CENtEr 2) 

Employees (FTEs) 

End of 2010 59,653 5,820 51,616 2,217 

End of 2009 (restated) 60,437 5,696 52,388 2,353 

Change –784 +124 –772 –136 

Branches 

End of 2010 3,033 299 2,734 

End of 2009 3,088 318 2,770 

Change –55 –19 –36 

1) Total figures for the three business segments F&SME, PB and CIB 

2) GBS = Global Banking Services 

Human Relations 

human resources management sees its role as initiating and 

driving change processes with the objective of creating an environment 

in which employees generate sustainable value for our customers. 

The shared values enshrined in the UniCredit Integrity 

Charter – fairness, transparency, respect, reciprocity, freedom to 

act, and trust – and the code of conduct serve as guiding principles 

for our human resources activities. 

We offer our employees a working environment with an international 

outlook while benefiting from diversity through international 

exchange and in daily cooperation. We also aim to be a great place 

to work for our future employees. In November 2009, we launched 

the “BestStart” training initiative to offer job opportunities. A total 

of 125 training positions were filled in 2010. We are planning to fill 

another 120 training positions in 2011. Structured training programmes 

and training on the job provide our BestStarters with 

broad banking know-how within a short time and give them an 

opportunity to apply acquired knowledge in practice. 

The Executive development Programme (EDP) and our Talent 

Management focus on strategic and individual personnel planning 

for executives and talents. Attention is given to ongoing development 

of management potential from within the bank while successively 

raising the percentage of female management positions. 

global job Model: Together with our managers we have prepared 

job descriptions for all activities in UniCredit and compiled tasks 

which are characterised by similar profiles of technical and personal 

requirements in the standardised Global Job Catalogue. 

All positions now have clear and comparable descriptions, titles, 

development opportunities and career paths. 

At UniCredit Bank Austria AG, Performance Management is 

aimed at consistently promoting employee development through 

transparent and fair assessment of performance and well-balanced 

market-oriented and transparent incentives. Employees are to be 

managed on the basis of annual targets derived from targets for 

the bank as a whole. Performance Management thus contributes 

to bringing sustainable performance and sustainable profitability of 

the bank into line. Transparent competence criteria applied in the 

AnnualPerformanceDialogue (APD) support the personal feedback 

process between employees and managers. 

In defining annual targets and performance criteria – and not least 

in the assessment of performance in our MbO and incentive system 

– we placed greater emphasis on customer satisfaction and 


24



sustainable performance standards to balance short-term sales 

and revenue targets. External customer satisfaction is measured 

using specific methodologies (see below) at all levels and in all 

regions of our sales network, and the results are taken into 

account in the incentive system with different weights, as is the 

internal assessment of service quality of central competence lines 

and subsidiaries providing services. 

Remuneration of top management is determined within UniCredit 

Group by way of a clearly-defined Group Compensation System, 

which has been implemented at UniCredit Bank Austria AG. The 

variable components of the remuneration mix are linked to sustainable, 

long-term and multi-year performance criteria; they also 

include non-financial criteria and do not encourage persons to 

take unreasonable risks. Deferred payment is possible for parts of 

variable remuneration. The amendment to the Austrian Banking Act 

which implements the provisions concerning remuneration policy 

contained in the Capital Requirements Directive (CRD 3) came into 

effect as at 1 January 2011. It defines a new framework for remuneration 

policies and practices for banks. UniCredit Bank Austria 

AG will adjust its remuneration policy to the new legal rules. 

Customer satisfaction 

Customer satisfaction is a component of the bank’s mission statement 

and therefore one of its objectives as well as an integral part 

of our business model. This is based on the belief that we can only 

be economically successful if we meet our customers’ needs, if we 

maintain relations with our customers on the basis of mutual trust, 

and if the quality of our products and services is attuned to the 

demands of our customers. We identify the preferences and opinions 

of our customers in a number of different ways, from dialogue 

with customers to measurements and statistical comparisons, to 

subsequently align our day-to-day business with customers 

accordingly from the feedback we receive. 

� Information on general customer satisfaction is obtained 

through regular surveys whose results are processed to create 

indices which are broken down by region and division. In the 

course of 2010, market research companies interviewed 42,312 

customers on our behalf. The feedback was evaluated at different 

levels (branches, regions, customer groups, divisions, the bank as 

a whole), which included a comparison with the banking sector 

and within UniCredit Group to enable us to respond to the results 

with a package of measures. In 2010 TRIM, the aggregated customer 

satisfaction index, improved by 5%, more than the figure for 

the market as a whole. 

� The customer surveys are complemented by regular mystery 

shopping in the sales units with instant feedback given to branches 

and employees. In 2010, we tested the quality of services in all 

branches with 1,576 tests (5.6 tests per branch each year). A further 

789 tests were conducted to ascertain to what extent needs-oriented 

advisory services took account of regulatory provisions (informing the 

customer of the risks involved). Bank Austria achieved an aboveaverage 

performance in the subsequent benchmarking. We defined 

service and advisory standards for business with customers (general 

services, advisory services, telephone conduct, complaints) with a 

view to improving service quality. In 2011 we will familiarise all sales 

staff with these standards through an intensive training programme. 

� In the fourth quarter of 2010 we launched the “Feedback kundenerlebnis” 

(customer experience feedback) initiative: immediately 

after an advisory talk with a customer, such as an annual review, we 

send the customer a short electronic questionnaire for the purpose of 

evaluating the talk. With a response rate of 65% to 4,400 e-mails, 

the trial run was very successful and will now be extended to other 

advisory-related situations. 

� In the area of complaints management we gave customers 

access to all our communications channels (e-mail, website, aroundthe-clock 

service line, branches, ombudsperson) and we improved 

the relevant processes with the aim of solving 80% of customer 

complaints within twenty-four hours. We set up an ombudsperson’s 

office for persons experiencing social hardship, where customers 

who are in financial difficulty receive assistance in reducing their 

debt, or are granted a delay in payment, etc. 

� In light of the growing complexity of processes and the division of 

labour it is important to also take account of the criticism and suggestions 

of our own employees. Our “People Survey” programme 

regularly provides us with extensive, important information for planning 

specific measures for improvement. Based on the feedback (the 

response rate from employees was most recently 74%), we prepared 

specific measures to be taken in all business areas and by all subsidiaries 

and service units. The implementation of these measures is 

reviewed in an ongoing monitoring process. 

Within the bank we ascertained the quality of services provided to 

“internal customers” by six service and competence lines by means 

of regular questionnaires (“Listening to Inside Clients”) and awarded 

five internal service awards to the best units at the Vienna head 

office. The internal service quality measured by this method is taken 

into account by the incentive system applicable for employees working 

at the head office in Vienna. 


25



Sustainability management 

The objective of Corporate Sustainability is to promote the integration 

of the social, ecological and economic dimensions of sustainability in 

Bank Austria. With a view to giving effect to entrepreneurial responsibility 

and the sustainability objective, Corporate Sustainability is 

responsible for executing and communicating a wide range of activities. 

For example, Corporate Sustainability is also involved in product 

development to give effect to these aspects. 

In the current critical environment, Corporate Sustainability provides 

strong impetus to reputation-related measures, with a focus on longterm 

orientation, credibility and customer relationships. In this context, 

Corporate Sustainability acts as moderator of the dialogue with 

stakeholders. “BankAustria-NachhaltigkeitsKreis” is an important 

forum for these activities. 

Maintaining a dialogue with customers, the bank is also in direct 

contact with its most important stakeholders. Other Corporate Sustainability 

activities range from sponsoring and public events, cooperation 

under various arrangements including the “Sharing knowledge” 

programme, and initiatives focusing on operations ecology and product 

ecology. 

Operations/product ecology: as part of its sustainability approach, 

UniCredit Bank Austria AG has for many years given close attention 

to ecology-related issues. A major factor in this context is ongoing 

control of direct environmental impacts such as the use of natural 

resources and waste generation. Indirect environmental impacts 

caused by business activities are also at the centre of attention. 

With the implementation of a certified environmental management 

system pursuant to ISO 14001, the bank has become the first universal 

bank in Austria to analyse and structure its environmental 

activities in this way, and to have them audited by external experts as 

at the end of the first quarter of 2011. In concrete terms, this has led 

to the ongoing publication of our environmental policy and the establishment 

of an effective organisational structure with the appointment 

of an Environmental Officer and an Environmental Manager. 

The bank maintains its ecological focus on the product side. In 2010, 

in addition to the relevant mutual funds of Pioneer Investments, we 

offered a savings product under the name of “Bau(m)sparen” which 

combines a classic building society savings contract with the possibility 

of actively contributing to the protection of rainforests. Based on 

the commitment of a Talents group, this initiative was taken up by 

the Management Board and promptly implemented. 

Research and development 

Bank Austria’s business object is to provide banking services. The 

production process of a bank does not involve research and development 

in an industrial sense. But day-to-day business operations continuously 

benefit from development activities, such as for the structuring 

of investment products (e.g. products with capital guarantees) 

or in conjunction with financial engineering for our customers. In the 

latter case, examples are complex acquisition or project finance 

arrangements over and beyond the employment of standard products. 

Generally, Bank Austria aims to meet the needs of different 

customer groups with simple products. The methodologies used in 

the bank’s risk management, the management of the structure of 

assets and liabilities, and in funding and liquidity management, are 

constantly being developed. This entails substantial cost, given the 

ongoing changes in the environment within which the bank operates 

and the work required to prepare for far-reaching regulatory changes. 

Information and communications technology (ICT) is also improved on 

an ongoing basis. This includes the EuroSIG project, which involves 

the step-by-step introduction of a common core banking system 

within UniCredit Group. According to current plans, Bank Austria will 

change to the new IT platform in 2012. All of the Group’s – and 

therefore also Bank Austria’s – key IT applications for sales and business 

with customers will be replaced by EuroSIG AT, a web-based 

system harmonised across the different regions. EuroSIG AT supports 

the development and settlement of products which are distributed on 

a cross-border basis within UniCredit Group. The new IT platform 

should shorten the time to market and significantly reduce IT complexity. 

This will result in lower IT costs over the longer term, while 

increasing IT efficiency. 

Further information 

The following detailed information is included in the notes to the 

consolidated financial statements: 

� Events after the reporting period are included in section F-15 

within “F – Additional disclosures” of the notes to the consolidated 

financial statements on page 185. 

� The risk report is a separate chapter (“E – Risk report”) in the 

notes to the consolidated financial statements (pages 149 to 173). 

� The report on key features of the internal control and risk management 

systems in relation to the financial reporting process is contained 

in section E.10 of the risk report (pages 167 to 169). 


26



Development of business segments 

Family & SME Banking (F&SME) 

(€ m) 2010 2009 1) ChANgE 

Net interest income 647 690 –42 –6% 

Net non-interest income 405 391 +14 +4% 

Operating income 1,052 1,080 –29 –3% 

Operating expenses –798 –780 –18 +2% 

Operating profit 253 300 –47 –16% 

Net writedowns of loans –212 –243 +30 –12% 

Other non-operating items 6 8 –1 –17% 

Profit before tax 47 65 –18 –27% 

Loans to customers (avg.) 19,678 18,812 +866 +5% 

Risk-weighted assets (avg.) 2) 12,880 10,342 +2,538 +25% 

Average equity 3) 746 825 –80 –10% 

1) For segment reporting purposes, the comparative figures for 2009 were restated to reflect the structure 

and methodology of the reporting period 2010 (see notes to the consolidated financial statements in 

section D on page 139 of this report). / 2) Average risk-weighted assets under Basel 2 (all risks). / 

3) Standardised capital; capital allocation to subsidiaries reflects actual IFRS capital. The difference 

compared to the consolidated equity of the Bank Austria Group is shown in the Corporate Center. See 

section D.2 in the notes to the consolidated financial statements on page 142. 

This information applies to all business segment tables. 

� The Family & SME Banking (F&SME) business segment is a 

major pillar of Bank Austria, with loans totalling € 20 bn and deposits 

amounting to € 22 bn (as at the end of 2010) and with operating 

income of over one billion euros. F&SME is also a key factor for 

the bank’s image, given the strong presence of a network comprising 

357 outlets in 280 locations and 3,815 employees in Austria. *) 

The F&SME Division is characterised by large business volume and 

a sharp focus on customer business. It did therefore not experience 

any major setback in the years of the financial market crisis and 

recession. Nevertheless, in 2010, business with private customers 

and small businesses felt the impact of economic developments in 

the difficult years preceding 2010. Growth of personal incomes was 

still weak and private households maintained consumption levels at 

the expense of the savings ratio. The low interest rate environment 

was another reason why capital formation of private households 

remained weak. Investors continued to act with restraint and 

responded sensitively to the extensive media coverage of external 

factors causing uncertainty, e.g. the public debt crisis. 

*) With the implementation of the “One4C programme”, the former Retail business segment was 

renamed “Family & SME Banking” (F & SME), a name used in UniCredit Group. The new name 

reflects a number of measures taken to enhance customer centricity by adopting customer 

service models that are targeted at specific customer groups and their needs. During 2009, the 

top segment of retail banking customers was transferred to the Private Banking (PB) segment 

with a view to providing these customers with specialised services. For segment reporting 

purposes, the related figures have been restated to reflect the changes. The transfer of the 

customer sub-segment comprising small and medium-sized enterprises (SMEs) from the CIB 

Division was prepared in the reporting year but did not become effective until the beginning of 

2011. For this reason, the 2010 figures for F&SME do not yet include the SME sub-segment. 

Nevertheless, the F&SME business segment emerged better from 

the transitional year 2010 than was to be expected in view of cyclical 

developments: 

� The moderate trend in operating performance reflected the 

fact that customers were seeking to reduce debt, primarily by 

repaying short-term loans and financing purchases of durable 

goods to a larger extent out of current income, all the more so as 

the low interest rate environment did not permit any significant 

returns on savings. Nevertheless, real estate financings and other 

medium-term/long-term loans continued to grow. Business on the 

liabilities side reflected a continued strong preference for liquidity 

as customers remained risk-averse. Demand for investments intensified 

again, especially in the first few months of the reporting year. 

Overall, net fees and commissions grew by 4%. 

� Structural shifts on the assets side and on the liabilities side 

had a much stronger effect than changes in overall volume. 

Revenues were therefore significantly determined by the interest 

rate environment, i.e. the flattening of the yield curve over long 

stretches of the year and the application of reference rates. 

The business segment result for 2010 was mainly burdened on 

he deposits side while lending business – with wide variations 

depending on maturities – held up well overall. Net interest income 

declined strongly, by 22%, due to narrower margins in 2010. 

The favourable development of net non-interest income largely 

offset this decline, so that operating income was only 3% lower 

than in the previous year. 

� Current business held up fairly well in terms of volume and net 

fees and commissions, although it was burdened by interest rate 

trends. In this environment F&SME succeeded in significantly 

reducing net writedowns of loans and provisions for guarantees 

and commitments by 12%. Developments in the economy, the 

labour market and personal incomes were evidently stable enough 

to prevent a general increase in loan losses, which would normally 

have to be expected at this stage of the cycle. In the sub-segment 

of Small Businesses, the provisioning charge fell by more than one 

half. This success is also in large measure attributable to risk management 

activities. 

� Profit before tax generated by F&SME nevertheless declined 

by € 18 m to € 47 m (down by 27%). Net interest income in 

2010 was € 647 m, down by € 42 m or 6% in 2010. Within this 

total figure, income from equity interests was € 7 m lower than in 

the previous year, thus net interest in a narrower sense declined by 

€ 35 m or 5%. 


27



Net fees and commissions are a major income component, 

accounting for 38% of total revenues. Around the middle of 2009, 

they showed a turnaround from their structural downward trend. 

Growth of 4% to € 404 m was mainly driven by a favourable 

development in the first half of 2010. Securities business picked 

up in 2010, reflected in rising transaction-based fees and higher 

management fees. Sales of mutual funds, guarantee products and 

our structured bonds as well as safe-custody business increased 

after a long period of low activity levels. Simplicity and transparency 

were characteristic features of the large number of our successfully 

placed new issues. We also offered new issues of three 

particularly successful guarantee funds of Pioneer Investments 

Austria (PIA) which carried a 100% capital guarantee at maturity, 

e.g. PIA Greater China Garantiefonds. PIA Flex React 9/2017 

(without a guarantee) is a product which we launched for the turnaround 

in the interest rate cycle. Real Invest Austria, an openended 

real estate fund, again met with strong demand from our 

customers. Sales of insurance products were also very successful. 

Fee and commission income from securities business and higher 

asset management fees more than offset the decline in fees and 

commissions from payment transactions and account maintenance. 

The revival of securities business is also reflected in the development 

of indirect deposits (safe-custody accounts and assets under 

management) as a proportion of total financial assets, which rose 

from 29% in 2009 to 33% in 2010. 

The increase in net non-interest income partly offset the marginrelated 

decline in net interest income, so that operating income in 

2010 totalled € 1,052 m, falling short of the previous year’s level 

by 3%. Operating expenses in 2010 were 2% higher than in 

2009, partly as a result of the addition of two subsidiaries to the 

group of consolidated companies: Bank Austria Finanzservice 

GmbH, which is responsible for mobile sales partners, and the 

Slovakian subsidiary of Card Complete, which is a consolidated 

company included in this business segment. Non-staff expenses 

remained constant. This resulted in an operating profit of 

€ 253 m for 2010 after € 300 m in the previous year (–16%). 

Two-thirds of the € 47 m decline in operating profit was offset by a 

more favourable development in the provisioning charge (a 

decrease of € 30 m). Net writedowns of loans and provisions 

for guarantees and commitments in 2010 were € 212 m, down 

by € 30 m or 12%, contrary to the usual pattern seen shortly after 

a recession. The cost of risk in F&SME steadily improved from 

quarter to quarter, from the peak reached in the middle of 2009 

(155 basis points) to 84 bp in Q4 2010; the annual average was 

108 bp of average lending volume, down from 129 bp in the previ- 

ous year. Net income from investments in 2010 rose by € 4 m 

to € 14 m, one of the reasons being the sale of shares from the 

financial assets of a subsidiary; provisions for risks and charges 

were up by € 5 m. Overall, non-operating items improved by a 

net € 29 m. Operating profit was € 253 m and non-operating 

items to be deducted totalled € 206 m, giving a profit before tax 

of € 47 m for 2010 after € 65 m in 2009. 

risk-weighted assets (RWAs) increased by 25% in 2010 while 

average lending volume was up by 5% on the previous year. 

A major factor in this development was currency appreciation of 

the Swiss franc and the yen. In calculating risk-weighted assets 

under Basel 2 rules, direct and indirect currency appreciation 

effects are more pronounced than for unweighted lending volume. 

� A sharp focus on customer needs, products which are easy to 

understand and, quite generally, achieving an increase in customer 

satisfaction were focal areas of our activities in sales, marketing 

and product development in 2010. In business with private customers 

we are going to implement a new service approach – 

Smart Banking – which will enable us to provide services and 

advice via modern communications channels, from personalised 

Online B@nking via the telephone to SMS – around the clock 

worldwide and independent of branch opening hours. This will also 

relieve the workload in standard business while enhancing the 

quality of the branch portfolio. 

Our country-wide network for serving small and medium-sized 

enterprises (SMEs) has been expanded from 22 to 60 units, and 

this is now fully operative in F&SME since the beginning of 2011. 

We are thereby closer to customers, meeting their needs through 

specialised services. The objective is to make better use of potential 

in relationships with business customers who are also private 

customers. In cooperation with national and international institutions 

of higher education, we made a significant investment in 

advanced training in investment advisory services for customer 

relationship managers in the sub-segment comprising Affluent 

customers. We are the first bank in Austria to apply feedback loops 

immediately after contacts with customers. The annual dialogue 

with our customers has proved to be a recurrent opportunity to 

strengthen personal contacts with customers and to obtain 

information on their specific needs; this will be intensified. 

As part of our performance-related compensation system we 

have given a strong weight to longer-term performance criteria 

and customer satisfaction (see the section on non-financial 

performance indicators). 


28



Private Banking 

(€ m) 2010 2009 ChANgE 

Net interest income 43 55 –12 –22% 

Net non-interest income 97 81 +15 +19% 

Operating income 140 136 +3 +3% 

Operating expenses –101 – 98 –3 +3% 

Operating profit 39 39 +0 +0% 

Net writedowns of loans –2 0 –2 n.m. 

Other non-operating items 2 0 +2 n.m. 

Profit before tax 39 38 +0 +1% 

Total financial assets (avg.) 16,559 15,760 +799 +5% 

Loans to customers (avg.) 369 340 +29 +8% 

Risk-weighted assets (avg.) 533 608 –75 –12% 

Average equity 123 144 –22 –15% 


Following completion of the integration of the predecessor institutions 

Bank Privat and AMG and the successful transfer of customers to 

form a homogeneous target group, the Private Banking division 

became fully operative in the 2010 financial year – the first year in 

its new structure – as the third pillar of our Austrian customer business. 

Private Banking maintains a presence in 25 locations throughout 

Austria and serves the top segment of private customers, almost 

34,000 high net worth individuals, while also specialising in foundations. 

With 569 employees – including highly qualified client relationship 

managers – and about € 17 bn in client assets under management, 

the Private Banking Division is market leader in Austria (19% 

market share). Within the Division, Schoellerbank – founded as a 

private banking institution in 1833 – operates under its own brand 

name in 13 locations throughout Austria. It manages € 7.1 bn in total 

financial assets. 

➔ In 2010, more than 2,000 private customers were transferred to 

Private Banking from the other divisions (and a much smaller number 

of customers was transferred from Private Banking to other divisions) 

with a view to providing them with integrated services. Although a 

number of specific projects were carried out to establish the Private 

Banking Division, 2010 was a successful year for Private Banking. 

This is reflected especially in the major component of income in this 

line of business: net fees and commissions increased by 9% compared 

with the adjusted figure 1) for the previous year. Operating 

income also rose (+3%) and profit before tax for 2010 was € 39 m, 

slightly higher than in the previous year. 

1) For a meaningful comparison with the previous year, the income statement figures and 

volume data for 2009 were restated to reflect the new structure in 2010. See segment reporting 

in section D.2 of the notes to the consolidated financial statements on page 142 of this report. 

� In the course of 2010, sentiment in world financial markets 

changed several times, as did investors’ preferences reflected in net 

inflows of funds. The first half of 2010 benefited from the recovery 

of global industrial activity, but in the middle of 2010 scepticism 

returned for some time. Global stock markets declined during the 

summer months, with a high degree of correlation among regions 

and industries. Bonds rose sharply, which resulted in historically low 

yields. The main factor which led to uncertainty was the public debt 

crisis in the peripheral European countries. The expansionary monetary 

policy and a number of unusual intervention measures caused 

concern – whether justified on factual grounds or not – especially 

among clients who take a long-term view, often thinking in terms of 

generations. Such fears are reflected in the price of gold, which rose 

to new highs. Investor restraint did not ease until the fourth quarter 

of 2010. Net inflows of funds resumed with the growing impact of 

the improved outlook for the economy and for the corporate sector. 

Performance of selected asset classes 2) 

tOtAl rEtUrN IN %, yEAr-ENd 2008 2009 2010 

World stock index (MSCI World, local currency) –38.3% +26.5% +10.6% 

… of which: BRIC –53.9% +72.2% +17.4% 

… of which: CEE (Emerging Europe) –66.0% +70.8% +17.6% 

… of which: euro area –44.3% +28.7% +3.3% 

Bonds: 10-year € benchmark bond +21.2% – 9.4% +8.6% 

10-year Greek bonds +1.1% +3.4% –29.2% 

Corporate bonds 

(non-financial, BBB, 3 to 5-year; iboxx) –1.8% +21.9% +6.0% 

Emerging Europe bonds (JPM EMBI Europe, €) –3.1% +19.4% +5.7% 

Money market (direct investment, 

JPM Euro Cash 6-month) +5.9% +2.9% +1.5% 

Commodities (Rogers, €) –41.3% +26.2% +19.0% 

Gold price (London bln, $/oz.) +3.1% +27.1% +29.3% 

Swiss franc against the euro +10.8% +0.7% +18.7% 

US dollar against the euro +4.4% –2.4% –7.2% 

2) Total return indices for bonds: price + coupon, for shares: price + dividend and effect of 

capital measures; otherwise quoted prices. 

➔ At the end of 2010, total financial assets of the Private Banking 

Division (Schoellerbank and Bank Austria Private Banking) were 

€ 16.9 bn, up by 4.4% on the year-end 2009 level. Our clients continued 

to hold a large portion of their portfolio in deposits, and it was 

only towards the end of the year that they started to switch investments 

into securities and asset management. Deposits as a percentage 

of total investment volume declined by one percentage 

point, from 33.2% to 32.3%, in the course of the year. 

� Operating income in 2010 was € 140 m, exceeding the previous 

year’s figure by 3%. Net fees and commissions – which are the 

main revenue component in Private Banking, accounting for 68% of 

operating income – were up by 9% to € 95 m. Net interest income 


29



(€ 43 m) declined significantly in 2010 (down by € 12 m or 22%). 

Trends in net interest income during the past two years reflected 

margin developments – as in the interest-based business of 

Bank Austria as a whole; given that deposits are the predominant 

part of Private Banking business (the loan/deposit ratio is about 7%), 

this is a weighty factor. Net interest income is thus strongly dependent 

on the yield curve and may quickly turn in the other direction. 

Operating expenses totalled € 101 m in 2010, an increase of 3% 

over the previous year. The increase reflects the first-time consolidation 

of Schoellerbank Invest, an investment management company, in 

June 2010. The non-operating items reflected a provisioning charge 

which was offset by a net release of other provisions. Profit before 

tax for 2010 was € 39 m, slightly higher than in the previous year 

(+1%). The special character of Private Banking becomes clear from 

the key indicators: its business is based on staff-intensive client 

relationships, reflected in a cost/income ratio of 72.3% (up by 

0.6 percentage points on 2009). Risk exposure is low and therefore 

average equity allocated to the Division is also low (and declined in 

2010). On this basis Private Banking generated a return on equity 

(ROE before tax) of 31.5% (compared with 26.4% in the previous 

year). Economic Value Added (EVA) of this relatively small business 

segment was + € 25 m in 2010 (2009: € 22 m), the risk-adjusted 

return on risk-adjusted capital (RARORAC) was 65% (62%). 

� Investors’ experience in the past few years has changed clients’ 

expectations in Private Banking. This development benefits the 

investment strategy and service approach of the Private Banking 

Division, which has always given priority to preserving wealth over 

achieving short-term performance, and has always managed risk 

through wide diversification. In Private Banking, the process chain 

starts with the professional analysis of needs, which is the basis for 

using our Financial Planning services for the benefit of our clients. 

For example, Private Portfolio Premium offers our clients more 

possibilities of individual fine-tuning, with the personal investment 

strategy being implemented through various types of portfolios 

depending on risk/return levels. In 2011 we launched 3% PlUS- 

Aktion, an innovative campaign aimed at activating investors under 

which clients receive a bonus of up to 3% in the form of interest 

credited to their account if the agreed performance targets are not 

met. In asset management, the global Investment Strategy (GIS) of 

UniCredit’s Private Banking Division assures the quality of investment 

decisions. An essential innovation is the ongoing review of portfolio 

quality and related adjustments to the environment and strategy 

through the newly created function performed by portfolio quality 

analysts. 

At the end of November 2010, the German “Elite Report” awarded its 

top grade – “summa cum laude” – to Schoellerbank: based on the 

number of points gained, it was thereby recognised as one of the 

four best asset managers in German-speaking countries among 360 

well-known providers in four countries, and as best private banking 

unit in Austria. From 2011, Schoellerbank will closely cooperate with 

banking subsidiaries in the entire UniCredit Group to attract international 

customers of these banks who want to invest part of their 

assets in Austria. Schoellerbank will become the Private Banking 

competence centre for customers from Central and Eastern Europe. 

Changes in interest rate trends 2009/2010 (in % p.a.) 

4.5 

4.0 

3.5 

3.0 

2.5 

2.0 

1.5 

1.0 

0.5 

0.0 

Q4 

2008 

Moving averages 

1.80 

0.50 

10-year 

5-year 

Money market 

(3 months) 

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 

2009 2010 


Q1 

2011 

30



Corporate & Investment Banking (CIB) 

(€ m) 2010 2009 ChANgE 

WIthOUt 

CP *) 

Net interest income 944 1,335 –391 –29% –4% 

Net non-interest income 390 227 +163 +72% +4% 

Operating income 1,334 1,562 –228 –15% –2% 

Operating expenses –435 –418 –17 +4% +17% 

Operating profit 899 1,144 –245 –21% –9% 

Net writedowns of loans –169 –306 +137 –45% –13% 

Other non-operating items –23 –74 +50 n.m. –77% 

Profit before tax 706 764 –58 –8% +38% 

Loans to customers (avg.) 45,967 48,791 –2,823 –6% 

Risk-weighted assets (avg.) 29,962 31,998 –2,037 –6% 

Average equity 3,510 2,807 +702 +25% 

*) Without the Counterparts sub-segment. 


The Corporate & Investment Banking (CIB) Division is a major pillar of 

Bank Austria’s business not only in volume terms, with € 46 bn in 

loans and receivables with customers, out of a total of € 66 bn in 

Austria as a whole. Profit before tax of € 706 m and especially an 

EVA of € 339 m and a risk-adjusted return on risk-adjusted capital of 

18% also make CIB by far the most profitable business segment of 

Bank Austria. 

The CIB Division is the result of the implementation of the UniCredit 

business model and the customer-focused strategy: in a first step in 

the middle of 2009, we created the Division by combining classic 

commercial corporate banking with trading and capital market activities 

(of MIB, the former Markets & Investment Banking Division). The 

objective of this move was to offer our corporate customers – more 

specifically: companies, institutional customers, the public sector and 

real-estate customers – a comprehensive range of services based on 

the one-face-to-the-customer approach: classic on-balance sheet 

products, commercial services, access to the international network of 

the entire Group and capital market transactions. The next step 

involved focusing the business structure of the Austrian CIB Division 

more closely on customer business by limiting trading activities in 

financial markets to customer-driven transactions (and on the performance 

of bank-internal tasks for funding, asset/liability management, 

treasury). As mentioned before in this report, proprietary trading 

activities, market-making, position-keeping, international placement/sales 

etc. were bundled within UniCredit Bank AG, Munich, in 

the major financial centres in order to achieve the required size 

thresholds. The CIB/Markets sub-segment can use the relevant 

services and benefit from the stature of a major market player while 

ensuring that the complete range of trading and capital market services 

continues to be available to customers via Bank Austria. 

The reorientation of trading activities was reflected in the reorganisation 

of UniCredit CAIB to focus on proprietary trading operations 

which were to be sold, and in the reintegration of the above-mentioned 

customer-oriented functions in UniCredit Bank Austria AG. 

After these preparations, UniCredit CAIB was sold in the middle of 

2010. To make a comparison with the previous year meaningful, 

UniCredit CAIB is included in the CIB business segment (within the 

CIB/Counterparts sub-segment) only for the first five months also in 

the segment reporting figures for 2009. It should be noted that the 

business focus of UniCredit CAIB changed considerably compared 

with the previous year. 

➔ This means that the income statement continues to reflect structural 

factors and the – good – performance from current customer 

business. It is therefore difficult to interpret the income statement 

and revenues for 2010. 

Operating income matrix: product view and network view 

€ m 

Finance & 

Advisory 

Markets 

Global 

Transaction 

Banking 


Total 

Network 2010 550 91 332 973 

2009 537 121 330 988 

Counterparts 2010 29 332 … 361 

2009 6 567 … 573 

total 2010 579 423 332 1,334 

2009 544 688 330 1,562 

� The organisational structure of the CIB Division, which is based on 

a matrix of product competencies and customer service responsibilities, 

provides more detailed information. In 2010, the CIB Division’s 

total operating income was € 1,334 m, down by € 228 m or 15% 

compared with 2009. The breakdown of operating income by product 

group shows that revenues in Finance & Advisory (classic and structured 

lending business and Credit Treasury/securitisation, Corporate 

Finance subsidiaries) improved (+6%) and growth was also achieved 

in Global Transaction Banking (+1%) (export finance, structured 

trade finance, commodity finance, custody, cash management and 

sight deposits). The decline in overall revenues was due to Markets, 

where revenues were down by 39% (mainly Corporate Treasury 

Sales and Capital Markets as well as Bank Austria position-keeping/ 

Treasury, ABSs, the Markets subsidiaries in CEE, and especially CAIB 

for five months). Operating income in the Network sub-segment, 

comprising classic commercial banking business with customers, 

came close to the previous year’s level (down by 1.6%) while Counterparts 

recorded a decline of € 213 m to € 361 m, which is still a 

good performance. 

➔ Overall, revenues from commercial banking business remained 

stable; excluding the development of Network/Markets, they showed 

an upward trend. Operating income was down as a result of the 

31



decline recorded by Counterparts compared with the previous year, 

which was due to a special effect: in the first two quarters of 2009, 

when market interest rates fell significantly, trading operations generated 

exceptionally high net interest income; the figure for 2010 was 

considerably lower because of the changes in trading activities which 

took place in the meantime and because the interest rate environment 

was completely different. 

� The income statement of the CIB business segment shows that net 

interest in a narrower sense reached € 900 m in 2010. The decline 

of € 418 m or 32% compared with the previous year was largely 

accounted for by Counterparts (down by € 364 m or 54%) due to the 

above-mentioned base effect; net interest generated by Network was 

only 4% lower than in the previous year. Commercial interest-based 

business (in Network) reflected a weak economic trend over long 

stretches of 2010, with relatively high levels of corporate liquidity and 

internal financing; the development of the yield curve and funding costs 

had a strong impact on the net interest performance. Lending business 

showed slightly lower average volume, but this development was offset 

by somewhat more favourable interest rate spreads (not least because 

liquidity costs declined). Volume on the liabilities side was also slightly 

lower than in the previous year, but margins were significantly narrower 

than a year earlier, reflecting a decline in customer interest rates, 

intense competition for deposits and reference rate developments. 

As dividend income and other income from equity investments 

increased, net interest income totalled € 944 m; the decrease of 29% 

compared with the previous year was due to the exceptionally high net 

interest income generated in the first half of 2009. 

Net fees and commissions have been gradually moving up from the 

low level seen in the middle of 2009 to which they had fallen in the 

aftermath of the financial market crisis and subsequent recession. In 

2010, net fees and commissions were € 337 m, up by 14% on 2009. 

The increase in commission income was mainly accounted for by Group 

Transaction Banking and one-time loan commissions, whereas commission 

income in securities business including derivatives continued to 

decline. Group Transaction Banking, a special competitive strength of 

Bank Austria, had a successful year; foreign trade services and custody 

services showed particularly strong growth. Although the net trading 

performance for the third quarter of 2010 – following the sale of CAIB 

– was negative, the net trading result for 2010 as a whole was positive, 

at € 35 m, after a net loss of € 78 m recorded in 2009 which 

mainly reflected valuation results of synthetic ABSs; the reversal compared 

with the previous year improved revenues by € 114 m. 

Operating expenses in 2010 were up by 4% on the previous year. 

Staff levels rose by 10 FTEs from the end of 2009 to the end of 2010 

(CAIB not included because of restatement), to a total of 1,436 FTEs. 

The cost/income ratio was 32.6% (2009: 26.7%). Operating profit 

for 2010 amounted to € 899 m (down by 21% from the previous 

year). 

Net writedowns of loans and provisions for guarantees and commitments 

were reduced by almost one half (by € 137 m or 45%) to 

€ 169 m although the credit cycle normally has a negative impact for 

a longer period after a recession. Thus the cost of risk for 2010 was 

37 basis points (bp) after 63 bp in 2009. This improvement is partly 

due to the release of a provision for a large loan in the Counterparts 

sub-segment in June 2010, without detracting from the favourable 

overall picture. Economic trends have without doubt supported the 

activities of export-oriented industrial companies and their suppliers. 

In business with medium-sized companies, the early identification of 

problems and restructuring efforts proved to be effective. At the end of 

2010, 3.9% of gross exposure was impaired; within that figure, nonperforming 

loans were only 1.5% of gross loans. 

Non-operating items, including net income from investments, were a 

net charge of € 193 m after a net charge of € 380 m in the previous 

year. This improvement mitigated the € 245 m decrease in operating 

profit – for the reasons explained above – by three-quarters. At 

€ 706 m, profit before tax was down by € 58 m or 8% from the previous 

year. Without the decline in Counterparts, profit before tax would 

have risen by € 103 m (+38%), but in absolute terms, results would 

have been significantly lower. 

➔ Average risk-weighted assets (restated) under Basel 2 (€ 30.0 bn) 

were 6% lower than in the previous year. This reflects the reorientation 

of trading activities: market risk in CIB was reduced by 57%. 

In connection with the reallocation after the capital increase, average 

equity capital employed rose by 25%, one of the reasons why 

return on equity before tax declined to 20.1% (2009: 27.2%). 

In March 2010 and 2009, allocated equity comprised the institutional 

capital of UniCredit CAIB, raising the annual average. The average 

figure for equity in the CIB Division in the second, third and fourth 

quarters of 2010 was € 2,163 m; on this basis, return on equity for 

2010 would be 33%. The calculation of Economic Value Added (EVA) 

is based on equity capital required depending on risk-weighted assets, 

EVA is therefore less distorted by the CAIB effect. In 2010, CIB generated 

an EVA of € 339 m (after € 401 m in 2009). This results in a 

risk-adjusted return on risk-adjusted capital of 18%. 

� The past years saw weak credit expansion as both demand and 

supply were low (deleveraging). In 2011 the market climate is 

expected to improve. The CIB Division with its stronger awareness of 

risk will intensify its lending activities, a key product area, for its target 

customers. At the same time, in cooperation with the international 

product factories, we will bring our strength in capital market-based 

financing to bear, not least with a view to raising RWA productivity. 

Real estate finance will also remain a focal area. With our leading 

position in transaction banking and cross-border initiatives we will 

continue to use potential for customer business which is available 

through our international network. And we aim to further intensify 

cooperation with the public sector. 


32



Central Eastern Europe (CEE) 

(€ m) 2010 2009 ChANgE Adj. *) 

Net interest income 3,256 3,003 +253 +8% +4% 

Net non-interest income 1,393 1,616 –224 –14% –17% 

Operating income 4,649 4,620 +29 +1% –3% 

Operating expenses –2,128 –1,951 –177 +9% +5% 

Operating profit 2,521 2,669 –148 –6% –9% 

Net writedowns of loans –1,454 –1,718 +264 –15% –15% 

Other non-operating items –3 –35 +32 n.m. n.m. 

Profit before tax 1,064 916 +148 +16% +5% 

Loans to customers (avg.) 61,785 59,774 +2,011 +3% –1% 

Risk-weighted assets (avg.) 74,284 70,930 +3,354 +5% +1% 

Average equity 11,112 9,978 +1,134 +11% +7% 

*) at constant exchange rates 


Overview 

� Volume and operating income in the Central Eastern Europe 

(CEE) business segment picked up in 2010. The upward trend 

started at the end of 2009, with wide regional variations being 

reflected in the overall development: open economies expanded in 

the wake of the high level of industrial activity in the core European 

countries. Large exporters of raw materials benefited from trends in 

demand and prices later in the year. Turkey, a large country with a 

relatively high degree of economic autonomy, experienced a strong 

recovery in 2009 and entered a calmer second phase of the upturn 

in 2010. The countries in South-East Europe, on the other hand, 

were lagging far behind. The credit cycle followed this regional pattern 

with the usual time lag. Overall, net writedowns of loans and 

provisions for guarantees and commitments were significantly lower 

than in 2009. In Turkey, net additions to provisions and direct writeoffs 

were as low as one-quarter of the amount recorded in 2009, 

with a favourable effect on the bottom line. The situation improved 

for the first time also in the CIS countries. The provisioning charge 

continued to rise only in South-East Europe, more specifically in 

Romania, Bulgaria and Croatia. 

➔ As operating performance stabilised and the provisioning 

charge declined, profit before tax of the CEE Division rose to 

€ 1,064 m, thus again exceeding one billion euros. The increase 

over the previous year was 16.2% (or 5.3%, adjusted for exchange 

rate movements). 

� When analysing results from current business with customers, 

one should note the U-shaped development of major aggregates in 

the past two years (see chart on this page). After emerging from the 

trough of recession in autumn 2009, the CEE business segment 

experienced a strong recovery which is hardly reflected in whole- 

year figures and annual averages. Average lending volume and 

risk-weighted assets have risen strongly over the past year. In the 

fourth quarter of 2010, lending volume was almost 10% higher 

than a year earlier – but in annual average terms, growth reached 

only 3.4%. Risk-weighted assets developed in a similar fashion: 

a comparison of Q4 2010 with Q4 2009 shows an increase of 

Quarterly trends versus annual average 

€ m 

1,300 

1,200 

1,100 

1,000 

Average 

lending volume 

Operating income 

+9.6% 

Q4/Q4 

+3.4% 

2010/2009 

+8.4% 

Q4/Q4 

+0.6% 


Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 

11.3%, while the annual average level rose by 4.7%. Operating 

income increased by 8.4% from Q4 2009 to Q4 2010 while 

remaining more or less constant in a comparison of full-year figures 

(+0.6%). There is another factor to be noted in this context: 

net trading, hedging and fair value income was exceptionally high 

in the first two quarters of 2009, due to high volatility in foreign 

exchange and interest rate markets in those periods; in the subsequent 

quarters and in the course of 2010, net trading performance 

returned to more normal levels. Net trading income for 2010 as a 

whole was therefore down by € 351 m or 71% from the previous 

year. Without this effect, revenues would have risen by 9.2% even 

in a full-year comparison. 

� An analysis covering the past five years (which also reflect the 

new structure) shows that operating income generated in the CEE 

business segment came very close to the peak level of 2008, falling 

short by just under 2%. Despite a 9% increase in 2010, costs 

were below the 2008 level (–4%) thanks to major cost containment 

measures taken in 2009. At € 2.5 bn, operating profit was 

lower than in 2009 but higher than in 2008. The strong increase in 

net writedowns of loans and provisions for guarantees and commitments 

started in 2008 and continued in 2009, when the provision- 


€ bn 

64 

62 

60 

58 

33



ing charge peaked at € 1.7 bn. While the decrease of € 264 m or 

15% in 2010 had a favourable effect on the income statement, the 

provisioning charge was nevertheless the main reason why results 

for 2010 were lagging behind in a multi-year comparison. This 

means that profit before tax did not yet pick up the longer-term 

trend, despite an improvement compared with 2009. 

CEE business segment – a multi-year comparison (€ m) 

2006 pf 2007 2008 2009 2010 

Operating income 2,788 3,367 4,732 4,620 4,649 

Operating expenses –1,557 –1,729 –2,224 –1,951 –2,128 

Operating profit 1,230 1,638 2,508 2,669 2,521 

Net writedowns of loans –177 –211 –537 –1,718 –1,454 

Other non-operating items –44 –86 54 –35 –3 

Profit before tax 1,010 1,342 2,025 916 1,064 

Risk-weighted assets (avg.) 42,746 46,593 67,682 70,930 74,287 

Average equity … 7,099 9,403 9,978 11,112 

pf) 2006 pro forma: retrospectively adjusted to the 2007 perimeter 

(assumption of CEE sub-holding function for UniCredit). 

Income statement of the 

CEE business segment 

� In 2010 the CEE business segment generated a profit before tax 

of € 1,064 m, with an upward trend seen during the year. The figure 

was up by 16% on 2009, a year in which the trend was downward. 

The CEE business segment accounted for 57% of Bank Austria’s 

overall profit before tax (without the Corporate Center), again underlining 

its role as the main driver of the bank’s growth and the strongest 

contributor to overall profits. CEE was the only business segment 

to achieve an improvement in profit before tax compared with the 

previous year. 

Commercial banking operations developed favourably: net interest 

income was € 3,256 m, up by 8% on the previous year (adjusted 

for exchange rate movements, the increase was 4%). Compared with 

the critical period of uncertainty experienced in spring 2009, when 

credit spreads widened significantly for some time, funding conditions 

also improved in most countries. The net interest margin (net 

interest / average loans to customers) rose from an annual average 

of 500 basis points in 2009 to 525 basis points in 2010. Quarterly 

developments during the year showed an even stronger improvement 

but the fourth quarter of 2010 was again characterised by weaker 

margins. In annual average terms, underlying volume significantly 

exceeded the previous year’s level (+3.4%). In 2010, net interest 

income showed particularly strong growth in Russia, where it 

exceeded the 2009 figure by over one-half, reflecting the optimised 

structure of assets and liabilities and the recovery of margins, and in 

Romania (+44), Croatia (+19%) and Hungary (+35%). These countries 

saw weak, or partly declining, volume trends due to the cyclical 

lag. However, more favourable funding conditions for lending business, 

which resulted from the combination of general interest rate 

trends and lower credit spreads, supported net interest income. 

Net interest income in Turkey, on the other hand, declined by 7% 

although economic conditions were completely different: volume on 

the assets side and on the liabilities side grew at double-digit rates 

(both in nominal terms and adjusted for exchange rate movements) 

but recently narrower interest margins in an environment of unusually 

low interest rates had an impact on net interest income (which 

was nevertheless 15% higher than two years earlier). In Ukraine and 

Kazakhstan, net interest income fell sharply, with little change in 

volume. 

Fee-earning business developed very favourably in the entire 

region, indicating that market penetration with modern banking 

products and services as well as securities business have regained 

momentum. In 2010, net fees and commissions were 12% up on 

the previous year; adjusted for exchange rate movements, the 

increase was 9%. Assets under management rose by about 20% 

(partly as a result of capital growth), as did assets under custody. 

Commission income generated from commercial banking operations 

– including credit card business, currency management and commitment 

fees – rose in almost all countries. The largest contribution to 

growth came from Turkey, where Yapi Kredı holds leading positions in 

a number of banking services (including credit cards and factoring). 

As the “sustainable” income components (net interest and net fees 

and commissions) improved by 9% or € 380 m to € 4,430 m, total 

operating income grew to € 4,649 m in 2010; the increase compared 

with the previous year was only 1% (adjusted for exchange 

rate movements, 3%) because net trading income declined by 

€ 351 m. The latter development reflects the turnaround in financial 

markets: net trading income fell from € 496 m in 2009 to € 145 m 

in the reporting year. The exceptionally strong trading performance in 

2009 was due to high volatility and strong trading activity as well as 

demand for hedging transactions in an environment characterised 

by scepticism about CEE and temporarily wide credit spreads. This 

development was seen in almost all countries, with the strongest 

decline recorded in Russia (– € 131 m), Croatia (– € 55 m), Romania 

(– € 39 m) and Kazakhstan (– € 35 m). 

Costs amounted to € 2,128 m in 2010, up by € 177 m or 9% 

(adjusted for exchange rate movements, 5%) on the previous year. 

On this basis, the cost/income ratio increased by 3.5 percentage 

points to 45.8%, while still remaining well below the average for the 

bank as a whole (52.3%). Staffing levels in December 2010 were 

down by 772 FTEs or 1.5% from the end of 2009. Cost growth 

reflects salary increases (e.g. in Turkey) and training costs (e.g. in 

Ukraine) and, in non-staff expenses, the opening of branches in 

Turkey (on which a tax is payable) and in Croatia, Bulgaria and the 

Czech Republic; another item was the levy on banks in Hungary, 

which amounted to € 28.5 m. The restructuring and expansion of 


34



central and divisional management and control functions in the 

Vienna-based CEE headquarters as well as the transfer of the former 

CEE subsidiaries of UniCredit CAIB also contributed to cost growth. 

The main factor reflecting the improvement in the economic environment 

in CEE, with the above-mentioned regional differences, was the 

decline in net writedowns of loans and provisions for guarantees 

and commitments. Overall, the provisioning charge for 2010 was 

€ 1.5 bn. Thanks to positive trends in countries which are ahead in 

the business cycle and the credit cycle, net additions to loan loss 

provisions were lower than a year earlier (and especially in the second 

half of 2009). Net writedowns of loans and provisions for guarantees 

and commitments for 2010 were down by € 264 m or 15% 

from the previous year. In line with regional economic trends, Turkey 

benefited from the strongest improvement in this context, through 

successful debt collection efforts and a net release of loan loss provisions 

following the large additions made in the previous year; a large 

securitisation transaction additionally reduced the provisioning 

charge, resulting in an improvement of € 234 m. The situation in 

Russia stabilised, reducing net writedowns of loans by € 65 m. 

On the other hand, the provisioning charge in South-East Europe 

(Bulgaria, Romania and Croatia) rose strongly, by a combined € 139 m 

to a total of € 341 m, which nevertheless accounted for less than 

one-quarter of total net writedowns of loans and provisions for guarantees 

and commitments. In 2010, Kazakhstan, Ukraine and the 

Baltic countries (including the guarantees by UniCredit Bank Austria 

booked in the Vienna-based CEE headquarters) accounted for 44% 

of the provisioning charge, though the charge for these countries also 

declined by € 145 m or 18%. Slovakia, the country with the lowest 

risk profile in 2009, experienced a strong increase, from € 11 m to 

€ 35 m, in net writedowns of loans and provisions for guarantees 

and commitments in 2010, as the bank was called upon under a 

guarantee booked in Vienna. The cost of risk (provisioning charge/ 

average net loans to customers) in CEE declined to 235 basis points 

(bp) from 287 bp in 2009. The chart shows that the portfolio is 

CEE loan portfolio: exposure by cost of risk 

Turkey 18% CoR: 65bp 

Slovenia 4% 

CoR: 96bp 

Czech Rep. 11% 

CoR: 103bp 

Serbia 2% CoR: 113bp 

Croatia 14% CoR: 125bp 

Slovakia 4% CoR: 134bp *) 

€ 65.2 bn 

Loan portfolio: end of December 2010; cost of risk (CoR): 1–12 2010 

*) including guarantees by UniCredit Bank Austria AG in the CEE headquarters 

Kazakhstan 6% CoR: 1,217bp *) 

Baltics 1% CoR: 1,570bp *) 

Ukraine 4% CoR: 496bp 

Romania 5% CoR: 462bp 

Bulgaria 6% 

CoR: 253bp 

Hungary 6% 

CoR: 206bp 

Russia 15% 

CoR: 157bp 

Bosnia 2% CoR: 141bp 

widely diversified in cost-of-risk terms: the countries with the highest 

cost of risk – Kazakhstan, Ukraine and the Baltic states – account for 

less than one-eighth (12%) of the total exposure. If Romania is 

included in this group of countries, it accounts for less than one-sixth 

(16%) of the total exposure. But three-quarters (74%) of the portfolio 

is in countries where the cost of risk (CoR) is below average. 

Operating profit for 2010 was € 2,521 m (68% of the figure for the 

bank as a whole without the Corporate Center). All of the decrease of 

€ 148 m or 6% was due to the fact that net trading income returned 

to a more normal level (down by € 351 m) from the high figure for the 

previous year. The decrease in operating profit was offset by the 

improvement of € 296 m in non-operating items. As a result, the CEE 

business segment generated a profit before tax of € 1,064 m, an 

increase of 16% or € 148 m. 

In 2010, we increased equity allocated to the CEE business segment 

by € 1.1 bn or 11% to € 11.1 bn. This provides a good base for taking 

advantage of the still intact medium-term to long-term outlook in 

Central and Eastern Europe. Despite the higher capital allocation, 

return on equity (ROE before tax) improved slightly, from 9.2% in 

2009 to 9.6% in 2010. For the years 2006 to 2008, ROE before tax 

averaged 21.7%. 

Development by country group in 2010 

In a breakdown by country group, to the extent that this is still meaningful, 

the Central European countries delivered a good operating performance 

in 2010. Operating profit was up by 11% (without the levy 

on banks in Hungary), fully reflecting the economic conditions in these 

integrated, export-oriented countries. Higher net writedowns of loans 

and provisions for guarantees and commitments (including the guarantee 

issued by the Vienna-based CEE headquarters) at our bank in 

Slovakia absorbed some of the increase in operating profit achieved 

by the banking subsidiaries in Central Europe. Profit before tax was 

nevertheless up by 14%, and accounted for one-quarter of the profit 

before tax generated by the CEE Division as a whole. 

All of the countries in the large region of South-East Europe (SEE) 

were characterised by unfavourable economic conditions: while the 

operating profit of our banking subsidiaries in SEE increased by 11%, 

supported in particular by a more favourable interest rate environment, 

the time lag preceding the economic upturn resulted in a higher 

provisioning charge. Profit before tax in South-East Europe for 2010 

was consequently 16% below the level of the previous year. With a 

combined profit before tax of € 401 m, SEE nevertheless contributed 

38% to the overall figure for the CEE Division, an achievement attributable 

partly to strong market positions in Croatia and Romania. 

Our equity interest in turkey, although accounted for under the proportionate 

consolidation method (41%), is a significant factor due to 

the local bank’s size. The 7% decline in operating profit reflects a 


35



return to normal levels after the sharp rise in 2009, and higher 

capital expenditure included in costs (operating profit rose by 

26% in a comparison of 2010 with 2008). Net writedowns of 

loans and provisions for guarantees and commitments declined 

significantly, by € 234 m, with profit before tax consequently 

rising by € 213 m or 60%. Similar trends were discernible in 

russia and Ukraine, where a decrease in operating profit was 

more than offset by a marked decline in the provisioning charge. 

This resulted in a 58% rise in profit before tax (this pattern 

applies to the two countries viewed together and also on an 

individual basis). 

The bank in kazakhstan posted a loss in 2010 following a 

sharp fall in all revenue components (by an overall 62%). This 

resulted in a meagre operating profit (€ 17 m). After deduction of 

a € 187 m provisioning charge from this amount (together with 

the guarantee provided by the Vienna-based CEE headquarters 

the figure would have been two and a half times this amount), 

the bank once again recorded a loss before tax, of € 163 m 

(the total figure, including the guarantee booked in Vienna, was 

€ 402 m). While the combined operating profit of our banking 

subsidiaries in the three Baltic states matched the level of the 

previous year, the non-operating items and the provisioning 

charge booked at the Vienna-based CEE headquarters resulted 

in a loss of € 74 m for 2010. 

Reports on CEE banking subsidiaries 

� turkey: In a positive environment in 2010, the Turkish banking 

sector witnessed strong volume growth, continuous progress 

in asset quality and increased profitability despite strong competition 

and narrowing margins driven by the low interest rate environment. 

As a result, koç Financial Services group (kFS), the 

financial holding company controlling 81.8% of Yapı Kredi Bank, 

recorded a strong performance in terms of both business activity 

and profitability through its focus on customer satisfaction, commercial 

efficiency and profitability. UniCredit Bank Austria AG 

holds a 50% interest in Koç Finansal Hizmetler AS, the group’s 

parent company. In Bank Austria’s consolidated financial statements, 

the Turkish bank (sub-group) is included using the proportionate 

consolidation method (41%). 

In 2010, KFS recorded consolidated net income of TL 1,818 m, 

an increase of 40% y/y. Return on equity increased to 25% 

compared to 20% in 2009. The capital adequacy ratio reached 

16.1% at bank level (15.3% at consolidated level) according to 

local accounting standards. Being the fourth-largest private-sector 

bank by total assets, Yapı Kredi enjoys leadership positions in 

credit cards, leasing and factoring, as well as strong leading 

positions in brokerage, mutual funds, insurance and private pensions. 

KFS recorded TL 5,528 m in revenues in 2010, driven by 

solid fee growth on the back of business volume performance 

which was above the sectoral average, a focus on new fee 

sources and the introduction of innovative products and services 

to compensate for the narrowing of net interest margins. The 

continuation of controlled cost management and efficiency initiatives 

resulted in a strong performance in terms of costs, which 

grew below inflation at about 6%, despite continuous investments 

for growth. The cost/income ratio was 42%. 

In terms of lending, KFS recorded loan growth of more than 

30% compared with 2009. Loan growth was mainly driven by 

consumer, SME and medium-term commercial lending on the 

local currency side and project finance loans on the foreign currency 

side. In the area of credit cards, the bank maintained its 

leading position in the sector with a 19.8% market share. In 

terms of asset gathering, KFS recorded above-sector deposit 

growth of almost 30% in 2010, driven by Yapı Kredi, and especially 

by local currency deposits. KFS recorded a 17% increase 

in assets under management and maintained its second place in 

the sector with a market share of 18.7%. 

In asset quality, Yapı Kredi recorded significant improvements, in 

line with more favourable economic conditions and on the back 

of a decrease in non-performing loan (NPL) inflows, strong collections, 

NPL portfolio sales, credit infrastructure improvements 

and restructuring programmes. As a result, Yapı Kredi’s NPL ratio 

declined to 3.4% according to local accounting standards. 

Yapı Kredi continued its branch expansion plan in 2010 with an 

increase of around 30 branches (39 new openings). As of the 

end of 2010, Yapı Kredi has the fourth-largest branch network in 

Turkey with 868 branches and a 9.3% market share, the fifthlargest 

ATM network with more than 2,485 ATMs, and an awardwinning 

Internet branch and call centre. The bank continuously 

invests in its alternative delivery channels (ADCs) to increase 

customer satisfaction and lower costs; in 2010 it managed 79% 

of its total banking transactions through ADCs – which is a significant 

improvement compared to 74% in 2009. 

� russia: ZAO UniCredit Bank, as a universal bank offering a 

large range of products to corporate, retail and Private Banking 

customers, continues to retain its position as the largest foreign 

bank among the top 10 banks in Russia by total assets, improving 

its market share to 1.91% as of November 2010 (compared 

with 1.79% as of December 2009). With 19% y/y growth in 

total assets – which is above market – and by recording higher 

profitability over last year (2010 ROE after tax of 16% compared 


36



with 12% in 2009), ZAO UniCredit Bank confirmed its strong financial 

standing. With a good capital base ending the year with a 16% 

capital adequacy ratio according to local standards, which is well 

above the regular 10% limit specified by the central bank, the bank 

easily met the capital requirements. It also strictly met the liquidity 

regulations. 

The country-wide network of 106 outlets plus one Representative 

Office in Minsk, Belarus, provides a basis for the continuous increase 

in the customer base, which reached the level of around 865,000 

private customers and about 22,600 corporate customers (including 

SMEs) as of the end of the year. 

During 2010, the bank’s core business grew significantly, resulting in 

a net profit of RUR 10 bn. This increase is more than 50% up on the 

result of last year, having been mainly driven by a reduction of new 

loan loss provisions. Revenues grew by 6% y/y (adjusted for 

exchange rate movements), influenced by the optimisation of the 

structure of the statement of financial position, and pricing which 

contributed significantly to an increase of more than 40% in net 

interest income compared to last year. Fee income rose by 4.7% 

thanks to fees from lending business and significant growth of com- 

Operating profit and profit before tax of CEE banking subsidiaries (€ m) 

Turkey 

Russia 

Croatia 

Czech Rep. 

Bulgaria 

Hungary 

Romania 

Serbia 

Slovenia 

Slovakia 

Bosnia 

Ukraine 

Baltic states 

Kazakhstan 

*) incl. guarantee by Bank Austria, Vienna 

*) 

*) 

*) 

missions related to trade finance operations and payments. Comprehensive 

cost containment measures proved highly efficient, thus the 

overall cost increase was limited to 8% compared with the previous 

year and led to an excellent cost/income ratio of 34%. Net writedowns 

on loans remained significantly below last year’s level, supported 

by lower-than-expected loan growth and an improvement of 

its quality. The share of non-performing loans as a percentage of the 

total portfolio decreased over 2009. 

Total assets of the bank increased significantly in the second half of 

the year to RUR 575 bn, corresponding to annual growth of 19%. 

After significant unexpected repayments in Q1 2010 due to high 

market liquidity, the bank focused on an acceleration of business 

growth which resulted in a 13% loan portfolio increase compared 

with 2009. The securities portfolio grew by 29%, mainly due to the 

acquisition of bonds from the central bank of Russia. Through a continuously 

strong emphasis on deposit-taking which led to 17% y/y 

deposit growth, the bank ensures a sound funding position by closing 

2010 with a net loan-to-deposit ratio of 117%. 

� Croatia: Zagrebačka banka (ZABA) delivered strong results in 

2010 despite a recessionary climate and a significant increase in 

Operating profit 2010 

Profit before tax 2010 

Loan loss provisions 

–450 –400 –350 –300 –250 –200 –150 –100 –50 0 50 100 150 200 250 300 350 400 450 500 550 600 650 


37



impaired loans and loan loss provisions, and continued to outperform 

the local banking industry and the home market at large. 

In 2010, the bank continued to provide its clients with strong support 

in their efforts to overcome the impacts of the difficult economic 

environment, intensifying its advisory role and strengthening 

its regional presence. 

ZABA Group achieved gross operating profit of € 312 m, outperforming 

2009 by more than 6%. This performance was mostly 

driven by a growth of total revenues of more than 3%. The strong 

performance was mainly achieved by the above-average growth of 

loans to corporate and public-sector clients as well as lower funding 

costs, and consequently lower interest rates on loans. In 2010, 

cost and process efficiency was steadily improved, resulting in a 

cost/income ratio of 47.1%, which is a notable improvement 

compared to the 48.5% reported in 2009. 

Compared to the end of 2009, total loans to individuals and small 

businesses increased by 4.1% to HRK 33.4 bn, while total deposits 

from these client groups increased by 6.7% to HRK 42.2 bn, 

driven by the 7.2% growth of term deposits. In regard to deposits 

from individuals, ZABA’s market share was 25.1% in 2010, while 

the market share for loans to individuals was 24.6%. 

Although the general business environment in Croatia in 2010 

was still affected by the recession, Zagrebačka banka achieved 

balanced growth in corporate banking. Total loans to corporate clients 

grew from HRK 30.1 bn at the end of 2009 to HRK 35.2 bn 

at the end of 2010. Corporate client deposits at the end of 2010 

amounted to HRK 15.0 bn, slightly above the level of 2009, 

reflecting balanced growth in business both with the public and 

the private sectors. The market share in loans increased further to 

25.8%, the market share in corporate deposits increased to 

24.7% at the end of December 2010. 

In 2010, ZABA’s Financing and Advisory further strengthened its 

position as the leading regional investment banking house. This 

success was recognised by Euromoney, awarding Zagrebačka 

banka the title of ‘Best Investment Bank in Croatia’ in two consecutive 

years, as well as by Financial Times/Merger Market, awarding 

UniCredit the title of ‘Best M&A House in CEE’. 

� Czech republic: UniCredit Bank Czech republic successfully 

closed the year with a net profit of CZK 3,002 m, which is 

8.4% above the 2009 result. With Q4 2010 revenues being 3% 

above the previous quarter, the bank continued to show a steady 

improvement of revenues which was based on the successful execution 

of highly profitable business opportunities mainly in the 

area of corporate business. 

The bank opened 10 new branches and 2 franchise outlets in 

Q4 2010 and launched a new consumer finance platform with 

the intention of increasing its retail presence, a strategic focus 

of the bank in the upcoming years. These initiatives go hand in 

hand with an increase of the bank’s cost base (q/q +8.6%), 

which is kept, however, under tight control. While loan loss 

provisions increased in Q4 2010, they were 21.2% down y/y. 

The cost of risk stands at an excellent 102 bp. 

� Slovakia: UniCredit Bank Slovakia managed to further 

expand its total revenues, driven by substantial y/y growth of 

loans and a slightly higher interest rate environment. The bank 

reached total assets of € 4.2 bn (nearly 33% y/y), keeping its 

capital adequacy ratio at a very high level of 13%. Significant 

y/y increases of market shares in both loans (+0.8%) and 

deposits (+1.5%) provide strong potential for a further positive 

outlook. 

Despite the impact of the macroeconomic environment on performance 

in H1 2010, the bank stabilised the generation of 

revenue with subsequent business improvements in H2 to 

reach the 2009 level of operating income. The bank successfully 

managed costs to strengthen efficiency, and reduced costs 

to a lower level than in the previous year. In the area of risk 

management, the bank continued to apply prudent policies with 

regard to credit, market and operational risk. 

� hungary: Despite the weak development of the banking 

sector due to the unfavourable impact of the special bank levy, 

UniCredit Bank hungary showed an extremely good performance 

in 2010 with profit after taxes increasing by more than 

21% compared to the previous year, supported by interest 

income and decreasing loan loss provisions, despite being 

impacted by costs which increased by 27% y/y due to the 

special bank levy. UniCredit Hungary succeeded in enhancing 

efficiency while maintaining its profitability in the CIB Division 

and promoting product innovations, campaigns and customer 

satisfaction in the Family & SME Banking business segment. 

As a result, the cost/income ratio was successfully kept below 

50% in 2010, lower than the sector. With a market share in 

key products of about 6%, UniCredit Bank Hungary contributed 

to over one-quarter of the net profit of the Hungarian banking 

sector in 2010. 

� Slovenia’s economy returned to moderate GDP growth in 

2010. At the same time, UniCredit Bank Slovenia achieved 

considerably higher revenues (+17%), amounting to € 74 m. 

A major driver of higher revenues was net interest income, 


38



benefiting from dividend income and better margins. The negative 

trading result was partly offset by higher fee and commission 

income. Although risk costs increased significantly due to specific 

and generic provisioning requirements, net profit for 2010 

amounted to € 13 m and clearly outperformed the previous year 

by about € 4 m. 

� In Bosnia and herzegovina (B&h), UniCredit is represented 

by two banks – UniCredit d.d. Mostar and UniCredit a.d. Banja 

Luka. Despite the challenging economic environment, characterised 

by signs of early post-recession recovery, amid export 

growth and weak domestic demand, UniCredit took over the leading 

position in terms of total assets and confirmed the position of 

the most profitable banking group in the country, mostly thanks 

to the bank based in the Federation entity. The Group operates 

through 137 branches (93 maintained by UniCredit Bank Mostar 

and 44 by UniCredit a.d. Banja Luka ) throughout the country, 

serving more than 1.2 million customers. In 2010, net profit after 

tax increased by almost 6% to € 17 m despite higher loan loss 

provisions as a consequence of the difficult market environment. 

In operational terms, total revenues grew by 4% y/y, whilst total 

expenses declined by 3% y/y, resulting in significant 22% 

growth in operating profit compared to the previous year. Customer 

satisfaction remained high and is reflected in an outstanding 

customer satisfaction index of 95 points, which is to be considered 

as a benchmark for the B&H market. 

� In 2010, Serbia’s GDP returned to moderate positive growth 

(1.9% y/y). At the same time, UniCredit Bank Serbia continued 

its strong growth path in the area of customer business and 

is now the fourth-largest bank in Serbia. Total assets were 

RSD 167 bn as of the end of 2010, showing growth of 23% y/y. 

Most importantly, the bank managed to further improve its client 

satisfaction which translated into strong revenue growth of 21% 

y/y. Revenues per employee grew by 18%, which impressively 

again confirmed the top performance of UniCredit Bank Serbia’s 

staff. The continued emphasis on cost control resulted in an 

improved cost/income ratio of below 40%. Moreover, the cost of 

risk was maintained at a level significantly below the market 

average. In 2010, net profit after tax reached RSD 3.5 billion, 

which in nominal terms is a historical record for the bank. 

� In a challenging economic environment in romania, with 

stagnating investment and low private consumption, UniCredit 

tiriac Bank recorded gross operating profit of RON 762.5 m for 

2010, up 18% y/y while revenues were 9% higher y/y. Operating 

expenses fell by almost 1% compared to the level of last 

year, further improving efficiency to a 43.3% cost/income ratio. 

Loans grew by about 11% y/y, well above the market. Risk costs 

doubled in 2010 to RON 562 m, with the NPL ratio reaching 

9.9%. Net profit in 2010 amounted to RON 175 m, 47% lower 

than the previous year due to the aforementioned higher provisioning 

charge. UniCredit Tiriac Bank maintained a solid capital 

adequacy level of 12.5% as of the end of 2010. 

Despite the ongoing recession, revenue from corporate banking 

activities including Private Banking grew by 9.8% y/y and the 

loan portfolio exceeded market growth. Deposits grew by 2% 

y/y, and loans by 17% y/y. 

� Bulgaria: Exposed to strong competition in an economically 

fragile environment, UniCredit Bulbank continued to be the 

largest player in Bulgaria, and its strategic measures were carefully 

watched by its main peers. Managing BGN 11.3 bn in 

assets, the bank topped the rankings in major performance 

indicators and accounted for 15% of assets in the banking sector. 

Gross loans and advances to customers increased by 2.1% 

y/y and amounted to BGN 8.1 bn. Growth in retail loans was 

stronger than that of corporate loans as a result of a renewed 

focus on mortgages. Deposits from customers also increased by 

1.9% y/y to BGN 6.5 bn and accounted for 14% of market 

share. Shareholder’s equity improved by 9.4% y/y, supported 

by 10% growth in share capital in Q4 2010. Total capital adequacy 

of 18% was 1.7 percentage points higher y/y at the end 

of December 2010.The limited business opportunities and 

weaker consumer budgets were particularly felt in Q4 2010 and 

also affected profitability in 2010. The NPL ratio deteriorated to 

10% but was kept 1.8 percentage points below the market 

average. Total operating income was BGN 595 m, 4.7% higher 

y/y, supported by enhanced net interest income and stable fee 

and commission income. Operations optimisation and cost 

containment contributed to higher operating efficiency, which 

could not, however, offset the increased impairment losses. 

Consequently, net profit declined by 20% y/y to BGN 162 m. 

Nevertheless, the well-defined leadership position of UniCredit 

Bulbank was underlined by the fact that the bank accounted for 

one-quarter of the banking sector’s net profit. 

� In 2010, Ukraine commenced its way to economic recovery. 

GDP recorded the much-expected growth of 4.5%, following a 

sharp 15% contraction in 2009. This clear sign of improvement 

together with regained political stability and the absence of a 

significant foreign exchange rate fluctuation of the Ukrainian 

hryvnia, positively influenced the Ukrainian banking sector. 

Lending business, although still fragile, grew mainly in the 

corporate sector. Ukrsotsbank, although reducing its total loan 

portfolio in net terms, concluded several new deals with 

corporate clients and also recorded stronger activity in retail 

consumer lending, mostly in the area of car loans. Fee and 

commission income grew in H2 2010 as commercial activities 


39



picked up and allowed Ukrsotsbank to increase its share of commissions 

as a proportion of total revenues to about 16%, thus 

narrowing the gap to the market in this key indicator. 

Asset quality remains the focus of attention for all banks, and 

the peak of new defaults was definitely passed in 2010. While 

Ukrsotsbank increased its overall coverage ratio substantially by 

about 6 percentage points, the cost of risk was reduced to 5.0% 

compared to 6.5% in 2009. This positive development of the 

bank’s credit risk profile is expected to continue in 2011, thereby 

improving the profitability level of Ukrsotsbank together with a 

significant acceleration in commercial activities across all customer 

segments, while maintaining an excellent level of operational 

efficiency. 

� The economy in kazakhstan strongly recovered in 2010 with 

GDP growth of 6%–7% y/y. Net exports played a major role in 

lifting GDP expansion, with major export items such as oil and 

metals benefiting from improved global demand. Consumption 

and trade have also contributed, with investments remaining 

weak. UniCredit’s subsidiary, AtF Bank (AtF), expanded its loan 

book by 3% y/y, excluding the write-offs with a major increase 

in H2 2010. ATF continued to spin off its non-core assets, including 

the sale of its pension fund subsidiary in Q1 2010 and 

focussed more on its core commercial banking business. 

Although the quality of the loan portfolio remains weak, the deterioration 

of asset quality levelled off in Q2 2010. ATF continued to 

have one of the highest coverage ratios amongst its peers, allowing 

ATF to re-focus its main activities on generating new business 

rather than dealing exclusively with problematic borrowers. The 

bank also substantially reduced its funding costs on the back of 

significant liquidity in the market and due to the country’s 

improving credit profile. Also, with growth of 11% y/y, the development 

of fee and commission income generated from banking 

operations showed a substantial improvement. The bank continued 

to focus on stringent cost management by further optimising 

its branch network and by bundling business processes. 

� In 2010, AS UniCredit Bank, active in all 3 Baltic countries 

(Estonia, Latvia and Lithuania), faced an ongoing difficult economic 

environment and a drop of lending volume in the market. 

Overall revenues reached LVL 9.3 m, with a positive trend in net 

interest income. Effective cost management lowered operating 

expenses by nearly 1% compared to 2009. Due to an ongoing 

deterioration of mortgage loan collateral, loan loss provisions had 

to be increased significantly in Q4 2010. AS UniCredit Bank 

maintained a solid capital adequacy ratio of 10.4% after capital 

increases totalling LVL 30.5 m in order to further support business 

activities in the Baltic countries. The bank improved its 

loan/deposit ratio to 165%, mainly due to an increase in customer 

deposits. External funding was also raised via institutions 

such as the European Investment Bank and the Nordic Investment 

Bank. 

Implementation of the 

UniCredit business model 

In 2010, key initiatives in CEE Corporate Banking were aimed 

at further strengthening customer centricity, while at the same 

time leveraging on the Group’s synergies and reinforcing crossselling 

opportunities. 

� The Group-wide implementation of a customer-centric 

approach had impacts on the organisational structure of CEE 

Corporate & Investment Banking. The full integration of investment 

banking business under the Corporate umbrella created a 

direct link between legal entities in CEE and global Corporate & 

Investment product hubs in Munich, London and Vienna. That 

spurs the ability to come up with the best possible solutions, no 

matter how complex, while at the same time simplifying procedures 

for the client. In addition, this approach facilitates the generation 

of customised solutions and the possibility to generate 

excellence and value added for the final clients who then have 

easier access to our products. With a view to promoting the customer-centric 

approach, improving the generation of synergies 

and exploiting cross-selling opportunities, CEE Corporate Banking 

in 2010 launched a number of campaigns aimed at strengthening 

cooperation and the integration of sales forces from different 

product lines. 

As far as customer satisfaction is concerned, more than 4,500 

interviews with the Group’s own clients and clients of competitors 

showed that in most CEE countries where UniCredit Group 

operates, UniCredit corporate banking clients are more satisfied 

than the clients of the Group’s peers. On the basis of survey 

results, local banks developed and adjusted their action plans. 

Special emphasis was put on optimising the credit process, 

increasing the transparency of financial offers, and on the further 

roll-out of Group web solutions. The underlying measures were 

supported by the central project “Achieving excellence in CEE”. 

Cooperation with clients facing economic turbulence was 

improved by offering tailor-made solutions. In the area of complaint 

management, specific measures were taken to optimise 

existing tools and processes. 


40



� In 2010, the CEE retail Banking focus was on further improving 

the sales force’s effectiveness and productivity as well as on the 

migration to direct distribution channels to maximise bank availability 

and increase accessibility of core banking services for customers. 

The customer centricity business model was accentuated by the 

launch of the new UniCredit brand positioning. A series of initiatives 

were introduced to identify main areas of interest for the customers 

for cross-border banking. The CEE banks were committed to optimising 

the credit process, thus making loan products accessible and 

readily available in an environment of restrictive legislative requirements. 

In an attempt to achieve superior customer service and positive 

experience, the banks implemented dedicated service models in the 

Family & SME business segment. 

In 2010, the measurement of external and internal customer satisfaction 

was intensified with a special focus on instant feedback. 

A dedicated Reputation Management Programme was introduced in 

some banks in the region and is to be expanded in 2011. 

� One of the major initiatives of CEE GBS in 2010 was the programme 

to enhance the credit risk processes in selected CEE countries. 

The programme focused on improving credit risk processes and 

supporting IT systems with the primary objective of improving “timeto-decision” 

(TTD) and “time-to-cash” (TTC). The project addressed a 

range of processes for corporate and private clients. 

In addition, risk control was further enhanced by two IT projects 

which implemented new applications to support collection processes 

and to prevent application fraud. 

To improve customer services, a major focus was also on multichannel 

IT applications. To this end, a number of service-oriented projects 

were launched in 2010, including “M-Banking”, bringing a new 

standard and quality of “Mobile Banking” to most of our CEE countries 

in 2011, the introduction of second-generation ATMs in a 

number of countries and the selection of a new Customer Relationship 

Management (CRM) system which will be implemented in 2011 

in Bulgaria, Romania, Serbia and Bosnia and Herzegovina. 

The core banking IT system “FlexCube” was successfully implemented 

in Russia to support customer needs and business growth. 

The implementation of FlexCube has also commenced in Ukraine, 

where it will be completed in 2011. The CEE efficiency programme 

maintained the focus on implementing measures in the back-office 

and real estate areas to achieve sustainable efficiency. 

� “Local experience, global excellence” is the motto in CEE HR, 

underlining the importance of linking local and global initiatives and 

the value added for all involved. In all our activities the cooperation 

and contribution of the CEE counterparts are essential, bringing real 

benefits of this diverse community to the Group. In 2010, the development 

of employees continued to have a high priority on the HR 

agenda, highlighted by the following examples: 

� The Mentoring Initiative for Executives in the CEE countries continued 

to be very successful. This was reflected in the growing number 

of participants. 

� As regards training activities, training units successfully switched 

to a stronger focus on in-house training and to other measures which 

support learning processes and career development. 

� A considerable number of management and soft-skill training programmes 

were provided on site. 


41



Income statement of the consolidated banking subsidiaries in CEE 

(€ m) 

CEE BANkS tOtAl 1) CZECh rEPUBlIC SlOVAkIA hUNgAry 

2010 2009 2010 2009 2010 2009 2010 2009 

Net interest income 3,154.3 2,811.7 245.2 243.9 73.1 76.5 214.1 159.3 

Net fee and commission income 1,095.6 1,063.9 114.76 96.6 28.0 23.7 93.6 91.4 

Net trading, hedging and fair value income 179.7 575.7 10.2 11.4 6.0 6.5 –0.4 18.3 

Net other income/expenses 67.1 57.9 0.7 0.6 1.9 4.1 5.7 –0.1 

Net non-interest income 1,342.4 1,697.5 125.7 108.7 35.9 34.3 98.9 109.6 

OPErAtINg INCOME 4,496.7 4,509.2 370.9 352.5 109.0 110.8 313.0 268.9 

OPErAtINg EXPENSES –2,000.6 –1,829.0 –157.0 –139.4 –72.3 –73.4 –154.5 –119.4 

OPErAtINg PrOFIt 2,496.1 2,680.2 213.9 213.1 36.8 37.3 158.6 149.5 

Provisions for risks and charges –36.5 –44.3 –0.9 0.0 –0.5 1.3 –1.1 1.0 

Net writedowns on loans –1,138.4 –1,657.2 –68.4 –83.0 –21.9 –11.0 –80.3 –86.2 

Net income from investments 45.8 12.3 –3.4 1.4 0.1 –0.2 7.7 4.9 

Integration costs –3.8 –4.2 –3.7 –3.6 0.0 0.0 0.0 –0.3 

PrOFIt BEFOrE tAX 1,363.2 986.9 137.4 127.9 14.5 27.4 84.9 68.9 

Cost/income ratio 44.5% 40.6% 42.3% 39.5% 66.3% 66.3% 49.3% 44.4% 

Risk/earnings ratio 36.1% 58.9% 27.9% 34.0% 29.9% 14.3% 37.5% 54.1% 

Exchange rate 25.284 26.435 Euro Euro 275.481 280.327 

Appreciation/depreciation against the euro +4.6% +1.8% 

(€ m) 

SlOVENIA BUlgArIA rOMANIA BAltICS 


Net interest income 55.1 40.7 219.4 209.5 182.8 38.0 13.4 13.4 

Net fee and commission income 21.8 19.3 79.5 77.7 53.9 54.7 –4.0 –0.3 

Net trading, hedging and fair value income –2.3 3.4 3.4 0.9 81.5 197.9 3.6 11.6 

Net other income/expenses –0.3 0.2 1.8 2.5 0.9 –0.4 0.0 –0.2 

Net non-interest income 19.3 23.0 84.7 81.1 136.3 252.2 –0.4 11.2 

OPErAtINg INCOME 74.4 63.6 304.1 290.6 319.1 290.2 13.0 24.6 

OPErAtINg EXPENSES –39.3 –36.4 –123.5 –124.8 –138.1 –138.4 –13.7 –13.9 

OPErAtINg PrOFIt 35.0 27.2 180.6 165.8 181.0 151.8 –0.7 10.8 

Provisions for risks and charges 0.9 –1.0 1.5 7.1 0.3 –1.4 0.0 0.0 

Net writedowns on loans –21.2 –15.8 – 95.4 –64.0 –133.5 –60.6 –32.0 –7.2 

Net income from investments 0.8 0.9 5.2 6.2 1.3 0.9 0.0 –0.5 

Integration costs 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 

PrOFIt BEFOrE tAX 15.6 11.2 91.9 115.1 49.2 90.7 –32.7 3.0 



Exchange rate Euro Euro 1.956 1.956 4.212 4.240 0.709 0.706 

Appreciation/depreciation against the euro –0.0% +0.7% –0.4% 

1) Sum of P/L figures of the individual CEE banks shown in this table. The CEE business segment also includes the Vienna-based CEE profit centre. 


42



(€ m) 

tUrkEy 2) rUSSIA kAZAkhStAN UkrAINE 


Net interest income 674.8 725.4 562.7 352.4 145.2 209.8 235.3 283.9 

Net fee and commission income 383.3 326.6 131.7 114.7 –34.8 40.9 45.9 47.2 

Net trading, hedging and fair value income 32.3 47.2 – 9.1 120.7 20.2 55.5 7.5 20.9 

Net other income/expenses 36.9 18.7 –6.0 –0.3 –18.0 –7.2 –1.8 –0.4 

Net non-interest income 452.4 392.5 116.6 235.2 –32.5 89.2 51.6 67.8 

OPErAtINg INCOME 1,127.2 1,117.9 679.3 587.6 112.7 298.9 287.0 351.7 

OPErAtINg EXPENSES –476.5 –415.7 –230.0 –193.5 – 95.2 –87.3 –113.5 –100.4 

OPErAtINg PrOFIt 650.7 702.1 449.4 394.0 17.4 211.6 173.4 251.3 

Provisions for risks and charges –34.0 –52.0 –0.7 0.0 0.0 0.0 –0.1 –0.4 

Net writedowns on loans –65.1 –299.4 –137.9 –203.1 –186.5 –499.0 –155.8 –228.0 

Net income from investments 18.9 7.0 7.9 –1.2 5.8 –7.2 0.6 –0.6 

Integration costs 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 

PrOFIt BEFOrE tAX 570.6 357.7 318.6 189.7 –163.4 –294.5 18.2 22.3 



Exchange rate 1.997 2.163 40.263 44.138 195.360 206.034 10.539 11.131 

Appreciation/depreciation against the euro +8.3% +9.6% +5.5% +5.6% 

(€ m) 

CrOAtIA BOSNIA SErBIA 

2010 2009 2010 2009 2010 2009 

Net interest income 392.0 330.0 77.1 74.6 64.0 54.4 

Net fee and commission income 134.5 123.7 30.5 29.2 16.7 18.4 

Net trading, hedging and fair value income 18.2 73.2 6.3 5.1 2.3 2.8 

Net other income/expenses 45.9 40.4 –0.1 0.6 –0.5 –0.6 

Net non-interest income 198.5 237.3 36.7 34.9 18.6 20.7 

OPErAtINg INCOME 590.5 567.3 113.8 109.5 82.6 75.1 

OPErAtINg EXPENSES –278.2 –275.4 –76.0 –78.3 –32.7 –32.6 

OPErAtINg PrOFIt 312.3 291.9 37.8 31.1 49.8 42.5 

Provisions for risks and charges –1.1 –0.3 –0.8 1.7 0.0 –0.1 

Net writedowns on loans –112.3 –77.6 –17.5 –13.7 –10.6 –8.7 

Net income from investments 1.3 0.5 0.8 0.2 –1.1 0.0 

Integration costs –0.1 –0.3 0.0 0.0 0.0 0.0 

PrOFIt BEFOrE tAX 200.1 214.1 20.3 19.3 38.0 33.7 

Cost/income ratio 47.1% 48.5% 66.8% 71.6% 39.6% 43.4% 

Risk/earnings ratio 28.7% 23.5% 22.7% 18.3% 16.6% 16.1% 

Exchange rate 7.289 7.340 1.956 1.956 103.043 93.985 

Appreciation/depreciation against the euro +0.7% 0.0% –8.8% 

2) pro quota 


43



Outlook 

Global economic trends 

� After a temporary slowdown in summer 2010 the global economy 

started to gather momentum around the turn of the year. We 

expect overall growth to reach 4.5% (weighted by purchasing power) 

in 2011 – and also in 2012. China was the first country to manage 

the turnaround after the financial market crisis, and will remain the 

major provider of impetus with growth rates of just below 10%. The 

Third World economy as a whole will expand by 6.5%. The combined 

GDP of industrialised countries, on the other hand, is expected to 

grow at a disproportionately low rate of 2.5% in the next two years. 

With the inventory cycle now past its final stage, and with the effects 

of the backlog boom now receding, global economic performance will 

be dampened by the switch from fiscal incentives to consolidation. 

Higher commodity prices and a more restrictive monetary policy are 

also having an impact. GDP growth in the US, which was comparatively 

low in summer 2010 at a level between 1.75% and 2.5% (on 

an annualised basis), started to rise towards year-end 2010. At the 

same time there were increasing signs of a self-sustaining upswing. 

On this basis we expect the US economy to grow by 3.3% in the 

current year (2012: +2.7%), also in light of recent decisions concerning 

massive tax reductions. It is nevertheless unlikely that interest 

rates will be raised in the near future. As persistent (mediumterm) 

economic risks outweigh fears of inflation, the additional measures 

of quantitative easing will probably be implemented. The Fed is 

not expected to abandon its zero rate policy before the beginning of 

2012 (current target rate: 0%-0.25%). The expansionary economic 

policy also involves risks: the US fiscal position is precarious and 

convincing plans for consolidation are not in sight. This is weakening 

the US dollar – in fundamental terms at least – and suggests future 

volatility. The heterogeneous character of world economic trends and 

increasing imbalances in the global balance of payments also put a 

question mark over future developments. 

� Although the pronounced countermovement to recession in 2010 

is tapering off, the euro area got off to a better-than-expected start 

in 2011. In Germany, the high level of export-driven industrial activity 

has stimulated domestic demand. The same applies to France. This 

benefits economies such as Austria and countries in CEE/Central 

Europe, which have close economic links with the large euro area 

countries. The upswing in the core countries has largely become selfsustaining. 

Nevertheless, massive fiscal consolidation measures and 

wide variations in terms of productivity in the euro area will curb 

economic growth. In 2011, the euro area’s GDP should be able to 

grow by 1.7% in real terms. Strong growth in the core countries and 

imported price increases are preparing the ground for subsequent 

effects and inflationary expectations. Despite the continued debt 

crisis, recurrent doubts about the solidarity of European banks and 

Eurosystem members’ varying use of facilities made available by the 

European Central Bank, the ECB will raise its main refinancing rate, 

currently at 1%, in the spring, thus initiating the end of the low interest 

rate phase. Long-term interest rates will continue to move closely 

in line with US rates. It is not until summer 2011, when the Fed’s first 

step to raise interest rates will also appear on markets’ time horizon, 

that long-term yields will also turn upwards for a sustained period. We 

expect that by the end of 2011, yields on 10-year Treasury bonds will 

have risen to 4% and the euro benchmarks to 3.5%. On this basis 

we will see an upward shift and some flattening of the yield curve. 

Interest rate spreads of highly indebted euro member states will 

remain high. Debt ratios are rising further for the time being and rollover 

problems continue to exist, despite the austerity measures put in 

place. The rescue fund is likely to be used by additional countries. 

The markets have so far not been convinced by efforts to find a solution 

with a credible medium-term consolidation path and a European 

set of rules including the possibility of imposing sanctions. 

Economic outlook for our markets 

� Overall, the economies in Central and Eastern Europe (CEE) have 

returned to a stable growth path. Economic growth (CEE 17 without 

Poland) of 3.6% in 2010 compares with a strong contraction of 5.9% 

in the crisis year 2009. In the current year and in 2012, growth is 

expected to reach 3.8% and 4.2%, respectively. The momentum will 

accelerate as countries which are currently lagging behind in the 

cycle, mainly economies in South-East Europe, catch up over time 

(see table). GDP growth, a general indicator of economic developments, 

is reviving across the region without any exceptions. 

The starting position differs widely within CEE, depending on a country’s 

output structure and the degree of international integration. 

As Turkey achieved very strong growth already in 2010 (+7.1%), 

growth rates will return to normal levels there in 2011 and 2012 

while remaining above average at 4.1% and 5.1%, respectively. 

The CIS countries which are major exporters of raw materials are also 

expected to record stable economic growth of over 4% (Russia) and 

over 5% (Ukraine and Kazakhstan). The highly integrated export- 

oriented countries in Central Europe will benefit from strong expansion 

in the European core area, with growth rates exceeding those for 

the euro area as a whole (+2.3% in 2011 and +3.5% in 2012). 

Hungary is a special factor with its economic policy geared to autonomous 

development. The only country group which is still affected by 

the repercussions of the crisis and by the need for adjustment is 

South-East Europe, primarily Romania and the Balkan countries 

Croatia and Bosnia. 

While there are considerable differences among the countries in Central 

and Eastern Europe, it should be noted that all of them were quick 

to respond to the new environment through their economic policy. 

All of these countries took determined action to address the twin 

deficits – external and domestic debt – and some of them did so with 

IMF/EU support. In this way they successfully dealt with the risk of 

contagion emanating from the debt crisis in the peripheral countries 

of the euro area, and now their debt ratios are comparatively low. 

Expressed as a percentage of GDP, the average public sector deficit in 


44



the region was down from 7.0% in 2009 to 5.4% in 2010, with a 

further decline to 4.7% expected for the current year. Public debt will 

remain below 40% of GDP in 2011. The adjustment had, and still 

has, an adverse impact on domestic demand, which means that 

there is no risk of the economy overheating. Yet the risk of inflation 

has increased. Commodity prices have gone up, partly as a result of 

geopolitical crises; food prices have also inceased, partly as a consequence 

of natural disasters (such as the drought in Russia); and 

excise duties have been raised. All of these factors point to accelerating 

inflation: we expect the average inflation rate for the CIS region 

to rise to over 7% after 6.4% in 2009, with particularly high rates in 

Ukraine (11%) and Kazakhstan (7%), Serbia (9.4%) and Russia 

(9.1%) – the latter mainly because of excessive growth of the money 

supply. The interest rate environment will thus become more restric- 

Economic growth (real GDP, % over the previous year) 

2008 2009 2010 2011 2012 

World (purchasing power parities) +2.8 –0.7 +4.7 +4.4 +4.4 

USA +0.0 –2.6 +2.9 +3.3 +2.7 

Euro area +0.3 –4.0 +1.7 +1.7 +1.6 

… Austria +2.2 –3.9 +1.9 +2.3 +2.0 

Czech Republic +2.5 –4.1 +2.3 +1.8 +3.3 

Slovakia +5.8 –4.8 +3.9 +3.1 +4.5 

Hungary +0.6 –6.3 +1.2 +2.5 +3.4 

Slovenia +3.7 –8.1 +1.2 +2.5 +2.8 

Central Europe +2.7 –5.3 +2.1 +2.3 +3.5 

Poland +5.1 +1.7 +3.8 +4.4 +3.9 

Bulgaria +6.2 –4.9 +0.1 +2.8 +3.5 

Romania +7.1 –7.1 –2.5 +1.7 +3.4 

Croatia +2.4 –5.8 –1.5 +1.6 +2.0 

Bosnia and Herzegovina +5.4 –2.9 +0.5 +1.8 +2.5 

Serbia +5.5 –3.1 +1.8 +2.7 +3.5 

Estonia –3.6 –14.1 +2.4 +3.9 +3.9 

Latvia –4.6 –18.0 –0.9 +3.9 +3.9 

Lithuania +2.8 –15.0 +0.9 +3.7 +3.7 

SEE and Baltic states +4.4 –8.0 –0.9 +2.4 +3.3 

Russia +5.2 –7.9 +3.4 +4.3 +4.1 

Turkey +0.7 –4.7 +7.4 +4.1 +5.1 

russia and turkey +3.8 –6.9 +4.6 +4.2 +4.4 

Kazakhstan +3.3 +1.2 +6.0 +5.3 +5.5 

Ukraine +2.1 –15.1 +4.0 +5.0 +5.0 

kazakhstan and Ukraine +2.6 –8.2 +4.8 +5.1 +5.2 

CEE (with Poland, GDP-weighted) +3.8 –5.9 +3.6 +3.9 +4.2 

CEE (without Poland, GDP-weighted) +3.6 –6.9 +3.6 +3.8 +4.2 

CEE (Bank Austria-weighted) *) +3.2 –6.1 +2.9 +3.3 +3.9 

Bank Austria market (GDP-weighted) +3.5 –6.6 +3.4 +3.6 +4.0 

Bank Austria market 

(Bank Austria-weighted) +2.9 –5.4 +2.6 +2.9 +3.3 

*) weighted by contribution of Bank Austria’s subsidiaries to operating income in CEE region 

Source: UniCredit Research. Forecasts CEE: 21 January 2011, rest of world: 21 February 2011 

tive in the entire region. As long-term perspectives of the CEE countries 

are intact and the countries have coped with the crisis comparatively 

well, net capital inflows have resumed in the past few months. 

For these reasons, apart from exchange rate fluctuations of the euro 

against the US dollar, we do not anticipate any major pressure for 

currencies to depreciate. 

Overall, the crisis has prompted a modification of the CEE growth 

model and its funding, with implications for the banking sector. 

Before the crisis, an overabundant supply of liquidity in international 

markets and low sovereign risk costs supported dynamic credit 

growth in the region. In light of low domestic savings ratios, loans 

were refinanced externally, via inflows of international capital; 

personal loans and foreign currency loans experienced a boom. 

The loan/deposit ratio declined in 2010, and in the next few years 

efforts will continue to focus on identifying local funding opportunities. 

Given stronger nominal growth, banks will nevertheless again pursue 

a more active lending strategy involving a greater diversification of 

loan products due to the prevailing shortage of capital, with a 

stronger focus on sustainability considerations. This will be at the 

expense of consumer loans while promoting corporate loans and 

project finance, including capital market instruments. 

Before the crisis, the banking sector had failed to properly appraise 

asset quality, especially in the retail segment, and the strong growth 

of the system had the effect of keeping the NPL ratio at a low level 

for too long. Overall, the marked rise of the provisioning charge is 

likely to have passed its peak in the CEE region. Impaired loans as a 

proportion of total lending volume are set to peak, or will pass their 

peak in the first half of 2011. Turkey took the lead in this regard (end 

of 2009), with the situation easing in most CEE countries at a high 

level in the middle of 2010. Hungary, Ukraine and Romania are lagging 

behind, while conditions in Kazakhstan, Bulgaria and Latvia will 

probably not improve until later in 2011. 

The crisis years have not impacted the long-term potential in Central 

and Eastern Europe. Convergence in the banking sector is still 

under way. The regional growth model, which is based on capital 

inflows, rising productivity and a higher standard of living, remains 

intact. The macroeconomic environment will be complemented by 

growing financial intermediation and the modernisation of financial 

services. In this context, market penetration with mortgage-based 

financing is not likely to amount to more than 8% of GDP, compared 

with 40% in the euro area. In CEE, the volume of business loans 

amounts to 26% of GDP; the figure for the euro area is 52%. There 

is moreover substantial untapped market potential in the areas of 

asset management and financial services offered to corporate customers. 

The next few years will see further growth in terms of volume 

and turnover in banking business, even if it is unlikely that this will 

match the growth rate of pre-crisis years. A vigorous upturn in 

domestic demand in CEE would be required for approaching the 

growth rates seen in the past. 


45



� In Austria, economic recovery will continue at a fairly buoyant 

rate in 2011. While the boost from external demand will weaken as 

the year progresses, exports will remain the key growth impetus 

throughout the year. This is reflected in the favourable sentiment 

prevailing in Austria’s export industry, and in the marked rise in 

new orders and strong increase in order buffers in this sector. Moderate 

wage growth will impact private consumption, and the upturn 

experienced by the labour market will be unable to maintain its current 

pace. Interest rates will remain at a low level, rising slightly 

later in the year. Consumption will therefore continue to expand at 

the expense of the savings ratio, but its momentum is expected to 

slow in the second half of the current year. Private consumption will 

grow by a little under 1 per cent in 2011 as a whole. The rise in 

the backlog of orders and the increase in capacity utilisation levels 

in industry will make investments, which will expand at a rate of 

3.5 per cent in real terms in 2011, the most important engine of 

growth. The strongest impetus will come from investments in plant 

and equipment. Investments in construction, impacted by the budgetary 

restraint of the public sector, will be weak (+0.6%) in light of 

plans to reduce the budget deficit from 4.1 per cent of GDP in 

2010 to 3.2 per cent. The measures to cut the budget deficit will 

moreover push up inflation slightly. The inflation rate will be fuelled 

primarily by further rises in world market prices for energy and 

basic agricultural products in 2011 to an average of about 2.5 per 

cent. Given the continued favourable outlook for exports and especially 

stronger investment activity, we expect GDP to rise slightly 

above the previous year’s level to a real 2.3 per cent in 2011. 

Austria thus numbers among the euro area countries with the 

strongest growth rates. 

On the monetary side, the ECB will probably change its interest 

rate policy in 2011, a measure which is currently being anticipated. 

The growth of bank deposits will however continue to weaken, 

despite a slight rise in interest rates. New capital formation will 

reflect a stronger shift by private households in favour of securities, 

including issues by banks, and funds. We expect demand for life 

assurance policies to remain strong, supported by the long terms of 

such agreements. Overall, the slow rise in real wages and especially 

weak credit demand will result in a continued decline of the 

savings ratio. New capital formation in 2011 will consequently still 

be below the pre-crisis levels. We expect demand for personal 

loans to remain weak in 2011, and business loans will continue 

to grow at a disproportionately low rate, although they may 

show a slight upturn. The latter are supported by the continued 

dynamic growth of the industrial sector and stronger investment 

activity, curbed by the favourable liquidity levels primarily of large 

companies. 

Outlook for Bank Austria’s performance 

Bank Austria has emerged well from the crisis years. The bank has 

closely geared its business structure to commercial banking business 

with customers and strengthened its risk-bearing capacity on 

its own. 

Results for the crisis year 2009 were weighed down by declining 

operating income and higher charges from non-operating items; 

risk-weighted assets were reduced (deleveraging) in that year, as 

were risk levels, primarily in trading activities. 

In 2010, revenue trends were more favourable but repercussions of 

the financial market crisis and of recession continued to have an 

impact through the lag in the credit cycle and the effects on the 

carrying amounts of equity interests. At the same time we are wellpositioned 

for further growth following the capital increase carried 

out in 2010. 

After the years of adjustment, we are now looking for expansion. 

For 2011 and beyond, we expect that the upward trend in volume 

and operating revenues will intensify and the exceptional burdens 

resulting from credit risk and goodwill impairment will gradually 

taper off; this means that developments on the operating and nonoperating 

sides will continue to return to normal. 

Our strategy is not aimed at any major reshaping but focuses on a 

number of initiatives under our customer-oriented business model. 

� First, we are seeking expansion in our core commercial banking 

business – i.e. loans, deposits and investments – with a focus on 

promising segments in our matrix of business lines and regions. We 

will take this into account in our capital allocation. 

� Second, we will promote those products and services which help 

us raise RWA productivity in the bank as a whole and increase efficiency 

in the employment of equity capital: in business with private 

customers, asset gathering continues to be a priority, especially in 

CEE countries. Quite generally, we expect to see stronger demand 

for advisory and other services. In business with large corporates, 

the use of capital market products is again becoming more significant, 

particularly in view of the Basel 3 rules. 

� Third, we are investing in our market position. Following completion 

of the One4C project, our sales organisation in Austria is now 

characterised by a more finely-tuned segmentation. In business with 

private customers we have identified two groups at which we will 

target our new “Smart Banking” approach. The new approach will 

enable Bank Austria to provide services and advice via modern 

communication channels – personalised OnlineB@nking, telephone, 

SMS – around the clock worldwide, independent of branch opening 

hours. This will also relieve the workload on staff at branches while 


46



further enhancing the quality of our branch portfolio. Our Austriawide 

network structure of service units for small and medium-sized 

businesses (SMEs) has been fully effective since the beginning of 

2011. We are thereby closer to customers and better positioned to 

meet customer needs through specialised services. One of the objectives 

of this move is to make better use of potential in relationships 

with business customers who are also private customers of Bank 

Austria. We will make additions to staff in the F&SME Division. Following 

the successful completion of customer transfers from other 

Divisions, Private Banking launched a quality initiative for the top 

segment of private customers, offering them a number of innovative 

services such as ongoing portfolio analysis based on international 

cooperation of UniCredit experts and “Private Portfolio Premium”, 

which provides our customers with clear contractual standards offering 

more scope for personal fine-tuning. In the CIB Division we are 

planning to significantly expand lending volume to support stronger 

investment activity while also focusing on capital market products 

and transaction banking, especially in the public sector. In international 

business with corporate customers, we will bring our leading 

position in trade finance and cash management services to bear in 

cross-border banking. 

In CEE we will implement our business model on a selective basis. 

This means that we will be guided by market potential and market 

penetration in the various countries; below the country level, we will 

give attention to prosperity in individual regions and locations. 

Another focus of attention in this context is the minimum size threshold 

of profitability. Our five-year plan provides for the addition of 

more than 900 branches (openings net of closures) to the network by 

2015, including 139 new branches in the current year, primarily in 

Turkey, Romania and the Czech Republic. We are promoting mobile 

sales networks as part of advanced multi-channel banking, such networks 

are already operated very successfully in several countries. 

Staff numbers will rise again, mainly in Romania, the Czech Republic 

and Russia. 

� Fourth, we have launched All4Quality, a comprehensive programme 

for sustained cost reduction and efficiency enhancement. 

Among other objectives, the programme is aimed at harmonising IT 

and back-office processes on a cross-border basis with a view to 

unlocking synergies. Beginning in 2011 and until the middle of 2012, 

the IT company Bank Austria Global Information Services (BAGIS) and 

the Austrian branch of UniCredit Global Information Services (UGIS), 

Bank Austria’s Facility Management and the back-office services provider 

UniCredit Business Partner (UCBP) will be combined to form a 

single company with about 2,500 employees. The successive rollout 

of EuroSIG, UniCredit’s core banking system, will continue. 

➔ The moderately favourable environment in combination with our 

numerous growth initiatives in commercial banking business suggest 

that the positive revenue trend seen in the past year will continue 

in 2011. We are planning for a robust operating profit, despite 

extensive investment projects. Net writedowns of loans and provisions 

for guarantees and commitments should continue to gradually 

return to normal, especially in the CEE business segment, thereby 

having a positive effect on the income statement. The outlook is 

also brightening for those countries which are late in the credit 

cycle, and the restructuring process of the banking sector in the CIS 

countries is making progress. On this basis it may be assumed that 

2011 will not see a recurrence of the exceptionally high burdens 

recorded in 2010 and that the improvement in operating performance, 

after the provisioning charge, will feed through to net profit for 

2011. The risks in this basic scenario mainly relate to general 

trends in interest rates and credit spreads, i.e. on the funding side. 

Moreover, Bank Austria is still exposed to market risk after the reorientation 

of trading activities. Volatility of interest rates and exchange 

rates will depend not least on future developments in the European 

public debt crisis, and renewed external disruptions – resulting, for 

example, from the geopolitical situation and commodity price trends 

– should be taken into account. 

When assessing the outlook for Bank Austria’s performance, one 

should note that the regulatory environment has changed significantly 

and banks will find themselves subject to stricter requirements. 

In the medium to long term, the implementation of the 

Basel 3 package will have the strongest impact on the banking 

sector, starting with the new definition of risk capital for the trading 

book and the new definition of equity capital all the way to the significant 

increases in minimum capital ratios. Together with other 

new rules (liquidity coverage ratio and net stable funding ratio), this 

will have an influence on the funding structure already before the 

new rules become effective, leading to further convergence of terms 

and conditions among banks and large companies. Bank Austria 

is well prepared, in terms of methodologies and organisational 

arrangements, for the changes in the regulatory environment. 

With our strong equity capital base of € 17.5 bn and our high Tier 1 

capital ratio of over 10%, we are very well positioned to meet the 

stricter requirements on our own while pursuing further business 

expansion. 

In 2011, the stability levy on credit institutions in Austria will be 

payable for the first time; a levy on banks was already payable in 

Hungary in 2010. The implementation of EU Directives (CRD II and 

CRD III), new rules for the deposit guarantee scheme and investor 

compensation, and possibly the collection of the capital gains tax 

introduced in Austria, will have direct impacts on current business 

and involve additional costs. Financial transaction taxes and restrictive 

regulatory rules for derivatives would limit efficiency and liquidity 

levels in financial markets, discriminating against transactions 

which are also required for commercial banking business. If the 

approach is not coordinated, the new regulatory rules and fiscal 

measures may accumulate to put a prohibitive burden on banks, 

ultimately affecting their performance capabilities. 


47



Vienna, 7 March 2011 

The Management Board 

Willibald Cernko 

(Chairman) 

Helmut Bernkopf Jürgen Danzmayr 

Massimiliano Fossati Francesco Giordano 

Rainer Hauser Gianni Franco Papa Doris Tomanek 


48

Consolidated Financial Statements 

in accordance with International Financial Reporting Standards (IFRSs) 


for the year ended 31 December 2010 80 

Income statement 80 

Other comprehensive income 81 

Taxes on items directly recognised in equity 81 

Statement of Financial Position at 31 December 2010 82 

Statement of Changes in Equity 83 

Statement of Cash Flows 84 


50

Consolidated Financial Statements in accordance with IFRSs 


of the Bank Austria Group for the year ended 31 December 2010 

Income statement for the year ended 31 December 2010 (€ m) 

Notes 2010 2009 

Interest income and similar revenues B.1 8,386 9,984 

Interest expense and similar charges B.1 –3,843 –5,250 

Net interest margin 4,543 4,733 

Fee and commission income B.2 2,463 2,245 

Fee and commission expense B.2 –472 –414 

Net fees and commissions 1,990 1,831 

Dividend income and similar revenue B.3 31 57 

Gains and losses on financial assets and liabilities held for trading B.4 301 329 

Fair value adjustments in hedge accounting B.5 –2 – 

Gains and losses on disposal of: B.6 43 126 

a) loans 3 5 

b) available-for-sale financial assets 40 123 

c) held-to-maturity investments –1 –2 

d) financial liabilities – – 

Gains and losses on financial assets/liabilities at fair value through profit or loss B.7 27 –6 

OperatiNg iNcOme 6,934 7,070 

Impairment losses on: B.8 –1,851 –2,297 

a) loans –1,837 –2,252 

b) available-for-sale financial assets –9 –26 

c) held-to-maturity investments – – 

d) other financial assets –5 –20 

Net income from financial activities 5,083 4,773 

Premiums earned (net) B.9 118 87 

Other income (net) from insurance activities B.10 – 95 –82 

Net income from financial and insurance activities 5,106 4,779 

Administrative costs: –3,462 –3,292 

a) staff expense B.11 –1,931 –1,898 

b) other administrative expense B.12 –1,531 –1,394 

Provisions for risks and charges B.13 –136 –114 

Impairment/write-backs on property, plant and equipment B.14 –200 –221 

Impairment/write-backs on intangible assets B.15 –112 –112 

Other net operating income B.16 169 207 

OperatiNg cOsts –3,741 –3,533 

Profit (loss) of associates B.17 126 84 

Gains and losses on tangible and intangible assets measured at fair value – – 

Impairment of goodwill –378 –19 

Gains and losses on disposal of investments B.18 33 24 

tOtal prOfit Or lOss befOre tax frOm cONtiNuiNg OperatiONs 1,146 1,335 

Tax expense (income) related to profit or loss from continuing operations B.19 –348 –182 

Net prOfit Or lOss fOr the year 798 1,152 

Attributable to: 

Owners of the parent company 747 1,102 

Non-controlling interests 51 51 

Earnings per share (in €, basic and diluted) 3.30 5.45 


51


Other comprehensive income (€ m) 


Gains/losses on assets held for sale (available-for-sale reserve) –57 51 

Gains/losses on cash flow hedges (cash flow hedge reserve) 10 126 

Changes at companies accounted for under the equity method 20 3 

Foreign currency translation – exchange differences 392 –515 

Foreign currency translation relating to assets held for sale – – 

Actuarial gains/losses on defined-benefit plans –114 –137 

Taxes on items directly recognised in equity 39 –4 

Other changes *) 60 –499 

recognised directly in equity 350 – 974 

Net profit 798 1,152 

tOtal Of iNcOme aNd expeNses recOgNised iN the repOrtiNg year 1,147 178 


Owners of the parent company 1,097 348 

Non-controlling interests 50 –169 

*) The figure for 2009 includes changes due to the recognition of the commitment to repurchase non-controlling interests. The figure for 2010 includes the € 69 m gain on the sale of UniCredit CAIB AG. 

Taxes on items directly recognised in equity (€ m) 


Gains/losses on assets held for sale (available-for-sale reserve) 15 –11 

Gains/losses on cash flow hedges (cash flow hedge reserve) –4 –27 

Actuarial gains/losses on defined-benefit plans 29 35 

taxes ON items directly recOgNised iN equity 39 –4 


52


Statement of Financial Position 

of the Bank Austria Group at 31 December 2010 

Assets (€ m) 

Notes 31 dec. 2010 31 dec. 2009 

Cash and cash balances C.1 3,030 3,213 

Financial assets held for trading C.2 4,304 4,137 

Financial assets at fair value through profit or loss C.3 304 235 

Available-for-sale financial assets C.4 17,544 10,826 

Held-to-maturity investments C.5 4,446 5,067 

Loans and receivables with banks C.6 19,749 23,076 

Loans and receivables with customers C.7 130,093 123,602 

Hedging derivatives C.8 2,449 151 

Changes in fair value of portfolio hedged items (+/–) C.9 44 – 

Investments in associates and joint ventures C.10 2,518 2,426 

Insurance reserves attributable to reinsurers – – 

Property, plant and equipment C.11 2,553 2,273 

of which held for investment 479 369 

Intangible assets C.12 3,751 3,938 

of which goodwill 3,225 3,415 

Tax assets C.13 1,254 1,330 

a) current tax assets 248 309 

b) deferred tax assets 1,006 1,021 

Non-current assets and disposal groups classified as held for sale C.14 2 13,210 

Other assets C.15 1,008 975 

tOtal assets 193,049 194,459 

Liabilities and equity (€ m) 

Notes 31 dec. 2010 31 dec. 2009 

Deposits from banks C.16 33,130 33,362 

Deposits from customers C.17 100,284 97,041 

Debt securities in issue C.18 27,555 28,822 

Financial liabilities held for trading C.19 2,448 915 

Financial liabilities at fair value through profit or loss C.20 1,651 1,967 

Hedging derivatives C.21 2,909 219 

Changes in fair value of portfolio hedged items (+/–) – – 

Tax liabilities C.22 543 552 

a) current tax liabilities 126 96 

b) deferred tax liabilities 417 456 

Liabilities included in disposal groups classified as held for sale C.23 – 10,492 

Other liabilities C.24 2,573 2,372 

Provisions for risks and charges C.25 4,297 4,167 

a) post-retirement benefit obligations 3,791 3,677 

b) other provisions 506 490 

Insurance reserves 183 162 

Equity C.26 17,476 14,388 

of which non-controlling interests (+/–) 546 539 

tOtal liabilities aNd equity 193,049 194,459 


53


Statement of Changes in Equity 


sub- 

scribed 

capital 

capital 

reserVes 

retaiNed 

earNiNgs 

fOreigN 

curreNcy 

traNslatiON 

reserVes iN 

accOrdaNce 

With ias 39 *) 

actuarial 

lOsses iN 

accOrdaNce 

With ias 19 

share- 

hOlders’ 

equity 


(€ m) 

NON-cONtrOlliNg 

iNterests equity 

as at 1 January 2009 1,469 5,327 8,425 –1,175 16 –558 13,505 733 14,237 

Changes in the group of consolidated companies – 9 9 

Shares in controlling companies –3 –3 –3 

Recognised income and expenses 870 –552 132 –103 348 –169 178 

Dividend paid – –34 –34 

Other changes – – 

as at 31 december 2009 1,469 5,325 9,295 –1,727 148 –660 13,850 539 14,388 

*) Reserves in accordance with IAS 39 1 Jan. 2009 31 Dec. 2009 

Cash flow hedge reserve –13 62 

Available-for-sale reserve 29 86 

Total 15 148 

of which reserves of companies classified as held for sale –27 

sub- 

scribed 

capital 

capital 

reserVes 

retaiNed 

earNiNgs 

fOreigN 

curreNcy 

traNslatiON 

reserVes iN 

accOrdaNce 

With ias 39 *) 

actuarial 

lOsses iN 

accOrdaNce 

With ias 19 

share- 

hOlders’ 

equity 

NON-cONtrOlliNg 

iNterests equity 

as at 1 January 2010 1,469 5,325 9,295 –1,727 148 –660 13,850 539 14,388 

Capital increase 212 1,788 2,000 2,000 

Transaction costs of capital increase –15 –15 –15 

Changes in the group of consolidated companies – 4 4 

Shares in controlling companies –1 –1 –1 

Recognised income and expenses 826 394 –37 –86 1,097 50 1,147 

Dividend paid – –47 –47 

Other changes – – 

as at 31 december 2010 1,681 7,096 10,121 –1,334 111 –746 16,931 546 17,476 

*) Reserves in accordance with IAS 39 1 Jan. 2010 31 Dec. 2010 

Cash flow hedge reserve 62 93 

Available-for-sale reserve 86 18 

Total 148 111 

54


Statement of Cash Flows 



(€ m) 


Net prOfit 798 1,152 

Non-cash items included in net profit, and adjustments to reconcile net profit to cash flows from operating activities 

Depreciation, amortisation, net writedowns of loans, and changes in fair values 2,564 2,670 

Increase in staff-related provisions and other provisions 385 335 

Increase/decrease in other non-cash items –577 –34 

Gains/losses on disposal of intangible assets, property, plant and equipment, and investments –76 –150 

sub-tOtal 3,094 3,973 

Increase/decrease in operating assets and liabilities after adjustment for non-cash components 

Financial assets held for trading –16 6,739 

Loans and receivables with banks and customers –5,046 16,731 

Other asset items –18,961 –656 

Financial liabilities held for trading 1,202 –5,910 

Deposits from banks and customers 3,294 –17,769 

Debt securities in issue –348 –3,451 

Other liabilities items 15,886 82 

cash flOWs frOm OperatiNg actiVities –895 –261 

Proceeds from disposal of 

investments 5,572 6,377 

property, plant and equipment 70 73 

Payments for purchases of 

investments –11,274 –5,922 

property, plant and equipment –353 –306 

Proceeds from sales (less cash disposed of) of subsidiaries 5,976 53 

Payments for acquisition (less cash acquired) of subsidiaries – – 

Other changes –190 –355 

cash flOWs frOm iNVestiNg actiVities –199 –80 

Proceeds from capital increase 2,000 – 

Dividends paid – – 

Subordinated liabilities and other financial activities (net) –1,131 –319 

cash flOWs frOm fiNaNciNg actiVities 869 –319 

cash aNd cash equiValeNts at eNd Of preViOus periOd 3,244 3,929 

Cash flows from operating activities –895 –261 

Cash flows from investing activities –199 –80 

Cash flows from financing activities 869 –319 

Effects of exchange rate changes 11 –25 

cash aNd cash equiValeNts at eNd Of periOd 3,030 3,244 

paymeNts fOr taxes, iNterest aNd diVideNds 

Income taxes paid – 91 –44 

Interest received 8,481 10,500 

Interest paid –4,026 –6,050 

Dividends received 66 83 

The amount of cash and cash equivalents stated in the statement of cash flows for 2009 also includes cash and cash equivalents of non-current assets and disposal groups classified as held for sale. 

55

Notes to the Consolidated Financial Statements 

A – Accounting policies 89 

B – Notes to the income statement 111 

C – Notes to the statement of financial position 123 

D – Segment reporting 139 

E – Risk report 149 

F – Additional disclosures 175 

Concluding Remarks of the Management Board 



Report of the Supervisory Board for 2010 192 

Note 

In this report, “Bank Austria” and “the Bank Austria Group” refer to the Group. To the extent that information relates to the parent company’s separate financial statements, “UniCredit Bank Austria AG” 

is used. In adding up rounded figures and calculating the percentage rates of changes, slight differences may result compared with totals and rates arrived at by adding up component figures which have 

not been rounded off. 


57

A – Accounting policies 

A.1 – Information on the company 90 

A.2 – Basis for the preparation of the financial statements 90 

A.3 – Consolidation principles 90 

A.4 – Application of amended and new IASs and IFRSs 91 

A.5 – Significant accounting policies 93 

A.6 – Impairment test 104 

A.7 – Group of consolidated companies and changes 

in the group of consolidated companies 

of the Bank Austria Group in 2010 106 


58


A – Accounting policies (CoNTINuED) 

A.1 – Information on the company 

UniCredit Bank Austria AG, Schottengasse 6–8, A-1010 Vienna, Austria, is a universal bank conducting banking business within the meaning of 

Section 1 (1) of the Austrian Banking Act. It is registered under no. FN 150714p in the Austrian Register of Firms at the Commercial Court of Vienna. 

The bank continues to operate in the market under the “Bank Austria” brand name. The geographical focus of the bank’s operations is on Austria and 

CEE. 

A.2 – Basis for the preparation of the financial statements 

The consolidated financial statements of Bank Austria for the year ended 31 December 2010 have been prepared in accordance with International 

Financial Reporting Standards (IFRSs) as adopted by the EU. In addition, the disclosure rules which are specified in the Accounting Manual of 

UniCredit S.p.A., the ultimate parent company, and are required to be applied throughout the Group, were used as a basis for the preparation of 

the consolidated financial statements. The comparative figures for the previous year are also based on these standards. The consolidated financial 

statements are prepared in euro. Unless indicated otherwise, all figures are in millions of euros (€). 

A.3 – Consolidation principles 

The consolidated financial statements are based on the financial statements of UniCredit Bank Austria AG and its subsidiaries as at 31 December 

2010. All direct or indirect subsidiaries that are material are consolidated in the consolidated financial statements as from the date on which the 

Bank Austria Group obtains control of such subsidiaries. Consolidation ends when the parent company loses control of a subsidiary. 

The financial statements of the subsidiaries are prepared using uniform accounting policies for the same reporting period as the financial statements 

of the parent company. All intragroup balances, transactions, unrealised gains and losses on intragroup transactions and dividends are eliminated in 

full. 

Investments in jointly controlled companies are accounted for under the proportionate consolidation method if they are material for the Bank Austria Group. 

Material investments in associated companies, i.e., companies which are neither indirectly nor directly controlled by the Bank Austria Group but in 

which a significant influence can be exercised, are accounted for using the equity method. 

The bank sponsors the formation of special purpose entities (SPEs) primarily for the purpose of facilitating investments by the bank’s customers, asset 

securitisation transactions, structured debt issuance, and to accomplish certain narrow and well-defined objectives. The bank consolidates those SPEs 

if the substance of its relationship with them indicates that it has control over them. 

Shares in all other companies are classified as investments available for sale and measured at their fair values, to the extent that fair value is reliably 

measurable. 

The method of inclusion in the consolidated financial statements is shown in the list of selected subsidiaries and other equity interests in section F.11. 


59



A.4 – Application of amended and new IASs and IFRSs 

Effects arising from changes in accounting methods 

The following comments refer to financial reporting standards which are of relevance in the Bank Austria Group and have been applied in preparing the 

2010 consolidated financial statements. 

A.4.1 – IFRSs which are required to be applied 

IAS 1 Presentation of Financial Statements 

In September 2007, the IASB issued amendments to IAS 1, “Presentation of Financial Statements” (“IAS 1 R”). The amended Standard prescribes the 

basis for the presentation and structure of financial statements. It also contains minimum requirements for the content of financial statements. IAS 1 R 

is effective for financial years beginning on or after 1 January 2009. The application of these amendments only had effects on the presentation of the 

consolidated financial statements. 

IAS 27 Consolidated and Separate Financial Statements 

In January 2008 the IASB issued the revised IAS 27, which deals with consolidated and separate financial statements. Pursuant to IAS 27 (2008), 

changes in the ownership level that do not result in a loss of control are accounted for as equity transactions. Such a transaction can therefore not 

lead to goodwill or to a gain or loss. Furthermore, the rules for attributing losses to the parent company’s owners and to non-controlling interests, as 

well as the accounting rules for transactions leading to the loss of control, are amended. The amended accounting standard is applied by the Group 

together with the revised IFRS 3 Business Combinations, including consequential amendments to IFRS 5, IAS 7, IAS 21, IAS 28, IAS 31 and IAS 39. 

IAS 7 Statement of Cash Flows 

In accordance with IAS 7 Statement of Cash Flows, paragraph 16, the separate disclosure of cash flows arising from investing activities is important 

because the cash flows represent the extent to which expenditures have been made for resources intended to generate future income and cash flows. 

In this connection the IASB included a clarification in IAS 7.16 according to which only expenditures leading to an asset recognised in the balance 

sheet may be reported in the cash flow statement as cash flows arising from investing activities. 

IAS 17 Leases 

In the context of classifying a lease of land and buildings, the requirement to classify it as an operating lease has been deleted in IAS 17. Following 

this amendment, a lease contract on land with a term of several decades may be classified as a finance lease. Nevertheless, in the case of a lease of 

land and buildings, the two elements are to be considered separately. 

IFRS 3 Business Combinations 

The revised standard dealing with business combinations, which was issued by the IASB in January 2008, is to be applied for financial years beginning 

on or after 1 July 2009. It introduces changes in the accounting treatment of business combinations which have an effect on the amount of goodwill 

recognised, on profit or loss for the period in which the business combination took place, and on future profit or loss. The revised standard is applied 

by the Group together with the revised IAS 27 Consolidated and Separate Financial Statements, including consequential amendments to IFRS 2, IFRS 7 

and IAS 39, in the reporting period beginning on 1 January 2010. 

IFRIC 9 and IAS 39 

In March 2009 the IASB issued amendments to IFRIC 9, “Reassessment of Embedded Derivatives”, and IAS 39, “Financial Instruments: Recognition 

and Measurement”, under the title of “Embedded Derivatives”. The amended rules require an entity to assess whether a derivative embedded in a host 

contract is required to be separated from the contract when the entire hybrid financial instrument is reclassified out of the “fair value through profit or 

loss” category of financial assets. Reclassifying a hybrid financial instrument is not possible if the fair value of an embedded derivative which is required 

to be separated is not reliably determinable. The amendments are effective for financial years ending on or after 30 June 2009. The application 

of these amendments had no significant effects on the consolidated financial statements. 


60



Effects of amendments to IAS 39 and IFRS 7 

In accordance with the amendments to IAS 39 and IFRS 7, “Reclassification of Financial Assets“, published in October 2008, and in response to 

the rare circumstances presented by the financial market crisis, we reclassified asset-backed securities (ABSs) from financial assets held for trading 

into loans and receivables with customers with effect from 1 July 2008 at the fair values determined at that date. Regardless of this fact, the 

following disclosure table shows the effects of reclassification by balance sheet item and income statement item. 

The effects arising from reclassification are shown in the following table as at 31 December 2010: 

Reclassified financial assets: carrying amount, fair value and effects on comprehensive income (€ m) 

types Of iNstrumeNts 

accOuNtiNg 

pOrtfOliO 

befOre reclassificatiON 

accOuNtiNg 

pOrtfOliO after 

reclassificatiON 

carryiNg 

amOuNt 

as at 

31 dec. 


fair Value 

as at 

31 dec. 


iNcOme/expeNses abseNt 

reclassificatiON 

(befOre taxes) 

frOm 

measuremeNt Other 

iNcOme/expeNses 

recOgNised duriNg the 

periOd (befOre taxes) 

frOm 

measuremeNt Other 

a. debt securities –1,585 –1,421 90 81 –18 50 

HFT AFS –18 –18 1 1 1 1 

HFT HTM –43 –46 2 3 – 2 

HFT Loans to banks – – – – – – 

HFT Loans to customers –1,482 –1,313 88 76 –21 45 

AFS Loans to banks – – – – – – 

AFS Loans to customers – – – – – – 

HTM AFS –42 –43 – – 2 – 

b. equity instruments – – – – – – 

c. loans – – – – – – 

d. units in investment funds – – – – – – 

tOtal –1,585 –1,421 90 81 –18 50 

A.4.2 – IFRSs which are not yet required to be applied 

The following comments relate to new or amended IFRSs issued by the IASB which are not of relevance in the Bank Austria Group or have not 

been applied: 

IFRS 2 Share-based Payment 

In June 2009 the IASB issued an amendment to IFRS 2 concerning accounting for group cash-settled share-based payment transactions. 

The amendment is to be applied for the first time for financial years beginning on or after 1 January 2010. The amendment replaces IFRIC 8 

and IFRIC 11. Since the beginning of 2009, there have been no new share-based payment programmes in Bank Austria. 

IAS 24 Related Party Disclosures 

In November 2009 the IASB issued a revised version of IAS 24 Related Party Disclosures (IAS 24 R). IAS 24 R provides a partial exemption from 

the disclosure obligations for companies which are controlled, jointly controlled or significantly influenced by a government (“government-related 

entities”). IAS 24 R also clarifies the definition of a related party. The revised version of IAS 24 is effective for financial years beginning on or after 

1 January 2011; there is no earlier application in Bank Austria. 

IAS 32 Financial Instruments: Presentation – Classification of Rights Issues (amended) 

The amended IAS 32 is to be applied for financial years beginning on or after 1 February 2010. It amends the definition of a financial liability in 

that rights (and specific options or warrants) are to be classified as equity instruments if such rights entitle the holder to acquire a fixed number of 

an entity’s equity instruments for a fixed price in any currency and the entity offers such rights pro rata to all of its existing owners of the same 

class of its own non-derivative equity instruments. 


61



IFRS 9 Financial Instruments: Classification and Measurement 

The issued version of IFRS 9 reflects the first phase of the IASB project to replace IAS 39 and deals with the classification and measurement of 

financial assets as defined in IAS 39. The standard is to be applied for financial years beginning on or after 1 January 2013. In further phases the 

IASB will deal with the classification and measurement of financial liabilities, hedging relationships and derecognition. The project is expected to 

be completed in early 2011. Application of the first phase of IFRS 9 affects the classification and measurement of financial assets of the Group. 

For a comprehensive presentation of potential effects, Bank Austria will only quantify the effects in conjunction with the other phases once they 

have been published. 

IFRIC 14 Prepayments of a Minimum Funding Requirement (amended) 

The amended IFRIC 14 is to be applied retrospectively for financial years beginning on or after 1 January 2011. The amendment provides guidance 

on how to determine the recoverable amount of a net pension asset. Under the amendment, entities may treat prepayments of a minimum 

funding requirement as an asset. The amendment is not expected to have any effects on the consolidated financial statements of Bank Austria. 

IFRIC 17 Distributions of Non-cash Assets to Owners, and IFRIC 18 Transfers of Assets from Customers 

The amendments issued by the IASB to IFRIC 17 and IFRIC 18, which are required to be applied for the first time for financial years beginning on 

or after 1 July 2009, were not applied in the Bank Austria Group. 

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments 

IFRIC 19 is to be applied for financial years beginning on or after 1 July 2010. The interpretation makes it clear that equity instruments issued to 

a creditor to extinguish a financial liability are “consideration paid”. The equity instruments issued are measured at fair value. If fair value is not 

reliably determinable, the equity instruments issued are to be measured at the fair value of the liability extinguished. Gains and losses are immediately 

recognised in the income statement. The application of this interpretation will have no effect on the consolidated financial statements of 

Bank Austria. 

A.5 – Significant accounting policies 

Business combinations 

When a subsidiary is acquired, the fair values of its identifiable assets, including identifiable intangible assets, and liabilities are offset against the 

cost of acquisition. The difference between the cost of acquisition and the fair value of net assets is recognised in the balance sheet as goodwill 

if such difference cannot be attributed to intangible assets, e.g. a customer base. Pursuant to IFRS 3 and IAS 36, goodwill is not amortised. Goodwill 

arising on business combinations after 1 April 2004 is stated in the currency of the acquired company and translated at the closing rate. 

Goodwill is tested for impairment at least once a year. 

As at the date of acquisition, equity of foreign subsidiaries which prepare their financial statements in foreign currency is translated into euros. 

Gains and losses arising on the foreign currency translation of equity of foreign subsidiaries are recorded directly in equity as at the dates of the 

subsequent statements of financial position. 

Goodwill arising on acquisitions of subsidiaries and other equity interests before 1 January 1995 has been offset against retained earnings. 

When a subsidiary is acquired, the calculation of non-controlling interests is based on the fair values of assets and liabilities. 

Foreign currency translation 

The consolidated financial statements are prepared in euro. Foreign currency transactions are translated into euro on initial recognition by applying 

the exchange rate at the date of the transaction. 

Foreign currency translation is performed in accordance with IAS 21. Monetary assets and liabilities denominated in currencies other than the 

euro are translated into euros at market exchange rates prevailing at the end of the reporting period. Forward foreign exchange transactions not 

yet settled are translated at the forward rate prevailing at the end of the reporting period. 

For the purpose of foreign currency translation of the financial statements of foreign subsidiaries, which are prepared in a currency other than the 

euro, the middle exchange rate prevailing at the end of the reporting period has been applied to items in the statement of financial position and 

the annual average exchange rate has been applied to income statement items. 


62



Exchange rates used for foreign currency translation 

aVerage 

(Exchange rate in currency/€) 

2010 2009 chaNge iN % 

eNd Of 

repOrtiNg 

periOd aVerage 

eNd Of 

repOrtiNg 

periOd aVerage 

eNd Of 

repOrtiNg 

periOd 

Bosnian marka BAM 1.9558 1.9558 1.9558 1.9558 0.00% 0.00% 

Bulgarian lev BGN 1.9558 1.9558 1.9558 1.9558 0.00% 0.00% 

Swiss franc CHF 1.3803 1.2504 1.5100 1.4836 –8.59% –15.72% 

Czech crown CZK 25.2840 25.0610 26.4349 26.4730 –4.35% –5.33% 

Croatian kuna HRK 7.2891 7.3830 7.3400 7.3000 –0.69% 1.14% 

Hungarian forint HUF 275.4806 277.9500 280.3271 270.4200 –1.73% 2.78% 

Kyrgyzstan som KGS 60.8800 62.9508 59.9115 63.5785 1.62% –0.99% 

Kazakh tenge KZT 195.3600 196.9640 206.0340 213.7750 –5.18% –7.86% 

Lithuanian litas LTL 3.4528 3.4528 3.4528 3.4528 0.00% 0.00% 

Latvian lat LVL 0.7087 0.7094 0.7057 0.7093 0.43% 0.01% 

Polish zloty PLN 3.9947 3.9750 4.3276 4.1045 –7.69% –3.16% 

Romanian leu RON 4.2122 4.2620 4.2399 4.2363 –0.65% 0.61% 

Serbian dinar RSD 103.0434 106.0450 93.9852 96.2044 9.64% 10.23% 

Russian rouble RUB 40.2630 40.8200 44.1376 43.1540 –8.78% –5.41% 

Turkish lira TRY 1.9965 2.0694 2.1631 2.1547 –7.70% –3.96% 

Ukrainian hryvnia UAH 10.5386 10.6254 11.1306 11.5642 –5.32% –8.12% 

US dollar USD 1.3257 1.3362 1.3948 1.4406 –4.95% –7.25% 

Cash and cash equivalents 

The amount of cash and cash equivalents stated in the statement of cash flows includes the cash holdings (cash and demand deposits with 

central banks). In addition to the cash and cash equivalents shown in the item Cash and cash balances in the statement of financial position, 

cash and cash equivalents also include those in the item Non-current assets and disposal groups classified as held for sale. 

Financial instruments – initial recognition and subsequent measurement 

In the Bank Austria Group we distinguish between the following classes: 

Classes 

• Debt instruments 

• Equity instruments 

• Units in investment funds 

• Loans 

• Derivatives 

This grouping into classes is reflected in the tables shown in the notes to the consolidated financial statements. 

The classes are subdivided into the following categories. 

Initial recognition and measurement 

Financial assets within the meaning of IAS 39 are classified as financial assets at fair value through profit or loss, as held-to-maturity investments, 

as loans and receivables, as available-for-sale financial assets, or as derivatives designated as hedging instruments and effective as 

such. The Group determines the classification of its financial assets when these are recognised initially. 

When financial assets are recognised initially, they are measured at fair value. In the case of instruments which are not classified as at fair 

value through profit or loss, transaction costs directly attributable to the acquisition of the assets are additionally taken into account. 

Financial liabilities within the meaning of IAS 39 are classified as financial liabilities at fair value through profit or loss, as loans, or as derivatives 

designated as hedging instruments and effective as such. The Group determines the classification of its financial liabilities when these 

are recognised initially. 


63



Financial assets and financial liabilities at fair value through profit or loss 

Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated as at fair value through 

profit or loss upon initial recognition. 

Financial assets and financial liabilities held for trading (HfT) 

Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing them in the near term. When an 

HfT financial instrument is recognised initially, it is measured at its fair value excluding transaction costs that are directly recognised in profit or 

loss. After initial recognition, an entity shall measure these financial instruments at their fair value through profit or loss. A gain or loss arising 

from sale or redemption or a change in the fair value of an HfT financial instrument is recognised in the income statement item Gains and losses 

on financial assets and liabilities held for trading. 

Financial assets held for trading include securities held for trading and positive market values of derivative financial instruments, recognised at 

their fair values. To determine fair values, market prices and quotes via Bloomberg, Reuters, MarkIT and other price indications from the interbank 

market etc. are used. Where such prices or quotes are not available, values based on present values or option pricing models are applied. 

The item Financial liabilities held for trading shows negative market values of derivative financial instruments and short positions held in the 

trading portfolio. To determine fair values, market prices and quotes via Bloomberg, Reuters, MarkIT and other price indications from the interbank 

market etc. are used. Where such prices or quotes are not available, values based on present value calculations or option pricing models are 

applied. 

At fair value through profit or loss (fair value option) 

When financial assets and financial liabilities are recognised initially, they may be classified as financial assets and financial liabilities at 

fair value through profit or loss if certain requirements are met (either reduction of valuation inconsistencies between related financial instruments, 

or inclusion in a group of financial instruments managed at their fair values on the basis of an investment and risk strategy). 

In UniCredit Bank Austria’s statement of financial position, financial assets/liabilities at fair value through profit or loss include only those financial 

instruments which were designated as at fair value through profit or loss upon initial recognition. 

Available-for-sale financial assets (AfS) 

Available-for-sale financial instruments include debt instruments and equity instruments. Equity instruments classified as available for sale are 

those which are not classified as held for trading or at fair value through profit or loss. To determine their fair values, the methods described in 

“Fair values – fair value hierarchy” below are used. Changes in fair values resulting from remeasurement are recognised in a component of equity 

(available-for-sale reserve) with no effect on income until the disposal of the financial asset. Impairment losses are recognised in income. Reversals 

of impairment losses on equity instruments are recognised in the available-for-sale reserve within equity; reversals of impairment losses on 

debt instruments are recognised in profit or loss. 

Shares in companies which are neither consolidated nor accounted for under the equity method are classified as available for sale. 

Held-to-maturity investments (HtM) 

Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity investments if the Group 

has the positive intention and ability to hold them to maturity. After initial recognition, held-to-maturity investments are recognised at amortised 

cost using the effective interest method, with any reduction for impairment. Impairment losses within the meaning of IAS 39.63 are recognised in 

profit or loss in the item Impairment losses on held-to-maturity investments. 

Loans and receivables 

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial 

recognition such financial assets are measured at amortised cost using the effective interest method, with any reduction for impairment. The 

computation of amortised cost includes a premium or discount upon acquisition, and fees or costs constituting an integral part of the effective 

interest rate. Income from amortisation using the effective interest method is included in the income statement as part of financial income. 

Impairment losses are recognised in the income statement as financial expenses. 


64



Fair values – fair value hierarchy 

In accordance with IFRS 7, financial instruments measured at fair value and stated at their fair values in the statement of financial position are 

classified according to a three-level fair value hierarchy based on the significance and liquidity of input parameters used for valuation purposes: 

• Level 1 – Quoted prices (without adjustment) in active markets for identical assets or liabilities 

• Level 2 – Observable inputs not qualifying as quoted prices according to Level 1 

• Level 3 – Non-observable inputs 

Financial instruments whose fair value is determined by using a valuation method are included in their entirety in Level 2 or Level 3, on the basis 

of the lowest level of the parameters which are significant for fair value. 

Level 1 contains financial instruments for which prices for identical assets or liabilities are directly observable in active markets and may be used 

for valuation without adjustment. This category includes in particular listed securities and derivatives if they are traded on an active market. 

Over-the-counter (OTC) derivatives cannot be included in Level 1 because these are specific contracts between counterparties for which there is 

no active market for “identical” instruments. 

Level 2 shows assets or liabilities whose fair value is determined on the basis of a valuation model. This does not involve the use of any non- 

observable inputs which are significant for valuation. Level 2 also includes instruments whose fair value is determined on the basis of a quoted 

price for an identical instrument for which there is no active market. 

Level 3 comprises assets or liabilities whose fair values are determined on the basis of significant non-observable inputs. An input qualifies as an 

observable input if it is directly observable as a market price or may be derived from an observable price. Examples of Level 3 inputs are historical 

volatility or interest rates for currencies and maturities for which there are no observable financial instruments. 

If the value of a financial instrument is based on non-observable inputs, the value of these inputs at the end of the reporting period may be 

selected from a range of reasonable possible alternatives. For the purpose of preparing the financial statements, the reasonable values selected 

for such non-observable inputs are in line with prevailing market conditions and the Group’s valuation verification approach. 

The following tables show a breakdown of financial assets and liabilities designated at fair value according to the above-mentioned levels, as well 

as the annual changes of Level 3 assets or liabilities. 

Breakdown by fair value level (€ m) 

fiNaNcial assets/liabilities measured at fair Value 31 dec. 2010 31 dec. 2009 

leVel 1 leVel 2 leVel 3 leVel 1 leVel 2 leVel 3 

Financial assets held for trading 626 3,625 54 1,174 2,712 250 

Financial assets at fair value through profit or loss 27 73 204 28 109 98 

Available-for-sale financial assets 4,908 10,654 1,982 2,625 5,953 2,248 

Hedging derivative assets – 2,448 1 2 149 – 

tOtal 5,560 16,800 2,240 3,830 8,922 2,596 

Financial liabilities held for trading 27 2,355 65 6 884 25 

Financial liabilities at fair value through profit or loss – 1,651 – – 1,967 – 

Hedging derivative liabilities – 2,883 25 – 219 – 

tOtal 27 6,890 91 6 3,070 25 


65



Annual changes in financial assets at fair value level 3 (€ m) 

held fOr tradiNg 


fiNaNcial assets 

at fair Value 

thrOugh 

prOfit Or lOss aVailable fOr sale hedgiNg deriVatiVes 

Opening balances 250 98 2,248 – 

increases 38 228 334 1 

Purchases 22 15 267 – 

Profits recognised in: 

Income statement 2 24 6 – 

of which unrealised gains 2 23 – – 

Equity X X 52 – 

Transfers from other levels – – – – 

Other increases 14 189 10 1 

decreases –234 –123 –600 – 

Sales –36 –12 –330 – 

Redemptions –19 –110 –104 – 

Losses recognised in: 

Income statement –9 –1 –4 – 

of which unrealised losses –6 –1 –3 – 

Equity X X –72 – 

Transfers to other levels –5 – –71 – 

Other decreases –165 – –18 – 

closing balance 54 204 1,982 1 

Annual changes in financial liabilities at fair value level 3 (€ m) 

held fOr tradiNg 


fiNaNcial liabilities 

at fair Value 

thrOugh 

prOfit Or lOss hedgiNg deriVatiVes 

Opening balances 25 – – 

increases 108 1 41 

Issuance 10 – 25 

Losses recognised in: 

Income statement 18 – – 

of which unrealised losses 14 – – 

Equity X X – 

Transfers from other levels – – – 

Other increases 80 1 15 

decreases –68 –1 –15 

Redemptions –28 – – 

Purchases –29 – –15 

Profits recognised in: 

Income statement –9 – – 

of which unrealised gains –8 – – 

Equity X X – 

Transfers to other levels –2 – – 

Other decreases – –1 – 

closing balances 65 0 25 


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Impairment of financial assets 

At the end of each reporting period, the Group assesses whether there is any objective evidence that a financial asset or a group of financial 

assets may be impaired. 

An impairment loss is determined in two steps: first, it is assessed whether there is any objective evidence that a financial asset is impaired. 

The second step is an assessment whether the financial instrument is actually impaired. 

Objective evidence of impairment includes facts which usually lead to actual impairment. For debt instruments, this includes events which have 

occurred and may lead to a borrower no longer meeting his obligations in full or at the agreed date. In the case of equity instruments, permanently 

or significantly lower market values as compared with the carrying amounts are objective evidence of impairment. 

In the case of loans and receivables, an impairment loss is measured as the difference between the carrying amount and the present value of 

estimated future cash flows. The future cash flows are to be determined by taking the events that have occurred (objective evidence) into account. 

Estimated future cash flows may be composed of expected repayment and/or interest payments and proceeds from the realisation of collateral. 

A specific writedown is made in the amount of the impairment loss thus determined. 

Writedowns on loans determined as described above are recognised in an allowance account which reduces the carrying amount of the loan 

on the assets side. A possible impairment loss on financial guarantees is determined analogously, with the impairment loss recognised as a 

provision. 

In respect of loans and receivables on which no specific writedowns have been made, any impairment losses which have been incurred as at 

the balance sheet date but have not yet been identified by the bank are covered by a portfolio-based writedown. In this context we use the Loss 

Confirmation Period Method. The Loss Confirmation Period is the period between the occurrence of a loss event or the default of a borrower and 

the time when the bank identifies the loss. The Loss Confirmation Period is determined on the basis of statistical methods, differentiated for 

various loan portfolios. The loss which has been incurred but has not yet been identified is estimated by means of the expected loss. 

Available-for-sale assets are classified as debt instruments and equity instruments. 

An impairment loss on debt instruments has been incurred if the events which have occurred lead to the borrower no longer meeting his obligations 

in full or at the agreed date. In this context an impairment loss has been incurred in the same cases as with loans and receivables with the 

same entity (issuer). 

The amount of the impairment loss is the difference between amortised cost and current fair value; the difference which is initially recognised in 

the available-for-sale reserve within equity is recognised in profit or loss when the asset is impaired. 

If the reason for the impairment ceases to exist, the difference between higher fair value and carrying amount at the last balance sheet date is 

written back up to the amount of acquisition cost and recognised in profit or loss. If the current fair value at the date of the statement of financial 

position exceeds acquisition cost, the difference is recognised in the available-for-sale reserve within equity. 

Equity instruments measured at fair value are impaired if the current fair value is significantly lower than the carrying amount or if the fair value 

has been permanently lower than the carrying amount. If the fair value is 50% lower than the carrying amount, this is in each case regarded as 

“significantly lower”; a period longer than 18 months is regarded as “permanently lower”. In this case, the difference between the current fair 

value and cost is recognised in profit or loss. This writedown through profit or loss is to be taken into account in respect of cost in subsequent 

periods. If the fair value rises in a subsequent period, the difference between a higher fair value and cost adjusted in the way described above is 

recognised in the available-for-sale reserve within equity. 

Equity instruments carried at cost are impaired if the current value is permanently lower than cost (or is lower than cost less impairment losses 

recognised if an impairment loss was incurred in the past). If there is evidence of impairment, the value of the equity instruments is to be determined. 

In determining their value, the estimated future cash flows discounted at the current market rate of return for a similar asset are to be 

used. The amount of the impairment loss is the difference between the current carrying amount and the value of the equity instrument determined 

as described above. The impairment loss is recognised in profit or loss. An impairment loss recognised for equity instruments must not be 

reversed through profit or loss when the reasons for the impairment cease to exist. 


67



Derivative financial instruments 

Derivative financial instruments may be interest rate contracts, foreign exchange contracts, equity-related and other instruments. Credit derivatives 

are used for active credit portfolio management to optimise writedowns of loans. Derivative transactions may be concluded over the counter (OTC), 

i.e. directly with the counterparty, or via exchanges. The exposure is reduced by a margin which must be deposited for exchange-traded contracts 

(futures and options) to absorb current price fluctuations. 

Derivative financial instruments are stated at their fair values at the date of conclusion of the contract, and in subsequent periods are remeasured 

at fair value. Credit derivatives meeting the definition of financial guarantees are shown like financial guarantees. To determine fair values as at the 

transaction date, market prices and official quotes (Bloomberg, MarkIT) are used. Where such prices or quotes are not available, recognised and 

tested models are used for determining current prices. Derivative financial instruments are recognised as financial assets if their fair value is positive, 

and as financial liabilities if their fair value is negative. 

Hedging derivatives/hedge accounting 

In hedge accounting, Bank Austria distinguishes between fair value hedges and cash flow hedges. To qualify for hedge accounting in accord ance 

with IAS 39, hedges must be highly effective. 

A fair value hedge provides protection against changes in the fair value of an asset or a liability. The hedging instrument is stated at its fair value, 

and any gains or losses on the hedging instrument are recognised in income. Gains or losses on the hedged item which are attributable to the 

hedged risk adjust the carrying amount of the hedged item and are recognised in profit or loss. The effectiveness of fair value hedges is measured 

on an ongoing basis. 

Since the 2010 financial year, Yapı ve Kredi Bankasi AS, our bank in Turkey, has for the first time used a portfolio fair value hedge, using crosscurrency 

interest rate swaps to hedge part of its mortgage and car loan portfolios denominated in Turkish lira against the possible effects of 

changes in market interest rates and foreign exchange rates. 

Cash flow hedges are used by Bank Austria for protecting future variable cash flows against changes in market rates. They hedge the exposure to 

variability in cash flows which result from assets or liabilities or from planned transactions and have an effect on income. Changes in the fair values 

of derivatives designated as hedging instruments are divided into a portion that is determined to be an effective hedge, and into an ineffective 

portion. The effective portion of any gain or loss on the hedging instrument is included in the cash flow hedge reserve and recognised in income 

in the same period in which the change in the value of the hedged item is recognised in profit or loss. This neutralises the effect on income. 

The effectiveness of cash flow hedges is measured on a regular basis. 

Property, plant and equipment 

Property, plant and equipment are carried at cost less accumulated depreciation and/or accumulated impairment losses. Assets are depreciated 

on a straight-line basis over their estimated useful lives. Bank Austria regards property, plant and equipment as having the following useful lives: 

• buildings used for banking operations: 20–50 years 

• office furniture and equipment: 4–15 years 

Items of property, plant and equipment are derecognised on disposal or when no future economic benefits are expected from their use or 

disposal. The gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between 

the net disposal proceeds and the carrying amount of the item; such gain or loss is included in profit or loss in the period in which the asset is 

derecognised. 

Investment property 

Land and buildings held as investment property to earn rental income and/or for capital appreciation are included in property, plant and equipment 

and measured at amortised cost. From 2006, rental income from such investments is included in Other net operating income. 


68



Intangible assets 

When recognised initially, intangible assets which are not acquired as part of a business combination are measured at cost. 

A distinction is made between intangible assets with a finite useful life and those with an indefinite useful life. 

Intangible assets with a finite useful life are amortised over the useful life and are tested for impairment if there is any indication that the intangible 

asset may be impaired. In the case of intangible assets with an indefinite useful life, an impairment test is performed at least once a year for each 

asset or at the level of the cash-generating unit. Such intangible assets are not amortised. The useful life of an intangible asset with an indefinite 

useful life is reviewed once a year to determine whether events and circumstances continue to support the useful life assessment. If they do not, 

the change in the useful life assessment from indefinite to finite is made prospectively. 

The amortisation period and the amortisation method for intangible assets with a finite useful life are reviewed at least at the end of each reporting 

period. The amortisation charge for intangible assets with a finite useful life is recognised in the income statement in the expense category corresponding 

to the function of the intangible asset in the company. Bank Austria regards intangible assets as having the following useful lives: 

• software: 4–6 years 

• other intangible assets: 4–20 years 

• customer base: 3–20 years 

Non-current assets classified as held for sale 

In respect of assets which are classified in the balance sheet as held for sale, management must be committed to a plan to sell such assets and 

such sale should be expected to qualify for recognition as a completed sale within one year from the date of classification. 

Non-current assets and disposal groups classified as held for sale are to be measured at the lower of their carrying amount and fair value less 

costs to sell. Assets and liabilities of the disposal group are stated separately in the consolidated financial statements. 

Deferred taxes 

Taxes on income are recognised and calculated in accordance with IAS 12 under the balance sheet liability method. At any taxable entity, the 

calculation is based on the tax rates that are expected to apply to the period in which the deferred tax asset or liability will reverse. 

Deferred tax assets and liabilities are calculated on the basis of the difference between the carrying amount of an asset or a liability recognised 

in the statement of financial position and its respective tax base. This difference is expected to increase or decrease the income tax charge in the 

future (temporary differences). Deferred tax assets are recognised for tax losses carried forward if it is probable that future taxable profits will be 

available at the same taxable entity. Deferred tax assets and liabilities are not discounted. 

The tax expense related to profit before tax is recognised in the relevant item in the consolidated income statement. Taxes other than those on 

income are included in the item Other administrative expenses. 

Pursuant to the group taxation rules introduced in Austria in 2005, Bank Austria has formed a group of companies. Profit and loss transfer agreements 

have been concluded with 28 group members, tax compensation agreements have been reached with 16 companies and there are 4 joint 

control arrangements. 

other assets 

The components of this item are accounts receivable from deliveries of goods and the performance of services, tax claims and deferred tax assets. 


69



Deposits from banks/customers, debt securities in issue 

These items are carried at amortised cost. 

In the case of debt securities in issue, any difference between the issue price and the amount repayable is amortised over the period to maturity. 

Long-term employee benefits and termination benefits 

Provisions for post-employment benefits are recognised using the projected unit credit method in accordance with IAS 19. Pursuant to IAS 19.93A, 

actuarial gains and losses are not recognised in income but directly in equity. Such gains and losses are stated in the table “Other comprehensive 

income”. 

Under a commitment to provide defined benefits, UniCredit Bank Austria AG continues to recognise a pension provision for the entitlements of employees 

who retired before the pension reform as at 31 December 1999 became effective, and – as a special feature of UniCredit Bank Austria AG’s 

staff regulations – for the future benefits, equivalent to those under mandatory insurance, earned by active employees and pensioners for whom 

UniCredit Bank Austria AG has assumed the obligations of the mandatory pension insurance scheme pursuant to Section 5 of the Austrian General 

Social Insurance Act (ASVG). 

The following are also covered by the provision: 

• disability risk and rights to future benefits based on early retirement and pension entitlements of surviving dependants, to the extent that the 

pension fund benefit is insufficient, 

• rights to future benefits under commitments to provide direct benefits in individual service agreements, 

• rights to future benefits relating to additional pension payments for employees performing manual work. 

The present value of pension obligations and severance-payment obligations as well as anniversary bonuses is determined with due regard to 

internal service regulations, on the basis of the following actuarial assumptions: 

• discount rate/Austria: 5.00% p.a. (2009: 5.25% p.a.) 

• increases under collective bargaining agreements: 2.45% p.a. (2009: 2.45% p.a.); assumption of increases for employees and pensioners 

• career trends including regular salary increases under the current collective bargaining agreement for employees of Austrian banks and the 

effects of the transitional rules under the 2005 reform of Bank Austria’s staff regulations. The rate applied in calculating non-regular salary 

increases was 0.25% p.a. (2009: 0.25% p.a.); assumption of increases for employees. 

• no discount for staff turnover 

• retirement age: as a basis for calculation in respect of employees enjoying “permanent tenure” status in accordance with the internal agreement 

dated 30 December 1999 (as amended on 1 May 2007) on the payment of a Bank Austria ASVG pension equivalent, the age of 60 for men and 

55 for women, with a transition to the retirement age of 65, has been taken into account. For all other employees, the new retirement age of 65 

for men and women has been taken into account in accordance with the applicable rules (2003 pension reform including transitional rules). 

If the corridor pension rule results in a lower retirement age, the lower age was used as retirement age. 

• 2008-P statistical tables of Aktuarverein Österreich (life-expectancy tables for salaried staff) 

No provisions are made for defined-contribution plans. Payments agreed to be made to a pension fund for defined-contribution plans are recognised 

as an expense. 

Insurance reserves 

Pursuant to IFRS 4, insurance contracts are contracts under which one party (the insurer) accepts significant insurance risk – i.e. risk, other than 

financial risk, to which the policy-holder is exposed on the basis of an uncertain event under contracts held by the policy-holder – from the policyholder. 

These reserves represent the obligations, calculated using actuarial methods, arising from insurance contracts within the meaning of IFRS 4. 


70



Equity 

Equity is composed of paid-in capital, i.e., capital made available to the company by shareholders (subscribed capital plus capital reserves), and 

earned capital (retained earnings, foreign currency translation reserves, IAS 39 reserves, actuarial gains/losses, profit carried forward from the 

previous year, and net profit). The IAS 39 reserves include gains and losses on available-for-sale financial assets (available-for-sale reserve), which are 

not recognised in income, and those components of hedge accounting in accordance with IAS 39 which are not included in income (cash flow hedge 

reserve), after adjustment for deferred taxes. Since 1 January 2005, minority interests have been included in equity. 

Treasury shares held are deducted from equity. The difference between the price on a later sale of treasury shares and the related post-tax repurchase 

cost is recognised directly in equity. 

Net interest margin 

Interest income and interest expense is accrued and recognised as long as such interest is expected to be recoverable. Income mainly received as 

payment for the use of capital (usually calculated, like interest, on the basis of a specific term or on the amount receivable) is included in income 

similar to interest. This item also includes income and expenses from the trading portfolio arising from interest, accrued interest on debt instruments 

and funding costs relating to the trading portfolio. The net interest margin also includes interest income and interest expense from hedging activities 

and from derivatives. 

Net fees and commissions 

Net fees and commissions comprise income from services provided on a fee and commission basis, including trading-induced commission components, 

as well as expenses incurred for services provided by third parties and related to fee-earning business. 

Fees and commissions are recognised on an accrual basis. Securities trading commission is recognised at the time the service is rendered. Investment 

portfolio management fees, advisory fees and investment fund management fees are recognised on a pro-rata time basis. Fees included in amortised 

cost used to calculate effective interest rates are not included under fees and commissions; they are part of interest expense. 

Dividend income 

Dividends are recognised in the income statement in the financial year in which their payment was approved. 

Gains and losses on financial assets and liabilities held for trading 

This item shows the realised and unrealised results from measuring all financial instruments of the trading portfolio at fair value through profit or loss 

using the mark-to-market method. Income and expenses from derivatives relating to the trading portfolio are not included. Such income and expenses 

are partly included in the net interest margin and partly in the net change in financial assets and liabilities at fair value through profit or loss. 

Gains and losses on disposals of financial instruments 

This item shows the results from disposals of loans and receivables, available-for-sale financial assets, held-to-maturity investments and financial 

liabilities. Gains and losses on disposal of financial assets held for trading and on financial instruments at fair value through profit or loss are not 

included. 

Gains and losses on financial assets/liabilities at fair value through profit or loss 

This item includes gains and losses on financial assets and financial liabilities as well as the results from the measurement of these items at their fair 

values. 

Impairment losses on loans/Impairment losses on other financial transactions 

These items include writedowns of loans, write-offs and additions to provisions for guarantees and commitments, and income from writebacks as well 

as recoveries of loans previously written off. 


71



Impairment/write-backs on property, plant and equipment and on intangible assets 

Writedowns on assets held under finance leases are part of this item. 

Profit (loss) of associates 

Dividends received from associates are included in the item Dividend income. 

Impairment of goodwill 

Impairment losses on goodwill reflect the results of the impairment test performed on an annual basis. 

Gains and losses on disposal of investments 

This item includes gains/losses on the disposal of investments in property and other assets. 

Repo transactions 

Securities received in a transaction that entails a contractual obligation to sell them at a later date or delivered under a contractual obligation to repurchase 

are neither recognised nor derecognised. In respect of securities purchased under an agreement to resell, the consideration is recog nised as a 

loan to customers or banks, or as an asset held for trading. In respect of securities held under a repurchase agreement, the liability is recognised as 

due to banks or customers, or as an HfT financial liability. 

Revenue from these loans, being the coupons accrued on the securities and the difference between the sale/purchase and resale/repurchase prices, 

is recognised in profit or loss through interest income and expenses on an accrual basis. These transactions can only be offset if, and only if, they are 

carried out with the same counterparty and provided that such offset is provided for in the underlying contracts. 

Risk and uncertainty due to use of estimated figures 

The IFRSs require that management provide valuations, estimates and projections in the context of the application of accounting principles and the 

carrying amount of assets, liabilities, expenses and revenue. Estimates and related projections based on experience and other factors judged to be 

reasonably included were used to estimate the carrying value of assets and liabilities not readily obtainable from other sources. 

The processes adopted support the values recognised at 31 December 2010. Valuation was particularly complex given the continuing macroeconomic 

and market situation which was characterised by the volatility of financial indicators used in the valuation process and by credit impairment. 

The parameters and information used to check the mentioned values were therefore significantly affected by the above factors, which could change 

rapidly in ways that cannot currently be foreseen, so that further effects on future balance sheet values cannot be ruled out. 

Estimates and projections are regularly reviewed. Any changes arising from these reviews are recognised in the period in which they are carried out, 

provided that they concern that period. If the reappraisal concerns both current and future periods, it is recognised in both current and future periods 

as appropriate. Estimates used in the consolidated financial statements of the Bank Austria Group related mainly to goodwill, provisions for risks and 

charges, and the calculation of impairment losses. 


72



A.6 – Impairment test 

Goodwill: annual changes (€ m) 


Opening balance 3,415 3,595 

Goodwill arising out of acquisitions made in the year – – 

Permanent reductions (impairment) –378 –19 

Disposals – – 

Net exchange differences 184 –274 

Transfer to/from non-current assets held for sale – 113 

Other changes 4 – 

closing balance 3,225 3,415 

The main changes in accumulated goodwill in 2010 were: 

• Impairment loss on goodwill relating to JSC ATF Bank, Kazakhstan: – € 359 m 

• Net exchange differences due to currency appreciation: € 184 m 

In compliance with IFRS 3 and in conjunction with IAS 36 and IAS 38 the carrying amount of goodwill or intangible assets with indefinite useful lives 

allocated to cash-generating units (CGUs) was tested for impairment as at 31 December 2010. 

The cash-generating unit represents the lowest level within the Group at which the goodwill is allocated for management purposes. Goodwill recognised 

is an intangible asset representing the future economic benefits arising from those assets acquired in a business combination which are not 

individually identified and separately recognised. 

In Bank Austria, business segments defined for segment reporting purposes are presented as cash-generating units. Within a business segment, 

significant legal entities or all entities in a specific country are considered to be separate cash-generating units. 

Impairment test – cash-generating units (€ m) 

gOOdWill 


Other 

iNtaNgibles 1) tOtal gOOdWill 

Other 

iNtaNgibles 1) tOtal 

retail – – – – – – 

private banking 39 – 39 39 – 39 

Schoellerbank 39 – 39 39 – 39 

corporate & investment banking 51 – 51 95 – 95 

Russia 51 – 51 47 – 47 

CAIB 2) – – – 48 – 48 

central eastern europe 3,088 76 3,164 3,272 70 3,342 

eu member states 

Baltics – – – 9 – 9 

Bulgaria 159 – 159 159 – 159 

Czech Republic 311 – 311 304 – 304 

Hungary 118 – 118 118 – 118 

Romania 139 – 139 140 – 140 

Slovakia 88 – 88 88 – 88 

Other 

Bosnia 39 – 39 39 – 39 

Croatia 52 – 52 52 – 52 

Kazakhstan 481 49 530 762 43 805 

Russia 785 – 785 742 – 742 

Serbia 20 – 20 22 – 22 

Turkey 399 – 399 379 – 379 

Ukraine 497 28 525 457 27 484 

corporate center 47 – 47 9 – 9 

tOtal 

1) Indefinite useful life 

3,225 76 3,301 3,415 70 3,485 

2) CAIB goodwill in UniCredit Bank Austria AG sold. Goodwill reflected in Corporate Center. 


73



The annual impairment test of goodwill, as required by IAS 36, is carried out as at the end of each reporting period. In addition, impairment tests are 

performed again whenever there is an indication that goodwill may be impaired. 

The carrying amount of a cash-generating unit is determined on the basis of pro-rata equity and the carrying amount of goodwill allocated to that unit. 

The recoverable amount relating to each CGU is the value in use and is determined on the basis of future cash flows expected from each CGU to 

which goodwill has been allocated. 

The 2011 budgets, on which the following valuation calculations are based, were adopted or taken note of by the management of the respective 

business units and by the Management Board and Supervisory Board of Bank Austria, respectively. 

According to current information available to the Management Board of Bank Austria, the assumptions for the years 2012 to 2019 are in line with 

probable developments at the respective business units (cash-generating units). Given the imponderable nature of future economic trends, actual 

developments may also differ from, and be significantly worse than, these assumptions. 

For the fair value calculation the Standard UniCredit Group Discounted Cash Flow Valuation Model (3-phase model) was employed throughout the 

Group using the following assumptions: 

• Phase 1 (2010): the figures are based on year-end projections for net profit and risk-weighted assets of the respective cash-generating units. 

• Phase 2 (2011–2019) 

– Phase 2a – planning period (2011–2015): the 2011 budget figures for net profit and RWAs were used for 2011, and multi-year planning figures 

were used for subsequent years. The figures are based on economic assumptions determined by the CEE Strategic Analysis unit. 

– Phase 2b (2016–2019): in this phase the growth rates of net income and risk-weighted assets converge towards 2%, reflecting the expected 

long-term growth potential of the euro area. In accordance with IAS 36, the growth rate was capped (net income/risk-weighted assets in 2015). 

The discount rate in the form of cost of equity (Ke) declines to the corresponding terminal value level. 

• Phase 3 – perpetual annuity: calculation of the present value of a perpetual annuity on the assumption of a long-term growth rate which takes the 

sustained long-term economic growth expected by Bank Austria for the euro area into account (2%). 

Phases 1 and 2a are the results of a detailed planning process which does not exceed the 5-year horizon in accordance with IAS 36. The purpose of 

phase 2b is to illustrate the expected long-term convergence of growth rates in these markets to those in Europe. 

Calculation of cost of equity 

The expected cash flows are discounted at the country-specific rate of cost of capital, which is determined on the basis of the long-term risk-free 

interest rate of the local currency, the debt risk premium and the UniCredit equity risk premium. 

• risk-free rate: Calculation is based on the historical average (6 years) of the 5-year swap rate in local currency. If no swap rate was available, the 

most liquid and comparable interbank rate (with a 3-month tenor) was used. 

• risk premium for debt: This is the country risk premium calculated as the historical average (6 years) of the 5-year credit default swap paid by the 

country (given the lack of time series in certain countries we considered a shorter time period or the asset swap spread of a benchmark government 

bond). 

• risk premium for equity: This is calculated using the option pricing model and is based on the historical volatility of the UniCredit share price. 

• terminal value cost of equity: Calculations are based on the methodology of the Group applied to a sample of European banks (peers), but instead 

of applying the tenor of 5 years the 10-year CDS and the 10-year risk-free rate is used. 

The terminal value cost of equity of those CGUs operating in countries expected to enter the euro area by 2018 was set equal to the average for 

European banks with low exposure to CEE countries (11%). For the other CGUs the terminal value cost of equity was set equal to 12.5%, in line 

with the European banks having an important exposure to Central and Eastern Europe. A rate of 10.55% was used for cash-generating units classified 

as West European CGUs. 


74



We should also stress that the parameters and the information used to test goodwill impairment are significantly influenced by the macroeconomic 

environment and market conditions, which can be subject to rapid unforeseeable changes, possibly leading to very different results as compared to 

those used for the 2010 consolidated financial statements. 

A sensitivity analysis was carried out for selected CEE CGUs (see table below; for the other CEE CGUs the results of the sensitivity analysis are not 

significant because there is no goodwill). This involved changing the cost of equity or the terminal value growth rate so that the fair value of the CGU 

equals the respective carrying amount. 

subsidiary chaNge iN Ke (perceNtage pOiNts) chaNge iN cagr (perceNtage pOiNts) 

Kazakhstan n.m. n.m. 1) 

Ukraine 0.87% –1.24% 

Turkey 3.83% –11.00% 

Serbia & Montenegro 2.30% –4.50% 

Slovakia n.m. n.m. 1) 

Russia 2.07% –4.68% 

Romania 6.40% n.m. 2) 

Hungary 5.14% –15.06% 

Czech Republic 4.20% –14.27% 

Bulgaria 12.62% n.m. 2) 

Bosnia 3.95% –14.54% 

Croatia 1.86% –4.11% 

1) No significant result due to fair value close or equal to carrying amount. 

2) In view of the high profitability, the results of the sensitivity analysis are not significant. 

A.7 – Group of consolidated companies and changes in the group of 

consolidated companies of the Bank Austria Group in 2010 

Consolidated companies 

Opening balance 97 

additions 35 

Newly established companies 3 

Companies newly added to the group of consolidated companies 32 

disposals 8 

Companies sold or liquidated 6 

Mergers 2 

clOsiNg balaNce 124 

Companies accounted for under the proportionate consolidation method 


Additions 1 

Disposals – 


Companies accounted for under the equity method 


additions 6 


Newly added companies 5 

disposals – 



Number 

Number 

Number 

75



Effects of changes in the group of consolidated companies 

in the statement of financial position at 31 December 2010 

The following table shows the aggregate balance sheet total of companies added to the group of consolidated companies in 2010. The disposal of 

companies is almost entirely reflected in the items Non-current assets and disposal groups classified as held for sale and Liabilities included in 

disposal groups classified as held for sale. 

Assets (€ m) 

31 dec. 2010 

Of Which: 

additiONs iN 2010 31 dec. 2009 

Cash and cash balances 3,030 19 3,213 

Financial assets held for trading 4,304 1 4,137 

Financial assets at fair value through profit or loss 304 1 235 

Available-for-sale financial assets 17,544 39 10,826 

Held-to-maturity investments 4,446 – 5,067 

Loans and receivables with banks 19,749 339 23,076 

Loans and receivables with customers 130,093 23 123,602 

Hedging derivatives 2,449 – 151 

Changes in fair value of portfolio hedged items (+/–) 44 – – 

Investments in associates and joint ventures 2,518 39 2,426 

Insurance reserves attributable to reinsurers – – – 

Property, plant and equipment 2,553 274 2,273 

of which held for investment 479 – 369 

Intangible assets 3,751 2 3,938 

of which goodwill 3,225 – 3,415 

Tax assets 1,254 2 1,330 

a) current tax assets 248 – 309 

b) deferred tax assets 1,006 2 1,021 

Non-current assets and disposal groups classified as held for sale 2 – 13,210 

Other assets 1,008 68 975 

tOtal assets 193,049 808 194,459 

Liabilities and equity (€ m) 


Of Which: 

additiONs iN 2010 31 dec. 2009 

Deposits from banks 33,130 132 33,362 

Deposits from customers 100,284 75 97,041 

Debt securities in issue 27,555 315 28,822 

Financial liabilities held for trading 2,448 – 915 

Financial liabilities at fair value through profit or loss 1,651 – 1,967 

Hedging derivatives 2,909 – 219 

Changes in fair value of portfolio hedged items (+/–) – – – 

Tax liabilities 543 7 552 

a) current tax liabilities 126 2 96 

b) deferred tax liabilities 417 5 456 

Liabilities included in disposal groups classified as held for sale – – 10,492 

Other liabilities 2,575 151 2,372 

Provisions for risks and charges 4,297 11 4,167 

a) post-retirement benefit obligations 3,791 4 3,677 

b) other provisions 506 7 490 

Insurance reserves 183 – 162 

Equity 17,475 117 14,388 

of which non-controlling interests (+/–) 546 – 539 

tOtal liabilities aNd equity 193,049 808 194,459 


76



Additions 

Newly established companies 

Name Of cOmpaNy dOmicile additiON as at 

Uctam Baltics SIA Riga 1 July 2010 

Uctam upravljanje d.o.o. Ljubljana 1 July 2010 

Uctam Ru Limited Liability Company Moscow 1 Nov. 2010 

The objects of the Uctam companies are to acquire, manage, administer and sell equity interests, properties and other business assets, especially of or 

from real estate projects and other business undertakings, deriving from debt restructuring. 

Companies newly added to the group of consolidated companies 


ATF Finance JSC Almaty 1 Jan. 2010 

ATF Inkassatsiya Ltd Almaty 1 Jan. 2010 

BA Betriebsobjekte GmbH Vienna 1 Jan. 2010 

BA Betriebsobjekte GmbH & Co Beta Vermietungs OG Vienna 1 Jan. 2010 

BA Betriebsobjekte Praha, spol.s.r.o. Prague 1 Jan. 2010 

BA GVG-Holding GmbH Vienna 31 Dec. 2010 

BA Immo-Gewinnscheinfonds1 Vienna 31 Dec. 2010 

BA Private Equity GmbH Vienna 31 Dec. 2010 

Bank Austria Finanzservice GmbH Vienna 1 Jan. 2010 

Bank Austria Real Invest Client Investment GmbH Vienna 31 Dec. 2010 

Bank Austria Real Invest Immobilien-Kapitalanlage GmbH Vienna 1 Jan. 2010 

“Cafu” Vermögensverwaltung GmbH & Co OG Vienna 1 Jan. 2010 

Cards & Systems EDV-Dienstleistungs GmbH Vienna 31 Dec. 2010 

Diners Club Slovakia s.r.o. Bratislava 1 Jan. 2010 

Europe Investment Fund Budapest Budapest 1 Jan. 2010 

GUS Consulting GmbH Vienna 31 Dec. 2010 

Human Resources Service and Development GmbH Vienna 31 Dec. 2010 

Immobilien Rating GmbH Vienna 31 Dec. 2010 

IVONA Beteiligungsverwaltung GmbH Vienna 31 Dec. 2010 

Kaiserwasser Errichtungs- u. BetriebsgesmbH Vienna 31 Dec. 2010 

KLEA ZS-Immobilienvermietung G.m.b.H. Vienna 1 Jan. 2010 

KLEA ZS-Liegenschaftsvermietung G.m.b.H. Vienna 1 Jan. 2010 

KSG Karten Verrechnungs- und Servicegesellschaft m.b.H. Vienna 1 Jan. 2010 

Limited Liability Company “AI Line” Moscow 31 Dec. 2010 

LLC “Special-purpose investm.build.asset man.comp.Ukrsots Real Estate” Kiev 31 Dec. 2010 

M.A.I.L Beteiligungsmanagement Ges. m.b.H. & Co KG Vienna 31 Dec. 2010 

M.A.I.L Finanzberatung Gesellschaft m.b.H. Vienna 1 Jan. 2010 

Real Invest Immobilien GmbH Vienna 1 Jan. 2010 

Sas-Real Ingatlanüzemelteto es Kezelo Kft. Budapest 1 Jan. 2010 

Schoellerbank Invest AG Vienna 1 Jan. 2010 

UniCredit CAIB Securities Romania SA Bucharest 1 Jan. 2010 

2010 Savjetovanje d.o.o. Zagreb 1 July 2010 

In 2010, all controlled companies with total assets of over € 500 thsd that are members of the banking group which is under regulatory supervision, and all controlled companies with total assets 

of over € 10 m that are members of the group of non-banks under regulatory supervision were included. The consolidation perimeter in accordance with IFRSs was thereby brought in line with the 

consolidation perimeter under regulatory supervision. 

Companies accounted for under the proportionate consolidation method 


Yapı Kredi Diversified Payment Rights Finance George Town 31 Dec. 2010 


77



Companies newly added to those accounted for under the equity method 


Anger Machining GmbH Traun 1 Jan. 2010 

Credanti Holding Limited Nicosia 1 Jan. 2010 

Forstinger Handels und Service GmbH Vienna 1 Jan. 2010 

Papcel a.s. Litovel 1 Jan. 2010 

Wien Mitte Immobilien GmbH Vienna 1 Jan. 2010 

Multiplus Card d.o.o. Zagreb 1 July 2010 

Disposals 

Companies sold or liquidated 

Name Of cOmpaNy dOmicile dispOsal as at selliNg price 

CAIB Securities AT Kiev 1 Jan. 2010 – 

Domus Bistro GmbH Vienna 1 Jan. 2010 € 73,559.03 

Open saving pensions fund OTAN JSC Almaty 12 March 2010 € 18,203,889 

UniCredit CAIB UK Ltd. London 19 May 2010 liquidated 

UniCredit CAIB AG Vienna 1 June 2010 € 5,942 m 

UniCredit CAIB Securities UK Ltd. London 31 May 2010 *) 

*) Included in the price for which UniCredit CAIB AG was sold. 

In the course of the reorganisation of Markets & Investment Banking business within UniCredit Group, the companies UniCredit CAIB and 

UniCredit CAIB Securities UK Ltd. were sold to UniCredit Bank AG (the former Bayerische Hypo- und Vereinsbank AG), Germany. The transaction 

was carried out within UniCredit Group, IFRS 3 was therefore not applied. The results generated by the two subsidiaries until 31 May 2010 are 

included in the Bank Austria Group’s results. The gain on the sale is recognised directly in equity. 

Mergers 

Name Of merged cOmpaNy dOmicile Name Of absOrbed cOmpaNy dOmicile merger 

2010 Savjetovanje d.o.o. Zagreb Zaba Turizam DOO Zagreb 30 July 2010 

Zaba Turizam DOO Zagreb Marketing Zagrebacke Banke doo Zagreb 30 Oct. 2010 


78

B – Notes to the income statement 

B.1 – Interest income/Interest expense 112 

B.2 – Fee and commission income/ 

Fee and commission expense 113 

B.3 – Dividend income and similar revenue 113 

B.4 – Gains and losses on financial assets and 

liabilities held for trading 114 

B.5 – Fair value adjustments in hedge accounting 114 

B.6 – Gains and losses on disposals/repurchases 115 

B.7 – Net change in financial assets and liabilities 

at fair value through profit or loss 115 

B.8 – Impairment losses 116 

B.9 – Premium earned (net) – breakdown 116 

B.10 – Other income (net) from insurance business 117 

B.11 – Payroll 117 

B.12 – Other administrative expenses 118 

B.13 – Net provisions for risks and charges 118 

B.14 – Impairment on property, plant and equipment 118 

B.15 – Impairment on intangible assets 118 

B.16 – Other net operating income 119 

B.17 – Profit (Loss) of associates 119 

B.18 – Gains and losses on disposal of investments 120 

B.19 – Income tax from continuing operations 120 

B.20 – Earnings per share 120 

B.21 – Appropriation of profits 120 


79


B – Notes to the income statement (CoNTINuED) 

B.1 – Interest income/Interest expense 

Interest income and similar revenues (€ m) 

debt securities lOaNs 

Interest expense and similar charges (€ m) 

depOsits securities 


Other 

traNsactiONs tOtal tOtal 

Financial assets held for trading 113 – 110 223 230 

Financial assets at fair value through profit or loss 8 – – 8 16 

Available-for-sale financial assets 523 – – 523 418 

Held-to-maturity investments 297 – – 297 442 

Loans and receivables with banks – 286 – 286 593 

Loans and receivables with customers 61 6,420 – 6,480 7,636 

Hedging derivatives X X 564 564 636 

Other assets X X 5 5 13 

tOtal 1,001 6,706 680 8,386 9,984 

Within this item, total interest income from financial assets that are not at fair value through profit or loss was € 7,068 m (2009: € 8,684 m). 


Other 

traNsactiONs tOtal tOtal 

Deposits from central banks –17 X – –17 –121 

Deposits from banks –707 X – –707 – 988 

Deposits from customers –2,082 X – –2,082 –2,949 

Debt securities in issue X –809 – –809 –1,101 

Financial liabilities held for trading – –1 – 90 – 91 –40 

Financial liabilities at fair value through profit or loss – –28 – –28 –33 

Other liabilities X X –1 –1 –2 

Hedging derivatives X X –108 –108 –16 

tOtal –2,805 –838 –199 –3,843 –5,250 

Within this item, total interest expense for liabilities that are not at fair value through profit or loss was € 3,616 m (2009: € 5,103 m). 


80



B.2 – Fee and commission income/Fee and commission expense 

Fee and commission income (€ m) 


guarantees given 203 195 

credit derivatives 5 2 

management, brokerage and consultancy services: 831 744 

securities trading 63 41 

currency trading 262 243 

segregated accounts 187 166 

custody and administration of securities 107 103 

custodian bank 58 38 

placement of securities 29 39 

client instructions 9 18 

advisory 30 31 

distribution of third party services 87 65 

collection and payment services 781 886 

securitisation servicing – – 

factoring 33 25 

tax collection services – – 

management of multilateral trading facilities – – 

management of current accounts 209 149 

Other services 400 244 

tOtal 2,463 2,245 

Fee and commission expense (€ m) 


guarantees received –37 –27 

credit derivatives –37 –43 

management, brokerage and consultancy services: –119 – 96 

trading in financial instruments –9 –11 

currency trading –1 –4 

portfolio management –24 –17 

custody and administration of securities –51 –44 

placement of financial instruments –3 –2 

off-site distribution of financial instruments, products and services –31 –18 

collection and payment services –229 –193 

Other services –50 –54 

tOtal –472 –414 

B.3 – Dividend income and similar revenue 

diVideNds 


iNcOme frOm uNits iN 

iNVestmeNt fuNds diVideNds 


(€ m) 

iNcOme frOm uNits iN 

iNVestmeNt fuNds 

Financial assets held for trading 1 – 3 – 

Available-for-sale financial assets 13 8 22 2 

Financial assets at fair value through profit or loss – – – 8 

Investments 9 X 22 X 

tOtal 23 8 46 11 

81



B.4 – Gains and losses on financial assets and liabilities held for trading (€ m) 

uNrealised 

prOfits 

realised 

prOfits 


uNrealised 

lOsses 

2009 

realised 

lOsses Net prOfit Net prOfit 

financial assets held for trading 201 511 – 96 –322 295 324 

Debt securities 35 112 –28 –25 95 274 

Equity instruments 68 23 –67 –19 5 7 

Units in investment funds – – – – – 16 

Loans – – – – – – 

Other 97 376 –1 –278 194 27 

financial liabilities held for trading 3 3 –10 –8 –11 –2 

Debt securities – – – – – – 

Deposits – – – – – 1 

Other 3 3 –10 –8 –11 –3 

Other financial assets and liabilities: exchange differences x x x x 162 16 

derivatives 640 514 –544 –570 –145 –9 

Financial derivatives 637 503 –503 –569 –117 –41 

on debt securities and interest rates 544 476 –477 –532 11 –407 

on equity securities and share indices 82 3 –19 –11 56 37 

on currency and gold X X X X –184 316 

other 11 24 –8 –27 – 12 

Credit derivatives 2 11 –41 –1 –28 32 

tOtal 843 1,029 –650 –899 301 329 

B.5 – Fair value adjustments in hedge accounting (€ m) 


gains on: 

Fair value hedging instruments 9 4 

Hedged asset items (in fair value hedge relationship) 17 1 

Hedged liability items (in fair value hedge relationship) – – 

Cash-flow hedging derivatives – – 

total gains on hedging activities 26 5 

losses on: 

Fair value hedging instruments –22 –4 

Hedged asset items (in fair value hedge relationship) –5 –1 

Hedged liability items (in fair value hedge relationship) –1 – 

total losses on hedging activities –28 –5 

Net hedgiNg result –2 –0 


82



B.6 – Gains and losses on disposals/repurchases 


gaiNs lOsses Net prOfit gaiNs lOsses Net prOfit 

financial assets 

Loans and receivables with banks – – – – – – 

Loans and receivables with customers 21 –19 3 8 –3 5 

Available-for-sale financial assets 54 –14 40 247 –125 123 

Debt securities 23 –13 10 51 –46 5 

Equity instruments 28 –1 27 191 –70 121 

Units in investment funds 3 – 3 5 –9 –4 

Loans – – – – – – 

Held-to-maturity investments 2 –2 –1 – –2 –2 

tOtal assets 77 –34 43 256 –130 126 

financial liabilities 

Deposits with banks – – – – – – 

Deposits with customers – – – – – – 

Debt securities in issue – – – – – – 

tOtal liabilities – – – – – – 

tOtal 77 –34 43 256 –130 126 

B.7 – Net change in financial assets and liabilities at fair value 

through profit or loss (€ m) 

uNrealised 

prOfits 

realised 

prOfits 


(€ m) 


uNrealised 

lOsses 

realised 

lOsses Net prOfit Net prOfit 

financial assets 24 22 –2 –3 42 –5 

Debt securities 2 2 –1 –2 1 6 

Equity instruments – – – – – – 

Units in investment funds 22 20 –1 –1 41 –11 

Loans – – – – – – 

financial liabilities 49 2 –23 –5 23 –189 

Debt securities 49 2 –23 –5 23 –188 

Deposits from banks – – – – – – 

Deposits from customers – – – – – – 

financial assets and liabilities in foreign currency: 

exchange differences x x x x 

credit and financial derivatives 23 5 –64 –2 –39 188 

tOtal 96 29 –89 –9 27 –6 

83



B.8 – Impairment losses 

Impairment losses on loans (€ m) 

specific 

Write-dOWNs Write-bacKs 


Write-Offs Other pOrtfOliO specific pOrtfOliO tOtal tOtal 

Loans and receivables with banks – –2 – 19 – 17 –4 

Loans and receivables with customers –59 –2,735 –207 1,009 139 –1,854 –2,248 

tOtal –59 –2,737 –207 1,028 139 –1,837 –2,252 

Impairment losses on available-for-sale financial assets (€ m) 

Impairment losses on other financial transactions (€ m) 

specific 





Write-Offs Other pOrtfOliO specific pOrtfOliO tOtal tOtal 

Guarantees given – –34 –6 36 3 –1 –16 

Credit derivatives – – – – – – – 

Commitments to disburse funds – –12 –1 7 2 –4 – 

Other transactions – – – – – – –3 

tOtal – –46 –7 43 5 –5 –20 

specific 

Write-Offs Other specific tOtal tOtal 

Debt securities –7 –5 4 –8 –10 

Equity instruments – – X – –1 

Units in investment funds –1 – – –1 –14 

Loans to banks – – – – – 

Loans to customers – – – – – 

tOtal –8 –5 4 –9 –26 

B.9 – Premium earned (net) – breakdown 

direct busiNess 


(€ m) 


iNdirect 

busiNess tOtal tOtal 

life business 

Gross premiums written (+) 12 – 12 16 

Reinsurance premiums paid (–) –3 – –3 –1 

total 9 – 9 15 

Non-life business 

Gross premiums written (+) 146 – 146 100 

Reinsurance premiums paid (–) –26 – –26 –25 

Change in gross value of premium reserve (+/–) –11 – –11 –1 

Change in provision for unearned premiums ceded to reinsurers (–/+) – – – –2 

total 108 1 109 72 

tOtal Net premiums 117 1 118 87 

84



B.10 – other income (net) from insurance business 


(€ m) 


Net change in insurance provisions –2 7 

Claims paid pertaining to the year –100 – 93 

Other income and expense from insurance business 7 5 

tOtal – 95 –82 

B.11 – Payroll 

(€ m) 


employees –1,895 –1,846 

Wages and salaries –1,374 –1,347 

Social charges –276 –265 

Severance pay – – 

Social security costs –47 –42 

Allocation to employee severance pay provision – –1 

Provision for retirement payments and similar provisions –246 –227 

Defined contribution –4 –3 

Defined benefit –243 –223 

Payments to external pension funds –30 –28 

Defined contribution –28 –27 

Defined benefit –2 –1 

Costs related to share-based payments –1 –4 

Other employee benefits –60 –83 

Recovery of compensation *) 139 150 

Others –37 –52 

tOtal –1,931 –1,898 

*) This includes recovery of staff costs relating to Bank Austria employees who are not active within the Group. 

Defined-benefit company retirement funds: total costs (€ m) 


pension and similar funds allowances – with defined benefits 

Current service cost –51 –37 

Interest cost –186 –181 

Expected return on plan assets – – 

Net actuarial gain/loss recognised in the year –5 –7 

Past service cost – – 

Gains/losses on curtailments and settlements – 1 

expeNses recOgNised iN staff expeNse –243 –223 

85



B.12 – other administrative expenses 

B.13 – Net provisions for risks and charges 

prOVisiONs 


(€ m) 


reallOcatiON 

surplus tOtal tOtal 

Other provisions 

Legal disputes –115 7 –108 –53 

Staff costs – – – – 

Other –48 20 –28 –61 

tOtal –163 27 –136 –114 

B.14 – Impairment on property, plant and equipment 

depreciatiON 

(€ m) 


impairmeNt 

lOsses Write-bacKs Net prOfit 

property, plant and equipment 

Owned –207 –3 11 –199 –218 

used in the business –200 –2 11 –192 –210 

held for investment –7 –1 – –8 –8 

finance lease –1 – – –1 –3 

used in the business –1 – – –1 –3 

held for investment – – – – – 

tOtal –208 –3 11 –200 –221 

B.15 – Impairment on intangible assets 

amOrtisatiON 

(€ m) 


impairmeNt 

lOsses Write-bacKs Net prOfit 

intangible assets 

Owned –113 – 1 –112 –112 

generated internally by the company –6 – – –6 –6 

other –107 – 1 –106 –106 

finance leases – – – – – 

tOtal –113 – 1 –112 –112 

(€ m) 


indirect taxes and duties –77 –30 

miscellaneous costs and expenses –1,454 –1,364 

Advertising, marketing and communication –126 –109 

Expenses related to credit risk –35 –21 

Expenses related to personnel –60 –52 

Information and communication technology expenses –383 –399 

Consulting and professional services –69 –64 

Real estate expenses –332 –326 

Other functioning costs –448 –393 

tOtal –1,531 –1,394 

86



B.16 – other net operating income 

Other operating expenses (€ m) 


Costs for operating leases – – 

Reclassification of gains/losses associated with cash flow hedges of non-financial assets or 

liabilities from equity to profit or loss (IAS 39, paragraph 98a) – – 

Non-deductible tax and other fiscal charges –1 –2 

Writedowns on improvements of goods owned by third parties –2 –1 

Costs related to the specific service of financial leasing – – 

Other –108 –82 

tOtal Other OperatiNg expeNses –111 –85 

Other operating income (€ m) 


recovery of costs 2 2 

Other income 279 289 

Revenue from administrative services 130 167 

Reclassification of valuation reserve relating to cash-flow hedging of non-financial assets/liabilities – – 

Revenues from rentals of real estate investments (net of operating direct costs) 16 15 

Revenues from operating leases 2 1 

Recovery of miscellaneous costs paid in previous years 2 2 

Revenues from finance lease activities – – 

Others 129 105 

tOtal Other OperatiNg iNcOme 281 291 

Other Net OperatiNg iNcOme 169 207 

B.17 – Profit (Loss) of associates 


companies subject to significant influence 

income 146 162 

Revaluations 144 148 *) 

Gains on disposal 2 14 

Writebacks – – 

Other gains – – 

expense –20 –78 

Writedowns –18 –59 *) 

Impairment losses –3 –18 

Losses on disposal – –2 

Other negative changes – – 

tOtal 126 84 

*) Figures for 2009 adjusted to changes in presentation. 


(€ m) 

87



B.18 – Gains and losses on disposal of investments 


(€ m) 


property 


Losses on disposal –2 –1 

Other assets 


Losses on disposal –3 –1 

tOtal 33 24 

B.19 – Income tax from continuing operations 

(€ m) 


Current tax (–) –356 –248 

Adjustment to current tax of prior years (+/–) 31 24 

Reduction of current tax for the year (+) 5 3 

Changes to deferred tax assets (+/–) – 70 

Changes to deferred tax liabilities (+/–) –28 –30 

tax expeNse fOr the year (–) –348 –182 

Reconciliation of theoretical tax charge to actual tax charge (€ m) 


total profit or loss before tax from continuing operations 1,146 1,335 

Applicable tax rate 25% 25% 

theoretical tax –286 –334 

Different tax rates 70 69 

Non-taxable income 6 61 

Non-deductible expenses – 94 –61 

Prior years and changes in tax rates 13 37 

a) effects on current tax 14 13 

b) effects on deferred tax –1 23 

Valuation adjustments and non-recognition of deferred taxes 27 46 

Amortisation of goodwill –84 –1 

Non-taxable foreign income 1 – 

Other differences – 1 

recOgNised taxes ON iNcOme –348 –182 

effective tax rate 30.4% 13.6% 

B.20 – Earnings per share 

During the reporting period, no financial instruments with a dilutive effect on the bearer shares were outstanding. Therefore basic earnings per share in 

accordance with IAS 33 equal diluted earnings per share in accordance with IAS 33. Earnings per share are calculated on the basis of the average 

number of shares outstanding (2010: 226.3 million shares; 2009: 202.0 million shares). 

B.21 – Appropriation of profits 

The profit of UniCredit Bank Austria AG for the financial year beginning on 1 January 2010 and ending on 31 December 2010 was € 233,844.67. 

The profit brought forward from the previous year was € 2,080,320.08. Thus the profit available for distribution was € 2,314,164.75. The Management 

Board proposes to the Annual General Meeting that no dividend be paid on the share capital of € 1,681,033,521.40 and that the total profit of 

€ 2,314,164.75 available for distribution be carried forward to new account. 

88

C – Notes to the statement of financial position 

Assets 

C.1 – Cash and cash balances 124 

C.2 – Financial assets held for trading 124 

C.3 – Financial assets at fair value through profit or loss 125 

C.4 – Available-for-sale financial assets 125 

C.5 – Held-to-maturity investments 126 

C.6 – Loans and receivables with banks 126 

C.7 – Loans and receivables with customers 127 

C.8 – Hedging derivatives 127 

C.9 – Changes in fair value of portfolio hedged items 128 

C.10 – Equity investments 128 

C.11 – Property, plant and equipment 129 

C.12 – Intangible assets 131 

C.13 – Tax assets 132 

C.14 – Non-current assets and disposal groups 

classified as held for sale 132 

C.15 – Other assets 133 

Liabilities and equity 

C.16 – Deposits from banks 133 

C.17 – Deposits from customers 133 

C.18 – Debt securities in issue 134 

C.19 – Financial liabilities held for trading 134 

C.20 – Financial liabilities at fair value 

through profit or loss 134 

C.21 – Hedging derivatives 135 

C.22 – Deferred tax liabilities 135 

C.23 – Liabilities included in disposal groups 

classified as held for sale 135 

C.24 – Other liabilities 136 

C.25 – Provisions for risks and charges 136 

C.26 – Equity 137 


89


C – Notes to the statement of financial position (CoNTINuED) 

C.1 – Cash and cash balances 

C.2 – Financial assets held for trading 

fair Value 

leVel 1 

31 dec. 2010 31 dec. 2009 

fair Value 

leVel 2 

fair Value 

leVel 3 

fair Value 

leVel 1 

fair Value 

leVel 2 


(€ m) 

fair Value 

leVel 3 

financial assets (non-derivatives) 625 1,246 15 1,171 1,119 213 

Debt securities 604 1,245 14 1,151 1,119 23 

Structured securities 11 – – 6 – – 

Other debt securities 593 1,245 14 1,145 1,119 23 

Equity instruments 9 1 1 11 – 2 

Units in investment funds 11 1 – 9 1 187 

Loans – – – – – – 

Reverse repos – – – – – – 

Other – – – – – – 

derivative instruments 1 2,378 39 3 1,593 38 

Financial derivatives 1 2,374 39 3 1,592 37 

Trading 1 2,374 39 3 1,592 35 

Related to fair value option – – – – – – 

Other – – – – – 2 

Credit derivatives – 4 – – – 1 

Trading – 4 – – – 1 

Related to fair value option – – – – – – 

Other – – – – – – 

tOtal 626 3,625 54 1,174 2,712 250 

(€ m) 


Cash 1,325 1,265 

Demand deposits with central banks 1,705 1,948 

tOtal 3,030 3,213 

90



C.3 – Financial assets at fair value through profit or loss 

fair Value 

leVel 1 


fair Value 

leVel 2 

fair Value 

leVel 3 

fair Value 

leVel 1 

fair Value 

leVel 2 

This item shows assets in respect of which Bank Austria used the option to designate financial instruments as at fair value through profit or loss in 

order to avoid inconsistencies in the valuation of assets and liabilities which are connected with each other. Most of these assets are complex structures 

with embedded derivatives. 


(€ m) 

fair Value 

leVel 3 

Debt securities 12 73 46 10 109 58 

Structured securities – – – – – – 

Other debt securities 12 73 46 10 109 58 

Equity instruments 15 – – 18 – – 

Units in investment funds – – 157 – – 34 

Loans – – – – – 6 

Structured – – – – – – 

Other – – – – – 6 

tOtal 27 73 204 28 109 98 

Financial assets at fair value through profit or loss: annual changes (€ m) 

debt securities 

equity 

iNstrumeNts 


uNits iN 

iNVestmeNt 

fuNds lOaNs tOtal 

Opening balance 176 18 34 6 235 

increases 96 2 226 – 324 

Purchases 81 2 16 – 98 

Positive changes in fair value 4 – 15 – 19 

Other increases 11 – 196 – 207 

decreases –141 –5 –103 –7 –255 

Sales –19 – –13 – –32 

Redemptions –109 –3 – 90 –6 –209 

Negative changes in fair value –4 – – – –4 

Other decreases –8 –2 –1 – –10 

clOsiNg balaNce 131 15 158 0 304 

C.4 – Available-for-sale financial assets 

fair Value 

leVel 1 


fair Value 

leVel 2 

fair Value 

leVel 3 

fair Value 

leVel 1 

fair Value 

leVel 2 

(€ m) 

fair Value 

leVel 3 

Debt securities 4,844 10,441 1,606 2,549 5,657 1,905 

Structured securities – 1 419 1 3 419 

Other 4,844 10,440 1,187 2,547 5,654 1,486 

Equity instruments 53 113 295 65 147 272 

Measured at fair value 53 113 256 65 147 263 

Carried at cost – – 40 – – 9 

Units in investment funds 11 99 81 11 148 70 

Loans – – – – – – 

tOtal 4,908 10,654 1,982 2,625 5,953 2,248 

91



C.5 – Held-to-maturity investments 

bOOK Value 


fair Value 

leVel 1 

fair Value 

leVel 2 

fair Value 

leVel 3 bOOK Value 

fair Value 

leVel 1 

fair Value 

leVel 2 


(€ m) 

fair Value 

leVel 3 

Debt securities 4,446 2,896 1,543 180 5,067 2,788 2,182 225 

Structured securities – – – – – – – – 

Other securities 4,446 2,896 1,543 180 5,067 2,788 2,182 225 

Loans – – – – – – – – 

tOtal 4,446 2,896 1,543 180 5,067 2,788 2,182 225 

Held-to-maturity investments: annual changes (€ m) 



increases 986 1,626 

Purchases 650 1,400 

Write-backs – – 

Transfers from other portfolios – – 

Other changes 336 226 

decreases –1,607 –2,313 

Sales –81 –1,070 

Redemptions –1,458 –1,035 

Write-downs –3 –4 

Transfers to other portfolios –41 – 


clOsiNg balaNce 4,446 5,067 

C.6 – Loans and receivables with banks 

(€ m) 


loans to central banks 6,155 5,225 

Time deposits 975 292 

Compulsory reserves 4,511 4,426 

Reverse repos 628 464 

Other 42 43 

loans to banks 13,594 17,851 

Current accounts and demand deposits 3,527 2,315 

Time deposits 6,569 10,908 

Other loans 3,498 4,628 

Reverse repos 951 1,773 

Finance leases – – 

Other 2,547 2,855 

Debt securities – – 

Structured – – 

Other – – 

tOtal (carryiNg amOuNt) 19,749 23,076 

tOtal (fair Value) 19,836 23,305 

Loan loss provisions deducted from loans and receivables 61 99 

92



C.7 – Loans and receivables with customers 


perfOrmiNg impaired perfOrmiNg impaired 

Current accounts 11,764 325 12,538 396 

Reverse repos 385 – 202 1 

Mortgages 23,056 1,695 22,021 950 

Credit cards and personal loans, including wage assignment loans 8,703 154 8,236 156 

Finance leases 363 24 381 26 

Factoring 997 8 778 7 

Other transactions 76,694 4,167 72,953 2,923 

Debt securities 1,694 65 1,979 55 

Structured securities – – – – 

Other debt securities 1,694 65 1,979 55 

tOtal (carryiNg amOuNt) 123,655 6,438 119,088 4,514 

tOtal (fair Value) 124,477 6,391 121,344 4,547 

Loan loss provisions deducted from loans and receivables 896 6,040 814 4,878 

Finance leases: customers (€ m) 


preseNt Value Of 

miNimum lease paymeNts 


(€ m) 

preseNt Value Of 

miNimum lease paymeNts 

amounts receivable under finance leases: 

Up to 12 months 163 179 

From 1 to 5 years 212 216 

Over 5 years 12 12 

preseNt Value Of miNimum lease paymeNts receiVable (Net iNVestmeNt iN the lease) 387 407 

C.8 – Hedging derivatives 

fair Value 

leVel 1 


fair Value 

leVel 2 

fair Value 

leVel 3 

fair Value 

leVel 1 

fair Value 

leVel 2 

(€ m) 

fair Value 

leVel 3 

financial derivatives – 2,448 1 2 149 – 

Fair value – 495 – 2 36 – 

Cash flows – 1,953 1 – 114 – 

Net investment in foreign subsidiaries – – – – – – 

credit derivatives – – – – – – 

Fair value – – – – – – 

Cash flows – – – – – – 

tOtal – 2,448 1 2 149 – 

93



C.9 – Changes in fair value of portfolio hedged items 

C.10 – Equity investments 


(€ m) 



increases 277 406 

Purchases 42 141 

Writebacks – – 

Revaluation 126 89 

Other changes 109 177 

decreases –185 –257 

Sales –16 –43 

Writedowns –3 –3 


clOsiNg balaNce 2,518 2,426 

(€ m) 


positive changes 44 – 

loans and receivables 44 – 

available-for-sale financial assets – – 

overall – – 

Negative changes – – 

loans and receivables – – 

available-for-sale financial assets – – 

overall – – 

tOtal 44 – 

Since the 2010 financial year, the Turkish bank Yapı ve Kredi Bankasi AS has for the first time used a portfolio fair value hedge for hedging part of its mortgage and car loan portfolios. 

94



C.11 – Property, plant and equipment 


(€ m) 


assets for operational use 2,074 1,904 

Owned 2,025 1,852 

Land 199 179 

Buildings 1,393 1,226 

Office furniture and fittings 147 155 

Electronic systems 180 180 

Others 105 111 

leased 49 52 

Land – – 

Buildings 48 49 

Office furniture and fittings – – 

Electronic systems – 2 

Others 1 1 

held-for-investment assets 479 369 

Owned 479 369 

Land 243 214 

Buildings 237 155 

leased – – 

Land – – 

Buildings – – 

tOtal 2,553 2,273 

95



Property, plant and equipment used in the business (€ m) 

laNd buildiNgs 

Office 

furNiture aNd 

fittiNgs 


electrONic 

systems Other tOtal 

gross opening balance 179 1,954 475 709 350 3,667 

Total net reduction in value – –678 –319 –527 –239 –1,764 

Net opening balance 179 1,275 155 182 112 1,904 

increases 21 258 30 85 50 443 

Purchases 1 82 27 72 37 219 

Capitalised expenditure on improvements – 6 – 5 1 12 

Writebacks – 1 – – 10 11 

Increase in fair value – – – – – – 

in equity – – – – – – 

through profit or loss – – – – – – 

Positive exchange differences 3 33 1 5 1 43 

Transfer from properties held for investment – 1 – – – 1 

Other changes 17 136 2 1 1 157 

reductions –1 – 93 –37 –86 –56 –273 

Disposals – –15 –2 –17 –8 –42 

Depreciation – –69 –34 –68 –30 –202 

Impairment losses – –1 – –1 – –2 

in equity – – – – – – 

through profit or loss – –1 – –1 – –2 

Reductions of fair value – – – – – – 

in equity – – – – – – 

through profit or loss – – – – – – 

Negative exchange differences –1 –6 – – –1 –8 

Transfers – –2 – – – –2 

property, plant and equipment held for investment – – – – – – 

assets held for sale – –2 – – – –2 

Other changes – –1 – –1 –16 –18 

Net fiNal balaNce 199 1,441 148 180 106 2,074 

Property, plant and equipment held for investment: annual changes (€ m) 


laNd buildiNgs tOtal 

Opening balances 214 155 369 


Purchases 8 28 36 

Capitalised expenditure on improvements – – – 

Increases in fair value – – – 

Writebacks – – – 

Positive exchange differences – – – 

Transfer from properties used in the business – – – 

Other changes 23 95 118 

reductions –3 –41 –44 

Disposals –2 – –3 

Depreciation – –7 –7 

Reductions in fair value – – – 

Impairment losses – –1 –1 

Negative exchange differences –1 –2 –3 

Transfers to – –1 –1 

properties used in the business – –1 –1 

non-current assets classified as held for sale – – – 

Other changes – –30 –30 

clOsiNg balaNces 243 237 479 

measured at fair Value 222 167 389 


96



C.12 – Intangible assets 


(€ m) 


goodwill 3,225 3,415 

Other intangible assets 526 523 

Assets carried at cost 526 523 

Intangible assets generated internally 39 46 

Other assets 487 477 

Assets valued at fair value – – 

Intangible assets generated internally – – 

Other assets – – 

tOtal 3,751 3,938 

Intangible assets – annual changes (€ m) 

gOOdWill 


Other iNtaNgible assets 

geNerated 

iNterNally Other tOtal 

gross opening balance 4,614 71 1,203 5,888 

Net reductions –1,199 –25 –727 –1,951 

Net opening balance 3,415 46 477 3,938 

increases 196 20 131 347 

Purchases – 16 80 96 

Increases in intangible assets generated internally X 2 – 2 

Writebacks X – 1 1 

Increase in fair value – – – 

in equity X – – – 

through profit or loss X – – – 

Positive exchange differences 192 – 23 215 

Other changes 4 1 27 33 

reductions –386 –27 –120 –534 

Disposals – –6 –7 –14 

Writedowns –378 –6 –107 –491 

Amortisation X –6 –107 –113 

Writedowns –378 – – –378 


through profit or loss –378 – – –378 

Reduction in fair value – – – 


through profit or loss X – – – 

Transfers to non-current assets held for sale – – – – 

Negative exchange differences –8 – –5 –13 

Other changes – –15 –1 –16 

Net clOsiNg balaNce 3,225 39 487 3,751 

97



C.13 – Tax assets (€ m) 


deferred tax assets related to: 

Assets/liabilities held for trading 46 5 

Other financial instruments 71 100 

Property, plant and equipment/intangible assets 17 28 

Provisions 446 353 

Writedowns on loans 69 85 

Other assets/liabilities 32 39 

Loans and receivables with banks and customers 39 26 

Tax losses carried forward 269 364 

Other 17 21 

tOtal 1,006 1,021 

In 2010, deferred taxes were also recognised directly in equity. € 20 m (2009: € 24 m) was credited to the available-for-sale reserve and € 24 m 

(2009: € 28 m) was debited to the cash flow hedge reserve. 

In addition, as actuarial gains and losses on pension and severance-payment obligations were not recognised in income in the reporting year, deferred tax 

assets of € 63 m (2009: € 34 m) were offset against equity in UniCredit Bank Austria AG. 

As a result of the first-time consolidation of the subsidiaries and sub-groups referred to in section A.6, and of foreign currency translation of deferred taxes 

and direct offsetting against reserves, part of the change in deferred taxes was not reflected in the expense in 2010. 

The assets include deferred tax assets arising from the carryforward of unused tax losses in the amount of € 269 m (2009: € 364 m). Most of the tax 

losses carried forward can be used without time restriction. 

In respect of tax losses carried forward in the amount of € 585 m (2009: € 472 m), no deferred tax assets were recognised because, from a current 

perspective, a tax benefit is unlikely to be realised within a reasonable period. 

C.14 – Non-current assets and disposal groups classified as held for sale (€ m) 


individual assets 

Financial assets – – 

Equity investments – – 

Property, plant and equipment 2 46 

Intangible assets – – 

Other non-current assets – – 

total 2 46 

asset groups classified as held for sale 

Financial assets held for trading – 11,557 

Financial assets at fair value through profit or loss – 25 

Available-for-sale financial assets – 259 

Held-to-maturity investments – 1 

Loans and receivables with banks – 11 

Loans and receivables with customers – – 

Equity investments – – 

Property, plant and equipment – – 

Intangible assets – – 

Other assets – 1,311 

total – 13,164 

assets 2 13,210 


98



C.15 – other assets 

C.16 – Deposits from banks (€ m) 


deposits from central banks 757 4,355 

deposits from banks 32,373 29,007 



Loans 16,002 16,226 

Reverse repos 967 1,126 

Other 15,034 15,101 

Liabilities in respect of commitments to repurchase treasury shares – – 

Other liabilities 115 461 

tOtal 33,130 33,362 

fair Value 33,782 33,588 


(€ m) 


Margin with derivatives clearers (non-interest bearing) 14 9 

Gold, silver and precious metals 70 52 

Positive value of “servicing contracts” for financial assets sold and derecognised – – 

Accrued income other than capitalised income 51 41 

Cash and other valuables held by cashier 1 1 

Interest and charges to be debited to 23 33 

customers 20 32 

banks 4 1 

Items in transit between branches not yet allocated to destination accounts – – 

Items in processing 193 225 

Items deemed definitive but not attributable to other items 169 144 

Securities and coupons to be settled 1 20 

Other transactions 167 123 

Adjustments for unpaid bills and notes 8 12 

Other taxes 3 5 

Other items 476 453 

tOtal 1,008 975 

As at 31 December 2010, the total amount of assets which are attributable to the “loans and receivables” category was € 153,880 m 

(2009: € 150,866 m). 

C.17 – Deposits from customers (€ m) 




Loans 893 669 

Reverse repos 590 395 

Other 302 274 

Liabilities in respect of commitments to repurchase treasury shares 565 529 

Other liabilities 5,042 6,327 

tOtal 100,284 97,041 

fair Value 100,762 97,407 

99



C.18 – Debt securities in issue (€ m) 

carryiNg 

amOuNt 


fair Value 

leVel 1 

fair Value 

leVel 2 

fair Value 

leVel 3 

carryiNg 

amOuNt 

fair Value 

leVel 1 

fair Value 

leVel 2 

fair Value 

leVel 3 

securities 

Bonds 24,913 1,094 23,305 390 26,764 2,075 23,312 1,189 

Structured 130 – – 130 99 – – 99 

Other 24,783 1,094 23,305 261 26,666 2,075 23,312 1,090 

Other securities 2,642 23 1,498 1,119 2,058 27 1,191 839 

Structured 23 23 – – 27 27 – – 

Other 2,620 – 1,498 1,119 2,030 – 1,191 839 

tOtal 27,555 1,117 24,803 1,510 28,822 2,103 24,503 2,028 

C.19 – Financial liabilities held for trading 

fair Value 

leVel 1 


fair Value 

leVel 2 

fair Value 

leVel 3 

fair Value 

leVel 1 

fair Value 

leVel 2 


(€ m) 

fair Value 

leVel 3 

financial liabilities 9 30 – 5 32 – 

deposits from banks – – – – – – 

deposits from customers 9 30 – 5 32 – 

debt securities – – – – – – 

Bonds – – – – – – 

Other securities – – – – – – 

derivative instruments 18 2,326 65 1 852 25 

financial derivatives 18 2,252 42 1 852 25 

Trading – 2,249 42 1 849 24 

Relating to fair value option 18 – – – – – 

Other – 4 – – 3 1 

credit derivatives – 73 23 – – – 

Trading derivatives – 73 23 – – – 

Relating to fair value option – – – – – – 

Other – – – – – – 

tOtal 27 2,355 65 6 884 25 

C.20 – Financial liabilities at fair value through profit or loss 

fair Value 

leVel 1 


fair Value 

leVel 2 

fair Value 

leVel 3 

fair Value 

leVel 1 

fair Value 

leVel 2 

(€ m) 

fair Value 

leVel 3 

Deposits from banks – – – – – – 

Deposits from customers – – – – – – 

Debt securities – 1,651 – – 1,967 – 

Structured – 1,651 – – 1,967 – 

Others – – – – – – 

tOtal – 1,651 – – 1,967 – 

This item shows liabilities in respect of which Bank Austria used the option to designate financial instruments as at fair value through profit or loss in 

order to avoid inconsistencies in the valuation of assets and liabilities which are connected with each other. Most of these liabilities are debt securities 

and complex structures with embedded derivatives. In 2010, changes in fair values resulting from changes in our own credit rating were € 39.2 m 

(2009: – € 63.5 m). 

100



C.21 – Hedging derivatives 

fair Value 

leVel 1 


fair Value 

leVel 2 

fair Value 

leVel 3 

fair Value 

leVel 1 

fair Value 

leVel 2 


(€ m) 

fair Value 

leVel 3 

financial derivatives – 2,883 25 – 219 – 

Fair value – 185 – – 76 – 

Cash flows – 2,698 25 – 143 – 

Net investment in foreign subsidiaries – – – – – – 

credit derivatives – – – – – – 

Fair value – – – – – – 

Cash flows – – – – – – 

tOtal – 2,883 25 – 219 – 

C.22 – Deferred tax liabilities (€ m) 


deferred tax liabilities related to: 

Loans and receivables with banks and customers 35 52 

Assets/liabilities held for trading 43 29 

Other financial instruments 182 195 

Property, plant and equipment/intangible assets 106 118 

Other assets/liabilities 24 30 

Deposits from banks and customers 1 2 

Other 27 29 

tOtal 417 456 

Pursuant to IAS 12.39, no deferred tax liabilities were recognised for temporary differences in connection with investments in domestic subsidiaries 

amounting to € 644 m because from a current perspective, they are not intended to be sold. 

C.23 – Liabilities included in disposal groups classified as held for sale (€ m) 


liabilities associated with assets classified as held for sale 

Deposits – – 

Securities – – 

Other liabilities – – 

total – – 

liabilities included in disposal groups classified as held for sale 

Deposits from banks – – 

Deposits from customers – – 

Debt securities in issue – – 

Financial liabilities held for trading – 8,663 

Financial liabilities at fair value through profit or loss – 35 

Provisions – – 

Other liabilities – 1,794 

total – 10,492 

liabilities – 10,492 

101



C.24 – other liabilities 

C.25 – Provisions for risks and charges (€ m) 


pensions and other post-retirement benefit obligations 3,791 3,677 

Other provisions for risks and charges 506 490 

Legal disputes 197 147 

Staff expenses 5 4 

Other 304 339 

tOtal 4,297 4,167 


(€ m) 


Liabilities in respect of financial guarantees issued – – 

Impairment: of financial guarantees issued, of credit derivatives, of irrevocable commitments to distribute funds 205 189 

Accrued expenses other than those to be capitalised for the financial liabilities concerned 90 81 

Share-based payments classified as liabilities under IFRS 2 – 1 

Other liabilities due to employees 371 396 

Other liabilities due to other staff 6 6 

Other liabilities due to directors and statutory auditors – – 

Interest and amounts to be credited 63 112 

Items in transit between branches and not yet allocated to destination accounts – 2 

Available amounts to be paid to others 18 19 

Items in processing 1,051 476 

Entries related to securities transactions 1 – 

Items deemed definitive but not attributable to other lines 269 294 

Liabilities for miscellaneous entries related to tax collection service – – 

Adjustments for unpaid portfolio entries – – 

Tax items different from those included in tax liabilities 49 41 

Other entries 448 755 

tOtal 2,573 2,372 

As at 31 December 2010, the total amount of liabilities which are attributable to “deposits from banks/customers and debt securities in issue” was 

€ 163,542 m (2009: € 161,597 m). 

Provisions for risks and charges: annual changes (€ m) 


peNsiONs aNd pOstretiremeNt 

beNefit 

ObligatiONs Other prOVisiONs tOtal 

Opening balance 3,677 490 4,167 


Provisions for the year 121 145 266 

Changes due to the passage of time – – – 

Differences due to discount-rate changes 124 – 124 

Other increases 25 21 43 

decreases –156 –150 –303 

Use during the year –119 –104 –223 

Differences due to discount-rate changes – – – 

Other decreases –36 –46 –80 

clOsiNg balaNce 3,791 506 4,297 

102



Insurance provisions (€ m) 

C.26 – Equity 

direct busiNess 


iNdirect 

busiNess tOtal tOtal 

Non-life business 80 1 81 64 

Provision for unearned premiums 58 – 59 45 

Provision for outstanding claims 21 1 22 15 

Other provisions – – – 3 

life business 102 – 102 98 

Mathematical provisions 98 – 98 96 

Provisions for amounts payable 2 – 2 2 

Other insurance provisions 2 – 2 1 

insurance provisions when investment risk is borne by the insured party – – – – 

Provision for policies where the performance is connected to investment funds and 

market indices – – – – 

Provision for pension funds – – – – 

tOtal iNsuraNce prOVisiONs 182 1 183 162 

As a result of a capital increase carried out at UniCredit Bank Austria AG on 4 March 2010, the number of shares rose by 29,197,080 from 

202,031,740 to 231,228,820. The total number includes registered shares, whose number rose from 10,100 to 10,115. The registered shares (10,000 

registered shares are held by “Privatstiftung zur Verwaltung von Anteilsrechten”, a private foundation under Austrian law; 115 registered shares are held 

by “Betriebsratsfonds des Betriebsrats der Angestellten der UniCredit Bank Austria AG Großraum Wien”, the Employees’ Council Fund of the Employees’ 

Council of employees of UniCredit Bank Austria AG in the Vienna area) carry special rights: for resolutions concerning spin-offs and specific mergers or 

specific changes in the bank’s Articles of Association to be adopted at a general meeting of shareholders, the registered shareholders have to be present 

when the resolutions are adopted. The relevant resolutions are specified in Article 20 (13) and (14) of UniCredit Bank Austria AG’s Articles of Association. 


103

D – Segment reporting 

D.1 – Reconciliation of reclassified accounts 

to mandatory reporting schedule 140 

D.2 – Description of segment reporting 142 

D.3 – Segment reporting 1–12 2010/1–12 2009 144 

D.4 – Segment reporting Q1–Q4 2010/Q1–Q4 2009 145 

Bank Austria · Annual Financial Statements 2010 104


D – Segment reporting (CoNTINuED) 

D.1 – Reconciliation of reclassified accounts to mandatory reporting schedule (€ m) 


Net interest 4,543 4,733 

Dividends and other income from equity investments 157 144 

Dividend income and similar revenue 31 57 

minus: dividends from equity instruments held for trading –1 –3 

Profit (loss) of associates – of which: Income (loss) from equity investments valued at net equity 126 89 

Net interest margin 4,701 4,877 

Net fees and commissions 1,990 1,831 

Net trading, hedging and fair value income 326 326 

Gains (losses) on financial assets and liabilities held for trading 301 329 

plus: dividends from equity instruments held for trading 1 3 

Fair value adjustments in hedge accounting –2 0 

Gains (losses) on disposal or repurchase of financial liabilities 0 0 

Gains (losses) on financial assets and liabilities designated at fair value through profit and loss 27 –6 

Net other expenses/income 191 211 

Gains (losses) on disposals/repurchases of loans and receivables – not impaired 1 1 

Premiums earned (net) 118 87 

Other income (net) from insurance activities – 95 –82 

Other net operating income 169 207 

minus: other operating income – of which: recovery of expenses –2 –2 

Net non-interest income 2,507 2,369 

OperatiNg iNcOme 7,208 7,245 

Payroll costs –1,931 –1,894 

Administrative costs – staff expenses –1,931 –1,898 

minus: integration costs 0 4 

Other administrative expenses –1,527 –1,389 

Administrative costs – other administrative expenses –1,531 –1,394 


Recovery of expenses = Other net operating income – of which: Operating income – recovery of costs 2 2 

Amortisation, depreciation and impairment losses on intangible and tangible assets –310 –333 

Impairment/Write-backs on property, plant and equipment –200 –221 

minus: impairment losses/write backs on property owned for investment 1 0 

Impairment/Write-backs on intangible assets –112 –112 


OperatiNg cOsts –3,766 –3,615 

OperatiNg prOfit 3,442 3,630 


105




Impairment of goodwill –378 –19 

Provisions for risks and charges –136 –114 

Integration costs –4 –9 

Net writedowns of loans and provisions for guarantees and commitments –1,839 –2,267 

Gains (losses) on disposal and repurchase of loans 3 5 

minus: gains (losses) on disposals/repurchases of loans and receivables – not impaired position –1 –1 

Impairment losses on loans –1,837 –2,252 

Impairment losses on other financial assets –5 –20 

Net income from investments 62 113 

Gains (losses) on disposal and repurchase of available-for-sale financial assets 40 123 

Gains (losses) on disposal and repurchase of held-to-maturity investments –1 –2 

Impairment losses on: available-for-sale financial assets –9 –26 

Impairment losses on: held-to-maturity investments 0 0 

plus: Impairment losses/write backs on property owned for investment –1 0 

Profit (loss) of associates 126 84 

minus: Profit (loss) of associates – Income (loss) from equity investments valued at net equity –126 –89 

Gains and losses on tangible and intangible assets 0 0 

Gains (losses) on disposal of investments 33 24 

prOfit befOre tax 1,146 1,335 

Income tax for the period = Tax (income) expense related to profit or loss from continuing operations –348 –182 

Net prOfit (lOss) fOr the year 798 1,152 


Owners of the parent company 747 1,102 

Non-controlling interests 51 51 


106



D.2 – Description of segment reporting 

As in previous periods, the segment reporting format is based on the internal reporting structure of business segments, which reflects management 

responsibilities in the Bank Austria Group in 2010. The business segments are presented as independent units with their own capital resources and 

responsibility for their own results. This also meets the requirements of IFRS 8. 

The definition of business segments is primarily based on organisational responsibility for customers. 

Family & SME Banking 

Responsibility for the Family & SME Banking Division covers Bank Austria’s business with private customers (except Private Banking customers) and 

small businesses and the credit card business. 

Private Banking 

Private Banking has responsibility for private customers with investments exceeding € 500,000. Schoellerbank AG and various other small subsidiaries 

are also included in the Private Banking Division. 

Corporate & Investment Banking 

The Corporate & Investment Banking segment covers the sub-segments large customers (international corporates, financial institutions, public sector) 

and real estate, business with medium-sized companies and customers using specific products as well as treasury activities. The Corporate & Investment 

Banking Division includes, beside others, Bank Austria Wohnbaubank AG and the Bank Austria Real Invest Group as consolidated companies. 

Responsibility for the CAIB subsidiaries in the CEE countries – with the exception of UniCredit CAIB Poland S.A., which continues to be allocated to the 

Corporate & Investment Banking business segment – was transferred to the CEE business segment in the first quarter of 2010. UniCredit CAIB and 

UniCredit CAIB Securities UK Ltd. are included in the consolidated results of the Bank Austria Group until the end of May 2010. After the integration of 

customer-driven investment banking activities of UniCredit CAIB into Bank Austria, proprietary trading activities remaining within CAIB and UniCredit CAIB 

Securities UK Ltd. were sold to UniCredit Bank AG (the former Bayerische Hypo- und Vereinsbank AG), Munich, in June 2010. 

CEE 

The CEE business segment includes the commercial banking units of the Bank Austria Group in the region of Central and Eastern Europe (including 

Turkey and Kazakhstan). The CAIB subsidiaries in the CEE countries – with the exception of UniCredit CAIB Poland S.A., which remains within the 

Corporate & Investment Banking business segment – were allocated to the CEE business segment in the first quarter of 2010. 


Corporate Center covers all equity interests that are not assigned to other segments and it also includes the contribution from UniCredit Global Leasing, 

in which Bank Austria has a shareholding interest of 31.01% accounted for under the equity method. Also included are inter-segment eliminations and 

other items which are not to be assigned to other business segments. 

Methods 

Net interest income is split up according to the market interest rate method. Costs are allocated to the individual business segments from which they 

arise. 

The result of each business segment is measured by the profit before tax and the net profit after tax, before deduction of minority interests, earned by 

the respective segment. 

The interest rate applied to investment of equity allocated to the business segments is determined for one year in advance as part of the budgeting 

process. It is composed of a “risk-free” interest rate plus a margin of the historical average (6 years) of the 5-year CDS spread of UniCredit. 


107



Overhead costs are allocated to the business segments according to a key of distribution applied within the Group on a uniform basis (50% costs, 

20% revenues, 20% FTEs and 10% proportionately). 

In 2010, capital allocated to the business segments in UniCredit Bank Austria AG, based on the Tier 1 capital ratio, is 6.7% of planned risk-weighted 

assets under the Basel 2 rules. Capital allocation to subsidiaries reflects actual IFRS capital. The adjustment item with respect to the consolidated IFRS 

capital of the Bank Austria Group is reflected in the Corporate Center. 

Restatements for 2009 and restatements of quarterly results in 2010: 

In 2010, a number of structural changes took place within the business segments and in the group of consolidated companies. This means that results 

for 2010 are not fully comparable with those for 2009. For this reason, the segment results for 2009 and quarterly results in 2010 have been adjusted 

to the new structure. The difference compared with Bank Austria’s overall results is presented in a separate column showing “Restatement differences”. 

The main pro-forma adjustments are as follows: 

• UniCredit CAIB and UniCredit CAIB Securities UK Ltd. were sold to UniCredit Bank AG (the former Bayerische Hypo- und Vereinsbank AG), Munich, in 

June 2010. They are therefore also included for only 5 months in the 2009 restated figures. The restated figures for 2009 also reflect the integration 

into UniCredit Bank Austria AG of customer-driven investment banking activities. Allocated capital in previous periods was adjusted accordingly. 

• The CAIB subsidiaries in CEE countries (with the exception of UniCredit CAIB Poland S.A.) were transferred from Corporate & Investment Banking to 

the CEE business segment. 

• The reorganisation of the Private Banking segment in the fourth quarter of 2009, the transfer of customers from Family & SME Banking to Private 

Banking in particular, is reflected in the figures for all quarters of 2009. In this context, figures for previous periods were further adjusted on the 

basis of a new assessment of effects. 

• WAVE Solutions Information Technology GmbH was transferred to UGIS (UniCredit Global Information Services S.p.A.) in May 2009 and is therefore 

no longer included in the restated figures for 2009. 

• The allocation of overhead costs was changed as from 2010, and the changes were also applied to 2009. 

• From 2010, income from custodian bank services is no longer allocated to the sales divisions but exclusively to the department responsible for 

settlement in Corporate & Investment Banking. The relevant comparative figures for 2009 were also restated. 


108



D.3 – Segment reporting 1–12 2010/1–12 2009 

family & sme 

baNKiNg 

diVisiON 

priVate 

baNKiNg 

diVisiON 

cOrpOrate & 

iNVestmeNt 

baNKiNg 

diVisiON 

ceNtral 

easterN 

eurOpe 

diVisiON 

cOrpOrate 

ceNter 

restatemeNt 

differeNces 1) 


(€ m) 

baNK austria 

grOup 

Net interest income 1–12 2010 647 43 944 3,256 –190 – 4,701 

1–12 2009 690 55 1,335 3,003 –422 216 4,877 

Net fees and commissions 1–12 2010 404 95 337 1,185 –32 – 1,990 

1–12 2009 389 88 295 1,063 –25 23 1,831 

Net trading, hedging and 1–12 2010 –2 2 35 145 146 – 326 

fair value loss/income 1–12 2009 1 2 –78 496 52 –146 326 

Net other expenses/income 1–12 2010 2 – 17 63 109 – 191 

1–12 2009 1 –8 10 58 152 –2 211 

Net non-interest income 1–12 2010 405 97 390 1,393 223 – 2,507 

1–12 2009 391 81 227 1,616 178 –125 2,369 

OperatiNg iNcOme 1–12 2010 1,052 140 1,334 4,649 34 – 7,208 

1–12 2009 1,080 136 1,562 4,620 –244 91 7,245 

OperatiNg expeNses 1–12 2010 –798 –101 –435 –2,128 –305 – –3,766 

1–12 2009 –780 – 98 –418 –1,951 –327 –41 –3,615 

OperatiNg prOfit 1–12 2010 253 39 899 2,521 –271 – 3,442 

1–12 2009 300 39 1,144 2,669 –571 50 3,630 

Goodwill impairment 1–12 2010 – – – –9 –369 – –378 

1–12 2009 – – – –1 –18 – –19 

Provisions for risks and charges 1–12 2010 –7 1 –20 –36 –74 – –136 

1–12 2009 –2 – –51 –46 –15 – –114 

Restructuring costs 1–12 2010 – – – –4 – – –4 

1–12 2009 – – –2 –4 – –3 –9 

Net writedowns of loans and provisions 1–12 2010 –212 –2 –169 –1,454 –1 – –1,839 

for guarantees and commitments 1–12 2009 –243 – –306 –1,718 – – –2,267 

Net income from investments 1–12 2010 14 – –3 46 6 – 62 

1–12 2009 10 – –21 16 108 – 113 

prOfit befOre tax 1–12 2010 47 39 706 1,064 –710 – 1,146 

1–12 2009 65 38 764 916 –496 48 1,335 

Income tax 1–12 2010 –12 –10 –182 –210 66 – –348 

1–12 2009 –8 –9 –202 –170 88 119 –182 

Net prOfit 1–12 2010 36 29 524 853 –645 – 798 

1–12 2009 57 29 562 746 –408 166 1,152 

risk-weighted assets (rWa) (avg.) 1–12 2010 12,880 533 29,962 74,284 5,246 –46 122,859 

1–12 2009 10,342 608 31,998 70,930 5,571 498 119,947 

Equity (avg.) 2) 1–12 2010 746 123 3,510 11,112 1,499 – 16,989 

1–12 2009 825 144 2,807 9,978 399 15 14,169 

Cost/income ratio in % 1–12 2010 75.9 72.3 32.6 45.8 n.m. n.m. 52.3 

1–12 2009 72.2 71.7 26.7 42.2 n.m. n.m. 49.9 

Risk/earnings ratio in % 1–12 2010 32.8 n.m. 17.9 44.7 n.m. n.m. 39.1 

1–12 2009 35.2 n.m. 22.9 57.2 n.m. n.m. 46.5 

1) The segment results for 2009 and previous quarters 2010 have been restated. The difference compared to Bank Austria’s results for 2009 is presented in a separate column showing 

“Restatement differences”, which mainly relate to changes in the group of consolidated companies (e.g. sale of WAVE Solutions Information Technology GmbH and UniCredit CAIB AG) and other 

adjustments. 

2) Total IFRS capital for the subsidiaries allocated to the respective Division together with standardised capital for the rest of the respective Division. The difference compared to the consolidated 

equity of the Bank Austria Group is shown in the Corporate Center. Allocated average capital adjusted due to the sale of UniCredit CAIB AG in Q2 2010; previous year restated accordingly, 

difference allocated to Corporate Center. 


109



D.4 – Segment reporting Q1–Q4 2010/Q1–Q4 2009 

family & sme 

baNKiNg 

diVisiON 

priVate 

baNKiNg 

diVisiON 

cOrpOrate & 

iNVestmeNt 

baNKiNg 

diVisiON 

ceNtral 

easterN 

eurOpe 

diVisiON 

cOrpOrate 

ceNter 

restatemeNt 



(€ m) 

baNK austria 

grOup 

Net interest income q4/2010 158 12 236 813 –32 – 1,188 

q3/2010 158 10 234 842 –32 – 1,212 



q4/2009 172 13 241 772 –106 42 1,133 

q3/2009 171 15 254 739 –108 115 1,186 

q2/2009 165 15 373 737 –125 56 1,222 

q1/2009 180 12 466 756 –83 4 1,335 

Net fees and commissions Q4/2010 98 27 82 315 –11 – 511 

Q3/2010 96 19 84 303 –11 – 492 



Q4/2009 103 23 82 281 –8 16 497 

Q3/2009 94 22 62 265 –10 2 436 

Q2/2009 94 22 64 263 –4 3 442 

Q1/2009 98 20 86 254 –3 1 457 

Net trading, hedging and Q4/2010 –1 – 3 69 –21 – 49 

fair value loss/income Q3/2010 –1 – –24 42 25 – 43 

Q2/2010 – 1 28 14 114 – 158 

Q1/2010 – – 28 20 28 – 76 

Q4/2009 – – 6 69 31 –17 89 

Q3/2009 –1 – 3 68 14 –117 –34 

Q2/2009 –8 1 –89 183 5 –12 81 

Q1/2009 10 – 2 176 2 – 190 

Net other expenses/income Q4/2010 1 –1 1 19 34 – 54 

Q3/2010 –1 – 5 28 26 – 57 

Q2/2010 1 1 6 15 26 – 48 

Q1/2010 2 – 6 1 23 – 31 

Q4/2009 –7 –2 2 –1 27 1 21 

Q3/2009 3 –1 2 31 56 4 95 

Q2/2009 2 –1 4 21 34 – 60 

Q1/2009 3 –4 3 6 34 –7 36 

Net non-interest income q4/2010 99 27 85 402 2 – 615 

q3/2010 94 19 65 373 40 – 592 



q4/2009 96 21 89 349 50 – 606 

q3/2009 95 21 67 363 60 –111 496 

q2/2009 89 22 –21 467 34 –8 584 

q1/2009 111 17 91 437 33 –6 683 

OperatiNg iNcOme q4/2010 257 38 322 1,215 –30 – 1,802 

q3/2010 252 30 299 1,216 8 – 1,804 

q2/2010 276 37 373 1,145 75 – 1,906 

q1/2010 267 35 340 1,072 –19 – 1,695 

q4/2009 268 34 330 1,121 –56 42 1,739 

q3/2009 267 37 321 1,102 –47 4 1,683 

q2/2009 254 37 353 1,204 – 91 48 1,805 

q1/2009 291 28 558 1,193 –49 –3 2,018 

OperatiNg expeNses q4/2010 –204 –27 –104 –561 –88 – – 984 

q3/2010 –202 –25 –106 –534 –76 – – 942 

q2/2010 –198 –25 – 99 –530 –72 – – 924 

q1/2010 –194 –24 –126 –503 –70 – – 916 

q4/2009 –187 –27 –88 –511 – 92 –17 – 922 

q3/2009 –194 –24 – 94 –484 –78 –23 –898 

q2/2009 –198 –23 –120 –479 –79 –3 – 904 

q1/2009 –200 –23 –115 –477 –79 3 –892 



adjustments. 

110



family & sme 

baNKiNg 

diVisiON 

priVate 

baNKiNg 

diVisiON 

cOrpOrate & 

iNVestmeNt 

baNKiNg 

diVisiON 

ceNtral 

easterN 

eurOpe 

diVisiON 

cOrpOrate 

ceNter 

restatemeNt 


baNK austria 

grOup 

OperatiNg prOfit q4/2010 53 11 218 654 –118 – 818 

q3/2010 50 5 193 682 –68 – 863 



q4/2009 81 8 242 611 –148 25 817 

q3/2009 72 12 227 618 –125 –20 785 

q2/2009 56 14 232 724 –169 45 902 

q1/2009 91 5 443 716 –129 – 1,126 

Goodwill impairment Q4/2010 – – – –9 –200 – –208 

Q3/2010 – – – – –3 – –3 

Q2/2010 – – – – –167 – –167 

Q1/2010 – – – – – – – 

Q4/2009 – – – – –18 – –18 

Q3/2009 – – – –1 – – –1 

Q2/2009 – – – – – – – 

Q1/2009 – – – – – – – 

Provisions for risks and charges Q4/2010 –7 1 –20 –7 –1 – –33 

Q3/2010 1 – – –13 – – –13 

Q2/2010 –1 – – –11 –8 – –19 

Q1/2010 – – – –6 –65 – –71 

Q4/2009 –1 – –41 –24 – 2 –64 

Q3/2009 – – –10 –5 –9 –2 –27 

Q2/2009 –1 – – –13 –5 – –20 

Q1/2009 – – – –3 – – –4 

Restructuring costs Q4/2010 – – – –1 – – –1 

Q3/2010 – – – –1 – – –1 



Q4/2009 – – –1 –1 – –2 –4 

Q3/2009 – – – –1 – – –1 

Q2/2009 – – –1 –1 – – –2 

Q1/2009 – – – –1 – – –1 

Net writedowns of loans and Q4/2010 –42 –2 –38 –444 – – –526 

provisions for guarantees Q3/2010 –52 – –48 –319 – – –418 

and commitments Q2/2010 –57 – –22 –377 –1 – –457 

Q1/2010 –63 – –62 –314 – – –439 

Q4/2009 –53 – –105 –501 – 4 –655 

Q3/2009 –63 – –31 –510 – 1 –603 

Q2/2009 –72 – –111 –376 – –4 –563 

Q1/2009 –55 – –60 –331 – –1 –446 

Net income from investments Q4/2010 1 – –6 7 –1 – 1 

Q3/2010 1 – 1 19 – – 22 

Q2/2010 1 – – 8 6 – 16 

Q1/2010 10 – 2 11 – – 22 

Q4/2009 2 – –5 4 33 – 34 

Q3/2009 1 – –11 5 27 – 23 

Q2/2009 5 – –3 4 3 – 9 

Q1/2009 2 – –2 2 45 – 47 

prOfit befOre tax q4/2010 6 11 154 201 –320 – 51 




q4/2009 29 8 90 89 –134 29 111 

q3/2009 10 12 175 106 –107 –21 176 

q2/2009 –12 14 118 338 –172 41 326 

q1/2009 38 5 381 383 –83 –1 722 

Income tax Q4/2010 –2 –3 –51 –38 41 – –52 

Q3/2010 – –1 –44 –77 –9 – –131 

Q2/2010 –9 –3 –53 –55 –10 – –130 

Q1/2010 –1 –3 –34 –40 43 – –34 

Q4/2009 –2 –7 –21 –20 42 30 22 

Q3/2009 –1 –1 –31 –21 24 14 –17 

Q2/2009 5 – –49 –51 –18 75 –38 

Q1/2009 –10 –1 –102 –76 40 –1 –150 



adjustments. 


111



family & sme 

baNKiNg 

diVisiON 

priVate 

baNKiNg 

diVisiON 

cOrpOrate & 

iNVestmeNt 

baNKiNg 

diVisiON 

ceNtral 

easterN 

eurOpe 

diVisiON 

cOrpOrate 

ceNter 

restatemeNt 


baNK austria 

grOup 

Net prOfit q4/2010 4 8 103 163 –279 – –1 




q4/2009 27 1 69 69 – 92 59 133 

q3/2009 9 11 145 85 –83 –7 159 

q2/2009 –7 14 69 286 –189 116 288 

q1/2009 28 4 279 306 –43 –2 572 

risk-weighted assets (rWa) q4/2010 15,892 552 28,971 76,847 5,245 – 127,508 

q3/2010 14,576 556 29,459 76,249 5,427 – 126,267 

q2/2010 11,613 534 30,842 74,338 5,120 – 122,446 

q1/2010 10,110 497 30,789 70,420 5,226 –115 116,927 

q4/2009 9,392 492 30,182 69,049 5,502 –230 114,386 

q3/2009 10,171 607 29,595 67,761 5,650 799 114,583 

q2/2009 10,888 667 32,985 72,056 5,498 827 122,921 

q1/2009 10,919 666 35,232 74,853 5,633 596 127,898 

Equity (avg.) 2) Q4/2010 759 118 2,239 11,372 2,956 – 17,444 

Q3/2010 740 125 2,075 11,171 3,452 – 17,562 

Q2/2010 737 128 2,175 10,968 3,307 – 17,316 

Q1/2010 747 119 7,550 10,938 –3,718 – 15,635 

Q4/2009 806 111 1,045 10,255 1,988 – 14,204 

Q3/2009 805 162 1,248 10,151 1,754 20 14,140 

Q2/2009 811 153 1,402 9,999 1,753 21 14,139 

Q1/2009 880 152 7,533 9,507 –3,899 21 14,194 

Cost/income ratio in % Q4/2010 79.3 70.5 32.3 46.2 n.m. n.m. 54.6 

Q3/2010 80.0 82.8 35.4 43.9 n.m. n.m. 52.2 



Q4/2009 69.9 77.5 26.7 45.5 n.m. n.m. 53.0 

Q3/2009 72.9 66.4 29.3 43.9 n.m. n.m. 53.3 

Q2/2009 78.1 63.3 34.1 39.8 n.m. n.m. 50.1 

Q1/2009 68.7 82.5 20.6 40.0 n.m. n.m. 44.2 

Risk/earnings ratio in % Q4/2010 26.2 n.m. 15.9 54.7 n.m. n.m. 44.3 

Q3/2010 32.7 n.m. 20.5 37.8 n.m. n.m. 34.5 



Q4/2009 30.8 n.m. 43.5 64.9 n.m. n.m. 57.8 

Q3/2009 36.8 n.m. 12.3 69.0 n.m. n.m. 50.8 

Q2/2009 43.4 n.m. 29.6 51.1 n.m. n.m. 46.1 

Q1/2009 30.3 n.m. 12.8 43.8 n.m. n.m. 33.4 



adjustments. 

2) Total IFRS capital for the subsidiaries allocated to the respective Division together with standardised capital for the rest of the respective Division. The difference compared to the consolidated 

equity of the Bank Austria Group is shown in the Corporate Center. Allocated average capital adjusted due to the sale of UniCredit CAIB AG in Q2 2010; previous year restated accordingly, 

difference allocated to Corporate Center. 



112

E – Risk report 

E.1 – Overall risk management including Basel 2 150 

E.2 – Market risk 152 

E.3 – Liquidity risk 159 

E.4 – Counterparty risk 160 

E.5 – Credit risk 161 

E.6 – Operational risk 165 

E.7 – Business risk 166 

E.8 – Financial investment risk and real estate risk 166 

E.9 – Legal risks 166 

E.10 – Report on key features of the internal control 

and risk management systems in relation 

to the financial reporting process 167 

E.11 – Information on the squeeze-out pursuant 

to the Austrian Federal Act on the Squeeze-out 

of Minority Shareholders (Gesellschafter- 

ausschlussgesetz) of the holders of bearer shares 

in UniCredit Bank Austria AG 169 

E.12 – Financial derivatives 169 



E – Risk report (CoNTINuED) 

E.1 – overall risk management including Basel 2 

UniCredit Bank Austria AG identifies, measures, monitors and manages all risks of the Bank Austria Group. In performing these tasks, Bank Austria 

works closely with the risk control and risk management units of UniCredit. In this context, UniCredit Bank Austria AG supports UniCredit’s ongoing 

projects which are aimed at establishing uniform group-wide risk controlling procedures. 

UniCredit Bank Austria AG divides the monitoring and controlling processes associated with risk management into the following categories: market risk, 

liquidity risk, counterparty risk, credit risk, operational risk, business risk, financial investment risk and real estate risk. 

The Management Board determines the risk policy and approves the principles of risk management, the establishment of limits for all relevant risks, 

and the risk control procedures. 

In performing these tasks, the Management Board is supported by specific committees and independent risk management units. All risk management 

activities of UniCredit Bank Austria AG are combined within a management function at Management Board level directed by the Chief Risk Officer 

(CRO); secondary lending decisions for corporate customers are made in the CIB Credit Operations, CEE Credit Operations and Market Risk departments, 

and for private customers and business customers in the Risk Management Family & SME Banking (+PB) department. The Special Credit Austria and 

CEE Credit Operations departments deal with problem loans. These organisational units are supported by the Strategic Risk Management & Control 

department. Credit risk control of the CEE business units is performed by the CEE Risk Control and CEE Credit Operations departments. The unit for 

active credit portfolio management (Credit Treasury) reports directly to the Chief Financial Officer (CFO). 

Cross-divisional control 

The Asset/Liability Committee (ALCO) is responsible for the management of balance-sheet structure positions, it controls liquidity risk, deals with 

cross-divisional risk management issues arising between sales units and overall bank management, and provides an overview of credit portfolio model 

results while also preparing reports on economic capital (Pillar II). Moreover, a committee which meets once a week was set up in 2008 to deal with 

the following liquidity-related topics: operational aspects of liquidity management including market monitoring; and compliance with the liquidity policy, 

with CEE banking subsidiaries also being covered in this context – Bank Austria acts as a regional liquidity centre of UniCredit Group. Control of market 

risk is ensured by the Market Risk Committee (MACO), which meets once a week. MACO deals with short-term business management issues relating 

to the presentation and discussion of the risk/earnings position of Markets & Investment Banking and with limit adjustments, product approvals and 

positioning decisions. In addition, the general framework and limits for banking subsidiaries are defined by MACO. Credit risk is assessed by the Credit 

Committee. The Operational Risk Committee (OpRiCo) meets on a quarterly basis to deal with operational risk issues. 

Counterparty risk arising from derivative transactions is managed by the Derivative Committee (DECO). DECO deals with classic credit risk issues and 

aspects of reputational risk in customer business. 

The Management Board of UniCredit Bank Austria AG sets risk limits for market risk activities of the entire Bank Austria Group at least once a year, in 

coordination with UniCredit Group. MACO, which holds a meeting every week, makes limit decisions at the operational level and analyses the risk and 

earnings positions of the bank’s Markets & Investment Banking units. ALCO performs analyses and makes decisions with regard to business activities 

closely connected with customer business (in particular, balance sheet structure, liquidity, and risk management issues arising between sales units and 

overall bank management). The decisions and results of these committees are reported directly to the bank’s full Management Board. Risk Management, 

which is separate from the business divisions up to Management Board level, is in charge of preparing analyses and monitoring compliance with 

limits. In 2010, the requirements which the Austrian supervisory authority specified in respect of the counterparty risk model when it approved the 

model were met. The relevant report on compliance with the requirements was sent to the Austrian Financial Market Authority (FMA) at the beginning 

of the fourth quarter of 2010; from UniCredit Bank Austria AG’s perspective, the approval process was thereby successfully completed. In addition to 

compliance with the requirements, further CEE countries were included in the model with a focus on risk management and not yet on regulatory 

approval. The bank took account of the growing importance of counterparty risk by creating a separate unit for this purpose within the Market Risk 

department at the beginning of 2010. 

The Bank Austria Group applies the principle of value-based management. 

Beyond compliance with the regulatory capital rules pursuant to Section 39 of the Austrian Banking Act, economic capital (Pillar II) is intended to reflect 

the bank’s specific risk profile in a comprehensive and more consistent way. These unexpected losses over a period of one year are calculated with a 

confidence level of 99.97%. 

Value-at-risk methodologies are used in the Bank Austria Group for calculating or planning economic capital for all specified types of risk (credit risk, 

market risk, operational risk, business risk, financial investment risk and real estate risk). The Bank Austria Group is included in the risk monitoring and 

risk management system of the entire UniCredit Group. This ensures overall risk management across the Group. 


114



Current status of the application of the internal ratings-based approach (IRB approach) 

to credit risk in the Bank Austria Group 

UniCredit Bank Austria AG has applied the internal ratings-based approach since March 2008, using its own estimates of loss given default and of 

conversion factors for the major part of its loan portfolio (advanced IRB approach). 

In the reporting period, the approval of the advanced IRB approach of UniCredit Bank Austria AG was extended to include the application of the 

Group-wide model for estimates of exposure at default (EAD) for the Group-wide segments covering countries, banks and multinational companies. 

The bank is planning to introduce various other Group-wide models in the next few years while also further refining and developing local 

models. 

Banca d’Italia (the Bank of Italy), the home supervisor of UniCredit Group, is responsible for all approvals at Group level, while local supervisory 

authorities are responsible for local topics in the legal entities and for local on-site reviews. Regulatory issues are being dealt with in close cooperation 

between home and host regulators (college of supervisors). 

Implementation of the advanced IRB approach has been established as a Group-wide programme. Therefore UniCredit is responsible for Groupwide 

decisions and guidelines as well as for the development of Group-wide models. For example, Group-wide homogeneous portfolios have been 

defined for which uniform rating models are used across the Group, such as those for countries, banks and multinational companies. 

Group standards have for the most part already been prepared and adopted by the UniCredit Group holding company in cooperation with the 

major IRB legal entities, and are used as an instrument for uniform Group-wide implementation, with a view to complying with local legal requirements 

– some of which differ from country to country – and safeguarding Group interests. These Group standards will continue to be gradually 

extended and complemented. 

The Group standards continue to be integrated step by step in the processes and organisational set-up of all business areas and Group units, with 

account being taken of local features and legal requirements in ensuring Basel 2 compliance. 

Austrian subsidiaries 

All Austrian subsidiaries of UniCredit Bank Austria AG started to use the standardised approach in 2008. From a current perspective, for reasons 

of materiality, it is not planned to switch to one of the IRB approaches. 

CEE subsidiaries 

The CEE subsidiaries have used the standardised approach to credit risk since the beginning of 2008. Based on a detailed roll-out plan, there are 

plans to switch to the advanced IRB approach at most of the CEE banking subsidiaries in line with the Group’s decision to use the advanced IRB 

approach. According to the detailed roll-out plan communicated to the supervisory authorities involved, the switch to the A-IRB approach will take 

place at the relevant CEE subsidiaries step by step. All subsidiaries will start with the Foundation IRB approach (F-IRB). 

In the course of the cross-border approval process, supervisory IRB assessments took place in an initial group of CEE subsidiaries in 2010. 

For the CEE subsidiaries UniCredit Bulbank AD and UniCredit Bank Czech Republic, a.s., the application of the F-IRB approach was approved as 

at 1 January 2011; further approvals for the application of the F-IRB approach at CEE subsidiaries are expected for 2011. 

Ukrsotsbank successfully completed the implementation of the standardised approach in the observation period. 

Current status of the application of the advanced measurement approach (AMA) 

for operational risk in the Bank Austria Group 

UniCredit Bank Austria AG has used the AMA since the beginning of 2008. 


Schoellerbank has applied the AMA in the area of operational risk since 2009. 


In the reporting period, approval for the use of the AMA in the area of operational risk was received by the banking subsidiaries in Romania and 

Bulgaria. Approval for the use of the AMA also exists for the banking subsidiaries in the Czech Republic, Slovakia, Hungary, Slovenia and Croatia. 

Further approvals are planned to be obtained in the course of 2011. 


115



Implementation of disclosure requirements pursuant to Sections 26 and 26a of the Austrian Banking Act 

(regular disclosure of information on the organisational structure, risk management and risk capital position pursuant to 

Sections 2 to 15 of the Austrian Disclosure Regulation) 

Within UniCredit Group, comprehensive disclosure (under the Pillar 3 disclosure requirements) is carried out by the parent company UniCredit on its website, 

based on the consolidated financial position in its function as EEA parent bank of Bank Austria. Bank Austria is a significant subsidiary pursuant to 

Section 26 (4) of the Austrian Banking Act and therefore discloses its supervisory capital structure (Section 4 of the Austrian Disclosure Regulation) and 

its capital adequacy requirement (Section 5 of the Austrian Disclosure Regulation); furthermore, the bank discloses information regarding the use of 

own estimates for volatility adjustments (comprehensive method) for credit risk mitigation techniques to take account of financial collateral pursuant to 

Section 17 of the Austrian Disclosure Regulation and in accordance with the approval by the Austrian Financial Market Authority (FMA). 

The disclosure by Bank Austria is available at its website www.bankaustria.at/Investor Relations/Basel II Disclosure Pillar 3. 

Current status of Basel 3 implementation in the Bank Austria Group 

Market risk in the trading book: 

The EU rules in the Capital Requirements Directive (CRD III) – which have been adapted in respect of their first-time application, postponing it to the 

end of 2011 – impose significantly stricter capital requirements on European banks. The main changes relating to the trading book are the new 

concepts of stressed VaR, incremental risk charge and the new requirements concerning structured securitisations (the latter are not applicable in 

UniCredit Bank Austria for lack of relevant holdings in the trading book). In the past year Bank Austria made extensive preparations in cooperation with 

the UniCredit holding company with a view to meeting the new capital requirements. Stressed VaR is supported by IMOD, the new market risk model, 

and is already calculated on a regular basis (the time window currently used for this purpose includes the Lehman crisis). The incremental risk charge 

to cover default risk and rating migration risk has also been calculated several times. The relevant results have been presented to the bank’s management 

via MACO. 

Counterparty risk: 

Changes will also take place in the area of counterparty credit risk; from a current perspective, these changes will need to be implemented by the end 

of 2012. Key changes include the calculation of a stress counterparty exposure, comparable to the stressed VaR in market risk. Other new features are 

the capital backing for market risk in respect of credit valuation adjustments and stricter standards for collateral management and margining. The 

treatment of central counterparties, which act as clearing centres, is also regulated in the Basel Committee proposals. 

Liquidity: 

Basel 3 sets liquidity standards under stressed conditions in the short-term maturity range (liquidity coverage ratio = 100%) and in the structural sector 

(net stable funding ratio = 1). Although compliance with these rules will not be mandatory before 2015 and 2018, respectively, Bank Austria will 

make the necessary extensions to the liquidity monitoring system in the course of 2011 and integrate the new regulatory standards in the current 

management information process. 

E.2 – Market risk 

Market risk management encompasses all activities in connection with our Markets & Investment Banking operations and management of the balance 

sheet structure in Vienna and at UniCredit Bank Austria’s subsidiaries. Risk positions are aggregated at least daily, analysed by the independent risk 

management unit and compared with the risk limits set by the Management Board and the committees (including MACO) designated by the Management 

Board. At Bank Austria, market risk management includes ongoing reporting on the risk position, limit utilisation, and the daily presentation of 

results of all positions associated with market risk. As part of the bundling of investment banking activities of UniCredit’s CIB Division (Corporate & 

Investment Banking), UniCredit CAIB AG was sold to UniCredit Bank AG (the former Bayerische Hypo- und Vereinsbank AG), Germany, in 2010. The sale 

was preceded by the carve-out of CAIB from UniCredit Bank Austria, a process whereby trading activities in UniCredit Bank Austria were significantly 

reduced. Most of the positions remaining in UniCredit Bank Austria are attributable to the banking book. Market risk of the banking book is an important 

factor also in other Divisions (the CEE banking subsidiaries, in particular). UniCredit Bank Austria uses uniform risk management procedures for 

all market risk positions throughout the Group. These procedures provide aggregate data and make available the major risk parameters for the various 

trading operations once a day. Besides Value at Risk (VaR), other factors of equal importance are stress-oriented sensitivity and position limits. 

Additional elements of the limit system are loss-warning and stress-warning levels. 

In August 2010, UniCredit Bank Austria applied to the Austrian supervisory authority to replace the risk model (“NoRISK”) developed by the bank itself, 

which has been used for many years, with the new IMOD model used within the entire UniCredit Group. This switch constitutes a significant change of 

model in accordance with Section 21e of the Austrian Banking Act. Regulatory approval by the college of supervisors (Italy, Germany, Austria) is expected 

for the first quarter of 2011. The new model is based on historical simulation with a 500-day market data time window for scenario generation. 

It is currently used on a uniform basis by many UniCredit Group subsidiaries. The model is applied by Market Risk within Bank Austria and is being 

further developed in cooperation with the UniCredit holding company. Further development includes reviewing the model as part of back-testing procedures, 

integrating new products, implementing requirements specified by the Management Board and the Market Risk Committee, and adjusting the 

model to general market developments. For this purpose Bank Austria has set up a Model Maintenance Meeting, in which representatives of Market 


116



Risk units in the holding company and at subsidiaries work together. In 2010, parallel operation for VaR limiting was gradually reduced in favour of the 

new model. Moreover, the bank continued to make preparations for taking account of the new CRD III rules for the trading book which will have to be 

applied from December 2011 onwards. This applies in particular to the stressed VaR and IRC (incremental risk charge), while CRM (comprehensive risk 

measure) is not applicable to UniCredit Bank Austria for lack of credit-tranche holdings in the trading book. 

A product introduction process has been established in which risk managers play a decisive role in approving products. The internal risk model, approved 

by the supervisory authorities since 1998, is used for computing capital requirements; in contrast to the internal risk management process, the 

computation of capital requirements takes into account the statutory parameters (confidence interval of 99%, 10-day holding period) and additionally 

the multiplier determined as part of the model review is applied. Once approval has been obtained for the model change, the new UniCredit market risk 

model will also cover the computation of capital requirements in 2011. The model will then be used for UniCredit Bank Austria AG, as until now, and 

for the Bank Austria Group. 

The risk model covers all major risk categories: interest rate risk and equity risk (both general and specific), currency risk and commodity position risk. 

The structure of the standard risk report presented at MACO’s weekly meetings covers (stress) sensitivities in addition to VaR figures. Regular and specific 

stress scenario calculations complement the information provided to MACO/ALCO and the Management Board. Macro scenarios show the potential 

adverse impacts of global developments with specific effects on the respective risk categories, while stress sensitivities of individual risk factors or 

groups of risk factors show the potential adverse impacts on partial market segments. Stress scenarios are based on assumptions of extreme movements 

in individual market risk parameters. The bank analyses the effect of such fluctuations and a liquidity disruption in specific products and risk 

factors on the bank’s results. These assumptions of extreme movements are dependent on currency, region, liquidity and the credit rating, and are set 

by Market Risk on a discretionary basis after consultation with experts in other areas of the bank (e.g. research, trading, Market Risk UniCredit holding 

company). The Greece Default Scenario is an example of a scenario which is also used by the UniCredit holding company on a Group-wide basis. 

In addition to the risk model results, income data from market risk activities are also determined and communicated on a daily basis. These data are 

presented over time and compared with current budget figures. Reporting covers the components reflected in IFRS-based profit and the marking to 

market of all investment positions regardless of their recognition in the IFRS-based financial statements (“total return”). The results are available to 

UniCredit Bank Austria’s trading and risk management units via the access-protected Intranet application “ERCONIS”, broken down by portfolio, income 

statement item and currency. The regulatory approach to prudent valuation in the trading book is implemented primarily by Market Risk and further developed 

on an ongoing basis through cooperation within UniCredit Group in the same way as “independent price verification”, which establishes valuation 

processes and verification procedures on a harmonised Group-wide basis. 

In Vienna, Bank Austria uses the “MARCONIS” system developed by the bank itself to completely and systematically review the market conformity of 

its trading transactions. The scope of application of this tool has been further extended to include almost all CEE banking subsidiaries with market 

risk activities. From this year onwards, the tool is also used to address the topic of price transparency (determining minimum margins and maximum 

hedging costs for Corporate Treasury Sales). 

Value-at-risk movements (1 day, confidence interval of 99%) in 2010 reflected the European sovereign crisis, which from the second quarter onwards 

prompted a significant increase in credit spread volatility of the countries concerned. This market development and the expansion of bond positions in 

the bank’s ALM portfolio led to an increase in value at risk compared with the second half of 2009. The additional holdings of bonds are to be seen in 

connection with liquidity management of the Bank Austria Group, including intra-group funding of the UniCredit holding company. 

VaR of the Bank Austria Group in 2008–2010 calculated on the basis of the old market risk model (€ m) 

–180 

–160 

–140 

–120 

–100 

–80 

–60 

–40 

–20 

0 

avg. 65.1 

avg. 21.2 

Jan. 08 

Feb. 08 

March 08 

April 08 

May 08 

June 08 

July 08 

Aug. 08 

Sept. 08 

Oct. 08 

Nov. 08 

Dec. 08 

Jan. 09 

Feb. 09 

March 09 

April 09 

May 09 

June 09 

July 09 

Aug. 09 

Sept. 09 

Oct. 09 

Nov. 09 

Dec. 09 

Jan. 10 

Feb. 10 

March 10 

April 10 

May 10 

June 10 

July 10 

Aug. 10 

Sept. 10 

Oct. 10 

Nov. 10 

Dec. 10 

Total Return VaR VaR in the trading book 

avg. 65.3 

avg. 20.4 

avg. 54.7 

avg. 10.3 

Average VaR 2010 declined from the 2009 level (the red line shows market risk calculated on the basis of the existing NoRISK model; the grey line 

represents the portion attributable to the IFRS trading book. 


117



The chart below shows the VaR in 2010 calculated on the basis of the new UniCredit market risk model. Although both models cover a market data 

window of 500 days, it can be seen that the existing NoRISK model “forgets” the stress volatility of the Lehman Brothers crisis relatively quickly 

(a volatility declustering algorithm adjusts the model very quickly to current market volatility), whereas in the new model the Lehman Brothers crisis has 

a sustained influence on VaR levels until the Lehman Brothers crisis scenarios leave the time window in September 2010 within a few weeks and VaR 

levels in both models converge towards the year-end. 

VaR of the Bank Austria Group in 2010 calculated on the basis of the new UniCredit Group model (€ m) 

–220 

–200 

–180 

–160 

–140 

–120 

–100 

–80 

–60 

–40 

–20 

0 

IMOD-VaR 

Jan. 10 Feb. 10 March 10 April 10 May 10 June 10 July 10 Aug. 10 Sept. 10 Oct. 10 Nov. 10 Dec. 10 

IMOD-VaR_Trading 

IMOD-VaR limit scope 

At the end of 2010, market risk of the Bank Austria Group (top line) was about € 100 m (confidence interval of 99%; 1-day holding period). The further 

significant reduction in December is due to a harmonisation of the treatment of own credit spreads (UniCredit bonds) in the banking book. While only 

UniCredit Bank Austria bonds were previously presented without a credit spread fluctuation, this now also applies to UniCredit bonds. Market risk managed 

by VaR limits (represented by the red broken line in the middle) was slightly below € 90 m at the end of 2010: loans to the public sector in the 

form of private placements, equity holdings in the banking book, hedge funds and private equity are excluded here because these are not managed via 

VaR limits. This compares with a VaR of the trading book of well below € 20 m at the end of 2010. 

Both models show that credit spread risk and interest rate risk account for most of the total risk of the Bank Austria Group. Other risk categories are 

much less significant by comparison. Since January 2007, commodity risk has only been assumed in the Bank Austria Group on a back-to-back basis. 

VaR of the Bank Austria Group by risk category (€ m) 

Old iNterNal mOdel miNimum aVerage maximum year-eNd 

Interest rate risk 19.7 31.2 61.6 40.9 

Credit spread 21.0 45.9 80.1 69.8 

Exchange rate risk 0.5 1.1 3.2 1.1 

Equity risk/trading 0.4 0.9 3.0 0.4 

Hedge funds 1.7 3.1 5.7 1.7 

Equity risk/investment 5.3 7.2 11.5 5.8 

Vega risk 0.1 0.2 0.8 0.1 

tOtal 2010 31.8 54.7 87.5 72.4 

total 2009 32.3 65.3 110.4 45.1 

NeW mOdel (imOd) miNimum aVerage maximum year-eNd 

Total 2010 94.9 144 214 103 

VaR limit relevant scope 83.2 117 183 85.3 

Trading positions only 12.4 25.9 38.8 15.8 

In addition to VaR, risk positions of the Bank Austria Group are limited through sensitivity-oriented limits. As part of daily risk reporting, detailed “Trader 

Reports” are prepared for a large number of portfolios, with updated and historical information made available to all risk-takers and the responsible 

senior management via the Intranet. These reports are now complemented by the new UniCredit market risk platform, which enables trading and other 

units to perform analyses down to individual position level. 


118



As at 31 December 2010, the entire interest rate position of the Bank Austria Group (trading and investment) for major currencies was composed as 

follows (the table below shows basis point values over € 500): 

Basis point values of the Bank Austria Group (in €) 

bpVs iN € 

up tO 

1 mONth 

1 mONth tO 

3 mONths 

as at 31 december 2010 aNNual aVerage, miNimum/maximum 

3 mONths 

tO 1 year 

1 year tO 

5 years 

OVer 

5 years tOtal maximum miNimum 


absOlute 

aVerage 

Europe EUR 45,788 –141,928 –166,044 – 90,379 –61,605 –414,169 –67,193 –601,094 354,281 

CHF –6,988 63,366 –4,550 –21,622 –31,673 –1,466 66,752 –182,227 47,278 

GBP 431 –2,363 2,072 –443 –1,112 –1,415 17,412 –27,934 8,625 

New EU countries BGN 1,051 1,767 7,301 –21,472 – 9,618 –20,970 –5,824 –23,205 12,626 

CZK –1,082 –24,757 –21,710 44,928 14,192 11,571 58,970 –45,160 19,535 

HUF –1,496 7,658 –13,655 –5,273 –4,082 –16,849 85,024 –26,724 25,220 

PLN – 945 1,285 –447 –1,257 – –1,363 13,473 –72,595 13,322 

RON –1,702 –4,581 –18,983 –22,851 –20,918 –69,035 –28,208 –71,450 52,536 

Central and Eastern AZN 14 –14 –62 –165 –4 –231 37 –520 283 

Europe incl. Turkey BAM –44 –257 –1,030 –434 581 –1,184 3,910 –1,184 1,996 

EEK – – – – – – 1,949 5 829 

HRK 5,621 –1,842 –4,037 –24,844 –28,883 –53,985 –24,425 –144,506 88,247 

KZT 1,069 –1,620 2,374 98,293 –87,586 12,530 13,644 –126,396 44,404 

LVL –109 –277 –2,923 –1,124 – –4,433 –1,820 –7,366 3,539 

RSD –249 –1,286 –6,009 –3,979 –4 –11,526 6,768 –16,702 5,232 

RUB 3,831 –581 –48,559 –56,571 –100,821 –202,701 –122,145 –338,449 242,682 

TRY –3,192 –22,878 –22,648 79,612 –149,915 –119,022 142,469 –329,827 51,022 

UAH 802 –1,022 –11,903 –17,383 –28,117 –57,623 –37,216 –128,301 69,018 

Overseas – highly AUD 101 22 558 – 93 – 587 1,952 –2,165 947 

developed countries CAD 405 –1,562 –2,235 2 – –3,390 –205 –10,525 4,459 

JPY –59 4,719 –629 –1,307 –1,078 1,646 33,868 –11,034 8,510 

NZD 1,230 –1,786 –4,778 – – –5,335 –641 –10,793 5,425 

USD 8,518 –16,935 –52,378 –4,139 –1,685,935 –1,750,869 –1,276,417 –2,109,511 1,688,038 

Other countries AED –13 – – – – –13 210 –595 103 

ILS – – – – – – 15,412 –6,139 7,656 

XAU 699 176 1 – – 876 10,849 229 2,484 

ZAR –15 – 33 – – 18 13,757 –10,905 2,105 

BPV



Credit spread basis-point values (CPVs) of the Bank Austria Group (€) 

aNNual aVerage, miNimum/maximum 

cpVs iN € sectOr maximum miNimum absOlute aVerage 

Main sectors Financial services –452,754 –2,094,264 1,119,446 

ABSs and MBSs –401,194 –749,087 535,349 

Corporates Industrial –2,074 –58,869 13,376 

Automobiles – –17,979 772 

Consumer goods –12,941 –55,944 29,137 

Pharmaceutical –59 –31,711 1,367 

Telecommunications –2,107 –40,843 12,291 

Energy & utilities –21,196 –69,588 33,184 

Other (e.g. indices) –7,095 –444,407 93,721 

Treasury-near Treasuries – EU & European industrial nations –1,509,450 –1,960,220 1,661,765 

Treasuries – new EU countries –730,720 – 956,245 875,070 

Treasuries – CEE & emerging markets –1,177,004 –2,266,706 1,677,671 

Treasuries – developed countries overseas 4,954 –38,818 1,913 

Treasuries – agencies & supranationals –7,410 –49,772 27,322 

Municipals & German Jumbo –210,060 –258,827 243,277 

tOtal –5,559,079 –7,418,361 6,325,113 

Measured by the total basis-point value, the Bank Austria Group’s credit spread position in 2010 ranged between – € 5.6 m and – € 7.4 m. On an 

annual average, the long position increased by about 0.7 m CPVs compared with the previous year 1). The increase was due to intra-group funding 

activities and to a higher sovereign position in CEE (mainly Turkey). Overall, Treasury-near instruments continue to account for the largest part of the 

credit spread positions while the current exposure to financials 2) and corporates is very low by comparison. The positions of asset-backed securities 

(ABSs) and mortgage-backed securities (MBSs) were further reduced in 2010, primarily through redemptions. The average CPV also continued to 

decline in this sector. Overall, the ABS book developed very favourably in 2010 in terms of total return in the year. Measured by redemption behaviour, 

the entire ABS/MBS book is to be classified as performing in 2010. 

The sale of CAIB resulted in a further reduction in the credit spread-sensitive trading portfolio in 2010. Bank Austria’s CDS book was sold together 

with CAIB, except for minor holdings and holdings used as hedges for the bank’s own credit spread in trading issues. The bond holdings remaining in 

Bank Austria are almost entirely attributable to the banking book. Trading bonds held by CEE subsidiaries are not significant at most entities; in the few 

subsidiaries where there are significant holdings (e.g. Russia), these are further reduced in favour of holdings in the banking book. 

Bank Austria further reduced its investments in hedge funds in 2010. The reduction will continue in 2011, so that hedge fund investments proper, 

which currently represent a low three-digit million euro amount, will decline to a two-digit million euro amount in the first six months of 2011. This 

means that the total investment in hedge funds is now low compared with the overall size of the Bank Austria Group. 

Capital requirements for market risk 

Bank Austria’s risk model is subjected to daily backtesting in accordance with regulatory requirements. As the number of backtesting excesses 

(negative change in value larger than model result) has been within the range permitted by law ever since the model was introduced, the multiplier 

need not be adjusted. In 2010, there was no backtesting excess (either in the old or in the new internal model). The backtesting results thus confirm 

the accuracy and reliability of both models. 

1) As in the previous year, bonds which are subject to a loan approval process are not included in this total (just under –1.4 m CPVs). Moreover, in 2010 we excluded Credit Treasury positions (at 

year-end, close to –200 thsd CPVs) because these positions are also managed via credit processes. On the other hand, in line with a Group standard, reclassified ABSs were again included (about 

0.5 m CPVs). 

2) Spread positions on UniCredit in the banking book are included in the presentation until 21 December and are now, as in the case of the Bank Austria banking book positions, no longer included 

(about –1.4 m CPVs intra-group funding). 


120



The chart below shows the backtesting results for the regulatory trading book, on the basis of clean hypothetical backtesting. It shows the results 

calculated with the old and the new model. 

Backtesting results for the regulatory trading book, 2010 (€ m) 

50 

40 

30 

20 

10 

0 

–10 

–20 

–30 

–40 

–50 

Jan. 10 Feb. 10 March 10 April 10 May 10 June 10 July 10 Aug. 10 Sept. 10 Oct. 10 Nov. 10 Dec. 10 

VaR-mirrored 

VaR 

BT 

IMOD-VaR 

IMOD-mirrored 

The relevant time window for scenario generation of VaR measurement is equal in both models, but in 2010 the new model very clearly shows the 

disappearance of the Lehman Brothers scenarios from the fourth quarter of 2008, while the application of a volatility declustering algorithm in the old 

model more quickly reflects changes in the volatility regime, showing significantly lower VaR levels at this point in time (“shorter memory”). 

Market risk management in CEE 

At Bank Austria, market risk management covers the activities in Vienna and the positions at the subsidiaries, especially in Central and Eastern Europe. 

These subsidiaries have local risk management units with a reporting line to Risk Management in UniCredit Bank Austria AG. Uniform processes, 

methods, rules and limit systems ensure consistent Group-wide risk management adjusted to local market conditions. 

The “IMOD” risk model has been implemented locally at major units (Czech Republic, Slovakia, Hungary, Croatia, Bulgaria, Russia, Turkey), and a daily 

risk report is made available to the other units. The new value-at-risk model of UniCredit Group (“IMOD”) was activated for daily risk management also 

at the CEE banks at the end of 2010. There is a multi-stage plan for filing applications for the use of internal models to calculate capital requirements 

for trading risks; the banking subsidiaries in the Czech Republic, Slovakia and Hungary will be the first to undergo the approval process for use of their 

models with the local regulatory authorities in the course of 2011. 

Analyses of position structure and balance sheet structure are available to all banks in the Group via “ALMRisk”, a Group-wide web tool. Liquidity 

monitoring is also based on this instrument. The web application “ERCONIS” records the daily business results of treasury activities in CEE. In line with 

a total-return approach, measurements of the performance of subsidiaries include income generated by the subsidiaries and the valuation results of 

the banking book. 

To avoid risk concentrations in the market risk position, especially in tight market conditions, Bank Austria has implemented at its banking subsidiaries 

Value-at-Risk limits and position limits for exchange rate risk, interest rate risk and equity risk, which are monitored daily. The monitoring of income 

trends at banking subsidiaries by means of stop-loss limits provides an early indication of any accumulation of position losses. 

The timely and continuous analysis of market risk and income is the basis for integrated risk-return management of treasury units at banking 

subsidiaries. 


121



Value at Risk of banks in CEE (€ m) 

year-eNd 2010 figures 

aVerage Var 2010 Var miNimum fx Var ir Var spread Var 

Bulgaria –2.4 –2.2 –0.1 –0.6 –1.9 

Baltics –0.1 0.0 0.0 0.0 0.0 

Czech Republic –7.6 –6.4 –0.1 –0.4 –5.8 

Croatia (incl. Bosnia) –3.2 –2.5 –0.7 –1.4 –1.8 

Hungary –2.5 –2.2 –0.1 –0.2 –1.7 

Kazakhstan –4.1 –1.9 –0.1 –1.9 –0.1 

Romania –2.3 –2.4 0.0 –1.2 –2.6 

Russia –5.1 –3.1 –0.9 –2.8 –0.7 

Serbia –0.3 –0.5 –0.1 –0.5 0.0 

Slovakia –0.8 –0.8 0.0 –0.1 –0.7 

Slovenia –2.6 –2.6 0.0 –0.1 –1.2 

Turkey –20.5 –29.1 –0.1 –23.5 –31.9 

Ukraine –16.4 –16.2 –0.3 –16.6 –0.4 

cee –33.7 –40.3 –1.1 –43.1 –37.3 

After the steady decline seen in 2009 in value-at-risk exposures of the CEE banks from all-time highs to levels around € 35 m (with a VaR limit of 

€ 85 m for CEE), the sovereign crises in 2010 led to a renewed increase in the credit-spread risk component, with VaR levels of just under € 50 m. 

Risk positions rose slightly as business activity picked up and some countries continued to invest in local sovereign debt instruments. At the end of 

2010, value at risk of all CEE banks was about € 40 m, with open interest rate positions in the banking books and credit-spread positions of securities 

still accounting for the largest risk contributions. CEE accounted for about 70% of the Bank Austria Group’s market risk. 

Management of balance sheet structure 

The matched funds transfer pricing system applied throughout the Group and the principle of causation applied in attributing credit risk, market risk and 

liquidity risk enable the bank to determine contribution margins from customer transactions in the bank’s business divisions. The risk committees of the 

bank ensure that the bank’s overall liquidity and interest rate gap structure is optimised, with the results from interest maturity transformation being reflected 

in the Corporates & Investment Banking Division. Factors taken into account in this context include the costs of compensation for assuming interest 

rate risk, liquidity costs and country risk costs associated with foreign currency financing at CEE banking subsidiaries. These funding costs burden 

lending business in CEE, but declined from peak levels as markets gradually eased; risk costs in the CEE countries rose temporarily as the debt crisis 

flared up. 

Products for which the material interest-rate and capital maturity is not defined, such as variable-rate sight and savings deposits, are modelled in respect 

of investment period and interest rate sensitivity by means of analyses of historical time series, and taken into account in the bank’s overall risk 

position. Interest rate sensitivities are determined and taken into account in hedging activities, which results in a positive contribution to profits from 

customer business. 

To assess its balance-sheet and profit structure, the bank uses the Value-at-Risk approach, complemented by a scenario analysis covering subsequent 

quarters and years. The bank thus also follows the Basel 2 recommendation concerning the simulation of future net interest income under different 

interest rate scenarios (“earnings perspective”). 

In the earnings perspective analysis, simulations of the future development of net interest income and of the market value of the banking book are 

generally based on assumptions regarding volume and margin developments under different interest rate scenarios. Parallel interest rate shocks as well 

as inversions and low-interest-rate scenarios can be analysed to identify their possible impact on the bank’s net interest income and the bank’s value. 

The analyses performed at year-end 2010 show that a further interest rate decline in all currencies, from an already low level, would have the strongest 

impact on the bank’s net interest income. This is a typical feature of commercial banks, given the interest rate remanence on the liabilities side of 

banks’ balance sheets (sight deposits, equity). But the emergence of inflationary trends suggests that this scenario is highly unrealistic. 

The Basel 2 rules require the measurement at Group level of “interest rate risk in the banking book” in relation to the bank’s capital by comparing a 

change in the market value of the banking book after a 2% interest rate shock with the bank’s net capital resources. In the event that such an interest 

rate shock absorbs more than 20% of a bank’s net capital resources, the bank supervisory authority could require the bank to take measures to reduce 

risk. 

A 2% interest rate shock would absorb about 5% of the Group’s net capital resources; this calculation also includes the current investment of equity 

capital as an open risk position. This means that the figure for Bank Austria is far below the outlier level of 20%. 


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E.3 – Liquidity risk 

Qualitative information 

General information, processes and management model 

In line with Group standards, the Bank Austria Group deals with liquidity risk as a central risk in banking business by introducing and monitoring shortterm 

and medium-term liquidity requirements. In this context the liquidity situation for the next few days and months and also for longer periods is 

analysed against a standard scenario and stress scenarios. Methods and procedures of liquidity analysis, analyses of the degree of liquidity of customer 

positions, management responsibilities and reporting lines in this area have been laid down in the liquidity policy, which is also applicable at 

Bank Austria’s CEE units and includes a contingency plan in the event of a liquidity crisis. 

Liquidity management in UniCredit Bank Austria AG is an integral part of UniCredit Group liquidity management. In line with the Group-wide distribution 

of tasks, Bank Austria ensures the consolidation of liquidity flows and the funding for subsidiaries in Austria and CEE. The flow of funds is thereby 

optimised and external funding is reduced to the necessary extent. Liquidity transfers within the Group are based on market prices. 

Liquidity management methods and control 

In medium-term and long-term liquidity management, liquidity inflows over 1 year and over 5 years must cover a minimum of 90% of expected 

liquidity outflows during these periods. This limit must be observed at Group level and for each banking subsidiary. The limit is to be observed also at 

individual currency level in order to avoid cross-currency funding arrangements as far as possible. At Bank Austria Group level, the liquidity ratio as at 

year-end 2010 was 0.95 for >1 year and 0.97 for >5 years. This means that in effect, long-term assets are fully funded at Group level. 

For the purpose of short-term liquidity management, volume limits have been implemented in the Bank Austria Group and in all banks for maturities up 

to three months, which limit all Treasury transactions and the securities portfolio of the respective bank. Volume limits are also established for open 

maturities in various currencies to keep down the risk of a need for follow-up funding in the event that foreign currency markets dry up. 

These limits were essentially observed. As credit demand in Central and Eastern Europe is gradually growing on the back of the economic recovery in 

the region, funding in CEE provided by the parent company is rising again after a crisis-induced decline. 

Liquidity stress test 

Bank Austria performs liquidity stress tests for the Group and for individual banks on a regular basis, using a standardised Group-wide instrument and 

standardised Group-wide scenarios. These scenarios describe the effects of market-driven or name-driven crisis signals on liquidity inflows and outflows, 

with assumptions also being made about the behaviour of non-banks. 

The liquidity outflows expected to occur in stress situations are compared with available collateral (essentially, securities and credit instruments eligible 

as collateral at the central bank) to examine the banks’ risk-taking capability in the short term up to two months. 

As Bank Austria holds large amounts of liquid collateral, liquidity outflows under the tested stress scenarios are not nearly equal to the available pool of 

collateral. In an extreme scenario (combining an extreme market crisis and a name-driven crisis) introduced in 2010, UniCredit Bank Austria AG meets 

the CEBS minimum expectation of a liquidity buffer. 

Quantitative information 

The breakdown by contractual residual maturity is shown in section F.1. 

Funding plan and liquidity costs in pricing 

Funding the CEE subsidiaries is one of the main functions of the Group’s liquidity management. Short and long-term funds are made available to the 

banking subsidiaries for their business on the basis of a funding plan. Part of these country risks is covered by MIGA or SACE guarantees (MIGA: Multilateral 

Investment Guarantee Agency, a member of the World Bank Group; SACE: a leading Italian credit insurer). The funding requirements of subsidiaries 

rose again with the stronger economic momentum in the CEE countries. 

Liquidity costs are part of the reference rate system. The applicable alternative costs are debited or, on the basis of an opportunity cost approach, 

credited to the various products on the assets side and the liabilities side which have an effect on liquidity. In the current controlling process this 

ensures the proper pricing of our business. 


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E.4 – Counterparty risk 

Bank Austria has made further efforts to refine the risk management model for derivatives, securities lending and repurchase agreements. The model 

was refined especially with regard to validation and backtesting. For the purposes of portfolio management and risk limitation in the derivatives and 

security financing business with banks and customers, Bank Austria uses an internal counterparty risk model (IMM) based on a Monte Carlo path 

simulation to estimate the potential future exposure at portfolio level for each counterparty. In 2010, the requirements which the Austrian supervisory 

authority specified in respect of the counterparty risk model when it approved the model were met. The relevant report on compliance with the requirements 

was sent to the Austrian Financial Market Authority (FMA) at the beginning of the fourth quarter of 2010; from Bank Austria’s perspective, the 

approval process was thereby successfully completed. In addition to compliance with the requirements, further CEE countries were included in the 

model with a focus on risk management, not yet on regulatory approval. The bank took account of the growing importance of counterparty risk by 

creating a separate unit for this purpose within Market Risk at the beginning of 2010. 

The calculations are based on market volatility, correlations between specific risk factors, future cash flows and stress considerations. Netting agreements 

and collateral agreements are also taken into account for simulation purposes. 

The simulation calculations are performed for all major types of transactions, e.g. forward foreign exchange transactions, currency options, interest 

rate instruments, equity/bond-related instruments, credit derivatives and commodity derivatives. Other transactions are taken into account with an 

add-on depending on factors such as maturity. The bank applies a confidence interval of 97.5%. 

At the end of 2010, derivative transactions, repurchase agreements and securities lending transactions resulted in the following exposures: 

Exposures (€ bn) 

Austria 2.68 

CEE 1.96 

tOtal 4.64 

In addition to further refinement of the model (in 2010 especially through CVA – Credit Valuation Adjustment), regular separate reporting on counterparty 

risk was introduced with a view to informing Bank Austria’s Market Risk Committee and Derivative Committee (DECO) of current exposure trends 

and providing additional information relevant to risk management. An example is reporting on stress test calculations. Moreover, backtesting is performed 

at regular intervals, at the level of individual counterparties and at overall bank level, in order to check the quality of the model on an ongoing 

basis. 

Line utilisation for derivatives and security financing business of customers is available online in WSS (“Wallstreet”), the central treasury system, on a 

largely group-wide basis. In addition to determining the potential future exposure, the path simulation also enables the bank to calculate the average 

exposure and the modified average exposure pursuant to Basel 2 (exposure at default), as well as the effective maturity of the exposure to each counterparty. 

This makes it possible to integrate counterparty risk in an internal model compliant with Basel 2. 

Bank Austria additionally limits the credit risk arising from its derivatives business, repurchase agreements and securities lending business through 

strict use of master agreements, the definition and ongoing monitoring of documentation standards by legal experts, and through collateral agreements 

and break clauses. Management takes proper account of default risk, especially because the relevance of this risk category has increased and on the 

basis of experience gained in the international financial market crisis, despite the good average credit rating of our business partners. 


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E.5 – Credit risk 

Breakdown of financial assets by portfolio and credit quality (carrying value) (€ m) 

pOrtfOliO/quality 

NONperfOrmiNg 

lOaNs 

dOubtful 

assets 

baNKiNg grOup Other cOmpaNies 

restructured 

expOsures past-due 

Other 

assets impaired Other tOtal 

Financial assets held for trading 10 – – – 4,286 – 8 4,304 

Available-for-sale financial assets 3 13 – 17 16,999 – 512 17,544 

Held-to-maturity financial instruments – – – – 4,446 – – 4,446 

Loans and receivables with banks 2 16 – – 19,703 – 29 19,749 

Loans and receivables with customers 2,378 3,587 276 197 123,608 – 47 130,093 

Financial assets at fair value through profit or loss – – – – 304 – – 304 

Financial instruments classified as held for sale – – – – – – – – 

Hedging instruments – – – – 2,449 – – 2,449 

tOtal 31 december 2010 2,393 3,616 276 214 171,794 – 595 178,888 

Breakdown of financial assets by portfolio and credit quality (gross and net values) (€ m) 

pOrtfOliO/quality 

grOss 

expOsure 

impaired assets perfOrmiNg 

specific 

WritedOWNs 

Net 

expOsure 

grOss 

expOsure 

pOrtfOliO 

adJustmeNts 

Net 

expOsure 

tOtal (Net 

expOsure) 

Financial assets held for trading 10 – 10 X X 4,294 4,304 

Available-for-sale financial assets 40 7 33 17,512 1 17,511 17,544 

Held-to-maturity financial instruments – – – 4,446 – 4,446 4,446 

Loans and receivables with banks 79 61 18 19,731 – 19,731 19,749 

Loans and receivables with customers 12,478 6,040 6,438 124,552 896 123,655 130,093 

Financial assets at fair value 

through profit or loss – – – X X 304 304 

Financial instruments classified 

as held for sale – – – – – – – 

Hedging instruments – – – X X 2,449 2,449 

tOtal 31 december 2010 12,607 6,108 6,499 166,241 897 172,389 178,888 

On-balance sheet and off-balance sheet exposure to banks: gross and net values (€ m) 

expOsure types/amOuNts grOss expOsure specific WritedOWNs pOrtfOliO adJustmeNts Net expOsure 

On-balance sheet exposure 

Non-performing loans 43 39 X 4 

Doubtful loans 25 10 X 16 

Restructured exposures 12 12 X – 

Past due – – X – 

Other assets 26,782 X 1 26,781 

total 26,863 61 1 26,801 

Off-balance sheet exposure 

Impaired 27 1 X 25 

Other 25,770 X – 25,770 

total 25,797 1 – 25,797 

tOtal 31 december 2010 52,660 62 1 52,598 


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On-balance sheet and off-balance sheet exposure to customers: gross and net values (€ m) 

expOsure types/amOuNts grOss expOsure specific WritedOWNs pOrtfOliO adJustmeNts Net expOsure 

On-balance sheet exposure 

Non-performing loans 6,357 3,978 X 2,379 

Doubtful loans 5,207 1,606 X 3,600 

Restructured exposures 710 434 X 276 

Past due 242 28 X 214 

Other assets 140,743 X 896 139,847 

total 153,259 6,047 896 146,316 

Off-balance sheet exposure 

banking group 

Impaired 548 149 X 400 

Other 42,574 X 55 42,519 

total 43,122 149 55 42,918 

tOtal 31 december 2010 196,381 6,195 952 189,234 

On-balance sheet exposure to customers: gross change in impaired exposures (€ m) 

sOurce/categOries 

chaNges iN 2010 

NON-perfOrmiNg 

lOaNs dOubtful assets 

restructured 

expOsures past-due expOsures 

Opening balance – gross exposure 4,471 3,811 933 184 

Sold but not derecognised – – – – 

increases 3,762 3,776 205 248 

Transfers from performing loans 1,884 3,006 181 128 

Transfers from other impaired exposure 1,511 393 24 7 

Other increases 367 377 – 113 

reductions –1,876 –2,380 –428 –190 

Transfers to performing loans –125 –293 –16 –38 

Derecognised items –630 –130 –9 – 

Recoveries –474 –454 –9 –1 

Sales proceeds –82 –18 – –2 

Transfers to other impaired exposure –327 –1,413 –173 –22 

Other reductions –237 –73 –221 –127 

closing balance – gross exposure 6,357 5,207 710 242 


On-balance sheet exposure to customers: changes in overall impairment (€ m) 

sOurce/categOries 

NON-perfOrmiNg 

lOaNs dOubtful assets 

restructured 

expOsures past-due expOsures 

total opening writedowns 3,120 1,260 462 41 


increases 2,719 1,633 155 13 

Writedowns 1,657 993 143 – 

Transfers from other impaired exposure 852 215 9 2 

Other increases 210 425 3 11 

reductions –1,861 –1,287 –183 –27 

Write-backs from assessments –159 –105 – – 

Write-backs from recoveries –472 –238 –9 –1 

Write-offs –630 –130 –9 – 

Transfers to other impaired exposure –183 –799 –88 –7 

Other reductions –416 –15 –76 –19 

final gross writedowns 3,978 1,606 434 28 



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Banking group – On-balance sheet and off-balance sheet credit exposure by external rating class (book values) (€ m) 

exterNal ratiNg classes 

balaNce at 31 dec. 2010 

class 1 class 2 class 3 class 4 class 5 class 6 

NO ratiNg tOtal 

On-balance sheet exposures 26,267 11,569 27,568 25,620 9,235 8,369 64,490 173,117 

derivative contracts 

Financial derivative contracts 2,561 13,667 491 331 95 266 8,711 26,121 

Credit derivatives contracts – 2 – – – – 1 3 

guarantees given 971 968 4,200 2,419 976 257 9,581 19,372 

Other commitments to disburse funds 284 933 1,824 1,006 311 162 14,908 19,429 

tOtal 30,083 27,139 34,083 29,376 10,617 9,053 97,691 238,042 

Banking group – On-balance sheet and off-balance sheet exposure by internal rating class (book values) (€ m) 

iNterNal ratiNg classes 

g h i J 


iNterNal ratiNg classes 

a b c d e f 

On-balance sheet exposures 26,224 10,660 11,720 15,298 21,600 9,421 


Financial derivative contracts 8,151 7,205 1,013 756 1,420 1,487 

Credit derivatives contracts – 2 – – – – 

guarantees given 1,203 987 2,063 2,793 2,325 1,148 

Other commitments to disburse funds 336 1,109 1,973 3,069 2,248 1,527 

tOtal 35,916 19,963 16,768 21,915 27,593 13,583 


impaired 

expOsures 

NO 

ratiNg tOtal 

On-balance sheet exposures 8,985 9,787 12,052 3,713 6,489 37,169 173,116 


Financial derivative contracts 292 302 336 23 173 4,964 26,121 

Credit derivatives contracts – – – – – 1 3 

guarantees given 1,147 861 1,380 226 132 5,106 19,372 

Other commitments to disburse funds 728 678 500 88 120 7,053 19,430 

tOtal 11,151 11,629 14,268 4,050 6,914 54,294 238,042 

Net writedowns of loans and provisions for guarantees and commitments in 2010 continued to reflect differences in the speed of recovery in the various 

segments. 

In the Corporates & Investment Banking segment, corporate restructuring activities were very successful, leading to significant releases of loan loss 

provisions especially in the first six months of 2010. At about € 170 m, net writedowns of loans and provisions for guarantees and commitments in 

this business segment were reduced to a level slightly exceeding one half of the previous year’s figure. Loans newly transferred to Special Credit units 

declined significantly as the year progressed, and this will also lead to a decrease in impaired loans with some time lag. 

The strong rise in unemployment in 2009 was expected to push up the provisioning charge in the sub-segments of Mass Market and Affluent customers 

with some delay. However, such an increase did not materialise: overall, net writedowns of loans and provisions for guarantees and commitments 

in the Family & SME Banking segment even declined noticeably, to about € 212 m. The provisioning charge decreased although an additional writedown 

was made on foreign currency loans in the fourth quarter as the value of the Swiss franc rose significantly; among other reasons, the additional 

writedown was made in anticipation of the amount outstanding under loans with final maturity in view of further appreciation of the Swiss franc. Quite 

generally, a large number of advisory talks were held with customers in this segment in several waves in order to evaluate the new situation and the 

credit risk arising for the bank from this type of loan on a timely basis. At any point in time, the risk-focused presentation (credit line in €, utilisation in 

currency) shows the amount of the credit line originally granted to the customer, the currency fluctuation allowed for when the loan was granted, and 

the amount currently outstanding. The Small Businesses sub-segment also made a substantial contribution to the strong improvement in the overall 

provisioning charge in the Family & SME Banking segment, with the provisioning charge in the Small Businesses sub-segment declining to less than 

one half of the previous year’s figure. 


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CEE 

In 2010, net writedowns of loans and provisions for guarantees and commitments in the CEE subsidiaries declined significantly, to about € 1,454 m, 

compared with the previous year (2009: € 1,718 m). 

While net writedowns of loans and provisions for guarantees and commitments in the first two quarters of 2010 were in line with the figures for the 

same periods of the previous year, the provisioning charge in the third and fourth quarters, at € 319 m and € 445 m, respectively, was substantially 

lower than in the same periods of the previous year (Q3 2009: € 509 m, Q4 2009: € 496 m). 

A regional analysis shows that Turkey and Kazakhstan, two of the major drivers of risk-related costs in the previous year, recorded significantly lower 

provisioning charges in 2010, amounting to € 65 m (2009: € 299 m) and € 425 m 3) (2009: € 499 m), respectively. Quite generally, this positive 

development was discernible in the entire CIS region, where net writedowns of loans and provisions for guarantees and commitments decreased by 

€ 216 m to € 719 m in 2010. 

Nevertheless, the repercussions of the crisis in this region should not be underestimated: in Kazakhstan, the real estate sector and the construction 

industry remained under pressure, and in Ukraine the difficult political climate was also a significant factor. 

Net writedowns of loans and provisions for guarantees and commitments in the Baltic countries rose considerably, from € 45 m 4) in the previous 

year to € 65 m 5) in 2010, reflecting the strained economic environment. In Romania, too, the provisioning charge increased strongly to € 115 m 6) 

(2009: € 61 m), mainly because the country is still impacted by the crisis and the government has taken austerity measures. 

Net writedowns of loans and provisions for guarantees and commitments in the region of South-East Europe were generally higher while remaining 

relatively stable in the Central European region. 

Mortgages are the main type of collateral used; other types of collateral accepted are guarantees and suretyships. 

Credit risk methods and instruments 

Very important factors in the credit approval process are a detailed assessment of risk associated with each loan exposure, and the customer’s credit 

rating in particular. Every lending decision is based on a thorough analysis of the loan exposure, including an evaluation of all relevant factors. Following 

the initial loan application, the bank’s loan exposures are reviewed at least once a year. If the borrower’s creditworthiness deteriorates substantially, 

shorter review intervals are obligatory. 

For internal credit assessment in Austria and by Bank Austria’s banking subsidiaries in CEE, the bank uses various rating and scoring models (for 

calculating the parameters PD, LGD and EAD on the basis of models specifically developed for these purposes) 7) for the customer/business segments 

to be assessed, in line with the various asset classes pursuant to Section 22b of the Austrian Banking Act, the Solvency Regulation and Directive 

2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions. 

There are country-specific or region-specific models (e.g. for corporate customers, private and business customers) and global models (e.g. for 

sovereigns, banks, multinational corporates). The assessment of a loan exposure is based on data from the respective company’s financial statements 

and on qualitative business factors. 

The various rating and scoring models provide the basis for efficient risk management of the Bank Austria Group and are embedded in all decisionmaking 

processes relating to risk management. They are also a key factor for capital required to be held against risk-weighted assets. Great attention 

is given to consistency in the presentation for supervisory purposes and the requirements of internal control. 

All internal rating and scoring systems are monitored on an ongoing basis. The systems are also subject to regular validation on an annual basis, including 

a review to verify if the rating/scoring system provides a correct representation of the risks to be measured. All model assumptions are based 

on multi-year statistical averages for historical defaults and losses, with appropriate attention being given to the potential impact of turbulence in international 

financial markets. 

In this context, credit risk stress tests, which are required by banking supervisory authorities and are carried out on a regular basis, are an essential 

instrument for assessing future risks in an unfavourable economic environment. Such tests enable the Management Board to assess the adequacy of 

regulatory capital and economic capital on the basis of different stress scenarios. 

3) of which € 186 m booked locally and € 239 m booked in Vienna 



6) In addition to the amount of € 115 m booked locally, about € 19 m was booked for Romanian customers in UniCredit Bank Austria AG. 

7) PD = probability of default; LGD = loss given default; EAD = exposure at default 


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Risk-adjusted pricing and proactive risk management constantly improve the diversification and the risk/earnings ratio of the portfolio. 

For real estate customers, the customer-related rating is complemented by a transaction rating. 

Bank Austria uses a retail scoring system. The automated rating tool is used for assessing, monitoring and managing the large number of loan 

exposures to private customers, small businesses, independent professionals and small non-profit organisations. Retail scoring comprises an 

application scoring procedure based on effective and recognised mathematical and statistical methods, and a behaviour scoring procedure taking 

into account such factors as amounts received in the account and customers’ payment practices. The retail scoring system provides information that 

is updated on a monthly basis. This gives the bank an efficient tool for lending decisions and early recognition of risk. Automated data processing 

helps Bank Austria to reduce costs required for credit control while accelerating lending decisions. 

In 2010, selected CEE banking subsidiaries were prepared for the switch from the standardised approach to the F-IRB approach in 2011. The forecasting 

quality of rating models and underlying processes were optimised in close cooperation with specialists at UniCredit Bank Austria AG. In developing 

models and carrying out validations, attention is given to ensuring the consistent and quality-assured implementation of Group guidelines. 

Credit Treasury 

Credit Treasury has two main tasks: preparing and monitoring the risk-adequate pricing of loans; and executing risk-transfer and capital-generating 

measures and transactions. 

To ensure uniform pricing within UniCredit Group, the risk-adjusted spread is determined on the basis of multi-year probabilities of default (depending 

on the term of the loan), added as a price component and monitored on an ongoing basis. 

Initially rolled out for a predefined customer segment of Austrian corporate customers as at 1 January 2011, this system is to be extended to cover 

other segments and regions. 

Moreover, Credit Treasury executes risk transfers and capital-generating measures and transactions (via synthetic securitisations, CLNs, etc.) and 

liquidity-generating measures/transactions for the entire Bank Austria Group (including CEE). 

The Credit Treasury Committee, which holds quarterly meetings, is responsible for strategic coordination and decisions on measures and 

transactions. 

E.6 – operational risk 

Operational risk (OpRisk) is defined as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external 

events (including legal risks). For example, compensation paid to customers for incorrect/inadequate product-related advice, IT system failures, 

damage to property, processing errors or fraud are subject to accurate and consolidated risk measurement and management (collection of loss data, 

external data, scenarios, indicators), on which the calculation of capital to be held for operational risk is based. 

Loss data are collected, and processes are optimised, in close coordination and cooperation with other departments and units including Internal 

Audit, the Compliance Office, Legal Affairs and the insurance sector. Over the years, UniCredit Bank Austria AG has taken numerous measures in the 

various divisions to manage and reduce operational risk. Thus data security measures, measures to ensure the confidentiality and integrity of stored 

data, access authorisation systems, the two-signatures principle, and a large number of monitoring and control processes as well as staff training 

programmes have been implemented among other measures. 

In line with other types of risk, UniCredit Bank Austria AG – like UniCredit – has built up a decentralised operational risk management framework 

based on representatives within divisions and at banking subsidiaries – Divisional OpRisk Managers (DORM) and OpRisk Managers – in addition to 

central operational risk management. While the main task of central risk management is to define the methods used and to perform risk measurement 

and analysis, decentralised risk managers are responsible for taking measures to reduce, prevent, or take out insurance against, risks. 

Activities in 2010 focused on meeting additional regulatory requirements under the advanced approach, and on preparing and supporting regulatory 

reviews at banking subsidiaries. Furthermore, OpRisk limits were introduced within all large banking subsidiaries, which are monitored and reported 

within the Bank Austria OpRisk Committee. 


129



Overall, the organisation of operational risk management at UniCredit Bank Austria AG is well established at a high level of quality. A network of 

independent functions and teams are involved in managing and controlling risks, providing the Management Board with sufficient information on the 

risk situation and enabling the Management Board to manage risk. The analysis of the general ledger for operational risk relevance confirmed the 

extensive and complete operational risk data collection. The functions of Divisional Operational Risk Managers were strengthened and expanded 

accordingly. With a view to further improving the level of knowledge of operational risk, an e-learning training programme was implemented, which 

is mandatory for all employees of UniCredit Bank Austria AG. 

Since 2008, the task of dealing with operational risk issues has been performed by a separate Operational Risk Committee (OpRiCo), whose 

meetings are held on a quarterly basis and are attended by the Chief Risk Officer, the Head of Strategic Risk Management & Control, the Head 

of UniCredit Operational Risk Management, Compliance, Internal Audit, the Divisional Operational Risk Managers and OpRisk representatives of 

CEE banking subsidiaries. The OpRiCo is a major step towards integrating operational risk in the bank’s processes; its main tasks are to report on 

current operational risk issues and developments, to approve operational risk-relevant documents, to report losses and serve as a body to which 

unresolved issues are referred. 

In 2011, activities with regard to operational risk will focus on 

• analysing risk-handling measures to contain losses through operational risk, 

• monitoring annual operational risk limits within the framework of the Operational Risk Committee, 

• analysing operational risk events related to credit risk and reporting them within the framework of the Operational Risk Committee, 

• supporting the units pursuant to the AMA rollout plan in carrying out the regulatory reviews in cooperation with UniCredit Group. 

E.7 – Business risk 

Business risk is defined as unexpected adverse changes in business volume and/or margins which cannot be attributed to other types of risk. 

Adverse changes result mainly from a significant deterioration in market conditions, changes in the competitive position or customer behaviour, and 

from changes in the legal environment. Business risk measurement thus measures the influence of external factors on a decline in profits and the 

effect on the market value. As part of general income and cost management, operational management of business risk is the responsibility of the 

individual business units. 

E.8 – Financial investment risk and real estate risk 

In dealing with risks arising from the bank’s shareholdings and equity interests, Bank Austria takes into account market price fluctuations in its 

equity holdings in listed and unlisted companies. 

Not included are equity interests in consolidated subsidiaries of the Group because risks associated with such companies are determined and 

recorded under the various other risk types. 

The portfolio includes various strategic investments; real estate holding companies are taken into account in real estate risk. 

Generally, Value at Risk is determined on the basis of market values and volatilities of the relevant equity interests. For shares in unlisted companies 

the bank uses book values and volatilities of relevant stock exchange indices and takes account of residual variances. 

Real estate risk measures the fluctuations in market value of bank-owned real estate on the basis of market prices and the volatility of related rent 

indices. 

E.9 – Legal risks 

We generally do not make provisions to the extent it is not possible to reliably predict the outcome of proceedings or to quantify possible losses. 

In cases where it is possible to estimate in a reliable manner the amount of the possible loss and such loss is deemed probable, we have made 

provisions in amounts we deem appropriate in light of the particular circumstances and in accordance with applicable accounting principles. 

In line with the above policy, a provision has been made in the amount of the estimated risk for the following pending legal proceedings. 

• UniCredit Bank Austria AG (“Bank Austria”) has joined as a process guiding intervening party in support of the defendant AKB Privatbank Zürich 

AG (formerly a subsidiary of Bank Austria and formerly Bank Austria (Schweiz) AG) in a suit in Switzerland relating to alleged claims of Bundesanstalt 

für Vereinigungsbedingte Sonderaufgaben “BvS” (formerly Treuhandanstalt), the legal successor to Deutsche Treuhandanstalt, the German 

public body for the new Länder reconstruction. Essentially it is asserted that the former subsidiary of Bank Austria in Switzerland participated in 


130



the embezzlement of funds from companies in the former East Germany. BvS lost the case in the court of first instance and fully won the appeal. 

Bank Austria filed an appeal against that judgment before the Court of Cassation of the Zurich Canton, the Court of Cassation’s procedure is 

currently pending. A provision has been made in the amount of the estimated risk in accordance with national accounting standards. 

In line with the above policy, no provisions have been made for the following pending legal proceedings. Due to the uncertain nature of litigation, 

however, we cannot exclude that the following may result in losses to the bank. 

• Action brought by the Belgian company Valauret S.A. in Paris on the grounds of alleged involvement of Creditanstalt AG 

(now UniCredit Bank Austria AG) in wilful deception in connection with a French joint stock company as a result of which the plaintiffs 

incurred losses through a loss in value of shares acquired by it in the joint stock company. 

• Proceedings were initiated in Austria related to Bernard L. Madoff’s fraud in which UniCredit Bank Austria AG, among others, was named as 

defend ant. The parties invested in funds that, in turn, invested directly or indirectly in Bernard L. Madoff Investment Securities LLC (BMIS). The 

judgements in these lawsuits so far have been almost completely in favour of the bank. UniCredit Bank Austria AG is also the subject of proceedings 

in Austria following the complaint filed by the Austrian Financial Market Authority with the Public Prosecutor’s Office and complaints filed 

with the said Public Prosecutor’s Office by private parties that invested in funds which, in turn, invested directly or indirectly in BMIS. The parties 

that filed said complaints maintain that UniCredit Bank Austria AG violated, among other things, the terms of the Consolidated Investment Act that 

governs UniCredit Bank Austria AG’s role as “auditor of the prospectus” of Primeo funds. 

UniCredit Bank Austria AG was named as one of many defendants in two putative class action suits filed in the United States District Court for 

the Southern District of New York. A liquidated indirect subsidiary of UniCredit Bank Austria AG has been named in one putative class action suit 

filed in the United States District Court for the Southern District of New York. In each of the suits, the petitioners claim to represent investors 

whose assets were invested in BMIS, directly or indirectly. The United States Bankruptcy Court appointed Irving H. Picard as Trustee (the “SIPA 

Trustee”) for the liquidation of BMIS. The Trustee’s job is to collect the assets of Madoff’s estate and distribute those assets to creditors including 

investors. In December 2010, the SIPA Trustee filed two complaints in the United States Bankruptcy Court in the Southern District of New York 

against many defendants, including UniCredit Bank Austria AG, to recover amounts to be determined at trial, but claimed to be in excess of US$ 

2 billion, allegedly representing so-called avoidable transfers. One complaint further alleges they violated the Racketeer Influenced and Corrupt 

Organizations Act (“RICO”) by allegedly participating in a plan to enrich themselves by feeding investors’ money into Madoff’s Ponzi scheme. The 

SIPA Trustee seeks treble damages under RICO, i.e. three times the reported net US$ 19.6 billion losses allegedly suffered by all BMIS investors. 

All pending actions are in the initial phases. UniCredit S.p.A. and its subsidiaries involved intend to defend themselves against the charges regarding 

the Madoff case by any method available to them. At present it is not possible to reliably estimate the timing and results of the various 

actions, nor determine the level of responsibility, if any responsibility exists. 

E.10 – Report on key features of the internal control and risk management 

systems in relation to the financial reporting process 

The Management Board is responsible for establishing and designing internal control and risk management systems which meet the company’s 

requirements in relation to the financial reporting process. The purpose of this report is to provide an overview of how internal controls are organised 

in relation to the financial reporting process. 

The objective of the internal control system is to assist management in assuring internal controls in relation to financial reporting which are effective 

and are improved on an ongoing basis. The system is geared to complying with rules and regulations and creating conditions which are conducive 

to performing specific controls in key accounting processes. 

Following the integration of the Bank Austria Group in UniCredit Group, the Italian Savings Law, Section 262 (process description for minimising risk 

in preparing financial statements) in particular, must be complied with. 

Pursuant to the “262 Savings Law”, the CEO and the CFO delegated by UniCredit S.p.A. are liable, under civil and criminal law, for any violation of 

the legal provisions. They are also responsible for every subsidiary within the group of consolidated companies which is covered by financial reporting 

because the “262 Savings Law” deals with consolidated financial statements. 

Internal Audit performs independent and regular reviews of compliance with internal rules also in the area of accounting. The Head of Internal Audit 

reports directly to the Management Board and provides the Chairman of the Supervisory Board with quarterly reports. 


131



Control environment 

The basic aspect of the control environment is the corporate culture in which management and all employees operate. UniCredit S.p.A., the parent 

company of UniCredit Bank Austria AG, works to improve communication and convey the corporate values defined in the Integrity Charter. The Integrity 

Charter embodies the UniCredit Group’s identity and is based on the following shared values: fairness, transparency, respect, reciprocity, freedom to 

act, and trust. 

In October 2006, the Management Board of UniCredit Bank Austria AG adopted the UniCredit Organisation Guidelines. The objective of the Guidelines 

is to have a uniform organisational structure in all countries as well as uniform reporting lines and levels of hierarchy. The organisational structure is 

based on the Governance Rules and the Group Organisation Guidelines of UniCredit S.p.A. 

The implementation of the internal control system in relation to the financial reporting process is set out in the internal rules and regulations: 

All accounting entries are made within the guidelines established in the Accounting Policy, and release follows defined instruction and control criteria. 

For each general ledger account there is a responsible person who reconciles the general ledger accounts in accordance with existing rules. This internal 

reconciliation process is interrogated by Financial Accounting and reviewed by Internal Audit. 

Risk assessment 

In the course of the “262 Savings Law” project, the persons having process responsibility identified risks in relation to the financial reporting process; 

these risks are monitored on an ongoing basis. The focus is on those risks which are typically considered to be material. 

To meet the “262 Savings Law” requirements, controls pursuant to the methodology used by UniCredit S.p.A. are required to be performed at least on 

a half-yearly basis (for full-year and half-year reporting). 

Controls 

All controls are applied in the current business process to ensure that potential errors or deviations in financial reporting are prevented or detected 

and corrected. Controls range from a management review of results for the various periods to specific reconciliation of accounts and the analysis of 

continuous accounting processes. 

The levels of hierarchy are designed so that an activity and the control of that activity is not performed by the same person (four-eyes principle). 

In the course of the preparation of financial reports, the general ledger accounts are reconciled with business and front-end systems. 

IT security controls are a cornerstone of the internal control system. The separation of sensitive activities is supported by a restrictive approach to IT 

access authorisation. The operation of the financial reporting system is also assured through automated IT controls included in the system. 

Information and communication 

Management regularly updates rules and regulations for financial reporting and communicates them to all employees concerned. 

Moreover, regular discussions on financial reporting and on the rules and regulations applicable in this context take place in various bodies and are 

repeatedly communicated to UniCredit Bank Austria AG. Employees in Financial Accounting receive regular training in new methods of international 

financial reporting in order to identify risks of unintended misreporting at an early stage. 

To perform monitoring and control functions with a view to proper financial accounting and reporting, extensive financial information is made available 

at key levels of the bank. Relevant information is not only provided to the Supervisory Board and the Management Board, middle management levels 

also receive detailed reports. 

Monitoring 

As part of the implementation of the internal control system pursuant to the “262 Savings Law”, instruments were introduced to monitor the effectiveness 

of controls. In connection with the compulsory half-yearly certification process for the preparation of the management report, the persons having 

process responsibility are required to carry out effectiveness tests to check the effectiveness of controls. It must be ascertained whether the controls 

work according to their design and whether the persons who perform controls have the competence/authority and qualifications required to perform 

the controls effectively. 


132



All persons having process responsibility confirm by means of certification that their processes are adequately documented, risks have been identified 

and controls have been evaluated with a view to deriving measures to minimise risk. 

The results of these monitoring activities are contained in a management report which is based on the certifications provided to the respective chief 

financial officer by all persons having process responsibility and issued on a half-yearly basis. The Chief Financial Officer of UniCredit Bank Austria AG 

receives the certifications by the chief financial officers of the subsidiaries covered by the process in accordance with the group of consolidated 

companies, and provides the Holding Company and the public with confirmation of the reliability and effectiveness of the internal control system in the 

context of the financial statements for the first six months and the annual financial statements. 

E.11 – Information on the squeeze-out pursuant to the Austrian Federal Act 

on the Squeeze-out of Minority Shareholders (Gesellschafterausschlussgesetz) 

of the holders of bearer shares in uniCredit Bank Austria AG 

The company’s Annual General Meeting on 3 May 2007 adopted a resolution concerning the planned squeeze-out. The legal actions for rescission 

and declaration of nullity brought against various resolutions adopted at the Annual General Meeting on 3 May 2007 were terminated in spring 2008. 

The squeeze-out was entered in the Register of Firms on 21 May 2008. After that date, former minority shareholders initiated proceedings for a 

review of the cash compensation offered by UniCredit. An expert has now been appointed in these proceedings to review the amount of the cash 

compensation paid. 

E.12 – Financial derivatives 

Derivatives shown in the following tables are classified as financial derivatives and credit derivatives, according to the underlying financial instrument. 

In these categories, a distinction is made between trading book and banking book and between different counterparties.UniCredit Bank Austria AG’s 

business volume in derivatives focuses on interest rate contracts. 

Over-the-counter transactions are individual agreements concerning volume, maturities and underlying instrument. In large-volume interbank trading, 

these agreements reflect international practice, while in customer business they are usually adjusted to specific needs. Exchange-traded contracts are 

always standardised in respect of volume and maturity date. 

Derivatives are mainly used by the bank itself for hedging market risk and credit spread risk arising from new issue activities. In customer business, 

market participants include banks, securities houses, mutual funds, pension funds and corporate customers. 

Trading in derivatives at Bank Austria is primarily related to the hedging of positions entered into vis-à-vis customers. 

For the purposes of portfolio and risk management, contracts are valued at current prices using recognised and tested models. Market values show 

the contract values as at the balance sheet date, positive market values indicate the potential default risk arising from the relevant activity. 

For the purposes of portfolio management and risk limitation in the derivatives business with banks and customers, UniCredit Bank Austria AG uses a 

Monte Carlo path simulation to estimate the potential future exposure at portfolio level for each counterparty. The calculations are based on market 

volatility, correlations between specific risk factors, future cash flows and stress considerations. Netting agreements and collateral agreements are also 

taken into account for simulation purposes. 

The simulation calculations are performed for all major types of transactions, e.g. forward foreign exchange transactions, commodity futures transactions, 

interest rate instruments, securities lending transactions and repurchase agreements, equity-related, commodity-related or inflation-related 

instruments and credit derivatives. Other (exotic) products are taken into account with an add-on factor (depending on volatility and maturity). The bank 

applies a confidence interval of 97.5%. 

In addition to determining the potential future exposure for the purpose of internal risk management, the path simulation also enables the bank to 

calculate the mean exposure and the Basel 2-modified mean exposure as well as the effective term of the exposure for each counterparty. In this way, 

counterparty risk can be taken into account in a Basel 2-compliant internal model for the calculation of capital requirements. In 2009, the bank 

obtained approval from the Austrian regulatory authorities for the use of the relevant model. 


133



Line utilisation for derivatives business is available online in WSS (“Wallstreet”), the central treasury system, on a largely Group-wide basis. For smaller 

units not connected to the central system, separate lines are allocated and monitored. Group-wide compliance with lines approved in the credit process 

is thus ensured at any time. 

UniCredit Bank Austria AG additionally limits the credit risk arising from its derivatives business through strict use of master agreements, through 

collateral agreements and break clauses. In combination with the very good average credit rating of our business partners in the derivatives business, 

management takes proper account of default risk. 

Regulatory portfolio: end of period notional amounts (€ m) 

deriVatiVe iNstrumeNt types/uNderlyiNgs OVer the cOuNter cleariNg hOuse 

debt securities and interest rate indexes 72,826 4,223 

Options 22,440 – 

Swap 47,789 – 

Forward 2,328 – 

Futures 109 4,223 

Others 160 – 

equity instruments and stock indexes 1,729 – 


Swap 43 – 

Forward 49 – 

Futures – – 

Others 446 – 

gold and currencies 46,684 570 


Swap 15,621 – 

Forward 24,188 – 

Futures – 570 

Others 66 – 

commodities 490 – 

Other underlyings 29 – 

tOtal 121,757 4,794 

Banking book: end of period notional amounts – Hedging derivatives (€ m) 


debt securities and interest rate indexes 148,646 – 


Swap 145,698 – 

Forward – – 


Others – – 

equity instruments and stock indexes 2 – 

Options 2 – 

Swap – – 




gold and currencies 32,421 – 

Options – – 

Swap 32,421 – 




commodities – – 

Other underlyings – – 

tOtal 181,070 – 


134



Banking book: end-of-period notional amounts – Other derivatives (€ m) 


derivative contracts related to fV option assets/liabilities – – 

Debt securities and interest rate indexes – – 

Equity instruments and stock indexes – – 

Gold and currencies – – 

Commodities – – 


embedded derivatives bifurcated from hybrid instruments – – 

Debt securities and interest rate indexes – – 

Equity instruments and stock indexes – – 

Gold and currencies – – 

Commodities – – 


Other ias 39 hft derivatives belonging to the banking book 134 224 

debt securities and interest rate indexes 27 – 

Options 27 – 

Swap – – 




equity instruments and stock indexes 107 – 

Options 102 – 

Swap – – 



Others 5 – 

gold and currencies – 224 

Options – – 

Swap – 224 




commodities – – 


tOtal 134 224 


135



Financial derivatives – breakdown by product (€ m) 

traNsactiON types/uNderlyiNgs 

pOsitiVe fair Value NegatiVe fair Value 

OVer the 

cOuNter cleariNg hOuse 

OVer the 

cOuNter cleariNg hOuse 

regulatory trading portfolio 2,412 1 2,290 – 

Options 496 – 393 – 

Interest rate swaps 954 – 1,120 – 

Cross currency swap 586 – 392 – 

Equity swaps 77 – – – 

Forward 290 – 384 – 

Futures 6 1 – – 

Others 4 – 1 – 

banking book – hedging derivatives 2,449 – 2,909 – 

Options 19 – 96 – 

Interest rate swaps 2,193 – 1,602 – 

Cross currency swap 237 – 1,210 – 

Equity swaps – – – – 

Forward – – – – 

Futures – – – – 

Others – – – – 

banking book – Other derivatives 1 – 4 18 

Options 1 – 1 – 

Interest rate swaps – – – – 

Cross currency swap – – – 18 

Equity swaps – – – – 

Forward – – – – 

Futures – – – – 

Others – – 4 – 

tOtal 4,862 1 5,203 18 

OTC financial derivatives – residual life: notional amounts (€ m) 

uNderlyiNg/residual maturity up tO 1 year 

OVer 1 year 

up tO 5 year OVer 5 year tOtal 

regulatory trading book 52,544 38,666 30,547 121,757 

Financial derivative contracts on debt securities and interest rates 14,145 31,029 27,652 72,826 

Financial derivative contracts on equity securities and stock indexes 360 823 545 1,729 

Financial derivative contracts on exchange rates and gold 37,817 6,580 2,286 46,684 

Financial derivative contracts on other values 222 233 64 518 

banking book 72,386 52,476 56,341 181,203 

Financial derivative contracts on debt securities and interest rates 65,537 39,331 43,805 148,673 

Financial derivative contracts on equity securities and stock indexes 2 102 5 109 

Financial derivative contracts on exchange rates and gold 6,847 13,044 12,531 32,421 

Financial derivative contracts on other values – – – – 

tOtal 124,930 91,142 86,888 302,960 


136



Credit derivatives – breakdown by product (€ m) 

pOrtfOliOs/deriVatiVe iNstrumeNt types pOsitiVe fair Value NegatiVe fair Value 

regulatory trading portfolio 4 97 

Credit default products 2 97 

Credit spread products 2 – 

Total rate of return swap – – 


banking book – – 

Credit default products – – 

Credit spread products – – 

Total rate of return swap – – 


tOtal 4 97 

Credit derivatives: end of period notional amounts (€ m) 

traNsactiON categOries 

regulatOry tradiNg bOOK baNKiNg bOOK 

With a siNgle 

cOuNterparty 

With mOre thaN ONe 

cOuNterparty (basKet) 

With a siNgle 

cOuNterparty 

With mOre thaN ONe 

cOuNterparty (basKet) 

protection buyer’s contracts 

Credit default products 52 5 – – 

Credit spread products – – – – 

Total rate of return swap – – – – 

Other – – – – 

tOtal 52 5 – – 

protection seller’s contracts 

Credit default products 1,853 109 – – 

Credit spread products 178 – – – 

Total rate of return swap – – – – 

Other – – – – 

tOtal 2,031 109 – – 

Credit derivatives – residual life: notional amount (€ m) 

uNderlyiNg/residual maturity up tO 1 year 

OVer 1 year 

up tO 5 years OVer 5 years tOtal 

regulatory trading book: 874 945 378 2,197 

Credit derivatives with qualified reference obligation 178 – – 178 

Credit derivatives with not qualified reference obligation 696 945 378 2,019 

banking book: – – – – 

Credit derivatives with qualified reference obligation – – – – 

Credit derivatives with not qualified reference obligation – – – – 

tOtal 874 945 378 2,197 


137

F – Additional disclosures 

F.1 – Time breakdown by contractual residual maturity 

of financial assets and liabilities 176 

F.2 – Geographical distribution 176 

F.3 – Related party disclosures 177 

F.3.1 – Information on members of the 

Management Board, the Supervisory Board 

and the Employees’ Council of 

uniCredit Bank Austria AG 177 

F.3.2 – Relationships with unconsolidated subsidiaries 

and other companies in which an equity 

interest is held 177 

F.3.3 – other information on related party relationships 178 

F.4 – Auditors’ fees 178 

F.5 – Assets pledged as security 179 

F.6 – Subordinated assets/liabilities 179 

F.7 – Assets and liabilities in foreign currency 179 

F.8 – Trust assets and trust liabilities 179 

F.9 – Repurchase agreements 179 

F.10 – Guarantees given and commitments 180 

F.11 – List of selected subsidiaries and 

other equity interests 180 

F.11.1 – Consolidated companies 180 

F.11.2 – Investments in companies accounted for 

under the proportionate consolidation method 183 

F.11.3 – Investments in associated companies 

accounted for under the equity method 183 

F.11.4 – Investments in associated companies not 

accounted for under the equity method 184 

F.12 – Employees 184 

F.13 – Supervisory Board and Management Board 184 

F.14 – Share-based payments 184 

F.15 – Events after the reporting period 185 

F.16 – Consolidated capital resources and 

regulatory capital requirements 186 



F – Additional disclosures (CoNTINuED) 

F.1 – Time breakdown by contractual residual maturity 

of financial assets and liabilities 

ON demaNd 

1 tO 7 

days 

7 tO 15 

days 

Geographical distribution of total assets and operating income (€ m) 


tOtal assets OperatiNg iNcOme tOtal assets OperatiNg iNcOme 

Austria 98,309 1,969 110,451 1,842 

Total European countries 89,676 4,718 78,420 4,831 

Western Europe 919 22 787 –4 

Central and Eastern Europe 88,757 4,695 77,633 4,835 

America 81 –11 87 –6 

Asia 4,982 258 5,500 404 

Rest of the world – – – – 

tOtal 193,049 6,934 194,459 7,070 

The geographic breakdown is based on the location of the subsidiary in which the transaction is recorded. 

15 days tO 

1 mONth 


1 tO 3 

mONths 

3 tO 6 

mONths 

6 mONths 

tO 1 year 

assets 17,823 3,554 3,430 7,267 14,517 14,318 10,969 40,705 59,225 

Government securities 22 83 17 103 969 811 986 3,089 2,440 

Other debt securities 1 408 359 578 1,682 635 385 4,514 7,511 

Units in investment funds 61 – – – – – – 22 12 

Loans 17,738 3,064 3,055 6,587 11,866 12,873 9,599 33,081 49,262 

Banks 3,613 1,444 2,358 2,841 2,953 1,469 782 2,115 2,130 

Customers 14,125 1,619 697 3,746 8,913 11,403 8,817 30,966 47,133 

liabilities 45,807 6,304 5,709 10,654 21,868 13,027 9,767 27,943 20,408 

Deposits and current accounts 45,297 5,568 5,191 8,996 18,507 7,594 6,418 9,677 3,079 

Banks 3,409 2,886 711 2,116 984 781 848 2,126 2,424 

Customers 41,888 2,682 4,481 6,880 17,523 6,813 5,569 7,551 655 

Debt securities 11 57 55 789 1,650 782 2,568 12,182 11,106 

Other liabilities 498 680 463 869 1,711 4,651 782 6,083 6,222 

Off-balance sheet transactions 

Physically settled financial derivatives 

long positions – 339 984 2,911 4,811 3,529 1,758 4,174 539 

short positions – 339 984 2,911 4,811 3,529 1,758 4,179 539 

Cash settled financial derivatives 

long positions 254 1,183 2,136 2,577 4,360 4,366 5,306 20,043 10,790 

short positions 333 1,183 2,136 2,577 4,357 4,367 5,290 20,043 10,790 

Deposits to be received 

long positions – – – – 1 2 1 – – 

short positions – – – – 1 2 1 – – 

Irrevocable commitments to disburse funds 

long positions 219 42 33 323 679 847 6,909 2,485 1,406 

short positions 1,818 41 17 458 602 831 6,318 2,249 608 

Written guarantees 76 830 19 146 259 490 703 1,659 1,724 

The breakdown by maturity reflects items of companies within the group of banks which are subject to regulatory supervision. 

F.2 – Geographical distribution 

1 tO 5 

years 


(€ m) 

OVer 5 

years 

139



F.3 – Related party disclosures 

Related party disclosures as at 31 December 2010 (€ m) 

F.3.1 – Information on members of the Management Board, the Supervisory Board and 

the Employees’ Council of uniCredit Bank Austria AG 

F.3.1.1 – Emoluments of members of the Management Board and the Supervisory Board 

The emoluments paid by UniCredit Bank Austria AG to Management Board members in the 2010 financial year (excluding payments into pension 

funds) totalled € 1,704,722.64 (comparable emoluments in 2009 totalled € 1,792 thsd). Of this total, € 1,273,695.47 (2009: € 1,792 thsd) related 

to fixed salary components and € 431,027.17 were variable salary components (2009: none). In the 2010 financial year, allocations and payments for 

members of the Management Board and former members of the Management Board as well as their surviving dependants totalled € 10,607,769.23 

(2009: € 10,023 thsd). The amount includes payments to pension funds amounting to € 110,264.96 (2009: € 79 thsd) for active members of the 

Management Board and € 1,300,000.00 (2009: € 10 thsd) for former members of the Management Board. Several members of the Management 

Board receive their emoluments from companies which are not included in the group of consolidated companies of Bank Austria; these emoluments 

granted to Management Board members for activities in UniCredit Bank Austria AG and in subsidiaries in the 2010 financial year amounted to 

€ 2,817,891.21 (2009: € 6,759 thsd). These Management Board members also received emoluments for activities which are not connected with the 

Bank Austria Group but are in the interest of UniCredit Group. 

Payments to former members of the Management Board and their surviving dependants (excluding payments into pension funds) totalled 

€ 8,609,438.27. (Of this total, € 4,975,028.86 was paid to former Management Board members of Creditanstalt AG, which merged with Bank Austria 

in 2002, and their surviving dependants; € 1,771,867.09 was paid to former Management Board members of Österreichische Länderbank AG, which 

merged with Zentralsparkasse in 1991, and their surviving dependants.) The comparative figure for 2009 was € 9,024 thsd. Emoluments paid to this 

group of persons for activities in subsidiaries amounted to € 422,857.05 (2009: € 940 thsd). 

The emoluments of the Supervisory Board members active in the 2010 business year totalled € 315,892.25 (2009: € 359 thsd) for 

UniCredit Bank Austria AG, and € 2,060 (2009: € 2 thsd) for the two credit associations. 

F.3.1.2 – Loans to members of the Management Board and of the Supervisory Board 

Loans to members of the Management Board amounted to € 1,044,862.93 (2009: € 732 thsd), overdrafts granted to them were € 28,171.13 (2009: 

€ 80 thsd). Repayments during the business year totalled € 37,084.92 (2009: € 19 thsd). Loans to members of the Supervisory Board amounted to 

€ 551,697.09 (2009: € 519 thsd). Credit lines and overdrafts granted to Supervisory Board members totalled € 274,029.59 (2009: € 168 thsd). 

Repayments during the business year totalled € 43,634.78 (2009: € 24 thsd). 

Loans to the Supervisory Board include those made to members of the Employees’ Council who are members of the Supervisory Board. The maturities of 

the loans range from five to twenty-five years. The rate of interest payable on these loans is the rate charged to employees of UniCredit Bank Austria AG 

and/or a rate in line with market conditions. 

F.3.2 – Relationships with unconsolidated subsidiaries and other companies 

in which an equity interest is held 

All related-party banking transactions were effected on market terms. 

pareNt cOmpaNy 

aNd uNcONsOlidated 

subsidiaries assOciates 

Key maNagemeNt 

persONNel 

Other related 

parties 

Loans and advances 12,525 1,302 2 662 

Equity instruments 9 27 – – 

Other receivables 3,618 – – 1 

tOtal assets 16,152 1,329 2 663 

Deposits 14,008 11,851 6 233 

Other financial liabilities 537 – – – 

Other liabilities 21 – – 1 

tOtal liabilities 14,566 11,851 7 235 

Transactions with companies which are related parties are explained in section F.3. There is a syndicate agreement – the “Restated Bank of the 

Regions Agreement” – between UniCredit, “Privatstiftung zur Verwaltung von Anteilsrechten” (“AVZ Stiftung”) and “Betriebsratsfonds des Betriebsrats 

der Angestellten der UniCredit Bank Austria AG Großraum Wien” (“Betriebsratsfonds”). 


140



In the Restated Bank of the Regions Agreement, “AVZ Stiftung” and “Betriebsratsfonds” have given an undertaking to UniCredit to the effect that if they 

want to sell UniCredit Bank Austria shares, they will first offer such shares held by them to UniCredit. If UniCredit does not accept the offer, the relevant 

contracting party could sell the UniCredit Bank Austria shares to a third party. In this case UniCredit has a right of preemption. 

For the duration of this agreement (10 years), “AVZ Stiftung” has a right to nominate two members of the Supervisory Board of UniCredit Bank Austria AG, 

and thereafter one member of the Supervisory Board for the duration of the guarantee issued by “AVZ Stiftung” and the Municipality of Vienna. 

As at 31 December 2010, UniCredit held a direct interest of 99.996% in UniCredit Bank Austria AG. 

As at 31 December 2010, there were the following interlocking relationships with UniCredit S.p.A.: 

• The Deputy Chairman of the Management Board of UniCredit Bank Austria AG was a member of the Board of Directors and a member of the 

Executive Management Committee of UniCredit. 

• Three members of the Supervisory Board of UniCredit Bank Austria AG were members of the Executive Management Committee of UniCredit. 

F.3.3 – other information on related party relationships 

Under Section 92 (9) of the Austrian Banking Act, “privatstiftung zur Verwaltung von anteilsrechten” (“AVZ Stiftung”, a private foundation under 

Austrian law) serves as deficiency guarantor for all liabilities of UniCredit Bank Austria AG in the event of the company’s insolvency. The board of 

trustees of the private foundation has 14 members. These included four members of the Supervisory Board of UniCredit Bank Austria AG. 

After the change in the legal form of Anteilsverwaltung Zentralsparkasse into a private foundation (“AVZ Stiftung”) in 2001, the municipality of Vienna 

serves as deficiency guarantor for all outstanding liabilities, and obligations to pay future benefits, of UniCredit Bank Austria AG (then Bank Austria 

Aktiengesellschaft) which were entered into prior to and including 31 December 2001. 

The board of trustees of Immobilien Privatstiftung has three members. One of them is a member of the Supervisory Board of UniCredit Bank Austria AG. 

As part of the sale of UniCredit CAIB AG, UniCredit Bank Austria AG entered into a cooperation agreement. Essentially, the cooperation agreement provides 

that UniCredit Bank Austria AG has to use the services of UniCredit Bank AG for long-term financing purposes. 

F.4 – Auditors’ fees 

(pursuant to Section 237 no. 14a and Section 266 no. 11 of the Austrian Business Code) 

The following table shows the fees charged by the auditors of the consolidated financial statements for the 2010 financial year in the following 

categories: 

Auditors’ fees (€ thsd) 

fees for the audit of the financial statements and the consolidated financial statements 4,174 

KPMG Austria (including the audit of subsidiaries) 2,869 

Austrian Savings Bank Auditing Association 1,305 

Other services involving the issuance of a report 623 

KPMG Austria 623 

Austrian Savings Bank Auditing Association – 

tax consulting services – 

KPMG Austria – 

Austrian Savings Bank Auditing Association – 

Other services 1,539 

KPMG Austria 209 

Austrian Savings Bank Auditing Association 1,330 

tOtal 6,336 



141



F.5 – Assets pledged as security 

As at 31 December 2010, assets pledged by UniCredit Bank Austria AG totalled € 20,079 m (2009: € 17,998 m including UniCredit CAIB AG). 

F.6 – Subordinated assets/liabilities 

F.7 – Assets and liabilities in foreign currency 


(€ m) 


Financial assets held for trading – – 

Financial assets designated at fair value – 2 

Available-for-sale financial assets 81 82 

Held-to-maturity investments – – 

Loans and receivables with banks 555 823 

Loans and receivables with customers 496 497 

subordinated assets 1,132 1,405 

Deposits from banks 218 200 

Deposits from customers 85 82 

Debt securities in issue 4,078 5,229 

subordinated liabilities 4,381 5,512 


(€ m) 

assets liabilities assets liabilities 

USD 23,158 20,968 32,721 30,815 

JPY 958 737 1,911 1,332 

CHF 16,513 2,095 16,292 3,255 

Other 51,852 39,626 47,082 35,839 

tOtal 92,481 63,426 98,006 71,240 

F.8 – Trust assets and trust liabilities 

Trust assets and liabilities (€ m) 

F.9 – Repurchase agreements 


Loans and receivables with banks – 6 

Loans and receivables with customers 866 585 

Equity securities and other variable-yield securities 7,686 8,054 

Debt securities 7,572 9,962 

Other assets 1,071 83 

trust assets 17,196 18,689 

Deposits from banks 190 4,303 

Deposits from customers 16,618 14,213 

Debt securities in issue – 58 

Other liabilities 388 115 

trust liabilities 17,196 18,689 

Under repurchase agreements, financial assets were sold to third parties with a commitment to repurchase the financial instruments at a price specified 

when the assets were sold. At the end of the reporting period, the total amount of repurchase agreements was € 1,558 m (2009: € 1,755 m). In 

those cases where Bank Austria is the transferor, the relevant assets continue to be recognised in its statement of financial position at their fair values. 

In those cases where Bank Austria is the transferee, the bank does not recognise the assets in its statement of financial position. 

142



F.10 – Guarantees given and commitments (€ m) 


financial guarantees given to: 6,195 7,911 

Banks 550 618 

Customers 5,645 7,293 

commercial guarantees given to: 13,145 12,518 

Banks 1,442 1,948 

Customers 11,703 10,570 

Other irrevocable commitments to disburse funds 14,737 12,971 

Banks 650 292 

Usage certain 55 49 

Usage uncertain 596 242 

Customers 14,086 12,680 

Usage certain 6,637 6,205 

Usage uncertain 7,449 6,475 

underlying obligations for credit derivatives: sales of protection 869 927 

assets used to guarantee others’ obligations – – 

Other commitments 3,807 3,587 

tOtal 38,754 37,915 

The amount of contingent claims in Bank Austria is equal to the amount of contingent liabilities. 

F.11 – List of selected subsidiaries and other equity interests 

The list of unconsolidated subsidiaries required under the Austrian Business Code/Austrian Banking Act is included in the notes to the financial statements 

of UniCredit Bank Austria AG as at 31 December 2010. The notes have been lodged with the Austrian Register of Firms, a public register at the 

Commercial Court of Vienna (Handelsgericht Wien). 

F.11.1 – Consolidated companies 

cOmpaNy city cOuNtry 

dOmicile iNterest iN % 

direct 

OWNership 

iNdirect 

OWNership tOtal 

AI Beteiligungs GesmbH Vienna Austria 100.00 0.00 100.00 

Alpine Cayman Islands Ltd. Grand Cayman Cayman Islands 100.00 0.00 100.00 

Arany Penzügyi Lizing Zrt. Budapest Hungary 0.00 100.00 100.00 

Artist Marketing GmbH Vienna Austria 0.00 100.00 100.00 

ATF Capital B.V. (NL) Rotterdam Netherlands 0.00 99.71 99.71 

ATF Finance JSC Almaty Kazakhstan 0.00 99.71 99.71 

ATF Inkassatsiya Ltd Almaty Kazakhstan 0.00 99.71 99.71 

AWT International Trade GmbH Vienna Austria 100.00 0.00 100.00 

BA Alpine Holdings Inc. (US) Wilmington County, New Castle USA 100.00 0.00 100.00 

BA Betriebsobjekte GmbH Vienna Austria 100.00 0.00 100.00 

BA Betriebsobjekte GmbH & Co Beta Vermietungs OG Vienna Austria 0.00 100.00 100.00 

BA Betriebsobjekte Praha, spol.s.r.o. Prague Czech Republic 0.00 100.00 100.00 

BA GVG-Holding GmbH Vienna Austria 100.00 0.00 100.00 

BA Immo-Gewinnscheinfonds1 Vienna Austria 98.33 0.00 98.33 

BA Private Equity GmbH Vienna Austria 100.00 0.00 100.00 

BA-CA Infrastructure Finance Advisory GmbH Vienna Austria 0.00 100.00 100.00 

BA-CA Markets Investment Beteiligung GmbH Vienna Austria 100.00 0.00 100.00 

BA-CA Wien Mitte Holding GmbH Vienna Austria 100.00 0.00 100.00 

Bank Austria Finanzservice GmbH Vienna Austria 100.00 0.00 100.00 

Bank Austria Global Information Services GmbH Vienna Austria 100.00 0.00 100.00 

Bank Austria Real Invest GmbH Vienna Austria 94.95 0.00 94.95 

Bank Austria Real Invest Immobilien- Kapitalanlage GmbH Vienna Austria 0.00 94.95 94.95 

Bank Austria Reals Invest Client Investment GmbH Vienna Austria 0.00 94.95 94.95 


143





direct 

OWNership 

iNdirect 


Bank Austria Wohnbaubank AG Vienna Austria 100.00 0.00 100.00 

CABET-Holding AG Vienna Austria 100.00 0.00 100.00 

Cafu Vermögensverwaltung GmbH & Co OG Vienna Austria 0.00 100.00 100.00 

card complete Service Bank AG Vienna Austria 50.10 0.00 50.10 

Cards & Systems EDV-Dienstleistungs GmbH Vienna Austria 52.00 3.50 55.50 

CEAKSCH Verwaltungs G.m.b.H. Vienna Austria 0.00 100.00 100.00 

Centar Kaptol doo Zagreb Croatia 0.00 84.21 84.21 

Christoph Reisegger Gesellschaft m.b.H. Vienna Austria 0.00 99.00 99.00 

CJSC Bank Sibir (RU) Omsk Russian Federation 0.00 99.71 99.71 

Closed Joint Stock Company UniCredit Securities Moscow Russian Federation 0.00 100.00 100.00 

Diners Club CEE Holding AG Vienna Austria 99.80 0.00 99.80 

Diners Club Slovakia s.r.o. Vienna Slovakia 0.00 99.80 99.80 

Diners Polska Sp.z.o.o. Warsaw Poland 0.00 99.80 99.80 

Domus Clean Reinigungs GmbH Vienna Austria 100.00 0.00 100.00 

Domus Facility Management GmbH Vienna Austria 100.00 0.00 100.00 

EK Mittelstandsfinanzierungs AG Vienna Austria 98.00 0.00 98.00 

Europe Investment Fund Budapest Budapest Hungary 0.00 100.00 100.00 

Euroventures-Austria-CA-Management GesmbH Vienna Austria 0.00 100.00 100.00 

Factorbank AG Vienna Austria 100.00 0.00 100.00 

GUS Consulting GmbH Vienna Austria 100.00 0.00 100.00 

Human Resources Service and Development GmbH Vienna Austria 100.00 0.00 100.00 

HVB Immobilien EOOD Sofia Bulgaria 0.00 92.86 92.86 

Immobilien Rating GmbH Vienna Austria 19.00 63.81 82.81 

ISTRA D.M.C Umag Croatia 0.00 60.46 60.46 

Istraturist Um., Hotelijerstvo i Turizam dd Umag Croatia 0.00 60.46 60.46 

IVONA Beteiligungsverwaltung GmbH Vienna Austria 0.00 94.95 94.95 

JOHA Gebäude-Errichtungs- und Vermietungsges.m.b.H. Vienna Austria 0.00 94.03 94.03 

JSC ATF Bank Almaty Kazakhstan 99.71 0.00 99.71 

Kaiserwasser Errichtungs- u. BetriebsgesmbH Vienna Austria 99.80 0.00 99.80 

KLEA ZS-Immobilienvermietung G.m.b.H. Vienna Austria 99.80 0.00 99.80 

KLEA ZS-Liegenschaftsvermietung G.m.b.H. Vienna Austria 99.80 0.00 99.80 

KSG Karten-Verrechnungs- und Servicegesellschaft m.b.H. Vienna Austria 0.00 50.10 50.10 

Lassallestraße B.-,P.-,E.- u. V.ges.m.b.H. Vienna Austria 99.00 0.00 99.00 

Limited Liability Company “AI Line” Moscow Russian Federation 0.00 99.90 99.90 

Limited Liability Company B.A. Real Estate Moscow Russian Federation 0.00 100.00 100.00 

LLC “SP investm.build.asset man.comp.Ukrsots Real Estate” Kiev Ukraine 0.00 95.34 95.34 

LLC Ukrsotsbud Kiev Ukraine 0.00 94.38 94.38 

Lowes Limited Nicosia Cyprus 0.00 100.00 100.00 

M.A.I.L Beteiligungsmanagement Ges. m.b.H. & Co KG Vienna Austria 0.00 94.95 94.95 

M.A.I.L Finanzberatung Gesellschaft m.b.H. Vienna Austria 0.00 94.95 94.95 

Marketing Zagrebacke Banke doo Zagreb Croatia 0.00 84.21 84.21 

MC Marketing GmbH Vienna Austria 100.00 0.00 100.00 

MC Retail GmbH Vienna Austria 0.00 100.00 100.00 

Mezzanin Finanzierungs AG Vienna Austria 56.67 5.45 62.12 

MY Beteiligungs GmbH Vienna Austria 100.00 0.00 100.00 

Palais Rothschild Vermietungs GmbH Co OEG Vienna Austria 0.00 100.00 100.00 

Pominvest dd Split Croatia 0.00 74.66 74.66 

Privat JSC Ferrotrade International Kiev Ukraine 100.00 0.00 100.00 

Prva Stambena Stedionica dd Zagreb Zagreb Croatia 0.00 84.21 84.21 

Public Joint Stock Company “Ukrsotsbank” Kiev Ukraine 26.19 69.15 95.34 

RAMSES Immobilien Gesellschaft m.b.H. & Co OG Vienna Austria 99.30 0.20 99.50 

Real Invest Immobilien GmbH Vienna Austria 0.00 94.95 94.95 

RIGEL Immobilien GmbH Vienna Austria 99.80 0.00 99.80 

Sas-Real Ingatlanüzemelteto es Kezelo Kft. Budapest Hungary 0.00 100.00 100.00 

Schoellerbank Aktiengesellschaft Vienna Austria 100.00 0.00 100.00 


144





direct 

OWNership 

iNdirect 


Schoellerbank Invest AG Vienna Austria 0.00 100.00 100.00 

SIRIUS Immobilien GmbH Vienna Austria 99.80 0.00 99.80 

SVIF Ukrsotsbud Kiev Ukraine 0.00 100.00 100.00 

Teledata Consulting und Systemmgmt. GesmbH Vienna Austria 0.00 94.95 94.95 

Treuconsult Beteiligungsgesellschaft mbH Vienna Austria 0.00 94.95 94.95 

Uctam Baltics SIA Riga Latvia 0.00 100.00 100.00 

UCTAM RU Limited Liability Company Moscow Russian Federation 0.00 100.00 100.00 

Uctam upravljanje d.o.o. Ljubljana Slovenia 0.00 100.00 100.00 

UniCredit Bank a.d. Banja Luka Banja Luka Bosnia and Herzegovina 90.92 0.00 90.92 

UniCredit Bank a.s. Bratislava Slovakia 99.03 0.00 99.03 

UniCredit Bank Czech Republic a.s. Prague Czech Republic 100.00 0.00 100.00 

UniCredit Bank d.d. Mostar Bosnia and Herzegovina 24.40 55.23 79.63 

UniCredit Bank Hungary ZRT. Budapest Hungary 100.00 0.00 100.00 

UniCredit Bank Latvia AS Riga Latvia 100.00 0.00 100.00 

UniCredit Bank OJSC (KG) Bishkek Kyrgyzstan 0.00 96.86 96.86 

UniCredit Bank Serbia J.S.C. Belgrade Serbia 100.00 0.00 100.00 

UniCredit Banka Slovenija d.d. Ljubljana Slovenia 99.99 0.00 99.99 

UniCredit Bulbank AD Sofia Bulgaria 92.86 0.00 92.86 

UniCredit CAIB Czech Republic a.s. Prague Czech Republic 100.00 0.00 100.00 

UniCredit CAIB Hungary Ltd. Budapest Hungary 100.00 0.00 100.00 

UniCredit CAIB Poland SA Warsaw Poland 100.00 0.00 100.00 

UniCredit CAIB Romania SRL Bucharest Romania 99.98 0.02 100.00 

UniCredit CAIB Securities Romania SA Bucharest Romania 0.00 99.11 99.11 

UniCredit CAIB Serbia Ltd. Belgrade Serbia 100.00 0.00 100.00 

UniCredit CAIB Slovakia a.s. Bratislava Slovakia 100.00 0.00 100.00 

UniCredit CAIB Slovenija d.o.o. Ljubljana Slovenia 100.00 0.00 100.00 

UniCredit Factoring EAD Sofia Bulgaria 0.00 92.86 92.86 

UniCredit Factoring Penzügyi Szolgoltato Zrt. Budapest Hungary 0.00 100.00 100.00 

UniCredit Jelzalogbank ZRT. Budapest Hungary 0.00 100.00 100.00 

UniCredit Securities International Limited Nicosia Cyprus 0.00 100.00 100.00 

UniCredit Tiriac Bank S.A. Bucharest Romania 50.56 0.03 50.59 

UniCredit Turn-Around Management GmbH Vienna Austria 100.00 0.00 100.00 

UNIVERSALE International Realitäten GmbH Vienna Austria 100.00 0.00 100.00 

UPI poslovni Sistem DOO Sarajevo Bosnia and Herzegovina 0.00 56.23 56.23 

WED Donau-City Gesellschaft m.b.H. Vienna Austria 0.00 67.80 67.80 

WED Holding Gesellschaft m.b.H. Vienna Austria 48.06 0.00 48.06 

WED Wiener Entwicklungsges.für den Donauraum AG Vienna Austria 38.00 29.80 67.80 

Z Leasing POLLUX Immobilien Leasing Ges.m.b.H Vienna Austria 99.80 0.00 99.80 

Zagreb Nekretnine doo Zagreb Croatia 0.00 84.21 84.21 

Zagrebacka banka dd Zagreb Croatia 84.21 0.00 84.21 

Zane BH doo Sarajevo Bosnia and Herzegovina 0.00 84.21 84.21 

ZAO IMB Leasing Moscow Russian Federation 0.00 100.00 100.00 

ZAO UniCredit Bank Moscow Russian Federation 100.00 0.00 100.00 

ZB INVEST DOO Zagreb Croatia 0.00 84.21 84.21 

ZETA Fünf Handels GmbH Vienna Austria 100.00 0.00 100.00 


145



F.11.2 – Investments in companies accounted for under 

the proportionate consolidation method 



direct 

OWNership 

iNdirect 


tOtal assets 

iN € thsd 

OperatiNg 

iNcOme 

iN € thsd 

equity 

capital 

iN € thsd 

Informations Technologie Austria GmbH Vienna Austria 50.00 0.06 50.06 4,546 4 3,972 

Koc Finansal Hizmetler AS Istanbul Turkey 50.00 0.00 50.00 2,122,411 1,726 2,095,692 

Stichting Custody Services YKB Amsterdam Netherlands 0.00 40.90 40.90 125 – 125 

UniCredit Menkul Degerler AS Istanbul Turkey 0.00 50.00 50.00 11,184 5,060 8,688 

Yapı Kredi Azerbaijan JSC Baku Azerbaijan 0.00 40.90 40.90 192,488 15,007 47,387 

Yapı Kredi Bank N.V. Amsterdam Netherlands 0.00 40.90 40.90 1,739,474 55,104 212,079 

Yapı ve Kredi Bankasi AS Istanbul Turkey 0.00 40.90 40.90 40,829,108 2,497,271 5,270,947 

Yapı Kredi Diversified 

Payment Rights Finance Georgetown 

Cayman 

Islands 0.00 40.90 40.90 730,486 – 3 

Yapı Kredi Emeklilik AS Istanbul Turkey 0.00 38.42 38.42 361,708 29,055 64,347 

Yapı Kredi Faktoring AS Istanbul Turkey 0.00 40.88 40.88 942,884 22,250 50,654 

YAPI Kredi Finansal Kiralama AO Istanbul Turkey 0.00 40.43 40.43 1,061,892 87,165 356,561 

Yapı Kredi Holding BV Amsterdam Netherlands 

Russian 

0.00 40.90 40.90 45,470 94 45,439 

Yapı Kredi Bank Moscow Moscow Federation 0.00 40.90 40.90 142,541 14,054 42,549 

Yapı Kredi Portföy Yönetimi AS Istanbul Turkey 0.00 40.88 40.88 47,787 40,278 43,768 

Yapı Kredi Sigorta AS Istanbul Turkey 0.00 38.42 38.42 433,466 1,555 158,664 

Yapı Kredi Yatirim Menkul Degerler AS Istanbul Turkey 0.00 40.89 40.89 378,668 58,173 124,462 

Yapı Kredi B Tipi Yatirim Ortakligi AS Istanbul Turkey 0.00 22.93 22.93 38,639 3,440 38,029 

F.11.3 – Investments in associated companies accounted for under the equity method 

iNVestmeNts Valued at equity dOmicile tOtal assets OperatiNg iNcOme equity capital 

Name Of cOmpaNy city cOuNtry add-% iN € thsd iN € thsd iN € thsd 

Air Plus Air Travel Card Vertreibsgesellschaft m.b.H. Vienna Austria 33.27 104,695 24,284 11,378 

Anger Machining GmbH Traun Austria 48.02 14,000 14,000 1,797 

Allianz ZB D.O.O. Drustvo za Upravljanje Dobrovoljnim Zagreb Croatia 41.26 3,379 1,756 1,910 

Allianz ZB D.O.O. Drustvo za Upravljanjie Obveznim Zagreb Croatia 41.26 22,984 14,866 21,618 

Bank fur Tirol und Vorarlberg Aktiengesellschaft Innsbruck Austria 47.38 8,865,100 193,400 684,737 

Banque de Commerce et de Placements SA Geneva Switzerland 12.54 1,675,897 55,133 117,008 

BKS Bank AG Klagenfurt Austria 36.03 6,358,300 186,422 618,692 

CA Immobilien Anlagen Aktiengesellschaft Vienna Austria 11.83 4,169,624 74,014 1,388,393 

Österreichische Clearingbank AG Vienna Austria 18.51 955,316 2,603 180,309 

Credanti Holdings Ltd Nicosia Cyprus 30.00 51,326 1,209 50,910 

Forstinger Handel und Service GmbH Vienna Austria 31.36 39,158 130,559 2,686 

Moll Holding GmbH Munich Germany 48.02 9,626 21 7,175 

Multiplus Card D.O.O za Promidzbu I Usluge Zagreb Croatia 21.05 2,052 –17 –497 

Notartreuhandbank AG Vienna Austria 25.00 1,076,223 14,096 20,393 

Oberbank AG Linz Austria 33.33 17,002,818 418,631 1,165,090 

Oesterreichische Kontrollbank Aktiengesellschaft Vienna Austria 49.15 35,000,000 156,000 558,724 

Österreichische Hotel- und Tourismusbank Ges.m.b.h. Vienna Austria 50.00 985,000 5,560 26,870 

Papcel a.s. Litovel Czech Republic 33.07 37,472 2,183 18,994 

Pay Life Bank GmbH Vienna Austria 23.87 385,354 66,327 117,936 

RCG Holdings LLC New York USA 22.87 1,035,573 123,767 164,613 

UniCredit Business Partner S.p.A. Cologno Monzese Italy 28.81 293,090 1,621 60,449 

UniCredit Global Leasing SPA, Milan, IT Milan Italy 31.01 30,377,139 530,685 2,572,449 

OOO UniCredit Leasing Company Moscow Russian Federation 40.00 187,859 7,849 53,492 

Wien Mitte Immobilien GmbH Vienna Austria 50.00 216,974 3,059 92,762 

Yapı Kredi Koray Gayrimenkul Yatirim Ortakligi AS Istanbul Turkey 12.45 46,332 6 35,509 


146



F.11.4 – Investments in associated companies not accounted for under the equity method 

Based on available financial statements, aggregate total assets of associated companies in which Bank Austria held investments which were not 

accounted for under the equity method were € 325.4 m. Aggregate equity capital of these companies amounted to € 312.8 m. The combined net 

profit of these companies was € 1.0 m. 

F.12 – Employees 

In 2010 and 2009, the Bank Austria Group employed the following average numbers of staff (full-time equivalents): 

Employees 

F.13 – Supervisory Board and Management Board 

The following persons are members of the Management Board of UniCredit Bank Austria AG: 

chairman and chief executive Officer: Willibald CERNKO 

deputy chairman: Federico GHIZZONI (until 21 January 2011) 

members: Helmut BERNKOPF, Jürgen DANZMAYR, Massimiliano FOSSATI (from 8 June 2010), Rainer HAUSER, Doris TOMANEK (from 7 May 2010), 

Carlo VIVALDI (until 31 January 2011), Stephan WINKELMEIER (until 7 June 2010) 

changes in 2011: Gianni Franco PAPA (Deputy Chairman from 22 January 2011). Francesco GIORDANO (member from 1 February 2011). 

The following persons were members of the Supervisory Board of UniCredit Bank Austria AG: 

chairman: Alessandro PROFUMO (until 21 September 2010) 

deputy chairman: Erich HAMPEL 

members: Sergio ERMOTTI, Paolo FIORENTINO (Chairman from 21 January 2011), Candido FOIS, Roberto NICASTRO, Vittorio OGLIENGO, Franz 

RAUCH, Karl SAMSTAG, Gerhard SCHARITZER (until 15 February 2010), Wolfgang SPRISSLER, Ernst THEIMER (from 7 July 2010), Wolfgang HEINZL, 

Adolf LEHNER, Emmerich PERL, Josef REICHL, Robert TRAUNWIESER, Barbara WIEDERNIG 

F.14 – Share-based payments 

Description of share-based payments 


Salaried staff 59,591 61,920 

Other employees 104 139 

tOtal *) 59,695 62,059 

of which: in Austria 7,815 8,146 

of which: abroad 51,880 53,913 

*) Average full-time equivalents of staff employed in the Bank Austria Group (employees of companies accounted for under the proportionate consolidation method are included at 100%), excluding 

apprentices and employees on unpaid sabbatical or maternity/paternity leave 

Outstanding Instruments 

Group Medium & Long Term Incentive Plans for selected employees refers to Equity-Settled Share Based Payments based on the shares of the parent 

company UniCredit S.p.A. 

This category includes the following: 

• stock Options allocated to selected Top & Senior Managers and Key Talents of the Group; 

• performance shares allocated to selected Top & Senior Managers and Key Talents of the Group and represented by free UniCredit ordinary shares 

that the Parent Company undertakes to grant, conditional upon achieving performance targets set at Group and strategic area level in the Strategic 

Plan and any amendments thereto approved by the Parent Company’s Board of Directors; 

• employee share Ownership plan (esOp) that offers to eligible Group employees the possibility to buy UniCredit ordinary shares with the following 

advantages: granting of free ordinary shares (“Discount Shares” and “Matching Shares” or, for the second category, rights to receive them) measured 

on the basis of the shares purchased by each participant (“Investment Shares”) during the “Enrolment Period”. The granting of free ordinary 

shares is subordinated to vesting conditions (other than market conditions) stated in the Plan Rules. 


147



Measurement model 

Stock Options 

The Hull and White Evaluation Model has been adopted to measure the economic value of Stock Options. 

This model is based on a trinomial tree price distribution using the Boyle’s algorithm and estimates the early exercise probability on the basis of 

a deterministic model connected to: 

• reaching a market share value equal to an exercise price-multiple (m); 

• probability of beneficiaries’ early exit (e) after the end of the vesting period. 

No new Stock Option Plans were granted during 2010. 

Other equity instruments (Performance Shares) 

The economic value of Performance Shares is measured considering the share market price at the grant date less the present value of the future 

dividends during the performance period. Parameters are estimated by applying the same model used for Stock Options measurement. 

No new Performance Share Plans were granted during 2010. 

Employee Share Ownership Plan 

For both Discount Shares and Matching Shares (or rights to receive them) the fair value is measured at the end of the Enrolment Period according to 

the weighted average price paid by participants to buy the Investment Shares on the market. 

The following table shows the measurements and parameters used in relation to Discount Shares and Matching Shares (or rights to receive them) 

connected to the “Employee Share Ownership Plans” approved in 2009. 

Measurement of Discount Shares ESOP 

esOp 2009 

Date of Discount Shares delivery to Group employees 14 January 2010 

Vesting period start-date 1 January 2010 

Vesting period end-date 31 December 2010 

Discount Shares’ fair value per unit (€) 1.880 

Measurement of Matching Shares ESOP 

esOp 2009 

Date of Matching Shares (or related rights) delivery to Group employees 14 January 2010 

Vesting period start-date 1 January 2011 

Vesting period end-date 31 December 2011 

Matching Shares’ (or related rights) fair value per unit [€] 1.880 

Within the limits of the “Employee Share Ownership Plan” approved in 2009: 

• all profit-and-loss and net equity effects related to Discount Shares were booked during 2010 (except adjustments, according to Plan Rules, that will 

be booked during 2011); 

• the profit-and-loss and net equity effects related to Matching Shares (or rights to receive them) will be booked during the three-year period 

2011–2013. 

Payroll costs in 2010 included share-based payments of € 709 thsd. The (cumulative) accrual totalled € 12.5 m. 

F.15 – Events after the reporting period 

After the end of the reporting period there were no events that are required to be mentioned in this report. 


148



F.16 – Consolidated capital resources and regulatory capital requirements 

The capital requirements pursuant to Section 22 of the Austrian Banking Act comprise requirements resulting from credit risk, from position risk in 

debt instruments, equities, commodities and foreign currencies, and from operational risk. 

Further details on risk calculations are contained in the risk report. 

The following tables show the capital requirements for the Bank Austria group of credit institutions pursuant to Section 30 of the Austrian Banking Act 

as at the end of the reporting period 2010 and 2009, as well as the various components of Bank Austria’s capital resources as at the end of 2010 and 

2009: 

Net capital resources of the Bank Austria group of credit institutions (€ m) 


Paid-in capital (less own shares) 1,681 1,469 

Reserves and minority interests 12,951 9,708 

Intangible assets –557 –579 

Deductions from Tier 1 capital (in particular 50% deduction pursuant to Section 23 (13) 3 to 4d 

of the Austrian Banking Act) 1) –833 –675 

core capital (tier 1) 13,242 9,923 

Net subordinated liabilities 2,857 3,004 

Revaluation reserves and undisclosed reserves 167 139 

supplementary capital resources (tier 2) 2,191 2,468 

Deductions from Tier 1 and Tier 2 (deduction pursuant to Section 23 (13) 4a) 2) –140 –138 

Net capital resources (excl. tier 3) 15,293 12,253 

Tier 3 (re-assigned subordinated capital) 228 243 

Net capital resOurces (iNcl. tier 3) 15,520 12,496 

Capital requirements of the Bank Austria group of credit institutions (€ m) 


capital requirements of 

a) Credit risk pursuant to standardised approach 6,201 5,846 

b) Credit risk pursuant to internal ratings-based (IRB) approach 2,866 2,285 

Credit risk 9,067 8,131 

Operational risk 938 777 

Position risk – debt instruments, equities, foreign currencies and commodities 228 243 

capital requiremeNt 10,232 9,151 

Total RWA 127,906 114,386 

Capital ratios 


Tier 1 capital ratio, based on all risks 10.35% 8.68% 

Total capital ratio, based on all risks 3) 12.13% 10.92% 

Tier 1 capital ratio, based on credit risk 11.68% 9.76% 

Total capital ratio, based on credit risk 4) 12.67% 11.29% 

1) Capital components in non-consolidated companies and “shortfall” under Basel 2 

2) Capital components in insurance companies 

3) Net capital resources (incl. Tier 3) as a percentage of the risk-weighted assessment basis for all risks 

4) Total capital resources less requirement for trading book, commodities risk, exchange rate risk and operational risk as a percentage of the risk-weighted assessment basis for credit risk 


149


Concluding Remarks of the Management Board 

of UniCredit Bank Austria AG 

The Management Board of UniCredit Bank Austria AG has prepared 

the consolidated financial statements for the financial year beginning 

on 1 January 2010 and ending on 31 December 2010 in accordance 

with International Financial Reporting Standards (IFRSs) published 

by the International Accounting Standards Board as adopted by 

the European Union. The management report of the Group was prepared 

in accordance with the Austrian Business Code and is consistent 

with the consolidated financial statements. 




(Chairman) 



The consolidated financial statements and the management 

report of the Group contain all required disclosures; in particular, 

events of special significance which occurred after the end of the 

financial year, and other major circumstances that are significant 

for the future development of the Group have been appropriately 

explained. 



150


Report of the Auditors 

Auditors’ report *) 

Report on the 

consolidated financial statements 

We have audited the accompanying consolidated financial statements 

of Bank Austria for the financial year from 1 January 2010 

to 31 December 2010. 

These consolidated financial statements comprise the statement of 

financial position as at 31 December 2010, the statement of comprehensive 

income, the statement of cash flows and the statement 

of changes in equity for the year ended 31 December 2010, and 

the notes to the consolidated financial statements. 

Management’s responsibility for the 

consolidated financial statements and 

for the consolidated accounting 

Bank Austria’s management is responsible for the consolidated 

accounting as well as the preparation and fair presentation of 

these consolidated financial statements in accordance with International 

Financial Reporting Standards as adopted by the EU. This 

responsibility includes: designing, implementing and maintaining 

internal control relevant to the preparation and fair presentation of 

consolidated financial statements that are free from material misstatement, 

whether due to fraud or error; selecting and applying 

appropriate accounting policies; and making accounting estimates 

that are reasonable in the circumstances. 

Auditors’ responsibility and description of 

the type and extent of the statutory audit 

Our responsibility is to express an opinion on these consolidated 

financial statements based on our audit. We conducted our audit in 

accordance with laws, regulations and principles governing an 

*) The report (in the German language, or translations into another language, including 

shortened or amended versions) may not be made public or used by third parties, when 

reference is made in whole or in part to the auditors’ report, without the express written 

consent of the auditors. 

audit of financial statements which are applicable in Austria and in 

accordance with International Standards on Auditing (ISAs), issued 

by the International Auditing and Assurance Standards Board 

(IAASB) of the International Federation of Accountants (IFAC). 

Those standards require that we comply with ethical requirements 

and plan and perform the audit to obtain reasonable assurance 

whether the consolidated financial statements are free from material 

misstatement. 

An audit involves performing procedures to obtain audit evidence 

about the amounts and disclosures in the consolidated financial 

statements. The procedures selected depend on the auditor’s 

judgment, including the assessment of the risks of material misstatement 

of the financial statements, whether due to fraud or 

error. In making those risk assessments, the auditor considers 

internal control relevant to the entity’s preparation and fair presentation 

of the consolidated financial statements in order to design 

audit procedures that are appropriate in the circumstances, but 

not for the purpose of expressing an opinion on the effectiveness 

of the entity’s internal control. An audit also includes evaluating 

the appropriateness of accounting policies used and the reasonableness 

of accounting estimates made by management, as well as 

evaluating the overall presentation of the consolidated financial 

statements. 

We believe that the audit evidence we have obtained is sufficient 

and appropriate to provide a basis for our audit opinion. 

Opinion 

Our audit did not give rise to any objections. Based on the results 

of our audit in our opinion, the consolidated financial statements 

present fairly, in all material respects, the financial position of the 

group as at 31 December 2010, and its financial performance and 

its cash flows for the financial year from 1 January 2010 to 

31 December 2010 in accordance with International Financial 

Reporting Standards (IFRSs) as adopted by the EU. 

This report has been translated from German into English for reference purposes only. Please refer to the official legally binding version as written and signed in German. Only the German version is definitive. 


151


Statement on the consolidated 

management report 

Laws and regulations require us to perform audit procedures to 

determine whether the consolidated management report is consistent 

with the consolidated financial statements and whether the other disclosures 

made in the consolidated management report are misleading 

to the group’s position. The audit report must also include a 

statement as to whether the consolidated management report is 

consistent with the consolidated financial statements and if the 

disclosures pursuant to section 243a of the Austrian Business Code 

are appropriate. 

In our opinion, the consolidated management report for the group is 

consistent with the consolidated financial statements. The disclosures 

pursuant to section 243a of the Austrian Business Code are 

appropriate. 


Austrian Savings Bank Auditing Association 

Auditing Board 

(Bank Auditor) 

Friedrich O. Hief Reinhard Gregorich 

Certified Accountant Auditor 

KPMG Austria GmbH 

Wirtschaftsprüfungs- und Steuerberatungsgesellschaft 

Bernhard Gruber Walter Reiffenstuhl 

Certified Accountant Certified Accountant 

This report has been translated from German into English for reference purposes only. Please refer to the official legally binding version as written and signed in German. Only the German version is definitive. 


152


Report of the Supervisory Board for 2010 

In the 2010 financial year the Supervisory Board performed its duties 

as defined by law and in the Articles of Association and the rules 

of procedure, with due regard to the Austrian Code of Corporate 

Governance. In five meetings and ten resolutions passed by written 

circular vote, the Supervisory Board dealt with current developments 

in the bank’s performance as well as operational, strategic and riskrelated 

issues and made the required decisions. 

Focus of the Supervisory Board’s activity 

The Management Board regularly informed the Supervisory Board, in 

writing and orally and in a timely and comprehensive manner, on 

business management issues, financial developments and earnings, 

and on events which were of major significance for the bank. On the 

basis of these reports, the Supervisory Board provided continuous 

advice to the Management Board, supervised the conduct of business, 

and passed resolutions on matters within its competence after 

appropriate evaluation. 

The rules of procedure for the Management Board, including the distribution 

of responsibilities, were modified to reflect the enlargement 

of the Management Board. The statement of compliance with the 

Austrian Code of Corporate Governance was adjusted to take account 

of current circumstances. 

A sustained focus of the thorough analyses performed by the Supervisory 

Board was the impact of the crisis in markets – in Central and 

Eastern Europe in particular – and its implications for the bank’s 

liquidity, earnings, risk position and reputation as well as the planning 

of any measures to be taken in this context. 

Specific reports dealt with the performance of Ramius, the sale of the 

property located in Renngasse 2, the reorganisation of Private Banking, 

the establishment of the special assets holding company for repossession 

(UniCredit Turn-Around Management GmbH) including subsequent 

status information, and the progress of the EuroSIG project. 

Information of special legal significance related to the Madoff case, 

derivatives transactions and the legal action brought by the German 

Bundesanstalt für vereinigungsbedingte Sonderaufgaben in Switzerland. 

Moreover, the Supervisory Board discussed further steps regarding 

the levy on banks, the Austrian capital gains tax and planned 

changes to the deposit guarantee scheme. 

Besides capital increases at the CEE banking subsidiaries AS 

UniCredit Bank Latvia, UniCredit Bank CZ, UniCredit Bank Serbia JSC, 

ZAO UniCredit Bank Russia and UniCredit Bulbank AD, the Supervisory 

Board passed resolutions concerning the transfer of parts 

of CAIB to Bank Austria and the sale of the residual CAIB to 

UniCredit Bank AG. The Supervisory Board also dealt with the 

acquisition of an additional interest in CA Immobilien Anlagen AG, the 

issue of comfort letters and the bid for OJSC UniCredit Bank (UCB). 

Other resolutions adopted by the Supervisory Board related to the 

approval of powers to represent and act on behalf of the bank, and to 

transactions governed by Section 28 of the Austrian Banking Act. 

In its meetings the Supervisory Board also discussed, on the basis of 

written and oral presentations, the main issues dealt with by the Supervisory 

Board Committees. 

Moreover, the Supervisory Board performed a self-evaluation of the 

efficiency of its work and discussed the relevant results. To the extent 

that this process indicated a need for changes, the Supervisory Board 

will take this into account in its future activities. 

Committee activities 

The Credit Committee held five meetings and passed four resolutions 

by written circular votes. Apart from decisions on loans requiring its 

approval, the Committee also took note of loans granted under the 

Management Board’s approval authority and dealt with exposures of 

relevance in connection with Art. 136 of the Italian Banking Act and 

with large exposures pursuant to Section 27 of the Austrian Banking 

Act. In addition to detailed risk and sector portfolio reports, the 

Committee dealt with the overall risk report, the report on the structure 

of the loan portfolio, and with risk policy principles. In its activities 

the Committee also considered information on aspects of credit risk, 

market risk, country risk, liquidity risk, reputational risk and operational 

risk as well as analyses of risk-bearing capacity and of the CEE loan 

portfolio. 

The Audit Committee held four meetings in 2010. It discussed the 

separate financial statements and the consolidated financial statements 

as well as the audit reports in the presence of the auditors. The Committee 

provided the Supervisory Board with information on these topics 

and informed it of the proposal concerning the election of the auditors 

of the separate financial statements and of the consolidated financial 

statements for the 2011 financial year. Internal Audit provided the 

Committee with regular information, and comprehensive reports on 

compliance activities were presented. The Audit Committee also analysed 

corporate governance reports, functional aspects of risk management 

and the internal control systems. The Committee periodically dealt 

with “262 Savings Law“ and in this context discussed the escalation 

process for the certification of the management report, monitoring of the 

financial reporting process, and control of financial reporting. Intensive 

deliberations focused on the management letter, the remuneration of the 

auditors and their engagement letter. 

The Strategy and Nominations Committee held one meeting and 

adopted one resolution by way of written circular vote with regard to 

the preparation of appointments to the Management Board and extensions 

of the term of office of Management Board members. 


153


The Remuneration Committee adopted resolutions by written 

circular votes as required. 

Management Board 

In the 2010 financial year, Stephan Winkelmeier resigned from the 

Management Board with effect from 7 June 2010. Doris Tomanek 

was appointed to the Management Board with effect from 7 May 

2010, and Massimiliano Fossati was appointed to the Management 

Board with effect from 8 June 2010. 

Supervisory Board 

The Supervisory Board was saddened by the death of Gerhard 

Scharitzer on 15 February 2010. At the Annual General Meeting held 

on 7 July 2010, and with effect from the same date, Ernst Theimer 

was elected to the Supervisory Board for the remaining term of office. 

The Chairman of the Supervisory Board, Alessandro Profumo, resigned 

from the Supervisory Board with effect from 21 September 

2010 (in January 2011, Paolo Fiorentino was elected to succeed him 

as Chairman of the Supervisory Board). 

Details of the composition of the Supervisory Board and the 

Super visory Board Committees in the past financial year are 

given in the section “Supervisory Board and Management Board 

of UniCredit Bank Austria AG” of the Annual Report. 

Separate financial statements and 

consolidated financial statements 

The accounting records, the 2010 separate financial statements and 

the management report were audited by the Auditing Board of the 

Austrian Savings Bank Auditing Association and by KPMG Austria 

GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft. As the 

audit did not give rise to any objections and the legal requirements 

were fully complied with, the auditors’ report was expressed without 

qualification. 

The Supervisory Board endorsed the findings of the audit, agreed 

with the separate financial statements and management report, 

including the proposal for the appropriation of profits, presented by 

the Management Board, and approved the 2010 separate financial 

statements, which were thereby adopted pursuant to Section 96 (4) 

of the Austrian Joint Stock Companies Act. 

The compliance review of the Corporate Governance Report pursuant 

to Section 243b of the Austrian Business Code was performed by 

Univ. Prof. DDr. Waldemar Jud Corporate Governance Forschung CGF 

GmbH and has not given rise to any major objections in its final 

findings. 

The 2010 consolidated financial statements were audited by the 

Auditing Board of the Savings Bank Auditing Association and by 

KPMG Austria GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft 

for consistency with International Financial Reporting Standards 

(IFRSs) published by the International Accounting Standards 

Board as adopted by the European Union, and the management report 

of the Group was audited for consistency with the Austrian Business 

Code. The audit did not give rise to any objections and the legal 

requirements were fully complied with. In the opinion of the auditors, 

the consolidated financial statements give a true and fair view of the 

financial position of the Group as at 31 December 2010, and of the 

results of the Group’s operations and its cash flows for the financial 

year beginning on 1 January 2010 and ending on 31 December 

2010, in accordance with International Financial Reporting Standards 

(IFRSs) as adopted by the European Union. 

The auditors certified that the management report of the Group was 

consistent with the consolidated financial statements, and that the 

legal requirements for exemption from the obligation to prepare also 

separate consolidated financial statements pursuant to Austrian law 

were met, and they expressed their unqualified opinion. 

The Supervisory Board has endorsed the findings of the audit. 

A word of thanks 

The Supervisory Board thanks the Management Board members, the 

Employees’ Council, and all employees for their personal commitment 

and dedication. In a challenging environment they performed 

well and achieved highly respectable results. 


The Supervisory Board 

Paolo Fiorentino 

Chairman of the Supervisory Board 


154

Statement by Management 

We state to the best of our knowledge that the consolidated financial 

statements prepared in accordance with the applicable financial 

reporting standards provide a true and fair view of the financial 

position and performance of the Group, and that in the management 

report of the Group the business trends including business 




(Chairman) 



results and the position of the Group have been presented in such 

a way as to provide a true and fair view of the financial position 

and performance of the Group, and that the management report of 

the Group describes the material risks and uncertainties to which 

the Group is exposed. 


Bank Austria · 2010 Annual Report 203

II. UniCredit Bank Austria AG 

Preliminary remarks on the financial statements 

of UniCredit Bank Austria AG for 2009 158 

Management Report of UniCredit Bank Austria AG 159 

Financial Statements of 

UniCredit Bank Austria AG for 2009 183 

Notes to the Financial Statements 


List of shares in group companies and equity 

interests of UniCredit Bank Austria AG 210 

Supervisory Board and Management 

Board of UniCredit Bank Austria AG 212 

Signatures of the Management Board 214 

Auditors’ Report 215 


Investor Relations, ratings, financial calendar, imprint 222 


Preliminary remarks on the financial statements of UniCredit Bank Austria AG for 2010 

UniCredit Bank Austria Aktiengesellschaft, the parent 

company of the Bank Austria Group, presents its balance 

sheet as at 31 December 2010 and its profit and loss account 

for the year ended 31 December 2010, as well as the 

management report and the notes pursuant to Austrian law. 

The consolidated financial statements of the Bank Austria 

Group for the financial year beginning on 1 January 2010 and 

ending on 31 December 2010 were prepared in accordance 

with International Financial Reporting Standards (IFRSs) 

published by the International Accounting Standards Board as 

adopted by the European Union. The annual report of the 

UniCredit Bank Austria Group, which includes, inter alia, the 

consolidated financial statements, as well as the Group’s 

management report and notes can be obtained, free of 

charge, under Investor Relations on the Internet (for contact 

details see page 216). 

The two reporting formats – under IFRSs and under the 

Austrian Banking Act (BWG) – cannot be compared with one 

another because the operations covered by the financial 

statements differ (consolidated financial statements versus 

separate financial statements of the Group’s parent company), 

and the valuation and accounting principles are also different. 

The annual report of the Group gives readers information on 

the status of the group of companies controlled by UniCredit 

Bank Austria AG. The consolidated financial statements 

provide international comparability, a fair value-based 

presentation of the financial position and performance, and 

more detailed information, for example through segment 

reporting. 

UniCredit Bank Austria AG’s separate financial statements, 

prepared in accordance with Austrian rules, fulfill other 

important functions, especially under supervisory aspects. 

They are also the basis for determining the profit available for 

distribution under Austrian law and the dividend of UniCredit 

Bank Austria AG. In making an economic evaluation of the 

bank, users of the separate financial statements should take 

into account especially the extensive financial relations 

between the parent company and its banking subsidiaries. For 

this reason the financial statements of the Group provide more 

comprehensive information. 


Management Report of UniCredit Bank Austria AG 

Development of UniCredit Bank Austria AG 2010 

1. Report on business developments and the economic 

situation 

1.1. Business developments 

Economic situation and banking environment in our core 

markets 

The global economy grew by about 4.75% in 2010, after 

contracting by 0.5% in the preceding year. After the implementation 

of the anti-cyclical economic support programmes, which were 

introduced to counteract the downturn in 2009, world trade provided 

decisive impetus in 2010, with growth of 16% in the reporting year, 

after a contraction of 11%. This time the drivers of the cyclical 

reversal were the emerging markets, led by China, whose economy 

grew by over 10%. Among commodities, the strongest price 

increases were recorded for crude oil (+22%) and industrial metals 

(+20%). The US economy, which used to act as global pacemaker 

in previous years, also overcame recession and grew by 2.9% in 

2010. But massive budget deficits as a result of measures aimed at 

supporting the economy pushed the public debt ratio to 93%. 

Despite the expansionary fiscal policy, unemployment remained at 

an unusually high level of 9.4% and the real estate sector did not 

recover to any significant extent, either. Therefore the Federal 

Reserve went a step beyond the zero-rate policy by purchasing 

substantial amounts of government bonds. 

Average economic growth of 1.7% in the euro area in 2010 (after a 

contraction of 4% in 2009) reflected huge differences: while the 

German economy expanded at a rate of 3.6% (after shrinking by 

4.7%), output in Spain, Ireland and Greece continued to contract. 

The Austrian economy performed slightly better than the euro area 

as a whole in both years, growing by 1.9% in 2010 after contracting 

by 3.9% in 2009. The period from the end of April to the middle of 

May saw the outbreak of the debt crisis in the euro area’s 

peripheral countries: Greek government bonds fell to 65% of their 

nominal value, with yields peaking at over 15% and 12% on 5-year 

and 10-year bonds, respectively. The crisis continued to smoulder 

even after the EU and the IMF put in place the € 750 bn rescue 

scheme, after the European Financial Stability Facility (EFSF) was 

established, and although dramatic austerity programmes were 

initiated; sovereign ratings of highly-indebted low-growth countries 

were reduced on several occasions. In November 2010, credit 

spreads for Ireland (because of the restructuring of the country’s 

banking sector), Portugal (in view of weak economic growth) and 

Hungary (which refused IMF support) were between 4.8% and 6.0%. 

Although Ireland and Greece used aid and guarantees under the 

rescue scheme, which were provided against strict conditions, the 

situation did not ease. The European Central Bank (ECB) therefore 

adhered to its policy of low interest rates. In the course of the year, it 

absorbed excess liquidity as money market dealings among major 

international banks started to normalise. But the ECB continued to 

allot bids in full at the fixed rate and thus supplied liquidity to the 

banking systems of countries affected by the debt crisis. Unlike the 

US and the United Kingdom, the ECB handled its “non-standard 

measures” (purchases of government bonds and covered bonds) in 

a highly restrictive manner. Spot and forward rates in money 

markets rose in the final months of 2010, thereby only moving a little 

closer to the key interest rate. 

In the first nine months of 2010, financial markets focused on asset 

classes which are – rightly or unjustifiably – seen as having the best 

quality: benchmark bonds and gold. It was only in the final months of 

2010 (and beyond the turn of the year) that risk tolerance rose 

again, as the economic upswing gathered momentum and became 

increasingly self-sustaining. The strong rise in benchmark bonds of 

the euro area peaked at the end of August, when yields fell to an alltime 

low of 2.09%. Yields subsequently rose to 2.97%, giving an 

annual performance of 7.6%. Interest margins continued to narrow in 

2010. The steepness of the euro yield curve, measured by the 

interest rate differential between five-year benchmark bonds and 3month 

money, became less pronounced, declining from 1.97 

percentage points at the beginning of the year to one half of a 

percentage point at the end of August, as interest rates in capital 

markets fell rapidly; it was only in the fourth quarter that the 

differential rose again slightly, to 1.20 percentage points at year-end 

2010. Moreover, credit spreads for banks remained high, as did 

liquidity and funding costs. 

Credit spreads for non-financial corporate bonds, and also for 

covered bonds and emerging markets bonds, hardly varied in the 

course of 2010 compared with their levels in previous years; yearon-year, 

they remained almost unchanged, reflecting stabilisation in 

the corporate sector. The world stock index (MSCI / local 

currency), which had recovered strongly in 2009 (+26.2%), moved 

sideways until late summer before advancing in the remaining part 

of the year (+8.3% in a comparison of year-end levels). Equity 

markets in emerging economies outperformed those in other 

countries from August onwards as capital inflows resumed. 

Nevertheless, the EuroStoxx remained unchanged in a comparison 

of year-end levels. The ATX advanced strongly (+16.4%), as did the 

DAX (+16.0%) and the CEE blue chips (CECE +15.7%). 

The public debt crisis flared up again and again, prompting support 

measures at short notice and discussions of fundamental reforms. 

All this failed to convince investors that the risk of debt rescheduling 

in European debtor countries was dispelled. Therefore gold 

continued its record-breaking run throughout the year, reaching an 

all-time high of US$ 1,431 per ounce on 7 December 2010. Although 

the Swiss central bank took temporary measures to contain the 

appreciation of the Swiss franc against the euro, its value rose by 

19.6% to a peak of CHF 1.2397 per euro on 30 December 2010. 

The US dollar benefited significantly from European uncertainty until 

the middle of the year, rising by 20.6% to a USD/EUR exchange rate 

of 1.1875 on 7 June 2010; later in the year it eased again to reach 

1.3377 at the end of 2010, a year-on-year increase of 7.0%. 

Austria saw a stable economic recovery in 2010, with surprisingly 

strong growth. While GDP was up by 1.9% in real terms, this did not 

nearly compensate for the sharp downturn in the crisis year of 2009, 

in which the economy contracted by 3.9%. This means that Austria 

is among the countries experiencing the strongest growth in the euro 

area. It should be noted, however, that the recovery was more or 

less limited to the export sector in most of the year: net exports 

accounted for close to 90% of economic growth. Austrian industry 

benefited from the strong performance of the Asian and Latin 

American emerging markets, mainly via supplies to the globally 

oriented German economy. 



Demand from several countries in Central and Eastern Europe, the 

Czech Republic and Slovakia in particular, also picked up in 

response to the global recovery. In 2010, the Austrian manufacturing 

sector increased its output by 6.5%. Capacity utilisation in this sector 

consequently rose to over 83% by the end of 2010, thus exceeding 

the multi-year average, a development which is unique in the euro 

area. It was only later in the year, and somewhat hesitantly, that the 

strong momentum of recovery spread to the domestic economy. The 

prevailing uncertainty kept investment activity at a low level for a 

long time; restraint on capital spending gradually disappeared only 

in the second half of 2010. Investment in equipment was still down 

by about 3% for 2010 as a whole. Private consumption held up well 

(down by only 1% in real terms) as developments in the labour 

market were comparatively favourable, with employment up by 0.7% 

and the unemployment rate declining from 4.8% in 2009 to 4.4%. 

Retail sales accelerated towards the end of the year, but a slightly 

negative trend in real wages (less overtime work, more flexible 

employment arrangements) curbed growth in 2010. As a result, all of 

the marked increase in the inflation rate to an average 1.9% for 

2010 (2009: 0.5%) was due to external factors (rising prices for 

commodities). 

Credit demand in Austria remained weak in 2010. Adjusted for the 

translation effect associated with the strong Swiss franc, lending 

volume in Austria in 2010 declined slightly. Demand for housing 

loans was very weak, though somewhat higher than in the previous 

year. Repayments of consumer loans and SME loans exceeded new 

business, leading to a slight decrease in total volume. Loans to 

corporate customers remained constant until the middle of 2010 and 

increased in the course of the second half of the year, in parallel 

with the recovery in investment activity. Although lending rates and 

deposit rates rose slightly towards the end of the year, bank 

customers in Austria saw interest rate levels in 2010 which were 

among the lowest in history. These developments reflected low 

money market rates and the flat yield curve. Moreover, the average 

period for which interest rates are locked in has shortened 

significantly over the past years. As income trends were moderate 

and consumer demand was relatively robust, financial assets held 

by Austrian private households in the first nine months of 2010 

increased at only half the growth rate seen in 2009. This 

development also reflects repayments of consumer loans. Deposits 

showed a particularly weak trend, hardly rising year-on-year. 

Somewhat stronger demand was again seen for mutual funds, but 

this did not yet compensate for the outflows in the period from mid- 

2007 to early 2009. New investments in shares and bonds in 2010 

were modest. The only sector which continued to record steady 

inflows was life assurance, not least thanks to long-term policies. 

Economic activity also picked up in Central and Eastern Europe 

(CEE) in 2010. The CEE region’s combined GDP expanded by a 

real 3.6% in 2010, twice the rate of western Europe, after the region 

was severely hit by the recession in the previous year (2009: –5.9% 

including Poland / –6.9% without Poland). Developments in the 

individual countries and country groups varied considerably. In 

2010, especially those countries which experienced a boom before 

the crisis had to focus on reducing their substantial external 

financing requirements (partly by curbing significant public deficits) 

to make themselves less crisis-prone. This was achieved with low 

wage rises, or in some cases even nominal wage reductions, 

austerity programmes, and subsequently a downturn in domestic 

economic growth. Thanks to the timely implementation of specific 

measures – partly supported by EU and IMF stand-by arrangements 

with conditions attached – and because of initially low public debt 

levels (which averaged less than 40% of GDP) the CEE countries 

managed to emerge from the public debt crisis unscathed. 

This is reflected in the performance of share prices (MSCI Emerging 

Europe +16.3%), the stability of interest-rate spreads on CEE 

government bonds (EMBI/Europe 270 bp at year-end 2010 / 291 bp 

at year-end 2009), and especially exchange rate developments. The 

CEE currencies of countries in our perimeter of operations together 

(weighted by the operating profit of our local subsidiaries) 

appreciated against the euro by 3.2% compared with year-end 2009 

and by 5.0% in average annual terms. This development was 

supported by countries which export raw materials: Russia (+9.6%), 

Ukraine (+6.4%) and Kazakhstan (+5.4%), whose currencies take 

their bearings from both the euro and the US dollar. The currencies 

of the remaining countries, notably Turkey (+8.3%) and the Czech 

Republic (+4.5%), also strengthened against the euro or remained 

unchanged; only Serbia’s currency depreciated more heavily (– 

8.2%). 

Lending volume in the CEE region is likely to have expanded by no 

more than 11% in 2010; this compares with growth of over 30% 

before the crisis broke out (2008: 32%, local currency, on a weighted 

basis). In some countries, the banking sector even experienced 

excess liquidity as a result of weak demand. Deleveraging and 

competition for deposits continued to have priority only in countries 

with a particularly large local financing gap, such as the Baltic states. 

The credit risk cycle lagged behind the business cycle in 2010 and 

mirrored the divergent trends. Turkey was the first country where 

loan losses were past their peak by the end of 2009, and which not 

only recorded a decline in additions to, but also an absolute 

decrease in, non-performing loans. In most countries the proportion 

of non-performing loans (NPL ratio) continued to rise in 2010, to 

levels which were significantly higher than before the crisis. The NPL 

ratio is likely to have peaked at the end of 2010/beginning of 2011; 

in Kazakhstan and Latvia the peak will probably occur later, in the 

second half of 2011. The equity capital ratios of banks in Central 

and South-East Europe were higher than before the crisis as profits 

were retained and because expansion was unusually weak; the 

ratios were moreover well above the statutory minimum levels. In the 

former CIS countries – Russia, Kazakhstan and Ukraine – the 

capital buffers of state-controlled banks were increased through 

national capitalisation programmes; the local banking sector is still 

being restructured. Overall, the challenges for CEE banks’ 

profitability in 2010 were more or less equal to those of 2009: while 

there was a slight improvement in the provisioning charge – except 

in the problem countries –, the delayed upturn was responsible for 

lower revenue growth, funding costs were still high, and credit 

demand was slack (and limited to low-margin segments). Banking 

business in the CEE countries still has significant catching-up 

potential (general prosperity gap, disproportionately low financial 

intermediation, low level of market penetration with banking 

services). However, as a result of the economic and financial market 

crisis, the time horizon of high growth expectations in the boom 

years had to be extended in 2010, and growth expectations had to 

be reduced in favour of moderate scenarios. 



In the last two years, efforts to address the crisis drew attention to 

institutional and regulatory deficits. In 2010, a plethora of reform 

processes and regulatory measures was initiated at the global, 

regional and national levels which affected the banking sector 

directly or indirectly, already in the preparatory stages. Besides the 

reform of the European regulatory system with new institutions and 

more competencies especially with regard to international banking 

groups, the new set of rules of the Basel Committee on Banking 

Supervision, known as the Basel 3 package, already cast its 

shadows before, prompting banks to adjust their business models 

ahead of the implementation of Basel 3. The new rules call for 

measures such as a significant increase of the minimum capital 

ratios over the medium term and a more restrictive definition of Tier 

1 capital (essentially now comprising only paid-up capital and 

reserves). A non-risk-weighted leverage ratio and regulatory 

standards for liquidity management (liquidity coverage ratio, net 

stable funding ratio) will be introduced in the next few years after a 

monitoring and calibration phase. The qualitative and quantitative 

capital requirements, in particular, started to have an impact in 2010, 

although the calibration process was not yet completed and the 

requirements are being phased in. The impact is reflected primarily 

in the level and structure of capital resources, medium-term funding, 

and in efforts to reduce leverage and to fund lending operations on a 

decentralised basis and largely through customer business. At the 

national level, governments took fiscal ad-hoc measures requiring 

the banking sector to participate in the costs of crisis management, 

such as the bank levy in Hungary, payable for the first time in 2010, 

or the bank levy in Austria (due in 2011). Similar measures are being 

discussed in other countries, and the EU is seeking to integrate such 

approaches in a crisis prevention framework. 

Adjustment measures and strategic projects in UniCredit Bank 

Austria AG in 2010 

In 2010, UniCredit Bank Austria AG concentrated on more swiftly 

implementing the enhanced UniCredit business model in response 

to changes in the banking environment. The key features of the 

business model were, and are: greater customer centricity, a 

stronger focus on regional business, a simplification of the range of 

products offered to customers, and sustainable development by 

giving priority to commercial business. This includes increasing the 

efficiency of back-office operations through the cross-regional 

bundling of production and settlement activities in specialised units 

or service units for the purpose of achieving cross-regional 

synergies. The measurement of customer satisfaction and the 

subsequent alignment of our services had a positive impact on dayto-day 

business with customers. In 2010, we took steps to maintain 

reputation levels and regain public confidence in banks which was 

eroded by the financial market crisis: we revised the product policy, 

the bank’s self-perception and the way the bank presents itself to 

the public; as part of this effort, we aligned our sales campaigns and 

the bank-internal performance incentives more closely with 

sustainability objectives. UniCredit Bank Austria AG underlined its 

intention to show solidarity in society by launching a number of 

initiatives and a new programme for sponsor-based projects in 2010. 

The “One4C” – One for Clients – project was the strategic guideline 

for the entire UniCredit Group in 2010, and therefore also for 

UniCredit Bank Austria AG. In line with this project, we streamlined 

the organisational structure with a number of individual projects and 

more closely defined the sub-segments of our sales operations 

according to customer centricity, simplicity and specific customer 

needs. In 2009 we had combined customer-related capital markets 

business and ongoing commercial banking business with corporate 

customers, which resulted in the creation of the Corporate & 

Investment Banking Division, and we started to bundle the entire 

target group comprising the top segment of private customers within 

the Private Banking Division; this involved the transfer of customers 

from other business segments. Priority in 2010 was given to creating 

specialised units for small and medium-sized companies (SMEs). 

We developed a separate service model for SMEs (according to 

qualitative criteria and/or turnover between € 3 m and € 50 m) with a 

decentralised sales network. This became fully operational at the 

beginning of 2011. In Central and Eastern Europe (CEE) we 

continued to press ahead with the divisionalisation process in 

selected countries, based on local market potential. In this context 

we gave greater attention to a pragmatic, selective approach and 

enlarged the branch network only in countries where this was 

warranted upon reaching a certain size threshold and with a 

foreseeable market outlook. This was primarily the case in Turkey, 

Romania, Russia, Bulgaria, Serbia, Hungary and Croatia. 

The most far-reaching changes in 2010 concerned investment 

banking operations, which – across the entire UniCredit Group – 

were made to focus on customer-driven business and on the related 

trading activities. As was agreed at the time of the business 

combination which resulted in the creation of UniCredit Group in 

2005, UniCredit Bank AG (the former Bayerische Hypo- und 

Vereinsbank), Munich, is responsible for this cross-regional 

competence centre, which conducts business from a number of 

different locations. For this reason, we sold UniCredit CAIB AG to 

UniCredit Bank AG in June 2010. This banking subsidiary was made 

to concentrate on trading activities not related to customer business 

in the period preceding its sale. Customer-driven investment banking 

activities were reintegrated in UniCredit Bank Austria AG, which was 

also assigned responsibility for the further conduct of the bank’s 

Treasury operations and liquidity management. This also involved a 

reintegration of staff. The sale of UniCredit CAIB AG and its 

subsidiary UniCredit CAIB Securities UK Ltd. to UniCredit Bank AG, 

Munich, is a transfer of business interests under common control. As 

in the case of other intra-group transfers, continuity is assured by 

UniCredit Bank Austria AG’s participation in profits of the “Markets” 

global product line of UniCredit’s CIB Division for a period of five 

years. Claims to future revenues constitute a derivative for 

accounting purposes and the valuation results are recognised in net 

trading, hedging and fair value income. One of the cornerstones of 

the UniCredit business model is the cross-regional bundling of 

production while continuing to focus on local customer centricity. In 

this way the bank meets the size threshold for participation in 

international financial markets and enhances its competitive abilities, 

while maintaining the principle of “one face to the customer”, i.e. 

offering local integrated customer services from a single source. 



Development of total assets 

Overview: As at 31 December 2010, UniCredit Bank Austria AG’s 

total assets were € 120.7 bn, down by € 8.9 bn or 6.8% from the 

level as at 31 December 2009. While customer business was more 

or less stable, rising in the course of the year, balance sheet 

developments were mainly determined by the above-mentioned 

reorganisation of trading and capital market activities. The sale of 

UniCredit CAIB AG had significant direct and indirect effects on 

assets and liabilities. These effects include those in connection with 

the handling of the transaction itself by the shareholding 

management unit, and the fact that UniCredit CAIB AG was no 

longer reflected in funding and liquidity management, which was the 

main reason for the decline in the balance sheet total. Indirect 

effects resulting from the transaction included the following: 

UniCredit CAIB AG performed various functions for UniCredit Bank 

Austria AG which after the sale had to be performed by the bank 

itself, including asset/liability management functions and liquidity 

management functions such as the holding of securities eligible for 

repurchase transactions. A comparison of selected balance sheet 

items expressed as a percentage of the balance sheet total at the 

end of 2010 and 2009 (see table below) shows that the structural 

changes involved a significant reduction of interbank business on 

both sides of the balance sheet, while the proportion of customer 

business increased. As at 31 December 2010, loans and advances 

to customers accounted for 55.2% of total assets, up from 51.5% in 

the previous year, and primary funds (i.e. amounts owed to 

customers and debts evidenced by certificates) were 55.5% of the 

balance sheet total, up from 55%. Lending business continued to be 

fully covered by primary funds. The bank’s balance sheet structure 

and risk-bearing capacity improved further, not least as a result of 

the € 2 bn capital increase carried out in March 2010. As at 

31 December 2010, capital and reserves (equity) amounted to € 

14.5 bn, representing 12.0% of the balance sheet total 

(31 December 2009: 9.6%). The ratio of total assets to equity – i.e. 

the leverage ratio – declined from 10.4 to 8.3. 

Selected balance sheet items as a proportion of the balance 

sheet total compared with the previous year 

31 Dec. 2010 31 Dec. 2009 

Assets 

Loans and advances to credit 

institutions (item 3) 

Loans and advances to customers 

19.1% 24.0% 

(item 4) 

Securities including shares (items 

55.2% 51.5% 

5 and 6) 

Shares in group companies (item 

7.8% 3.9% 

8) 10.4% 14.0% 

Liabilities and equity 

Amounts owed to credit 

institutions (item 1) 25.0% 27.8% 

Amounts owed to customers (item 

2) 38.0% 37.6% 

Debts evidenced by certificates 

(item 3) 17.4% 17.4% 

Primary funds (items 2 and 3) 55.5% 55.0% 

Capital and reserves (total of items 

9, 10, 11 and 12) 12.0% 9.6% 

Major balance sheet items – comparison of year-end levels 


On the assets side, cash in hand and balances with central 

banks and postal giro offices declined by € 25.0 m or 2.0% to € 

1,221.1 m, mainly on account of lower balances with 

Oesterreichische Nationalbank, Austria’s central bank. During the 

financial market crisis, liquidity was transferred among banks 

primarily via central bank accounts. In the reporting year, interbank 

activity levels increased, at least among market participants with a 

high credit rating. 

To create additional liquidity reserves, Treasury bills and similar 

securities were increased by € 496.4 m to € 3.4 bn. Holdings of 

euro-area government bonds, which are eligible for refinancing in 

the Eurosystem, rose by € 827.5 m. 

Loans and advances to credit institutions were € 23.1 bn, down 

by € 8.0 bn or 25.8% from the year-end 2009 level. The reduction of 

interbank business reflected the – desirable – trend in the banking 

industry as a whole. In UniCredit Bank Austria AG, this development 

was explained as part of the reorganisation of trading and 

investment banking functions; all of the decline in loans and 

advances to credit institutions was due to domestic credit 

institutions, with the sale of UniCredit CAIB AG accounting for 

almost the entire amount of the decline. Loans and advances to 

foreign credit institutions, on the other hand, rose strongly – mainly 

for funding the stronger growth of business volume at the CEE 

subsidiaries, especially our Moscow-based banking subsidiary. 

Loans and advances to customers were unchanged at € 66.7 bn. 

Domestic customers accounted for about three-quarters of total 

lending volume (€ 50.5 bn); loans and advances to domestic 

borrowers increased by 2.1%, with mortgage loans showing the 

strongest growth, followed by local-authority loans. A significant 

decline was recorded in consumer loans, while other loans and 

advances declined only slightly, mainly because of the cyclical lag in 

investment activity and the good liquidity position of our corporate 

customers. Foreign currency loans were no longer actively offered 

by the bank. Where necessary, foreign currency loans were hedged 

or rescheduled through joint action with customers. Nevertheless, 

the currencies concerned appreciated to such an extent that 

conversion into euro resulted in a nominal increase (Swiss franc: 

+18.7%, Japanese yen +14.5% against the euro, year-on-year). 

Loans and advances to foreign customers were down by 5.9% from 

the previous year although export financing increased. 

Bonds and other fixed-income securities rose by € 4.4 bn, doubling 

to € 9.0 bn. The increase was mainly due to the acquisition of 

foreign euro-denominated securities. 

Shares in group companies declined by € 5.6 bn or 30.8% to € 

12.6 bn. The main reason for the decline was the sale of UniCredit 

CAIB AG; in addition, the valuation of the shareholdings in our 

banking subsidiaries in Kazakhstan and Latvia had to be adjusted to 

the difficult situation and to changes in the outlook for the local 

banking sector. 



As a result of the sale of investment banking operations, interbank 

business was significantly lower also on the liabilities side. Amounts 

owed to credit institutions were down by € 5.9 bn or 16.3% to € 

30.2 bn. The decline mainly reflects the net effect of the sale of 

UniCredit CAIB AG and the increase in amounts owed to UniCredit 

Bank AG (the former Bayerische Hypo- und Vereinsbank), Munich, 

which assumed some of the functions previously performed by 

UniCredit CAIB AG. A comparison with previous years shows that 

interbank business declined strongly over several years. 

As at 31 December 2010, amounts owed to customers were € 

45.9 bn (down by € 2.8 bn or 5.7%). Savings deposits totalled € 16.4 

bn, the decrease of € 1.2 bn or 7% compared with the previous year 

was mainly due to the low interest rate environment. Other liabilities, 

primarily interest rate-sensitive and volatile time deposits held by 

large companies and institutional customers, declined by € 1.6 bn or 

5.0%. 

Debts evidenced by certificates were down by € 1.4 bn to € 21.1 

bn in 2010 as bullet bonds matured and securities were repaid 

before maturity. Sales of mortgage bonds and local-authority bonds 

rose strongly because in an environment characterised by low 

interest rates, investors were looking for higher-yielding issues of top 

quality. 

Other liabilities, mainly comprising trading liabilities, increased by € 

102.8 m or 6.9% to € 1.6 bn, also in connection with the 

reintegration of trading activities of the former UniCredit CAIB AG 

which complement commercial banking business. 

Allocations to provisions amounted to € 287.9 m in 2010, bringing 

the total amount to € 4.1 bn as at 31 December 2010. Provisions for 

severance payments and pension provisions, accounting for a 

combined 74% of the total amount, showed little change. Other 

provisions (up by € 248.7 m to € 1,007.9 m) related to pending 

losses on lending and securities business, risks associated with 

equity interests, and litigation risks and guarantee obligations. 

Subordinated liabilities declined by € 1.1 bn or 28.6% to € 2.8 bn 

as a result of the redemption of securities with a bullet maturity. 

There were no new issues. Supplementary capital also decreased 

by € 40.3 m to € 452.8 m. This is to be seen in the context of the 

expected more restrictive rules concerning surrogate forms of 

capital. 

Capital and reserves (equity) rose by a total of € 2.0 bn as a result 

of the capital increase carried out in March 2010. The share capital 

was increased by € 212.3 m to a nominal amount of € 1.7 bn; capital 

reserves subject to legal restrictions rose by € 1.8 bn to € 7.9 bn. 

Capital and reserves of UniCredit Bank Austria AG totalled € 14.5 

bn, an increase of 16.1% over year-end 2009. The bank has thus 

created the base for further business expansion and a higher riskbearing 

capacity, and for meeting stricter capital requirements. 

The € 18.5 m increase in the reserve pursuant to Section 23 (6) of 

the Austrian Banking Act to a total of € 2.1 bn resulted from the 

fact that the bank took over part of the operations of UniCredit CAIB 

AG. 

Profit and loss account for 2010 

Overview: 

The reporting period was a year of stabilisation and gradual recovery 

after the serious financial market crisis experienced in the preceding 

years. UniCredit Bank Austria AG’s profit and loss account for 2010 

reflects this development more clearly than the balance sheet. The 

“sustainable” income components (net interest income and net fee 

and commission income) of UniCredit Bank Austria AG’s current 

business with a focus on Austria rose by 18.7% in 2010; at a 

combined € 2.0 bn, these two components of income were 

significantly higher than in the two preceding years, though still 

below the 2007 level. The favourable development of the CEE 

subsidiaries in some regions permitted higher dividend payments. 

The net trading result showed a significant profit. Overall, operating 

income rose by more than one-quarter (+26.7%) in 2010 while costs 

grew at a much lower rate (+8.6%). On this basis, operating results 

increased from € 688 m in 2009 to € 1,152 m in 2010 but did not yet 

return to the level achieved before the crisis broke out (2007: 

€ 1,695 m). 

Business in Central and Eastern Europe showed mixed trends in 

2010. The banking subsidiaries in Central Europe and especially the 

units in Russia and Turkey performed well and partly achieved 

strong growth; the performance of the banking subsidiaries in South- 

East Europe also improved, though moderately. On the other hand, 

the restructuring process in the banking sector in some highly 

exposed countries continued and our local banking subsidiaries had 

to deal with legacy problems, mainly those in Kazakhstan, Ukraine 

and the Baltic states. Net income/expense items between operating 

results and results from ordinary business activities – reflecting the 

provisioning charge and positive and negative valuation results of 

UniCredit Bank Austria AG as a whole – were still high in absolute 

terms (-€ 1,111 m) but lower than in the two crisis years preceding 

the reporting year (2009: – € 1,636 m; 2008: – € 2,331 m). 

Driven by the improvement in operating income, operating results 

rose strongly in 2010, by € 465 m to € 1,152.9 m, despite the 

repercussions of the financial market crisis. These operating results 

were used for additions to loan loss provisions and for adjustments 

to the valuation of several banking subsidiaries. Thanks to the 

strong operating performance, and despite the high provisioning 

charge and valuation adjustments, results from ordinary business 

activities for 2010 were positive, at € 41.8 m, after a loss recorded 

in the previous year. After deduction of taxes and the inclusion of the 

profit brought forward from the previous year, the accumulated 

profit for 2010 was € 2.3 m. 



Items in the profit and loss account for 2010 compared with the 

previous year 

Net interest income in the reporting period was € 1,308.6 m, up by 

€ 211.7 m or 19.3%. After a strong decline in 2009, interest rates 

continued to fall until late summer in 2010. Given ample liquidity, the 

decline in market interest rates for short maturities was more 

pronounced than for medium-term and long maturities. Customer 

interest rates followed this pattern, resulting in a slight improvement 

in interest margins in the Austrian banking sector. 

Income from securities and equity interests rose by € 216.0 m or 

45.3% to € 692.6 m in 2010, mainly on account of dividend 

payments by CEE banking subsidiaries. In past years, which saw 

strong growth, priority was given to the capital resources of local 

banking subsidiaries. In 2010, several banks were in a position for 

the first time to distribute profits, e.g. Zagrebačka banka d.d., 

Zagreb, UniCredit Bank, Moscow, UniCredit Bank Czech Republic 

a.s., and UniCredit Bulbank AD. A smaller contribution also came 

from BA-CA Markets & Investment Beteiligung Ges.m.b.H., an 

Austrian company which distributed a gain resulting from the 

settlement of the UniCredit CAIB AG transaction. 

Net fee and commission income increased by 17.7% to € 698.8 

m. While fee and commission expenses were almost unchanged, 

fee and commission income rose by 13.1% to € 911.2 m. The 

increase was mainly due to the gradual recovery of securities 

business, with growing fee income from sales of mutual funds and 

new issues and also in connection with direct investments as part of 

safe-custody business. Growth was mainly driven by commissions 

generated from lending business, primarily for guarantees, including 

those to CEE banks. Other fee-based business saw a slight decline 

in income from payment transactions and from trading in foreign 

exchange, foreign notes and coins, and precious metals, which was 

more or less offset by an increase in fee and commission income 

from other services. 

Net profit on trading activities amounted to € 34.5 m, reflecting a 

positive swing from the negative results recorded in the two 

preceding years. While the sale of UniCredit CAIB AG involved the 

disposal of the major part of business whose results are reflected in 

this item, the bank participates in profits of the relevant UniCredit 

product line in accordance with the relevant contract. In any case, 

this item also shows that financial markets have returned to more 

normal conditions. 

Operating income in 2010 totalled € 2,840.7 m, up by € 598 m or 

26.7% from the comparative figure for 2009. 

In 2010, general administrative expenses were € 1,461.9 m, up by 

€ 72.5 m or 5.2%. Staff costs rose by 5.4% or € 45 m to € 879.6 m. 

Other administrative expenses, including those for services provided 

by Group-internal service companies, increased by 4.9% or € 27.5 m 

to € 582.3 m, mainly as a result of increases in the areas of advisory 

services and Information & Communications Technology (ICT). The 

major portion of the cost increase was due to structural changes: as 

part of the separation of customer-driven business and tradingrelated 

activities of UniCredit CAIB AG, a number of UniCredit CAIB 

AG’s employees were reintegrated in UniCredit Bank Austria AG 

before the banking subsidiary was sold. Moreover, in the middle of 

2010, various operations-related services (Postal Service and 

Printing Service) were retransferred from UniCredit Business 

Partners (UCBP) to the bank, increasing staff costs and other 

administrative expenses. 

Operating expenses, including depreciation and amortisation and 

other operating expenses, rose by € 133.2 m or 8.6% to € 

1,687.8 m. As operating income grew at a significantly higher rate 

than operating expenses, the cost/income ratio declined from 67.8% 

to 57.2%. 

Net expenses from the disposal and valuation of loans and 

advances as well as securities increased by € 152.9 m to € 704.7 

m compared with the previous year. Most of the increase resulted 

from the fact that additions to loan loss provisions were up by € 72.9 

m on the previous year, and results from the sale of securities were 

down by € 80.0 m. 

Net expenses from the disposal and valuation of financial fixed 

assets amounted to € 406.4 m, mainly resulting from provisions for 

equity interests in Kazakhstan and Latvia. 

Results from ordinary business activities in 2010 were € 41.8 m 

(2009: minus € 947.7 m). After deduction of income taxes (€ 21 m) 

and other taxes (also € 21 m, in connection with the capital 

increase), the annual surplus was € 234 thsd (2009: € 106 thsd). 

Together with the profit brought forward from the previous year, 

UniCredit Bank Austria AG’s accumulated profit amounted to € 2.3 

m. 



1.2. Structural changes in the Bank Austria Group 


Opening balance 

Number 

97 

Additions 

35 


Companies newly added to the group of 

3 

consolidated companies 32 

Disposals 

8 

Companies sold or liquidated 6 

Mergers 2 

Closing balance 

124 

Companies accounted for under the proportionate 

consolidation method 


Additions 

Disposals 


Companies accounted for under the 

equity method 

Number 

16 

1 

0 

17 


Number 

19 

Additions 

6 


Newly added companies 5 

Disposals 


0 

25 

Additions 


Name of Company Domicile Addition as at 

ATF Finance JSC Almaty 1 Jan. 2010 

ATF Inkassatsiya Ltd Almaty 1 Jan. 2010 

BA Betriebsobjekte GmbH Vienna 1 Jan. 2010 

BA Betriebsobjekte GmbH & Co Beta Vermietungs OG Vienna 1 Jan. 2010 

BA Betriebsobjekte Praha, spol.s.r.o. Prague 1 Jan. 2010 

BA GVG-Holding GmbH Vienna 31 Dec. 2010 

BA Immo-Gewinnscheinfonds1 Vienna 31 Dec. 2010 

BA Private Equity GmbH Vienna 31 Dec. 2010 

Bank Austria Finanzservice GmbH Vienna 1 Jan. 2010 

Bank Austria Real Invest Client Investment GmbH Vienna 31 Dec. 2010 

Bank Austria Real Invest Immobilien-Kapitalanlage GmbH Vienna 1 Jan. 2010 

"Cafu" Vermögensverwaltung GmbH & Co OG Vienna 1 Jan. 2010 

Cards & Systems EDV-Dienstleistungs GmbH Vienna 31 Dec. 2010 

Diners Club Slovakia s.r.o. Bratislava 1 Jan. 2010 

Europe Investment Fund Budapest Budapest 1 Jan. 2010 

GUS Consulting GmbH Vienna 31 Dec. 2010 

Human Resources Service and Development GmbH Vienna 31 Dec. 2010 

Immobilien Rating GmbH Vienna 31 Dec. 2010 

IVONA Beteiligungsverwaltung GmbH Vienna 31 Dec. 2010 

Kaiserwasser Errichtungs- u. BetriebsgesmbH Vienna 31 Dec. 2010 

KLEA ZS-Immobilienvermietung G.m.b.H. Vienna 1 Jan. 2010 

KLEA ZS-Liegenschaftsvermietung G.m.b.H. Vienna 1 Jan. 2010 

KSG Karten Verrechnungs- und Servicegesellschaft m.b.H. Vienna 1 Jan. 2010 

Limited Liability Company "AI Line" Moscow 31 Dec. 2010 

LLC "Special-purpose investm.build.asset man.comp.Ukrsots 

Real Estate" Kiev 31 Dec. 2010 

M.A.I.L Beteiligungsmanagement Ges. m.b.H. & Co KG Vienna 31 Dec. 2010 

M.A.I.L Finanzberatung Gesellschaft m.b.H. Vienna 1 Jan. 2010 

Real Invest Immobilien GmbH Vienna 1 Jan. 2010 

Sas-Real Ingatlanüzemelteto es Kezelo Kft. Budapest 1 Jan. 2010 

Schoellerbank Invest AG Vienna 1 Jan. 2010 

UniCredit CAIB Securities Romania SA Bucharest 1 Jan. 2010 

2010 Savjetovanje d.o.o. Zagreb 1 July 2010 

In 2010, all controlled companies with total assets of over € 500 thsd 

that are members of the banking group which is under regulatory 

supervision, and all controlled companies with total assets of over € 

10 m that are members of the group of non-banks under regulatory 

supervision were included. The consolidation perimeter in 

accordance with IFRSs was thereby brought in line with the 

consolidation perimeter under regulatory supervision. 



Uctam Baltics SIA Riga 1 July 2010 

Uctam upravljanje d.o.o. Ljubljana 1 July 2010 

Uctam Ru Limited Liability Company Moscow 1 Nov. 2010 

The objects of the Uctam companies are to acquire, manage, 

administer and sell equity interests, properties and other business 

assets, especially of or from real estate projects and other business 

undertakings, deriving from debt restructuring. 



Companies accounted for under the proportionate 

consolidation method 


Yapi Kredi Diversified Payment Rights Finance George Town 31 Dec. 2010 

Companies accounted for under the equity method 


Anger Machining GmbH Traun 1 Jan. 2010 

Credanti Holding Limited Nicosia 1 Jan. 2010 

Forstinger Handels und Service GmbH Vienna 1 Jan. 2010 

Papcel a.s. Litovel 1 Jan. 2010 

Wien Mitte Immobilien GmbH Vienna 1 Jan. 2010 

Multiplus Card d.o.o. Zagreb 1 July 2010 

Disposals 

Companies sold or liquidated 

Name of Company Domicile Disposal as at 

CA IB Securities AT Kiev 1 Jan. 2010 

Domus Bistro GmbH Vienna 1 Jan. 2010 

Open saving pensions fund OTAN JSC Almaty 12 March 2010 

UniCredit CA IB UK Ltd. London 19 May 2010 

UniCredit CA IB Securities UK Ltd. London 31 May 2010 

UniCredit CA IB AG Vienna 1 June 2010 

In the course of the reorganisation of Markets & Investment Banking 

business within UniCredit Group, the companies UniCredit CAIB AG 

and UniCredit CAIB Securities UK Ltd. were sold to UniCredit Bank 

AG (the former Bayerische Hypo- und Vereinsbank AG), Germany. 

Mergers 

Name of merged company Domicile Name of absorbed company Domicile Merger as at 

2010 Savjetovanje d.o.o. Zagreb Zaba Turizam DOO Zagreb 30 July 2010 

Zaba Turizam DOO Zagreb Marketing Zagrebacke Banke doo Zagreb 30 Oct. 2010 

1.3. Branches 

On 29 December 2006, UniCredit Bank Austria AG set up a 

permanent establishment in Milan, Via Tortona 33, which is 

exclusively engaged in the management of equity interests of 

UniCredit that were transferred by way of contribution in kind. 

Therefore these activities are not banking activities. 

1.4. Financial and non-financial performance indicators 

Financial performance indicators 

2010 2009 2008 2007 2006 

Tier 1 capital ratio 21.0% 19.7% 18.7% 20.1% 14.1% 

Return on equity before taxes 0.3% 0.0% 0.0% 12.3% 13.8% 

Return on equity after taxes 0.0% 0.0% 0.0% 12.2% 13.6% 

Cost/income ratio 57.2% 67.8% 70.1% 48.5% 69.8% 

Risk/earnings ratio 33.7% 38.3% 18.1% 10.0% 24.0% 

Risk/earnings ratio (without dividends) 51.6% 54.9% 33.6% 18.3% 33.5% 

Definitions of performance indicators 

Tier 1 capital ratio: regulatory Tier 1 capital divided by riskweighted 

assets (banking book) pursuant to the Austrian Banking 

Act (Bankwesengesetz – BWG) 

Return on equity before taxes: annual surplus before taxes 

divided by average equity 

Return on equity after taxes: annual surplus divided by average 

equity 

Equity: subscribed capital, capital reserves, revenue reserves, 

reserve pursuant to Section 23 (6) of the Austrian Banking Act, 

untaxed reserves 

Average equity: equity as at 1 January of the reporting year + 

equity as at 31 December of the reporting year divided by 2 

Cost/income ratio: general administrative expenses (including 

depreciation) divided by operating income including the balance of 

other operating income/expenses 

Risk/earnings ratio: net income/expenses from the disposal and 

valuation of loans and advances divided by net interest income 

including income from securities and equity interests 

Non-financial performance indicators 

Branch network 

2010 2009 2008 2007 2006 

Domestic branches 281 291 304 313 333 

Foreign branches (without 

banking business) 1 1 1 1 - 

Outlets at companies 1 1 3 7 8 

Head office 1 1 1 1 1 

Total 284 294 309 322 342 



Employees: Under the place-of work principle applied to UniCredit 

Bank Austria AG and its subsidiaries, staffing levels and staff costs 

are recorded by those companies in which the employees work. A 

comparison of year-end levels for 2010 and 2009 shows that staff 

numbers rose compared with the previous year. The increase was 

due to the integration of a number of employees of UniCredit CAIB 

AG, the reintegration of the “Packaging & Printing” services and the 

inclusion for statistical purposes of FTEs of Human Resources 

Service and Development GmbH (HRSD), our personnel leasing 

company, previously not included in the calculation of staff numbers. 

Headcount 1) 

of which; workers other 

Annual 

31 Dec. average for 31 Dec. 31 Dec. 31 Dec. 31 Dec. 

2010 2010 2009 2008 2007 2006 

7,054 6,821 6,627 6,599 7,236 7,512 

than salaried staff 0 0 0 0 0 0 

Full-time equivalents 1) 

6,469 6,285 6,097 6,072 6,711 6,978 

of which: workers other 

than salaried staff 0 0 0 0 0 0 

1) excluding apprentices and employees on unpaid maternity/paternity leave 

but including workers other than salaried staff and delegated employees 

under the “place-of-work principle” 

Human Resources: 

Human Resources management sees its role as initiating and 

driving change processes with the objective of creating an 

environment in which employees generate sustainable value for 

our customers. The shared values enshrined in the UniCredit 

Integrity Charter – fairness, transparency, respect, reciprocity, 

freedom to act, and trust – and the code of conduct serve as 

guiding principles for our human resources activities. 

We offer our employees a working environment with an international 

outlook while benefiting from diversity through international 

exchange and in daily cooperation. We also aim to be a great place 

to work for our future employees. In November 2009, we launched 

the "BestStart" training initiative to offer job opportunities. A total of 

125 training positions were filled in 2010. We are planning to fill 

another 120 training positions in 2011. Structured training 

programmes and training on the job provide our BestStarters with 

broad banking know-how within a short time and give them an 

opportunity to apply acquired knowledge in practice. 

The Executive Development Programme (EDP) and our Talent 

Management focus on strategic and individual personnel planning 

for executives and talents. Attention is given to ongoing 

development of management potential from within the bank while 

successively raising the percentage of female management 

positions. 

Global Job Model 

Together with our managers we have prepared job descriptions for 

all activities in UniCredit and compiled tasks which are characterised 

by similar profiles of technical and personal requirements in the 

standardised Global Job Catalogue. All positions now have clear 

and comparable descriptions, titles, development opportunities and 

career paths. 

Sustainability management 

The objective of Corporate Sustainability is to promote the 

integration of the social, ecological and economic dimensions of 

sustainability in Bank Austria. With a view to giving effect to 

entrepreneurial responsibility and the sustainability objective, 

Corporate Sustainability is responsible for executing and 

communicating a wide range of activities. For example, Corporate 

Sustainability is also involved in product development to give effect 

to these aspects. 

Cultivating relationships with stakeholders on an ongoing basis is an 

essential task. In the current critical environment, Corporate 

Sustainability provides strong impetus to reputation-related 

measures, with a focus on long-term orientation, credibility and 

customer relationships. In this context, Corporate Sustainability acts 

as moderator of the dialogue with stakeholders. “BankAustria- 

NachhaltigkeitsKreis” is an important forum for these activities. 

Maintaining a dialogue with customers, the bank is also in direct 

contact with its most important stakeholders, discussing with them 

such topics as sustainability, innovation and customer satisfaction. 

Other Corporate Sustainability activities range from sponsoring and 

public events, cooperation under various arrangements including the 

“Sharing knowledge” programme, and initiatives focusing on 

operations ecology and product ecology. 

Operations ecology and product ecology 

As part of its sustainability approach, UniCredit Bank Austria AG has 

for many years given close attention to ecology-related issues. A 

major factor in this context is ongoing control of direct environmental 

impacts such as the use of natural resources and waste generation. 

Indirect environmental impacts caused by business activities are 

also at the centre of attention. 

After taking part in the “eco-profit” programme of the environmental 

service package for the Vienna business sector in 2009, Bank 

Austria took a further logical step in 2010. With the implementation 

of a certified environmental management system pursuant to ISO 

14001, the bank has become the first universal bank in Austria to 

analyse and structure its environmental activities in this way, and to 

have them audited by external experts as at the end of the first 

quarter of 2011. 

In concrete terms, this has led to the ongoing publication of our 

environmental policy, an action programme of activities addressing 

direct and indirect impacts, and the establishment of an effective 

organisational structure with the appointment of an Environmental 

Officer and an Environmental Manager. 

The bank maintains its ecological focus on the product side. In 2010, 

in addition to the relevant mutual funds of Pioneer Investments, we 

offered a savings product under the name of “Bau(m)sparen” which 

combines a classic building society savings contract with the 

possibility of actively contributing to the protection of rainforests. 

Based on the commitment of a Talents group which underlines the 

ecological potential in Bank Austria, this initiative was taken up by 

the Management Board and promptly implemented. 



Key ecological indicators for Bank Austria: 1) 

Electricity consumption in KWh incl. computer 

operations centre 83,000,000 2) 

89,509,114 3) 

Heating in KWh (incl. long-distance heating, oil and 

natural gas) 55,100,000 2) 

52,383,439 3) 

C02 emissions from electricity and heating in t * 9,366 25,736 

Business travel in km 24,018,073 22,285,340 

of which: air travel in km 17,739,435 15,975,899 

of which: by car in km 5,560,294 5,543,793 

of which: by train in km 718,344 765,648 

CO2 emissions due to business travel in t 4) 

3,125 2,942 

Water consumption in m 3 incl. well water 290,000 315,000 

Waste in kg 5) 


1,845,905 2,253,622 

Paper consumption in kg 1,021,761 1,069,690 

of which: TCF/ECF paper 964,114 1,017,140 

of which: recycling 21,150 21,970 

1) 

Includes all branches, central office locations and subsidiaries 

located there 

2) 

Projection 

3) 

In contrast to the projections for 2009 included in the 2009 Annual 

Report, these figures are effective consumption data for 2009. 

This explains why they differ from the projections. 

4) 

Determined on the basis of conversion factors from: GHG 

Protocol Initiative “CO2 emissions from business travel” version 

2.0 

5) 

As the company canteen was sold, kitchen waste is no longer 

included in the data. 

*) Since the beginning of 2010, all electricity supplied to Bank 

Austria has come from renewable sources of energy. 

1.5. Capital resources and capital requirement of UniCredit 

Bank Austria AG 

The increase of about € 2 bn in Tier 1 capital is due to a capital 

increase in 2010. 

The bank’s capital resources of € 13,233 m are composed of Tier 1 

capital, Tier 2 capital (supplementary capital resources) and Tier 3 

capital. 

Tier 3 capital amounts to € 96 m; in addition, unused Tier 2 capital of 

€ 558 m is available for reclassification into Tier 3 capital. 

Tier 1 capital is equal to 110.5 per cent of net capital resources. 

The comparative figures show the development of capital resources 

of UniCredit Bank Austria AG: 

Amounts in € m 31 Dec. 2010 31 Dec. 2009 

Paid-in capital 1,681 1,469 

Capital reserves 9,332 7,544 

Other reserves eligible as Tier 1 capital 3,587 3,569 

Fund for general banking risks 0 0 

Less: own shares 0 0 

Less: intangible assets -81 -106 

Tier 1 capital 14,519 12,476 

Net valuation reserve 0 0 

Net supplementary capital 445 484 

Net subordinated capital 2,059 2,181 

Tier 2 capital 2,504 2,665 

Less: carrying value of shares where the equity interest is 10% 

or less (excess over free amount) 0 0 

Less: carrying value of shares where the equity interest exceeds 

10% -1,204 -1,121 

Less: subordinated claims where the holdings exceed 10% -45 -46 

Less: carrying value of equity interests and capital components 

of insurance companies -82 -82 

Less: settlement risk 0 0 

Less: securitisation exposure with a risk weighting of 1.250% -1,968 -1,434 

Less: IRB provision shortfall -587 -287 

Net capital resources 13,137 12,171 

Tier 3 capital 96 116 

13,233 12,287 

Capital requirement 

Amounts in € m 31 Dec. 2010 31 Dec. 2009 

Capital requirement for credit risk pursuant to Sections 

22a-22h of the Austrian Banking Act 5,521 5,256 

Capital requirement for settlement risk - - 

Capital requirement for position risk in debt instruments, 

equities, foreign currencies and commodities 96 116 

Capital requirement for operational risk 273 189 

Capital requirement resulting from switch to Basel 2 

rules (Section 103e, no. 6, of the Austrian Banking Act) - - 

Total capital requirement 5,890 5,561 

Net capital resources composed of Tier 1 capital and Tier 2 capital 

(€ 13,137 m) exceed by 137.9% the capital requirement for credit 

risk (€ 5,521 m). 

Tier 1 capital amounts to € 14,519 m and would on its own suffice to 

cover the entire capital requirement. 



1.6. Information on the share capital and the exercise of special 

rights 

The subscribed capital of UniCredit Bank Austria AG as at 31 

December 2010 amounted to € 1,681,033,521.40 and consisted 

solely of ordinary shares. 

Pursuant to a resolution passed at the Annual General Meeting on 

19 May 2005, the Management Board was authorised, in 

accordance with Section 169 of the Austrian Joint Stock Companies 

Act (Aktiengesetz), to increase the share capital by up to € 

534,460,374.90 by issuing up to 73,515,870 new no-par value 

shares against contributions in cash or in kind, excluding or not 

excluding subscription rights, until 21 June 2010. 

When the authority expired as at 21 June 2010, the amount of 

additional authorised capital was up to € 134,610,374.90. 

At the Extraordinary General Meeting of UniCredit Bank Austria AG 

on 4 March 2010, a resolution was adopted to increase the 

company’s share capital by € 212,262,771.60 through the issue of 

29,197,065 no-par value bearer shares and 15 no-par value 

registered shares. This capital increase became legally effective as 

at 12 March 2010. 

As at 31 December 2010, UniCredit S.p.A. held a direct interest of 

99.996% in UniCredit Bank Austria AG. 

The registered shares held by “Privatstiftung zur Verwaltung von 

Anteilsrechten” (“AVZ Stiftung”, a private foundation under Austrian 

law) and by “Betriebsratsfonds des Betriebsrats der Angestellten 

der UniCredit Bank Austria AG Großraum Wien” 

(“Betriebsratsfonds”) [the Employees’ Council Fund of the 

Employees’ Council of UniCredit Bank Austria AG for the Vienna 

area (the Employees’ Council Fund)] have a long tradition and carry 

special rights for historical reasons: for specific important resolutions 

to be adopted at a general meeting of shareholders, the registered 

shareholders have to be present when the resolutions are adopted. 

The relevant resolutions are specified in Article 20 (13) and (14) of 

the bank’s Articles of Association. 

There is a syndicate agreement – the Restated Bank of the Regions 

Agreement (ReBORA) – between UniCredit, “AVZ Stiftung” and 

“Betriebsratsfonds”. 

In the Restated Bank of the Regions Agreement, “AVZ Stiftung” and 

“Betriebsratsfonds” have given an undertaking to UniCredit to the 

effect that if they want to sell UniCredit Bank Austria AG shares, 

they will first offer such shares held by them to UniCredit. If 

UniCredit does not accept the offer, the 

relevant contracting party could sell the UniCredit Bank Austria AG 

shares to a third party. In this case UniCredit has a right of 

preemption. 

For the duration of this agreement (10 years), which was made in 

2006, “AVZ Stiftung” has a right to nominate two members of the 

Supervisory Board of UniCredit Bank Austria AG, and thereafter one 

member of the Supervisory Board for the duration of the guarantee 

issued by “AVZ Stiftung” and the Municipality of Vienna. 

There are no agreements on compensation between UniCredit Bank 

Austria AG and the members of its Management Board and its 

Supervisory Board or its staff members in the event of a public 

takeover bid. 

1.7. Proposal for the appropriation of profits for the 2010 

financial year 

The annual surplus for the financial year beginning on 1 January 

2010 and ending on 31 December 2010 was € 233,844.67. The 

profit brought forward from the previous year was € 2,080,320.08. 

Thus the profit available for distribution was € 2,314,164.75. The 

Management Board proposes to the Annual General Meeting that no 

dividend be paid on the share capital of € 1,681,033,521.40 and that 

the total profit of € 2,314,164.75 available for distribution be carried 

forward to new account. 

1.8. Information on the squeeze-out pursuant to the Austrian 

Federal Act on the Squeeze-out of Minority Shareholders 

(Gesellschafterausschlussgesetz) of the holders of 

bearer shares in UniCredit Bank Austria AG 

The company’s Annual General Meeting on 3 May 2007 adopted a 

resolution concerning the planned squeeze-out. The legal actions for 

rescission and declaration of nullity brought against various 

resolutions adopted at the Annual General Meeting on 3 May 2007 

were terminated in spring 2008.The squeeze-out was entered in the 

Register of Firms on 21 May 2008. After that date, former minority 

shareholders initiated proceedings for a review of the cash 

compensation offered by UniCredit. An expert has now been 

appointed in these proceedings to review the amount of the cash 

compensation paid. 

2. Report on risk management, risks, third-party 

guarantees and future developments 

2.1. Risk management 

Overall risk management including Basel 2 

UniCredit Bank Austria AG identifies, measures, monitors and 

manages all risks of the Bank Austria Group. In performing these 

tasks, the bank works closely with the risk control and risk 

management units of UniCredit. In this context, UniCredit Bank 

Austria AG supports UniCredit's ongoing projects which are aimed at 

establishing uniform group-wide risk controlling procedures. 

UniCredit Bank Austria AG divides the monitoring and controlling 

processes associated with risk management into the following 

categories: market risk, liquidity risk, counterparty risk, credit risk, 

operational risk, business risk, financial investment risk and real 

estate risk. 

The Management Board determines the risk policy and approves the 

principles of risk management, the establishment of limits for all 

relevant risks, and the risk control procedures. 



In performing these tasks, the Management Board is supported by 

specific committees and independent risk management units. All risk 

management activities of UniCredit Bank Austria AG are combined 

within a management function at Management Board level directed 

by the Chief Risk Officer (CRO); secondary lending decisions for 

corporate customers are made in the CIB Credit Operations, CEE 

Credit Operations and Market Risk departments, and for private 

customers and business customers in the Risk Management Family 

& SME Banking (+PB) department. The Special Credit Austria and 

CEE Credit Operations departments deal with problem loans. These 

organisational units are supported by the Strategic Risk 

Management & Control department. Credit risk control of the CEE 

business units is performed by the CEE Risk Control and CEE 

Credit Operations departments. The unit for active credit portfolio 

management (Credit Treasury) reports directly to the Chief Financial 

Officer (CFO). 

Cross-divisional control 

The Asset/Liability Committee (ALCO) is responsible for the 

management of balance-sheet structure positions, it controls liquidity 

risk, deals with cross-divisional risk management issues arising 

between sales units and overall bank management, and provides an 

overview of credit portfolio model results while also preparing reports 

on economic capital (Pillar II). Moreover, a committee which meets 

once a week was set up in 2008 to deal with the following liquidityrelated 

topics: operational aspects of liquidity management including 

market monitoring; and compliance with the liquidity policy, with CEE 

banking subsidiaries also being covered in this context – Bank 

Austria acts as a regional liquidity centre of UniCredit Group. Control 

of market risk is ensured by the Market Risk Committee (MACO), 

which meets once a week. MACO deals with short-term business 

management issues relating to the presentation and discussion of 

the risk/earnings position of Markets & Investment Banking and with 

limit adjustments, product approvals and positioning decisions. In 

addition, the general framework and limits for banking subsidiaries 

are defined by MACO. Credit risk is assessed by the Credit 

Committee. The Operational Risk Committee (OpRiCo) meets on a 

quarterly basis to deal with operational risk issues. 

Counterparty risk arising from derivative transactions is managed by 

the Derivative Committee (DECO). DECO deals with classic credit 

risk issues and aspects of reputational risk in customer business. 

The Management Board of UniCredit Bank Austria AG sets risk 

limits for market risk activities of the entire Bank Austria Group at 

least once a year, in coordination with UniCredit Group. MACO, 

which holds a meeting every week, makes limit decisions at the 

operational level and analyses the risk and earnings positions of the 

bank's Markets & Investment Banking units. ALCO performs 

analyses and makes decisions with regard to business activities 

closely connected with customer business (in particular, balance 

sheet structure, liquidity, and risk management issues arising 

between sales units and overall bank management). 

The decisions and results of these committees are reported directly 

to the bank's full Management Board. Risk Management, which is 

separate from the business divisions up to Management Board level, 

is in charge of preparing analyses and monitoring compliance with 

limits. In 2010, the requirements which the Austrian supervisory 

authority specified in respect of the counterparty risk model when it 

approved the model were met. The relevant report on compliance 

with the requirements was sent to the Austrian Financial Market 

Authority (FMA) at the beginning of the fourth quarter of 2010; from 

Bank Austria’s perspective, the approval process was thereby 

successfully completed. In addition to compliance with the 

requirements, further CEE countries were included in the model with 

a focus on risk management and not yet on regulatory approval. The 

bank took account of the growing importance of counterparty risk by 

creating a separate unit for this purpose within the Market Risk 

department at the beginning of 2010. 

The Bank Austria Group applies the principle of value-based 

management. 

Beyond compliance with the regulatory capital rules pursuant to 

Section 39 of the Austrian Banking Act, economic capital (Pillar II) is 

intended to reflect the bank's specific risk profile in a comprehensive 

and more consistent way. These unexpected losses over a period of 

one year are calculated with a confidence level of 99.97%. 

Value-at-risk methodologies are used in the Bank Austria Group for 

calculating or planning economic capital for all specified types of risk 

(credit risk, market risk, operational risk, business risk, financial 

investment risk and real estate risk). The Bank Austria Group is 

included in the risk monitoring and risk management system of the 

entire UniCredit Group. This ensures overall risk management 

across the Group. 

Management of balance sheet structure 

The matched funds transfer pricing system applied throughout the 

Group and the principle of causation applied in attributing credit risk, 

market risk and liquidity risk enable the bank to determine 

contribution margins from customer transactions in the bank's 

business divisions. The risk committees of the bank ensure that 

UniCredit Bank Austria AG's overall liquidity and interest rate gap 

structure is optimised, with the results from interest maturity 

transformation being reflected in the Corporates & Investment 

Banking Division. Factors taken into account in this context include 

the costs of compensation for assuming interest rate risk, liquidity 

costs and country risk costs associated with foreign currency 

financing at CEE banking subsidiaries. These funding costs burden 

lending business in CEE, but declined from peak levels as markets 

gradually eased. 

Products for which the material interest-rate and capital maturity is 

not defined, such as variable-rate sight and savings deposits, are 

modelled in respect of investment period and interest rate sensitivity 

by means of analyses of historical time series, and taken into 

account in the bank's overall risk position. Interest rate sensitivities 

are determined and taken into account in hedging activities, which 

results in a positive contribution to profits from customer business. 



To assess its balance-sheet structure, the bank uses the Value-at- 

Risk approach, complemented by a scenario analysis covering 

subsequent quarters and years. The bank thus also follows the 

Basel 2 recommendation concerning the simulation of future net 

interest income under different interest rate scenarios ("earnings 

perspective"). 

In the earnings perspective analysis, simulations of the future 

development of net interest income and of the market value of the 

banking book are generally based on assumptions regarding volume 

and margin developments under different interest rate scenarios. 

Parallel interest rate shocks as well as inversions and low-interestrate 

scenarios can be analysed to identify their possible impact on 

the bank's net interest income and the bank’s value. 

The analyses performed at year-end 2010 show that a further 

interest rate decline in all currencies, from an already low level, 

would have the strongest impact on the bank's net interest income. 

This is a typical feature of commercial banks, given the interest rate 

remanence on the liabilities side of banks’ balance sheets (sight 

deposits, equity). 

The Basel 2 rules require the measurement at Group level of 

"interest rate risk in the banking book" in relation to the bank's 

capital by comparing a change in the market value of the banking 

book after a 2% interest rate shock with the bank's net capital 

resources. In the event that such an interest rate shock absorbs 

more than 20% of a bank's net capital resources, the bank 

supervisory authority could require the bank to take measures to 

reduce risk. 

A 2% interest rate shock would absorb about 1% of the Group's net 

capital resources; this calculation also includes the current 

investment of equity capital as an open risk position. This means 

that the figure for UniCredit Bank Austria AG is far below the outlier 

level of 20%. 

Credit Treasury 

Credit Treasury has two main tasks: preparing and monitoring the 

risk-adequate pricing of loans; and executing risk-transfer and 

capital-generating measures and transactions. 

To ensure uniform pricing within UniCredit Group, the risk-adjusted 

spread is determined on the basis of multi-year probabilities of 

default (depending on the term of the loan), added as a price 

component and monitored on an ongoing basis. 

Initially rolled out for a predefined customer segment of Austrian 

corporate customers as at 1 January 2011, this system is to be 

extended to cover other segments and regions. 

Moreover, Credit Treasury executes risk transfers and capitalgenerating 

measures and transactions (via synthetic securitisations, 

CLNs, etc.) and liquidity-generating measures/transactions for the 

entire Bank Austria Group (including CEE). 

The Credit Treasury Committee, which holds quarterly meetings, is 

responsible for strategic coordination and decisions on measures 

and transactions. 

2.2. Risks 

Market risk 

Market risk management at UniCredit Bank Austria AG 

encompasses the identification, measurement, monitoring and 

management of all market risks resulting from the banking business. 

The processes and methods used for measuring risk, defining and 

reviewing limits and for trading activities have been summarised in 

the Financial Markets Rulebook, which is available via the Intranet. 

UniCredit Bank Austria AG uses uniform Group-wide risk 

management procedures. These procedures provide aggregate data 

and make available the major risk parameters for the various trading 

operations at least once a day. Besides Value at Risk (VaR; for 

internal risk measurement on the basis of a one-day holding period 

and a confidence interval of 99%), other factors of equal importance 

are stress-oriented volume and position limits. Additional elements 

of the limit system are loss-warning level limits, sensitivity and 

options-related limits applied to trading and positioning in non-linear 

products. 

In August 2010, UniCredit Bank Austria AG applied to the Austrian 

supervisory authority to replace the risk model ("NoRISK") 

developed by the bank itself, which has been used for many years, 

with the new IMOD model used within the entire UniCredit Group. 

This switch constitutes a significant change of model in accordance 

with Section 21e of the Austrian Banking Act. Regulatory approval 

by the college of supervisors (Italy, Germany, Austria) is expected 

for the first quarter of 2011. The new model is based on historical 

simulation with a 500-day market data time window for scenario 

generation. It is currently used on a uniform basis by many UniCredit 

Group subsidiaries. The model is applied by Market Risk within 

UniCredit Bank Austria AG and is being further developed in 

cooperation with the UniCredit holding company. In 2010, parallel 

operation for VaR limiting was gradually reduced in favour of the 

new model. Moreover, the bank continued to make preparations for 

taking account of the new CRD III rules for the trading book which 

will have to be applied from December 2011 onwards. This applies 

in particular to the stressed VaR and IRC (incremental risk charge), 

while CRM (comprehensive risk measure) is not applicable to 

UniCredit Bank Austria AG for lack of credit-tranche holdings in the 

trading book. 



As at 31 December 2010, VaR at UniCredit Bank Austria AG for the 

respective risk categories was as follows (calculated on the basis of 

the new model): 

Amounts in € m 

Exchange rate risk, overall -1.5 

Equity position risk, trading book 0.0 

Equity position risk, banking book -8.0 

Interest rate position risk, trading and 

banking book 0.2 

Credit spread risk (VaR limit scope) -22.5 

Overall market risk (VaR limit scope) -23.7 

Overall market risk -39.0 

The above figures are based on the new internal model because this 

is now relevant for limit management. To enhance transparency as 

to which market risk components are managed via VaR limiting, 

overall market risk is this year additionally stated inclusive of 

components which are not subject to a VaR limit. 

For the purpose of determining capital requirements, the old model 

is still used until approval is obtained for the new model. The 

parameters used in this context are a 10-day holding period, a 

confidence level of 99% and a multiplier of 3. As at 31 December 

2010, the amount at risk was € 79.1 m. After taking account of the 

default risk surcharge, the capital requirement was € 96.4 m. 

Within the Bank Austria Group, the reliability and accuracy of the 

internal model is monitored by daily backtesting, comparing the VaR 

amounts with the actually observed fluctuations in market 

parameters and in the total value of the trading books. In 2010, there 

was no backtesting excess. This applies to the old and the new 

market risk models. The results of backtesting have thus confirmed 

the accuracy and reliability of both models. The multiplier of the old 

model therefore remains unchanged, while a decision on the 

multiplier of the new model is expected to be made by the college of 

supervisors towards the end of the first quarter of 2011. 

Value-at-risk calculations are complemented by various stress 

scenarios to identify the potential effects of stressful market 

conditions on the Group’s earnings. The assumptions made under 

such stress scenarios include extreme movements in prices or rates 

and a dramatic deterioration in market liquidity. Market risks 

resulting from the general balance sheet structure and the 

positioning of asset-liability management are additionally determined 

and regularly analysed by means of simulations of net interest 

income volatility. In addition to the business volume at the reporting 

date, these simulations are based on various interest rate scenarios, 

assumptions regarding new business, demand behaviour and 

general developments affecting margins in those market segments 

which are of greatest importance to UniCredit Bank Austria AG. 

Modelling over the projection period provides indications of trends in 

net interest income and enables the bank to identify risks at an early 

stage and to take appropriate measures. 

In addition to calculating VaR for trading activities, the bank uses the 

Value-at-Risk method for measuring market risk in the banking book. 

Information on the amount of market risks of UniCredit Bank Austria 

AG is contained in the notes to the financial statements. 

Market risk management in CEE 

At UniCredit Bank Austria AG, market risk management covers the 

activities in Vienna and the positions at the subsidiaries, especially 

in Central and Eastern Europe. These subsidiaries have local risk 

management units with a reporting line to Risk Management in 

UniCredit Bank Austria AG. Uniform processes, methods, rules and 

limit systems ensure consistent Group-wide risk management 

adjusted to local market conditions. 

The "IMOD" risk model has been implemented locally at major units 

(Czech Republic, Slovakia, Hungary, Croatia, Bulgaria, Russia, 

Turkey), and a daily risk report is made available to the other units. 

The replacement of the previous internal model “NoRISK” by IMOD, 

a Group application, also requires formal approval of the system by 

the banking supervisory authorities in the major CEE countries. The 

approval process for the Czech Republic, Slovakia and Hungary 

started at the beginning of 2011; the other relevant banking 

subsidiaries will undergo the approval process for the risk model in 

2012. 

Analyses of position structure and balance sheet structure are 

available to all banks in the Group via "ALMRisk", a Group-wide web 

tool. Liquidity monitoring is also based on this instrument. The 

instrument will be extended in the course of 2011 to cover liquidity 

requirements under Basel 3. 

The web application "ERCONIS" records the daily business results 

of treasury activities in CEE. In line with a total-return approach, 

measurements of the performance of subsidiaries include income 

generated by the subsidiaries and the valuation results of the 

banking book. 

To avoid risk concentrations in the market risk position, especially in 

tight market conditions, the bank has implemented at its subsidiaries 

Value-at-Risk limits and position limits for exchange rate risk, 

interest rate risk and equity risk, which are monitored daily. The 

monitoring of income trends at banking subsidiaries by means of 

loss-warning levels provides an early indication of any accumulation 

of position losses. The timely and continuous analysis of market risk 

and income is the basis for integrated risk-return management of 

treasury units at banking subsidiaries. 



Liquidity risk 

General information, processes and management model 

In line with Group standards, the Bank Austria Group deals with 

liquidity risk as a central risk in banking business by introducing and 

monitoring short-term and medium-term liquidity requirements. In 

this context the liquidity situation for the next few days and months 

and also for longer periods is analysed against a standard scenario 

and stress scenarios. Methods and procedures of liquidity analysis, 

analyses of the degree of liquidity of customer positions, 

management responsibilities and reporting lines in this area have 

been laid down in the liquidity policy, which is also applicable at the 

bank's CEE units and includes a contingency plan in the event of a 

liquidity crisis. 

Liquidity management in UniCredit Bank Austria AG is an integral 

part of UniCredit Group liquidity management. In line with the Groupwide 

distribution of tasks, UniCredit Bank Austria AG ensures the 

consolidation of liquidity flows and the funding for subsidiaries in 

Austria and CEE. The flow of funds is thereby optimised and 

external funding is reduced to the necessary extent. Liquidity 

transfers within the Group are based on market prices. 

Liquidity management methods and control 

In medium-term and long-term liquidity management, liquidity inflows 

over 1 year and over 5 years must cover a minimum of 90% of 

expected liquidity outflows during these periods. This limit must be 

observed at Group level and for each banking subsidiary. The limit is 

to be observed also at individual currency level in order to avoid 

cross-currency funding arrangements as far as possible. At Bank 

Austria Group level, the liquidity ratio as at year-end 2010 was 0.95 

for >1 year and 0.97 for >5 years. This means that in effect, longterm 

assets are fully funded at Group level. 

For the purpose of short-term liquidity management, volume limits 

have been implemented in the Bank Austria Group and in all banks 

for maturities up to three months, which limit all Treasury 

transactions and the securities portfolio of the respective bank. 

Limits are also established for open maturities in various currencies 

to keep down the risk of a need for follow-up funding in the event 

that foreign currency markets dry up. 

These limits were essentially observed. As credit demand in Central 

and Eastern Europe is gradually growing on the back of the 

economic recovery in the region, funding in CEE provided by the 

parent company is rising again after a crisis-induced decline. 

Liquidity stress test 

UniCredit Bank Austria AG performs liquidity stress tests for the 

Group and for individual banks on a regular basis, using a 

standardised Group-wide instrument and standardised Group-wide 

scenarios. These scenarios describe the effects of market-driven or 

name-driven crisis signals on liquidity inflows and outflows, with 

assumptions also being made about the behaviour of non-banks. 

The liquidity outflows expected to occur in stress situations are 

compared with available collateral (essentially, securities and credit 

instruments eligible as collateral at the central bank) to examine the 

banks’ risk-taking capability in the short term up to two months. 

As UniCredit Bank Austria AG holds large amounts of liquid 

collateral, liquidity outflows under the tested stress scenarios are not 

nearly equal to the available pool of collateral. In an extreme 

scenario (combining an extreme market crisis and a name-driven 

crisis) introduced in 2010, UniCredit Bank Austria AG meets the 

CEBS minimum expectation of a liquidity buffer. 

Funding plan and liquidity costs in pricing 

Funding the CEE subsidiaries is one of the main functions of the 

Group’s liquidity management. Short and long-term funds are made 

available to the banking subsidiaries for their business on the basis 

of a funding plan. Part of these country risks is covered by MIGA or 

SACE guarantees (MIGA: Multilateral Investment Guarantee 

Agency, a member of the World Bank Group; SACE: a leading 

Italian credit insurer). The funding requirements of subsidiaries rose 

again with the stronger economic momentum in the CEE countries. 

Liquidity costs are part of the reference rate system. The applicable 

alternative costs are debited or, on the basis of an opportunity cost 

approach, credited to the various products on the assets side and 

the liabilities side which have an effect on liquidity. In the current 

controlling process this ensures the proper pricing of our business. 

Counterparty risk 

UniCredit Bank Austria AG has made further efforts to refine the risk 

management model for derivatives, securities lending and 

repurchase agreements. The model was refined especially with 

regard to validation and backtesting. For the purposes of portfolio 

management and risk limitation in the derivatives and security 

financing business with banks and customers, UniCredit Bank 

Austria AG uses an internal counterparty risk model (IMM) based on 

a Monte Carlo path simulation to estimate the potential future 

exposure at portfolio level for each counterparty. 



In 2010, the requirements which the Austrian supervisory authority 

specified in respect of the counterparty risk model when it approved 

the model were met. The relevant report on compliance with the 

requirements was sent to the Austrian Financial Market Authority 

(FMA) at the beginning of the fourth quarter of 2010; from Bank 

Austria’s perspective, the approval process was thereby successfully 

completed. In addition to compliance with the requirements, further 

CEE countries were included in the model with a focus on risk 

management and not yet on regulatory approval. The bank took 

account of the growing importance of counterparty risk by creating a 

separate unit for this purpose within Market Risk at the beginning of 

2010. 

The calculations are based on market volatility, correlations between 

specific risk factors, future cash flows and stress considerations. 

Netting agreements and collateral agreements are also taken into 

account for simulation purposes. 

The simulation calculations are performed for all major types of 

transactions, e.g. forward foreign exchange transactions, currency 

options, interest rate instruments, equity/bond-related instruments, 

credit derivatives and commodity derivatives. Other transactions are 

taken into account with an add-on depending on factors such as 

maturity. The bank applies a confidence interval of 97.5%. 

In addition to further refinement of the model (in 2010 especially 

through CVA – Credit Valuation Adjustment), regular separate 

reporting on counterparty risk was introduced with a view to 

informing UniCredit Bank Austria AG’s Market Risk Committee and 

Derivative Committee (DECO) of current exposure trends and 

providing additional information relevant to risk management. An 

example is reporting on stress test calculations. Moreover, 

backtesting is performed at regular intervals, at the level of individual 

counterparties and at overall bank level, in order to check the quality 

of the model on an ongoing basis. 

Line utilisation for derivatives and security financing business of 

customers is available online in WSS ("Wallstreet"), the central 

treasury system, on a largely group-wide basis. In addition to 

determining the potential future exposure, the path simulation also 

enables the bank to calculate the average exposure and the 

modified average exposure pursuant to Basel 2 (exposure at 

default), as well as the effective maturity of the exposure to each 

counterparty. This makes it possible to integrate counterparty risk in 

an internal model compliant with Basel 2. 

UniCredit Bank Austria AG additionally limits the credit risk arising 

from its derivatives business, repurchase agreements and securities 

lending business through strict use of master agreements, the 

definition and ongoing monitoring of documentation standards by 

legal experts, and through collateral agreements and break clauses. 

Management takes proper account of default risk, especially 

because the relevance of this risk category has increased and on 

the basis of experience gained in the international financial market 

crisis, despite the good average credit rating of our business 

partners. 

Credit risk 

Net writedowns of loans and provisions for guarantees and 

commitments in 2010 continued to reflect differences in the speed of 

recovery in the various segments. 

In the Corporates & Investment Banking segment, corporate 

restructuring activities were very successful, leading to significant 

releases of loan loss provisions especially in the first six months of 

2010. At € 150.8 m, net writedowns of loans and provisions for 

guarantees and commitments in this business segment were 

reduced to a level slightly exceeding one half of the previous year’s 

figure. Loans newly transferred to Special Credit units declined 

significantly as the year progressed, and this will also lead to a 

decrease in impaired loans with some time lag. 

The strong rise in unemployment in 2009 was expected to push up 

the provisioning charge in the sub-segments of Mass Market and 

Affluent customers with some delay. However, such an increase did 

not materialise: overall, net writedowns of loans and provisions for 

guarantees and commitments in the Family & SME Banking 

segment even declined noticeably, to about € 210 m. The 

provisioning charge decreased although an additional writedown 

was made on foreign currency loans in the fourth quarter as the 

value of the Swiss franc rose significantly; among other reasons, the 

additional writedown was made in anticipation of the amount 

outstanding under loans with final maturity in view of further 

appreciation of the Swiss franc. Quite generally, a large number of 

advisory talks were held with customers in this segment in several 

waves in order to evaluate the new situation and the credit risk 

arising for the bank from this type of loan on a timely basis. At any 

point in time, the risk-focused presentation (credit line in €, utilisation 

in currency) shows the amount of the credit line originally granted to 

the customer, the currency fluctuation allowed for when the loan was 

granted, and the amount currently outstanding. The Small 

Businesses sub-segment also made a substantial contribution to the 

strong improvement in the overall provisioning charge in the Family 

& SME Banking segment, with the provisioning charge in the Small 

Businesses sub-segment declining to less than one half of the 

previous year’s figure. 

In 2010, net writedowns of loans and provisions for guarantees and 

commitments in the CEE segment in UniCredit Bank Austria AG 

were € 312 m. This amount includes risk assumptions for the Baltic 

countries and for Slovakia, and a provision for the guarantee given 

for the Kazakh loan portfolio to support the local subsidiary. 

Moreover, as in previous years, writedowns were made on CEE 

exposures booked in Vienna, especially in the Real Estate subsegment. 

Credit risk methods and instruments 

Very important factors in the credit approval process are a detailed 

assessment of risk associated with each loan exposure, and the 

customer’s credit rating in particular. Every lending decision is based 

on a thorough analysis of the loan exposure, including an evaluation 

of all relevant factors. Following the initial loan application, the 

bank’s loan exposures are reviewed at least once a year. If the 

borrower’s creditworthiness deteriorates substantially, shorter review 

intervals are obligatory. 



For internal credit assessment in Austria and by Bank Austria’s 

banking subsidiaries in CEE, the bank uses various rating and 

scoring models (for calculating the parameters PD, LGD and EAD 

on the basis of models specifically developed for these purposes) *) 

for the customer/business segments to be assessed, in line with the 

various asset classes pursuant to Section 22b of the Austrian 

Banking Act, the Solvency Regulation and Directive 2006/48/EC of 

the European Parliament and of the Council of 14 June 2006 

relating to the taking up and pursuit of the business of credit 

institutions. There are country-specific or region-specific models 

(e.g. for corporate customers, private and business customers) and 

global models (e.g. for sovereigns, banks, multinational corporates). 

The assessment of a loan exposure is based on data from the 

respective company’s financial statements and on qualitative 

business factors. 

The various rating and scoring models provide the basis for efficient 

risk management of the Bank Austria Group and are embedded in 

all decision-making processes relating to risk management. They 

are also a key factor for capital required to be held against riskweighted 

assets. Great attention is given to consistency in the 

presentation for supervisory purposes and the requirements of 

internal control. 

All internal rating and scoring systems are monitored on an ongoing 

basis. The systems are also subject to regular validation on an 

annual basis, including a review to verify if the rating/scoring system 

provides a correct representation of the risks to be measured. All 

model assumptions are based on multi-year statistical averages for 

historical defaults and losses, with appropriate attention being given 

to the potential impact of turbulence in international financial 

markets. 

In this context, credit risk stress tests, which are required by banking 

supervisory authorities and are carried out on a regular basis, are an 

essential instrument for assessing future risks in an unfavourable 

economic environment. Such tests enable the Management Board 

to assess the adequacy of regulatory capital and economic capital 

on the basis of different stress scenarios. 

Risk-adjusted pricing and proactive risk management constantly 

improve the diversification and the risk/earnings ratio of the portfolio. 

For real estate customers, the customer-related rating is 

complemented by a transaction rating. 

UniCredit Bank Austria AG uses a retail scoring system. The 

automated rating tool is used for assessing, monitoring and 

managing the large number of loan exposures to private customers, 

small businesses, independent professionals and small non-profit 

organisations. Retail scoring comprises an application scoring 

procedure based on effective and recognised mathematical and 

statistical methods, and a behaviour scoring procedure taking into 

account such factors as amounts received in the account and 

customers' payment practices. The retail scoring system provides 

information that is updated on a monthly basis. This gives the bank 

an efficient tool for lending decisions and early recognition of risk. 

Automated data processing helps the bank to reduce costs required 

for credit control while accelerating lending decisions. 

In 2010, selected CEE banking subsidiaries were prepared for the 

switch from the standardised approach to the F-IRB approach in 

2011. The forecasting quality of rating models and underlying 

processes were optimised in close cooperation with specialists at 

UniCredit Bank Austria AG. In developing models and carrying out 

validations, attention is given to ensuring the consistent and qualityassured 

implementation of Group guidelines. 

*) PD = Probability of Default; LGD = Loss Given Default; EAD = Exposure at 

Default 

Operational risk 

Operational risk (OpRisk) is defined as the risk of loss resulting from 

inadequate or failed internal processes, people and systems or from 

external events (including legal risks). For example, compensation 

paid to customers for incorrect/inadequate product-related advice, IT 

system failures, damage to property, processing errors or fraud are 

subject to accurate and consolidated risk measurement and 

management (collection of loss data, external data, scenarios, 

indicators), on which the calculation of capital to be held for 

operational risk is based. 

Loss data are collected, and processes are optimised, in close 

coordination and cooperation with other departments and units 

including Internal Audit, the Compliance Office, Legal Affairs and the 

insurance sector. Over the years, UniCredit Bank Austria AG has 

taken numerous measures in the various divisions to manage and 

reduce operational risk. Thus data security measures, measures to 

ensure the confidentiality and integrity of stored data, access 

authorisation systems, the two-signatures principle, and a large 

number of monitoring and control processes as well as staff training 

programmes have been implemented among other measures. 

In line with other types of risk, UniCredit Bank Austria AG – like 

UniCredit – has built up a decentralised operational risk 

management framework based on representatives within divisions 

and at banking subsidiaries – Divisional OpRisk Managers (DORM) 

and OpRisk Managers – in addition to central operational risk 

management. While the main task of central risk management is to 

define the methods used and to perform risk measurement and 

analysis, decentralised risk managers are responsible for taking 

measures to reduce, prevent, or take out insurance against, risks. 

Activities in 2010 focused on meeting additional regulatory 

requirements under the advanced approach, and on preparing and 

supporting regulatory reviews at banking subsidiaries. Furthermore, 

OpRisk limits were introduced within all large banking subsidiaries, 

which are monitored and reported within the UniCredit Bank Austria 

AG OpRisk Committee. 



Overall, the organisation of operational risk management at 

UniCredit Bank Austria AG is well established at a high level of 

quality. A network of independent functions and teams are involved 

in managing and controlling risks, providing the Management Board 

with sufficient information on the risk situation and enabling the 

Management Board to manage risk. The analysis of the general 

ledger for operational risk relevance confirmed an extensive and 

complete operational risk data collection. The functions of Divisional 

Operational Risk Managers were strengthened and expanded 

accordingly. With a view to further improving the level of knowledge 

of operational risk, an e-learning training programme was 

implemented, which is mandatory for all employees of UniCredit 

Bank Austria AG. 

Since 2008, the task of dealing with operational risk issues has been 

performed by a separate Operational Risk Committee (OpRiCo), 

whose meetings are held on a quarterly basis and are attended by 

the Chief Risk Officer, the Head of Strategic Risk Management & 

Control, the Head of UniCredit Operational Risk Management, 

Compliance, Internal Audit, the Divisional Operational Risk 

Managers and OpRisk representatives of CEE banking subsidiaries. 

The OpRiCo is a major step towards integrating operational risk in 

the bank’s processes; its main tasks are to report on current 

operational risk issues and developments, to approve operational 

risk-relevant documents, to report losses and serve as a body to 

which unresolved issues are referred. 

In 2011, activities with regard to operational risk will focus on 

� analysing risk-handling measures to contain losses through 

operational risk, 

� monitoring annual operational risk limits within the framework of 

the Operational Risk Committee, 

� analysing operational risk events related to credit risk and 

reporting them within the framework of the Operational Risk 

Committee, 

� supporting the units pursuant to the AMA rollout plan in 

carrying out the regulatory reviews in cooperation with 

UniCredit Group. 

Business risk 

Business risk is defined as unexpected adverse changes in 

business volume and/or margins which cannot be attributed to other 

types of risk. Adverse changes result mainly from a significant 

deterioration in market conditions, changes in the competitive 

position or customer behaviour, and from changes in the legal 

environment. 

Business risk measurement thus measures the influence of external 

factors on a decline in profits and the effect on the market value. 

As part of general income and cost management, operational 

management of business risk is the responsibility of the individual 

business units. 

Financial investment risk and real estate risk 

In dealing with risks arising from the bank’s shareholdings and 

equity interests, UniCredit Bank Austria AG takes into account 

market price fluctuations in its equity holdings in listed and unlisted 

companies. 

Not included are equity interests in consolidated subsidiaries of the 

Group because risks associated with such companies are 

determined and recorded under the various other risk types. The 

portfolio includes various strategic investments; real estate holding 

companies are taken into account in real estate risk. 

Generally, Value at Risk is determined on the basis of market values 

and volatilities of the relevant equity interests. For shares in unlisted 

companies the bank uses book values and volatilities of relevant 

stock exchange indices and takes account of residual variances. 

Real estate risk measures the fluctuations in market value of bankowned 

real estate on the basis of market prices and the volatility of 

related rent indices. 

Legal risks 

We generally do not make provisions to the extent it is not possible 

to reliably predict the outcome of proceedings or to quantify possible 

losses. In cases where it is possible to estimate in a reliable manner 

the amount of the possible loss and such loss is deemed probable, 

we have made provisions in amounts we deem appropriate in light of 

the particular circumstances and in accordance with applicable 

accounting principles. 

In line with the above policy, a provision has been made in the 

amount of the estimated risk for the following pending legal 

proceedings. 

� UniCredit Bank Austria AG (“Bank Austria”) has joined as a 

process guiding intervening party in support of the defendant 

AKB Privatbank Zürich AG (formerly a subsidiary of Bank 

Austria and formerly Bank Austria (Schweiz) AG) in a suit in 

Switzerland relating to alleged claims of Bundesanstalt für 

Vereinigungsbedingte Sonderaufgaben “BvS” (formerly 

Treuhandanstalt), the legal successor to Deutsche 

Treuhandanstalt, the German public body for the new Länder 

reconstruction. Essentially it is asserted that the former 

subsidiary of Bank Austria in Switzerland participated in the 

embezzlement of funds from companies in the former East 

Germany. BvS lost the case in the court of first instance and 

fully won the appeal. Bank Austria filed an appeal against that 

judgment before the Court of Cassation of the Zurich Canton, 

the Court of Cassation’s procedure is currently pending. A 

provision has been made in the amount of the estimated risk in 

accordance with national accounting standards. 



In line with the above policy, no provisions have been made for the 

following pending legal proceedings. Due to the uncertain nature of 

litigation, however, we cannot exclude that the following may result 

in losses to the bank. 

� Action brought by the Belgian company Valauret S.A. in Paris 

on the grounds of alleged involvement of Creditanstalt AG (now 

UniCredit Bank Austria AG) in wilful deception in connection 

with a French joint stock company as a result of which the 

plaintiffs incurred losses through a loss in value of shares 

acquired by it in the joint stock company. 

� Proceedings were initiated in Austria related to Bernard L. 

Madoff’s fraud in which UniCredit Bank Austria AG, among 

others, was named as defendant. The parties invested in funds 

that, in turn, invested directly or indirectly in Bernard L. Madoff 

Investment Securities LLC (BMIS). The judgements in these 

lawsuits so far have been almost completely in favour of the 

bank. UniCredit Bank Austria AG is also the subject of 

proceedings in Austria following the complaint filed by the 

Austrian Financial Market Authority with the Public Prosecutor’s 

Office and complaints filed with the said Public Prosecutor’s 

Office by private parties that invested in funds which, in turn, 

invested directly or indirectly in BMIS. The parties that filed said 

complaints maintain that UniCredit Bank Austria AG violated, 

among other things, the terms of the Consolidated Investment 

Act that governs UniCredit Bank Austria AG’s role as “auditor of 

the prospectus” of Primeo funds. 

UniCredit Bank Austria AG was named as one of many defendants 

in two putative class action suits filed in the United States District 

Court for the Southern District of New York. A liquidated indirect 

subsidiary of UniCredit Bank Austria AG has been named in one 

putative class action suit filed in the United States District Court for 

the Southern District of New York. In each of the suits, the 

petitioners claim to represent investors whose assets were invested 

in BMIS, directly or indirectly. The United States Bankruptcy Court 

appointed Irving H. Picard as Trustee (the "SIPA Trustee") for the 

liquidation of BMIS. The Trustee's job is to collect the assets of 

Madoff's estate and distribute those assets to creditors including 

investors. In December 2010, the SIPA Trustee filed two complaints 

in the United States Bankruptcy Court in the Southern District of 

New York against many defendants, including UniCredit Bank 

Austria AG, to recover amounts to be determined at trial, but claimed 

to be in excess of US$ 2 billion, allegedly representing so-called 

avoidable transfers. One complaint further alleges they violated the 

Racketeer Influenced and Corrupt Organizations Act ("RICO") by 

allegedly participating in a plan to enrich themselves by feeding 

investors' money into Madoff's Ponzi scheme. The SIPA Trustee 

seeks treble damages under RICO, i.e. three times the reported net 

US$ 19.6 billion losses allegedly suffered by all BMIS investors. All 

pending actions are in the initial phases. UniCredit S.p.A. and its 

subsidiaries involved intend to defend themselves against the 

charges regarding the Madoff case by any method available to 

them. At present it is not possible to reliably estimate the timing and 

results of the various actions, nor determine the level of 

responsibility, if any responsibility exists. 

Current status of the application of the internal ratings-based 

approach (IRB approach) to credit risk in the Bank Austria 

Group 

UniCredit Bank Austria AG has applied the internal ratings-based 

approach since March 2008, using its own estimates of loss given 

default and of conversion factors for the major part of its loan 

portfolio (advanced IRB approach). 

In the reporting period, the approval of the advanced IRB approach 

of UniCredit Bank Austria AG was extended to include the 

application of the Group-wide model for estimates of exposure at 

default (EAD) for the Group-wide segments covering countries, 

banks and multinational companies. The bank is planning to 

introduce various other Group-wide models in the next few years 

while also further refining and developing local models. 

Banca d’Italia (the Bank of Italy), the home supervisor of UniCredit 

Group, is responsible for all approvals at Group level, while local 

supervisory authorities are responsible for local topics in the legal 

entities and for local on-site reviews. Regulatory issues are being 

dealt with in close cooperation between home and host regulators 

(college of supervisors). 

Implementation of the advanced IRB approach has been established 

as a Group-wide programme. Therefore UniCredit is responsible for 

Group-wide decisions and guidelines as well as for the development 

of Group-wide models. For example, Group-wide homogeneous 

portfolios have been defined for which uniform rating models are 

used across the Group, such as those for countries, banks and 

multinational companies. 

Group standards have for the most part already been prepared and 

adopted by the UniCredit Group holding company in cooperation 

with the major IRB legal entities, and are used as an instrument for 

uniform Group-wide implementation, with a view to complying with 

local legal requirements – some of which differ from country to 

country – and safeguarding Group interests. These Group standards 

will continue to be gradually extended and complemented. 

The Group standards continue to be integrated step by step in the 

processes and organisational set-up of all business areas and 

Group units, with account being taken of local features and legal 

requirements in ensuring Basel 2 compliance. 


All Austrian subsidiaries of UniCredit Bank Austria AG started to use 

the standardised approach in 2008. From a current perspective, for 

reasons of materiality, it is not planned to switch to one of the IRB 

approaches. 




The CEE subsidiaries have used the standardised approach to 

credit risk since the beginning of 2008. Based on a detailed roll-out 

plan, there are plans to switch to the advanced IRB approach at 

most of the CEE banking subsidiaries in line with the Group’s 

decision to use the advanced IRB approach. According to the 

detailed roll-out plan communicated to the supervisory authorities 

involved, the switch to the A-IRB approach will take place at the 

relevant CEE subsidiaries step by step. All subsidiaries will start with 

the Foundation IRB approach (F-IRB). 

In the course of the cross-border approval process, supervisory IRB 

assessments took place in an initial group of CEE subsidiaries in 

2010. For the CEE subsidiaries UniCredit Bulbank AD and UniCredit 

Bank Czech Republic, a.s., the application of the F-IRB approach 

was approved as at 1 January 2011; further approvals for the 

application of the F-IRB approach at CEE subsidiaries are expected 

for 2011. 

Ukrsotsbank successfully completed the implementation of the 

standardised approach in the observation period. 

Current status of the application of the advanced measurement 

approach (AMA) for operational risk in the Bank Austria Group 

UniCredit Bank Austria AG has used the AMA since the beginning of 

2008. 


Schoellerbank has applied the AMA in the area of operational risk 

since 2009. 


In the reporting period, approval for the use of the AMA in the area 

of operational risk was received by the banking subsidiaries in 

Romania and Bulgaria. Approval for the use of the AMA also exists 

for the banking subsidiaries in the Czech Republic, Slovakia, 

Hungary, Slovenia and Croatia. Further approvals are planned to be 

obtained in the course of 2011. 

Current status of Basel 3 implementation in the Bank Austria 

Group 

Market risk in the trading book 

The EU rules in the Capital Requirements Directive (CRD III) – 

which have been adapted in respect of their first-time application, 

postponing it to the end of 2011 – impose significantly stricter capital 

requirements on European banks. The main changes relating to the 

trading book are the new concepts of stressed VaR, incremental risk 

charge and the new requirements concerning structured 

securitisations (the latter are not applicable in UniCredit Bank 

Austria AG for lack of relevant holdings in the trading book). In the 

past year Bank Austria made extensive preparations in cooperation 

with the UniCredit holding company with a view to meeting the new 

capital requirements. Stressed VaR is supported by IMOD, the new 

market risk model, and is already calculated on a regular basis (the 

time window currently used for this purpose includes the Lehman 

crisis). The incremental risk charge to cover default risk and rating 

migration risk has also been calculated several times. The relevant 

results have been presented to the bank’s management via MACO, 

so that the related increase in capital requirements, which will be 

applicable in December 2011 at the latest, has been taken into 

account in planning activities for 2011. 

Counterparty risk 

Changes will also take place in the area of counterparty credit risk; 

from a current perspective, these changes will need to be 

implemented by the end of 2012. Key changes include the 

calculation of a stress counterparty exposure, comparable to the 

stressed VaR in market risk. Other new features are the capital 

backing for market risk in respect of credit valuation adjustments and 

stricter standards for collateral management and margining. The 

treatment of central counterparties, which act as clearing centres, is 

also regulated in the Basel Committee proposals. 

Liquidity 

Basel 3 sets liquidity standards under stressed conditions in the 

short-term maturity range (liquidity coverage ratio = 100%) and in 

the structural sector (net stable funding ratio = 1). Although 

compliance with these rules will not be mandatory before 2015, 

Bank Austria will make the necessary extensions to the liquidity 

monitoring system in the course of 2011 and integrate the new 

regulatory standards in the current management information 

process. 

2.3. Third-party guarantees 

Under Section 92 (9) of the Austrian Banking Act, "Privatstiftung 

zur Verwaltung von Anteilsrechten" ("AVZ Stiftung", a private 

foundation under Austrian law) serves as deficiency guarantor for all 

liabilities of UniCredit Bank Austria AG in the event of the company's 

insolvency. 

After the change in the legal form of Anteilsverwaltung- 

Zentralsparkasse into a private foundation (“AVZ Stiftung”) in 2001, 

the Municipality of Vienna serves as deficiency guarantor for all 

outstanding liabilities, and obligations to pay future benefits, of 

UniCredit Bank Austria AG (then Bank Austria Aktiengesellschaft) 

which were entered into prior to and including 31 December 2001. 



2.4. Outlook for 2011 

The economic environment 

After a temporary slowdown in summer 2010 the global economy 

started to gather momentum around the turn of the year. We expect 

overall growth to reach 4.5% (weighted by purchasing power) in 

2011 – and also in 2012. China was the first country to manage the 

turnaround after the financial market crisis, and will remain the major 

provider of impetus with growth rates of just below 10%. The Third 

World economy as a whole will expand by 6.5%. The combined 

GDP of industrialised countries, on the other hand, is expected to 

grow at a disproportionately low rate of 2.5% in the next two years. 

We expect the US economy to grow by 3.3% in 2011 and by 2.7% in 

2012, also in light of recent decisions concerning massive tax 

reductions. Quantitative easing measures taken by the Fed are 

supporting economic expansion. The Fed is not expected to 

abandon its zero rate policy before the beginning of 2012 (current 

target rate: 0%-0.25%). This suggests future volatility of the US 

dollar, with periods of weakness. 

The euro area got off to a better-than-expected start in 2011. In 

Germany, the high level of export-driven industrial activity has 

stimulated domestic demand. Nevertheless, there are wide 

variations in the euro area, which means that GDP growth in real 

terms should only reach the same rate as in the previous year 

(2011: 1.7%, 2012: 1.6%). Despite the continued debt crisis, 

recurrent doubts about the solidarity of European banks and 

Eurosystem members’ varying use of facilities made available by the 

European Central Bank, the ECB will raise its main refinancing rate, 

currently at 1%, in the spring, thus initiating the end of the low 

interest rate phase. Long-term interest rates will not turn upwards 

until summer 2011, when the Fed’s first step to raise interest rates 

appears on markets’ time horizon. We expect that by the end of 

2011, yields on 10-year US Treasury bonds will have risen to 4% 

and the euro benchmarks to 3.5%. Interest rate spreads of highly 

indebted euro member states will remain high. Debt ratios are rising 

further for the time being, despite the austerity measures put in 

place, and rollover problems are becoming more pronounced. The 

rescue fund is likely to be used by additional countries. 

Overall, the economies in Central and Eastern Europe (CEE) have 

returned to a stable growth path. While the further reduction of 

external and domestic financing deficits is having a dampening 

impact on domestic demand, economic growth (CEE without 

Poland) in 2011 and 2012 is expected to be significantly higher than 

in Western Europe, reaching 3.8% and 4.2%, respectively, after a 

strong contraction of 5.9% in the crisis year 2009. There are regional 

differences, depending on a country’s output structure and the 

degree of international integration, but GDP is growing in all 

countries. The economies in South-East Europe weigh down the 

average growth figure as they are still struggling with the 

repercussions of the crisis. On the other hand, Russia, Kazakhstan 

and Ukraine will achieve disproportionately strong economic growth. 

We expect the average inflation rate in the CEE region to rise to 

over 7% after 6.4% in the previous year, a development which will 

mainly be driven by the CIS countries. Expressed as a percentage of 

GDP, the public sector deficit in the CEE region was down from 

7.0% in 2009 to 5.4% in 2010 as a result of determined 

consolidation measures, with a further decline to 4.7% expected for 

the current year. 

Public debt will remain below 40% of GDP in 2011. This reduces the 

risk of contagion if the public debt crisis should worsen. Stronger 

nominal growth suggests that credit expansion in CEE will 

accelerate. Given the shortage of capital, banks will further diversify 

their range of loan products. This will be at the expense of consumer 

loans while promoting corporate loans and project finance, including 

capital market instruments. The marked rise of the provisioning 

charge is likely to have passed its peak in the CEE region as a 

whole. Impaired loans as a proportion of total lending volume are 

also set to peak, or will pass their peak in the first half of 2011. In 

Kazakhstan, Bulgaria and Latvia the situation will probably not 

improve until later in 2011. 

In Austria, economic recovery will continue at a fairly buoyant rate 

in 2011. While the boost from external demand will weaken as the 

year progresses, exports will remain the key growth impetus 

throughout the year. Private consumption will grow by a little under 1 

per cent in 2011 as a whole, expanding at the expense of the 

savings ratio as wage growth is moderate and the upturn in the 

labour market tapers off. The rise in the backlog of orders and the 

increase in capacity utilisation levels in industry will make 

investments, which will expand at a rate of 3.5 per cent in real terms 

in 2011, the most important engine of growth. The strongest impetus 

will come from investments in plant and equipment. Investments in 

construction, impacted by the budgetary restraint of the public 

sector, will be weak (+0.6%) in light of plans to reduce the budget 

deficit from 4.1 per cent of GDP in 2010 to 3.2 per cent. The 

measures to cut the budget deficit, in combination with further rises 

in world market prices for energy and basic agricultural products, will 

push up inflation to an average of about 2.5 per cent in 2011. Given 

the continued favourable outlook for exports and especially brighter 

investment prospects, we expect GDP growth to rise slightly above 

the previous year’s level to a real 2.3 per cent in 2011. On the 

monetary side, the ECB will probably change its interest rate policy 

in 2011, a measure which is currently being anticipated. The growth 

of bank deposits will however continue to weaken, despite a slight 

rise in interest rates. New capital formation will reflect a stronger 

shift by private households in favour of securities, including issues 

by banks, and mutual funds. We expect demand for life assurance 

policies to remain strong. Overall, the slow rise in real wages and 

especially weak credit demand will result in a continued slight 

decline in the savings ratio. We expect demand for personal loans to 

remain weak in 2011, and business loans will continue to grow at a 

disproportionately low rate, although they may show a slight upturn. 



Outlook for UniCredit Bank Austria AG’s performance 

For 2011 and beyond, we expect that the upward trend in volume 

and operating revenues will intensify and the exceptional burdens 

experienced in 2010 will gradually taper off; this means that 

developments on the operating and non-operating sides will 

continue to return to normal. Our strategy is not aimed at any major 

reshaping but focuses on a number of initiatives under our 

customer-oriented business model. 

� First, we are seeking expansion in our core commercial 

banking business – i.e. loans, deposits and investments – with 

a focus on promising segments in our matrix of business lines 

and regions. We will take this into account in our capital 

allocation. 

� Second, we will promote those products and services which 

help us raise RWA productivity in the bank as a whole and 

increase efficiency in the employment of equity capital: in 

business with private customers, asset gathering continues to 

be a priority, especially in CEE countries. Quite generally, we 

expect to see stronger demand for advisory and other services. 

In business with large corporates, the use of capital market 

products is again becoming more significant, particularly in 

view of the Basel 3 rules. 

� Third, we are investing in our market position. Following 

completion of the One4C project, our sales organisation in 

Austria is now characterised by a more finely-tuned 

segmentation. In business with private customers we have 

identified two groups at which we will target our new “Smart 

Banking” approach. The new approach will enable Bank Austria 

to provide services and advice via modern communication 

channels – personalised OnlineB@nking, telephone, SMS – 

around the clock worldwide, independent of branch opening 

hours. This will also relieve the workload on staff at branches 

while further enhancing the quality of our branch portfolio. Our 

Austria-wide network structure of service units for small and 

medium-sized businesses (SMEs) has been fully effective 

since the beginning of 2011. We are thereby closer to 

customers and better positioned to meet customer needs 

through specialised services. One of the objectives of this 

move is to make better use of potential in relationships with 

business customers who are also private customers of Bank 

Austria. We will make additions to staff in the F&SME Division. 

Following the successful completion of customer transfers from 

other Divisions, Private Banking launched a quality initiative for 

the top segment of private customers, offering them a number 

of innovative services such as ongoing portfolio analysis based 

on international cooperation of UniCredit experts and “Private 

Portfolio Premium”, which provides our customers with clear 

contractual standards offering more scope for personal finetuning. 

In corporate banking we are planning to significantly 

expand lending volume to support stronger investment activity 

while also focusing on capital market products and transaction 

banking, especially in the public sector. In international 

business with corporate customers, we will bring our leading 

position in trade finance and cash management services to 

bear in cross-border banking. In CEE we will implement our 

business model on a selective basis. This means that we will 

be guided by market potential and market penetration in the 

various countries; below the country level, we will give attention 

to prosperity in individual regions and locations. Another focus 

of attention in this context is the minimum size threshold of 

profitability. Our five-year plan provides for the addition of more 

than 900 branches (openings net of closures) to the network by 

2015, including 139 new branches in the current year, primarily 

in Turkey, Romania and the Czech Republic. Staff numbers will 

rise again, mainly in Romania, the Czech Republic and Russia. 

� Fourth, we have launched All4Quality, a comprehensive 

programme for sustained cost reduction and efficiency 

enhancement. Among other objectives, the programme is 

aimed at harmonising IT and back-office processes on a crossborder 

basis with a view to unlocking synergies. Beginning in 

2011 and until the middle of 2012, the IT company Bank 

Austria Global Information Services (BAGIS) and the Austrian 

branch of UniCredit Global Information Services (UGIS), Bank 

Austria’s Facility Management and the back-office services 

provider UniCredit Business Partner (UCBP) will be combined 

to form a single company with about 2,500 employees. The 

successive rollout of EuroSIG, UniCredit’s core banking 

system, will continue. 

The moderately favourable environment in combination with our 

numerous growth initiatives in commercial banking business suggest 

that the positive revenue trend seen in the past year will continue in 

2011. We are planning for a robust operating profit, despite 

extensive investment projects. Net writedowns of loans and 

provisions for guarantees and commitments should continue to 

gradually return to normal, especially in the CEE business segment, 

thereby having a positive effect on the income statement. The 

outlook is also brightening for those countries which are late in the 

credit cycle, and the restructuring process of the banking sector in 

the CIS countries is making progress. On this basis it may be 

assumed that 2011 will not see a recurrence of the exceptionally 

high burdens recorded in 2010 and that the improvement in 

operating performance, after the provisioning charge, will feed 

through to net profit for 2011. The risks in this basic scenario mainly 

relate to general trends in interest rates and credit spreads, i.e. on 

the funding side. Moreover, Bank Austria is still exposed to market 

risk after the reorientation of trading activities. Volatility of interest 

rates and exchange rates will depend not least on future 

developments in the European public debt crisis, and renewed 

external disruptions – resulting, for example, from the geopolitical 

situation and commodity price trends – should be taken into 

account. 

When assessing the outlook for Bank Austria’s performance, one 

should note that the regulatory environment has changed 

significantly and banks will find themselves subject to stricter 

requirements. In the medium to long term, the implementation of the 

Basel 3 package will have the strongest impact on the banking 

sector, starting with the new definition of risk capital for the trading 

book and the new definition of equity capital all the way to the 

significant increases in minimum capital ratios. Together with other 

new rules (liquidity coverage ratio and net stable funding ratio), this 

will have an influence on the funding structure already before the 

new rules become effective, leading to further convergence of terms 

and conditions among banks and large companies. Bank Austria is 

well prepared, in terms of methodologies and organisational 

arrangements, for the changes in the regulatory environment. With 

our strong equity capital base of € 17.5 bn and our high Tier 1 

capital ratio of over 10%, we are very well positioned to meet the 

stricter requirements on our own while pursuing further business 

expansion. 



In 2011, the stability levy on credit institutions in Austria will be 

payable for the first time; a levy on banks was already payable in 

Hungary in 2010. The implementation of EU Directives (CRD II and 

CRD III), new rules for the deposit guarantee scheme and investor 

compensation, and possibly the collection of the capital gains tax 

introduced in Austria, will have direct impacts on current business 

and involve additional costs. Financial transaction taxes and 

restrictive regulatory rules for derivatives would limit efficiency and 

liquidity levels in financial markets, discriminating against 

transactions which are also required for commercial banking 

business. If the approach is not coordinated, the new regulatory 

rules and fiscal measures may accumulate to put a prohibitive 

burden on banks, ultimately affecting their performance capabilities. 

Research and development 

UniCredit Bank Austria AG’s business object is to provide banking 

services. The production process of a bank does not involve 

research and development in an industrial sense. But day-to-day 

business operations continuously benefit from development 

activities, such as for the structuring of investment products (e.g. 

products with capital guarantees) or in conjunction with financial 

engineering for our customers. In the latter case, examples are 

complex acquisition or project finance arrangements over and 

beyond the employment of standard products. Generally, UniCredit 

Bank Austria AG aims to meet the needs of different customer 

groups with simple products. The methodologies used in the bank’s 

risk management, the management of the structure of assets and 

liabilities, and in funding and liquidity management, are constantly 

being developed. This entails substantial cost, given the ongoing 

changes in the environment within which the bank operates and the 

work required to prepare for far-reaching regulatory changes. 

Information and communications technology (ICT) is also improved 

on an ongoing basis. This includes the EuroSIG project, which 

involves the step-by-step introduction of a common core banking 

system within UniCredit Group. According to current plans, UniCredit 

Bank Austria AG will change to the new IT platform in 2012. All of 

the Group’s – and therefore also UniCredit Bank Austria AG’s – key 

IT applications for sales and business with customers will be 

replaced by EuroSIG AT, a web-based system harmonised across 

the different regions. EuroSIG AT supports the development and 

settlement of products which are distributed on a cross-border basis 

within UniCredit Group. The new IT platform should shorten the time 

to market and significantly reduce IT complexity. This will result in 

lower IT costs over the longer term, while increasing IT efficiency. 

3. Events after the balance sheet date 

After the balance sheet date there were no significant events that 

are required to be reported. 

4. Report on key features of the internal control and risk 

management systems in relation to the financial reporting 

process 

The Management Board is responsible for establishing and 

designing internal control and risk management systems which meet 

the company’s requirements in relation to the financial reporting 

process. The purpose of this report is to provide an overview of how 

internal controls are organised in relation to the financial reporting 

process. 

The objective of the internal control system is to assist management 

in assuring internal controls in relation to financial reporting which 

are effective and are improved on an ongoing basis. The system is 

geared to complying with rules and regulations and creating 

conditions which are conducive to performing specific controls in key 

accounting processes. 

Following the integration of the Bank Austria Group in UniCredit 

Group, the Italian Savings Law, Section 262 (process description for 

minimising risk in preparing financial statements) in particular, must 

be complied with. 

Pursuant to the “262 Savings Law”, the CEO and the CFO 

delegated by UniCredit S.p.A. are liable, under civil and criminal law, 

for any violation of the legal provisions. They are also responsible for 

every subsidiary within the group of consolidated companies which 

is covered by financial reporting because the “262 Savings Law” 

deals with consolidated financial statements. 

Internal Audit performs independent and regular reviews of 

compliance with internal rules also in the area of accounting. The 

Head of Internal Audit reports directly to the Management Board and 

provides the Chairman of the Supervisory Board with quarterly 

reports. 

Control environment 

The basic aspect of the control environment is the corporate culture 

in which management and all employees operate. 

UniCredit S.p.A., the parent company of UniCredit Bank Austria AG, 

works to improve communication and convey the corporate values 

defined in the Integrity Charter. The Integrity Charter embodies the 

UniCredit Group’s identity and is based on the following shared 

values: fairness, transparency, respect, reciprocity, freedom to act, 

and trust. 

In October 2006, the Management Board of UniCredit Bank Austria 

AG adopted the UniCredit Organisation Guidelines. The objective of 

the Guidelines is to have a uniform organisational structure in all 

countries as well as uniform reporting lines and levels of hierarchy. 

The organisational structure is based on the Governance Rules and 

the Group Organisation Guidelines of UniCredit S.p.A. 

The implementation of the internal control system in relation to the 

financial reporting process is set out in the internal rules and 

regulations: 

All accounting entries are made within the guidelines established in 

the Accounting Policy, and release follows defined instruction and 

control criteria. For each general ledger account there is a 

responsible person who reconciles the general ledger accounts in 

accordance with existing rules. This internal reconciliation process is 

interrogated by Financial Accounting and reviewed by Internal Audit. 



Risk assessment 

In the course of the “262 Savings Law” project, the persons having 

process responsibility identified risks in relation to the financial 

reporting process; these risks are monitored on an ongoing basis. 

The focus is on those risks which are typically considered to be 

material. 

To meet the “262 Savings Law” requirements, controls pursuant to 

the methodology used by UniCredit S.p.A. are required to be 

performed at least on a half-yearly basis (for full-year and half-year 

reporting). 

Controls 

All controls are applied in the current business process to ensure 

that potential errors or deviations in financial reporting are prevented 

or detected and corrected. Controls range from a management 

review of results for the various periods to specific reconciliation of 

accounts and the analysis of continuous accounting processes. 

The levels of hierarchy are designed so that an activity and the 

control of that activity is not performed by the same person (foureyes 

principle). In the course of the preparation of financial reports, 

the general ledger accounts are reconciled with business and frontend 

systems. 

IT security controls are a cornerstone of the internal control system. 

The separation of sensitive activities is supported by a restrictive 

approach to IT access authorisation. The operation of the financial 

reporting system is also assured through automated IT controls 

included in the system. 

Information and communication 

Management regularly updates rules and regulations for financial 

reporting and communicates them to all employees concerned. 

Moreover, regular discussions on financial reporting and on the rules 

and regulations applicable in this context take place in various 


Cernko 

(Chairman) 

bodies and are repeatedly communicated to Bank Austria. 

Employees in Financial Accounting receive regular training in new 

methods of international financial reporting in order to identify risks 

of unintended misreporting at an early stage. 

To perform monitoring and control functions with a view to proper 

financial accounting and reporting, extensive financial information is 

made available at key levels of the bank. Relevant information is not 

only provided to the Supervisory Board and the Management Board, 

middle management levels also receive detailed reports. 

Monitoring 

Bernkopf Danzmayr Fossati 

Giordano Hauser Papa Tomanek 

As part of the implementation of the internal control system pursuant 

to the “262 Savings Law”, instruments were introduced to monitor 

the effectiveness of controls. In connection with the compulsory halfyearly 

certification process for the preparation of the management 

report, the persons having process responsibility are required to 

carry out effectiveness tests to check the effectiveness of controls. It 

must be ascertained whether the controls work according to their 

design and whether the persons who perform controls have the 

competence/authority and qualifications required to perform the 

controls effectively. 

All persons having process responsibility confirm by means of 

certification that their processes are adequately documented, risks 

have been identified and controls have been evaluated with a view 

to deriving measures to minimise risk. 

The results of these monitoring activities are contained in a 

management report which is based on the certifications provided to 

the respective chief financial officer by all persons having process 

responsibility and issued on a half-yearly basis. The Chief Financial 

Officer of UniCredit Bank Austria AG receives the certifications by 

the chief financial officers of the subsidiaries covered by the process 

in accordance with the group of consolidated companies, and 

provides the Holding Company and the public with confirmation of 

the reliability and effectiveness of the internal control system in the 

context of the financial statements for the first six months and the 

annual financial statements. 


Financial Statements of UniCredit Bank Austria AG 

Balance Sheet at 31 December 2010 

Assets 31 Dec. 2010 31 Dec. 2009 

Change 

in € 1,000 in € 1,000 in € 1,000 in % 

1. Cash in hand, balances with central banks and postal giro offices 1,221,130 1,246,124 -24,994 -2.0 

2. Treasury bills and other bills eligible for 

refinancing at central banks 

a) treasury bills and similar securities 

b) other bills eligible for refinancing 

at central banks 

3,418,027 2,921,630 496,397 17.0 

3,418,027 2,921,630 496,397 17.0 

--- --- --- --- 

3. Loans and advances to credit institutions 23,092,322 31,141,370 -8,049,048 -25.8 

a) repayable on demand 3,068,524 6,198,339 -3,129,815 -50.5 

b) other loans and advances 

20,023,798 24,943,031 -4,919,233 -19.7 

4. Loans and advances 66,704,530 to customers 66,677,491 27,039 0.0 

5. Bonds and other 

fixed-income securities 9,009,293 4,587,251 4,422,042 96.4 

a) issued by public borrowers 772,250 672,700 99,550 14.8 

b) issued by other borrowers 8,237,043 3,914,551 4,322,492 >100,0 

of which: own bonds 

527,111 696,403 -169,292 -24.3 

6. Shares and other variable-yield 425,883 securities414,426 

11,457 2.8 

7. Equity interests 2,808,729 2,813,346 -4,617 -0.2 

of which: in credit institutions 

194,727 194,560 167 0.1 

8. Shares in group companies 12,555,297 18,143,427 -5,588,130 -30.8 

of which: in credit institutions 

9,121,297 9,159,396 -38,099 -0.4 

9. Intangible fixed assets 80,683 105,702 -25,019 -23.7 

10. Tangible fixed assets 256,696 306,099 -49,403 -16.1 

of which: land and buildings used by the credit institution 

for its own business operations 

137,133 175,205 -38,072 -21.7 

11. Own shares and 

shares in a controlling company --- --- --- --of 

which: par value 

--- --- --- --- 

12. Other assets 1,097,108 1,171,381 -74,273 -6.3 

13. Prepaid expenses 

62,596 61,911 685 1.1 

120,732,294 129,590,158 -8,857,864 -6.8 



Liabilities and Shareholders' Equity 31 Dec. 2010 31 Dec. 2009 

Change 

in € 1,000 in € 1,000 in € 1,000 in % 

1. Amounts owed to credit institutions 30,152,398 36,027,777 -5,875,379 -16.3 

a) repayable on demand 4,648,678 3,290,249 1,358,429 41.3 

b) with agreed maturity dates or periods of notice 25,503,720 32,737,528 -7,233,808 -22.1 

2. Amounts owed to customers 45,921,168 48,721,928 -2,800,760 -5.7 

a) savings deposits 16,437,147 17,680,262 -1,243,115 -7.0 

aa) repayable on demand 4,662,385 4,713,076 -50,691 -1.1 

bb) with agreed maturity dates or periods of notice 11,774,762 12,967,186 -1,192,424 -9.2 

b) other liabilities 29,484,021 31,041,666 -1,557,645 -5.0 

aa) repayable on demand 16,680,934 17,365,886 -684,952 -3.9 

bb) with agreed maturity dates or periods of notice 12,803,087 13,675,780 -872,693 -6.4 

3. Debts evidenced by certificates 21,053,024 22,492,122 -1,439,098 -6.4 

a) bonds issued 12,723,037 13,620,035 -896,998 -6.6 

b) other debts evidenced by certificates 8,329,987 8,872,087 -542,100 -6.1 

4. Other liabilities 1,590,027 1,487,265 102,762 6.9 

5. Deferred income 46,612 41,151 5,461 13.3 

6. Provisions 4,118,829 3,830,964 287,865 7.5 

a) provisions for severance payments 251,510 245,181 6,329 2.6 

b) pension provisions 2,794,149 2,761,380 32,769 1.2 

c) provisions for taxes 65,300 65,227 73 0.1 

d) other 1,007,870 759,176 248,694 32.8 

6.A Special fund for general banking risks --- --- --- --- 

7. Subordinated liabilities 2,794,736 3,911,838 -1,117,102 -28.6 

8. Supplementary capital 452,810 493,114 -40,304 -8.2 

9. Subscribed capital 1,681,034 1,468,771 212,263 14.5 

10. Capital reserves 9,332,128 7,544,391 1,787,737 23.7 

a) subject to legal restrictions 7,913,947 6,126,210 1,787,737 29.2 

b) other 1,418,181 1,418,181 

11. Revenue reserves 1,379,715 1,379,694 21 0.0 

a) for own shares and 

shares in a controlling company --- --- --- --b) 

statutory reserve 14,535 14,535 --- --c) 

reserves provided for by the bye-laws 

--- --- --- --d) 

other reserves 1,365,180 1,365,159 21 0.0 

12. Reserve pursuant to Section 23 (6) 

of the Austrian Banking Act (BWG) 2,129,748 2,111,291 18,457 0.9 

13. Accumulated profit/loss 2,314 2,080 234 11.3 

14. Untaxed reserves 77,751 77,772 -21 0.0 

a) valuation reserve resulting from special depreciation 77,751 77,772 -21 0.0 

b) other untaxed reserves --- --- --- --aa) 

investment reserve pursuant to Section 9 

of the Austrian Income Tax Act (EStG) 1988 --- --- --- --bb) 

investment allowance pursuant to Section 10 

of the Austrian Income Tax Act (EStG) 1988 --- --- --- --cc) 

rent reserve pursuant to Section 11 

of the Austrian Income Tax Act (EStG) 1988 --- --- --- --dd) 

reserve transferred pursuant to Section 12 

of the Austrian Income Tax Act (EStG) 1988 --- --- --- --- 

120,732,294 129,590,158 -8,857,864 -6.8 



Items shown below the Balance Sheet 

Assets 31 Dec. 2010 31 Dec. 2009 

in € 1,000 in € 1,000 

Change 

in € 1,000 in % 

1. Foreign assets 57,659,214 46,381,938 11,277,276 24.3 

Liabilities and Shareholders' Equity 31 Dec. 2010 31 Dec. 2009 

Change 

in € 1,000 in € 1,000 in € 1,000 in % 

1. Contingent liabilities 

of which: 

a) acceptances and 

14,171,106 15,167,259 -996,153 -6.6 

endorsements --- --- --- --b) 

guarantees and assets pledged as 

collateral security 

14,171,106 15,167,259 -996,153 -6.6 

2. Commitments 2,757,487 2,758,745 -1,258 -0.0 

of which: commitments arising from repurchase agreements 

3,634 5,450 -1,816 -33.3 

3. Liabilities arising from 1,127transactions on1,239 a trust basis -112 -9.0 

4. Eligible capital pursuant to Article 23 para. 14 13,233,417 12,286,655 946,762 7.7 

of which: Own funds pursuant to Article 23 para. 14 no. 7 

96,360 115,691 -19,331 -16.7 

5. Capital requirement pursuant to Article 22 para. 1 5,890,458 5,560,944 329,514 5.9 

of which: Capital requirement pursuant to Article 22 para. 1 nos. 1 and 4 5,794,098 5,445,253 348,845 6.4 

6. Foreign liabilities 

30,278,238 22,529,823 7,748,415 34.4 



Profit and Loss Account for the year ended 31 Dec. 2010 

Profit and Loss Account for the year ended 31 December 2010 2010 2009 

Change 

in € 1,000 in € 1,000 in € 1,000 in % 

1. Interest and similar income 3,171,681 4,114,596 -942,915 -22.9 

of which: from fixed-income securities 

317,238 292,285 24,953 8.5 

2. Interest and similar expenses -1,863,123 -3,017,733 -1,154,610 -38.3 

I. NET INTEREST INCOME 1,308,558 1,096,863 211,695 19.3 

3. Income from securities and equity interests 692,582 476,584 215,998 45.3 

a) income from shares, other ownership interests and 

variable-yield securities 7,341 13,706 -6,365 -46.4 

b) income from equity interests 16,033 8,393 7,640 91.0 

c) income from shares in group companies 

669,208 454,485 214,723 47.2 

Net fee and commission income 

(sub-total of items 4 and 5) 

698,755 593,731 105,024 17.7 

4. Fee and commission income 911,200 805,425 105,775 13.1 

5. Fee and commission expenses -212,445 -211,694 751 0.4 

6. Net profit/loss on trading activities 34,524 -28,576 63,100 >100,0 

7. Other operating income 106,273 104,126 2,147 2.1 

II. OPERATING INCOME 2,840,692 2,242,728 597,964 26.7 

8. General administrative expenses -1,461,874 -1,389,367 72,507 5.2 

a) staff costs -879,566 -834,505 45,061 5.4 

wages and salaries -474,755 -435,470 39,285 9.0 

expenses for statutory social-security contributions 

and compulsory contributions related to 

wages and salaries -105,344 -101,430 3,914 3.9 

other employee benefits -11,001 -10,214 787 7.7 

expenses for retirement 

benefits -239,693 -247,486 -7,793 -3.1 

allocation to the pension provision -19,856 -11,113 8,743 78.7 

expenses for severance payments 

and payments to severance-payment funds 

-28,917 -28,792 125 0.4 

b) other administrative expenses -582,308 -554,862 27,446 4.9 

9. Depreciation and amortisation 

of asset items 9 and 10 -80,037 -60,666 19,371 31.9 

10. Other operating expenses -145,870 -104,592 41,278 39.5 

III. OPERATING EXPENSES -1,687,781 -1,554,625 133,156 8.6 

IV. OPERATING RESULTS 1,152,911 688,103 464,808 67.5 




Change 

in € 1,000 in € 1,000 in € 1,000 in % 

11./12. Net income/expenses from the disposal and 

valuation of loans and advances, securities 

as well as contingent liabilities and commitments -704,699 -551,758 152,941 27.7 

13./14. Net income/expenses from the disposal and 

valuation of securities valued as financial 

fixed assets, and of shares in group companies 

and equity Interests -406,420 -1,084,040 -677,620 -62.5 

V. RESULTS FROM ORDINARY BUSINESS ACTIVITIES 41,792 -947,695 989,487 >100,0 

15. Extraordinary income --- 935,562 -935,562 -100.0 

of which: releases from the special fund for general banking risks 

--- 

935,562 -935,562 -100.0 

16. Extraordinary expenses 

--- 

--- --- --of 

which: allocations to the special fund for general banking risks --- --- --- --- 

17. Extraordinary results --- 935,562 -935,562 -100.0 

(sub-total of items 15 and 16) 

18. Taxes on income -20,930 12,763 -33,693 >-100,0 

19. Other taxes not included under item 18 -20,628 -524 20,104 >100,0 

VI. ANNUAL SURPLUS/ANNUAL DEFICIT 234 106 128 >100 

20. Movements in reserves --- --- --- --- 

VII. PROFIT/LOSS FOR THE YEAR 234 106 128 >100 

21. Profit/loss brought forward from previous year 2,080 1,974 106 5.4 

VIII. ACCUMULATED PROFIT/LOSS 2,314 2,080 234 11.3 



Notes to the Financial Statements of 

UniCredit Bank Austria AG 

1. General information 

The financial statements of UniCredit Bank Austria AG 

for the 2010 financial year were prepared pursuant to 

the provisions of the Austrian Business Code 

(Unternehmensgesetzbuch – UGB) in its currently 

applicable version and in compliance with the rules of 

the Austrian Banking Act (Bankwesengesetz – BWG) 

and the Austrian Joint Stock Companies Act 

(Aktiengesetz – AktG) that are applicable to credit 

institutions. The formats of the balance sheet and of 

the profit and loss account comply with the forms in 

Annex 2 to Section 43 of the Austrian Banking Act. 

As the securities issued by UniCredit Bank Austria AG 

are admitted to trading on a regulated exchange in the 

European Union, UniCredit Bank Austria AG prepares 

its consolidated financial statements as a credit 

institution in accordance with International Financial 

Reporting Standards (IFRSs). The consolidated 

financial statements are published on the Internet 

(www.bankaustria.at). 

UniCredit Bank Austria AG is a subsidiary included in 

the consolidated financial statements of UniCredit 

S.p.A. 

The consolidated financial statements prepared by the 

Group’s parent company are published at the following 

address: UniCredit S.p.A., registered office: Via A. 

Specchi 16, 00100 Rome, Italy. They are published on 

the Internet at www.unicreditgroup.eu . 

Implementation of disclosure requirements 

pursuant to Sections 26 and 26a of the Austrian 

Banking Act 

Disclosure pursuant to Section 26 (1) of the Austrian 

Banking Act for UniCredit Bank Austria AG is carried 

out as part of comprehensive disclosure by the parent 

company UniCredit based on the consolidated financial 

position in its function as EEA parent bank of UniCredit 

Bank Austria AG. 

As regards the disclosure requirements pursuant to 

Section 26 (1) of the Austrian Banking Act, we refer to 

the website of UniCredit Group. 

UniCredit Bank Austria AG is a significant subsidiary 

pursuant to Section 26 (4) of the Austrian Banking Act 

and therefore discloses its supervisory capital structure 

and its capital adequacy requirement; furthermore, the 

bank discloses information regarding the use of own 

estimates for volatility adjustments (comprehensive 

method) for credit risk mitigation techniques to take 

account of financial collateral pursuant to Section 17 of 

the Austrian Disclosure Regulation and in accordance 

with the approval by the Austrian Financial Market 

Authority (FMA). 

As regards the disclosure requirements pursuant to 

Section 26a of the Austrian Banking Act and Section 

17 of the Austrian Disclosure Regulation 

(Offenlegungsverordnung – OffV), we refer to the 

website of UniCredit Bank Austria AG at 

www.bankaustria.at 

Size classification pursuant to Section 221 of the 

Austrian Business Code 

According to the size classification pursuant to Section 

221 of the Austrian Business Code, UniCredit Bank 

Austria AG is classified as a large company. 

2. Accounting and valuation methods 

2.1. General rule 

The financial statements were prepared on the basis of 

generally accepted accounting principles and in 

compliance with the general requirement of giving a 

true and fair view of the company’s assets and 

liabilities, its financial position and results. Assets and 

liabilities were valued in accordance with the principle 

of individual valuation on a going concern basis. The 

principle of prudence was observed with due regard to 

the special characteristics of banking business 

operations. 



2.2. Accounting and valuation methods 

2.2.1. Foreign currency translation 

Assets and liabilities denominated in foreign currencies 

were stated in the balance sheet at the European 

Central Bank’s reference rates as at 31 December 

2010. Expenses and income in foreign currencies were 

translated at the ECB’s end-of-month reference rates. 

The euro denominations were translated as at 1 

January 2002 at the rates fixed on 31 December 1998. 

Forward transactions that had not been settled at the 

balance sheet date were translated at the forward rate. 

2.2.2. Loans and advances 

Provisions were made for identifiable lending risks. To 

the extent that it was possible to combine individual 

risk assets into groups, provisions were made on a 

portfolio basis. 

2.2.3. Securities 

Securities intended to be held as long-term 

investments were valued at cost. Use was made of the 

optional rule contained in Section 56 (2) and (3) of the 

Austrian Banking Act (spreading premiums/discounts 

in the profit and loss account over the period to 

maturity). The relevant amounts of premiums and 

discounts are indicated in item 4 of the notes to the 

balance sheet (4.7. Differences between cost and 

repayable amount of bonds and other fixed-income 

securities). 

Securities held in the trading book were marked to 

market. Other securities held as current assets were 

valued at cost or market, whichever was lower. Own 

issues that were repurchased were stated in the 

balance sheet at average cost. 

Details are given in item 4 of the notes to the balance 

sheet (4.8. Differences between cost and market value 

of securities admitted to trading on an exchange which 

are not held as financial fixed assets). 

2.2.4. Equity interests and shares in group 

companies 

Equity interests and shares in group companies were 

stated at cost. In the case of permanent diminutions in 

value, writedowns were made in respect of listed and 

unlisted companies. 

Impairment test 

For the fair value calculation the Standard UniCredit 

Group Discounted Cash Flow Valuation Model (3phase 

model) was employed throughout the Group 

using the following assumptions: 

� Phase 1 (2010): the free cash flows are based on 

year-end projections for net profit and risk-weighted 

assets. 

� Phase 2 (2011–2019) 

o Phase 2a – planning period (2011–2015): the 

2011 budget figures for net profit and riskweighted 

assets were used for 2011, and multiyear 

planning figures were used for subsequent 

years. The figures are based on economic 

assumptions determined by the CEE Strategic 

Analysis unit. 

o Phase 2b (2016–2019): in this phase the growth 

rates of net income and risk-weighted assets 

converge towards 2%, reflecting the expected 

long-term growth potential of the euro area. 

In accordance with IAS 36, the growth rate was 

capped (net income / risk-weighted assets in 

2015). 

The discount rate in the form of cost of equity 

(Ke) declines to the corresponding terminal 

value level. 

� Phase 3 – perpetual annuity: calculation of the 

present value of a perpetual annuity on the 

assumption of a long-term growth rate which takes 

the sustained long-term economic growth expected 

by Bank Austria for the euro area into account (2%). 



Phases 1 and 2a are the results of a detailed planning 

process which does not exceed the 5-year horizon in 

accordance with IAS 36. Phase 2b is based on the 

reduction of growth rates to the levels on which the 

perpetual annuity is based. 

Calculation of cost of equity 

The expected cash flows are discounted at the 

country-specific rate of cost of capital, which is 

determined on the basis of the long-term risk-free 

interest rate of the local currency, the debt risk 

premium and the UniCredit equity risk premium. 

� Risk-free rate: Calculation is based on the 

historical average (6 years) of the 5-year swap rate 

in local currency. If no swap rate was available, the 

most liquid and comparable interbank rate (with a 

3-month tenor) was used. 

� Risk premium for debt: This is the country risk 

premium calculated as the historical average (6 

years) of the 5-year credit default swap paid by the 

country (given the lack of time series in certain 

countries we considered a shorter time period or 

the asset swap spread of a benchmark 

government bond). 

� Risk premium for equity: This is calculated using 

the option pricing model and is based on the 

historical volatility of the UniCredit share price. 

� Terminal value cost of equity: Calculations are 

based on the methodology of the Group applied to 

a sample of European banks (peers), but instead 

of applying the tenor of 5 years the 10-year CDS 

and the 10-year risk-free rate is used. 

The terminal value cost of equity of those cashgenerating 

units (CGUs) operating in countries 

expected to enter the euro area by 2013 was set 

equal to the average for European banks with low 

exposure to CEE countries (11%). For the other 

CGUs the terminal value cost of equity was set 

equal to 12.5 %, in line with the European banks 

having an important exposure to Central and 

Eastern Europe. A rate of 10.55% was used for 

cash-generating units classified as West European 

CGUs. 

2.2.5. Intangible assets 

Intangible assets were valued at cost. The rate of 

amortisation applied to computer software was 

between 16.67% p.a. and 25% p.a., in line with its 

ordinary useful life. 

2.2.6. Tangible fixed assets 

Land, buildings and office furniture and equipment 

were stated at cost. The rate of depreciation applied to 

buildings was between 2% p.a. and 5% p.a. and for 

furniture and equipment between 10% p.a. and 25% 

p.a., in line with their ordinary useful lives. 

2.2.7. Low-value assets 

Low-value assets were fully depreciated in the year of 

acquisition. 

2.2.8. Derivatives 

Derivatives in the banking book were recognised at 

amortised cost. Derivatives assigned to the trading 

book were marked to market. To the extent that 

derivatives were interest-rate hedging transactions, 

related income was included in net interest income. 

2.2.9. Liabilities 

Liabilities were stated in the balance sheet at the 

repayable amount. Premiums and discounts in 

connection with own issues are spread over the period 

to maturity. 

2.2.10. Provisions 

Provisions were recognised in the amount required 

pursuant to generally accepted accounting principles. 



Provisions for severance payments and pensions 

Provisions for pension obligations and severancepayment 

obligations are recognised pursuant to the 

Chamber of Public Accountants' expert opinions KFS – 

RL 2 and 3, using the projected unit credit method in 

accordance with IAS 19. Pursuant to the corridor 

method, that part of the actuarial gains and losses 

which relates to the respective provisions and exceeds 

the corridor is spread over the average remaining 

period of service of the employees concerned and 

recognised as an expense. 

As at 1 May 2007, the internal service agreement on 

the Bank Austria pension equivalent (ASVG 

equivalent) was adjusted to changes in the legal 

environment – in particular, by raising the minimum 

retirement age, introducing specific reductions and 

reducing widows’ pensions. 

Under a commitment to provide defined benefits, 

UniCredit Bank Austria AG continues to recognise a 

pension provision for the entitlements of employees 

who retired before the pension reform as at 31 

December 1999 became effective, and – as a special 

feature of UniCredit Bank Austria AG’s staff regulations 

– for the future benefits equivalent to those under 

mandatory insurance, earned by active employees and 

pensioners for whom UniCredit Bank Austria AG has 

assumed the obligations of the mandatory insurance 

scheme pursuant to Section 5 of the Austrian General 

Social Security Act (ASVG). 

The following are also covered by the provision: 

� disability risk and rights to future benefits based on 

early retirement and pension entitlements of 

surviving dependants, less reimbursement from 

the pension funds, 

� pension entitlements based on direct benefit 

commitments contained in individual employment 

contracts, and 

� rights to future benefits relating to additional 

pension payments for employees performing 

manual work. 

The present value of pension obligations and 

severance-payment obligations and of anniversary 

bonuses is determined with due regard to internal 

service regulations, on the basis of the following 

actuarial assumptions: 

� Discount rate: 5.00% p.a. (2009: 5.25% p.a.) 

� Increases under collective bargaining agreements: 

2.45% p.a. (2009: 2.45% p.a.) (assumption of 

increases for employees and pensioners) 

� Career trends including regular salary increases 

under the current collective bargaining agreement 

for employees of Austrian banks and the effects of 

the transitional rules under the 2005 reform of 

UniCredit Bank Austria AG’s service regulations. 

The rate applied in calculating non-regular salary 

increases was 0.25% p.a. (2009: 0.25% p.a.). 

(Assumption of increases for employees.) 

� No discount for staff turnover 

� Retirement age: for employees enjoying 

“permanent tenure” status under the internal 

services regulations on the payment of a Bank 

Austria pension equivalent to a mandatory socialsecurity 

pension, dated 30 December 1999 (as 

amended on 1 May 2007), the retirement age is 60 

for men and 55 for women, with the transition to 

the retirement age of 65 being taken into account. 

For all other staff members the new retirement age 

of 65 – for both men and women – under the 

applicable rules (2003 Pension Reform) was taken 

into account, with the transitional rules of the 2003 

Pension Reform. If the corridor pension rule results 

in a lower retirement age, the lower age was used 

as retirement age. 

� 2008 P statistical tables for salaried staff 

(Aktuarverein Österreich, life expectancy tables for 

salaried staff) 

No provisions are made for defined-contribution plans. 

Payments agreed to be made to a pension fund for 

defined-contribution plans are recognised as an 

expense. 

3. Changes in accounting and valuation methods, 

reclassifications 

No changes in accounting and valuation methods were 

made compared with the previous year. 



4. Notes to the balance sheet 

4.1. Breakdown by maturity 

Breakdown by maturity 


(in EUR) (in EUR thsd) 

Loans and advances to credit institutions 

up to three months 3,131,264,472.15 8,830,851 

over three months and up to one year 5,277,758,105.03 2,699,338 

over one year and up to five years 6,130,480,044.54 6,405,018 

over five years 5,484,295,839.48 7,007,824 






Amounts owed to credit institutions 





Amounts owed to customers 

a) Savings deposits *) 





b) Other amounts owed to customers 





Other debts evidenced by certificates 


over three months and up to one year 419,808,030.41 1,215,257 



*) For savings deposits, the expected deposit period was used as the remaining period pursuant to Section 25 

of the Austrian Banking Act. Recognised statistical methods were used for the calculation. 

4.2. Assets and liabilities denominated in foreign 

currencies 

As at 31 December 2010, foreign currency assets 

amounted to EUR 28,106,914,369.96 or 23.23 % of 

total assets 

(31 December 2009: EUR 27,477,134 thsd or 21.18 % 

of total assets). Foreign currency liabilities amounted 

to 

EUR 28,186,104,488.73 or 23.29 % of the balance 

sheet total (31 December 2009: EUR 27,556,312 thsd 

or 21.24 % of the balance sheet total). 

4.3. Loans and advances to, and amounts owed 

to, group companies and companies in which 

an equity interest is held 

Group companies 

Companies in which an 

equity interest is held 

Key management 

personnel 

31 Dec. 2010 31 Dec. 2009 31 Dec. 2010 31 Dec. 2009 31 Dec. 2010 31 Dec. 2009 

(in EUR) (in EUR thsd) (in EUR) (in EUR thsd) (in EUR) (in EUR thsd) 

Loans and advances 

Loans and advances to credit 

institutions 

Loans and advances to 

19,081,129,689.00 26,673,471 749,019,225.00 582,344 - - 

customers 

Bonds and other fixed-income 

7,290,421,059.00 7,576,075 520,288,608.00 544,123 1,567,836.66 1,498 

securities 4,495,445,569.44 1,620,065 - - - - 

Amounts owed 

Amounts owed to credit 

institutions 18,329,513,355.00 20,227,872 11,611,853,291.00 12,369,143 - - 

Amounts owed to customers 6,944,857,739.00 839,995 228,128,405.00 529,067 6,226,356.64 7,397 

4.4. Group companies and companies in which an 

equity interest is held 

Those companies in which UniCredit Bank Austria AG 

holds at least 20% of the share capital – directly or 

through group 

companies – are listed in the notes to the financial 

statements (Annex 1) pursuant to Section 238, item 2, 

of the Austrian 

Business Code. 

Most of the business relations with group companies 

were customary banking relationships. 

Equity capital substitutes were used for some 

financings. 

At the balance sheet date, UniCredit Bank Austria AG 

maintained single entity agreements for tax purposes 

with the following companies: 

� BA Betriebsobjekte GmbH 

� BA Immobilien Entwicklungs- und Verwertungs 

GmbH 

� BA-CA Markets & Investment Beteiligung GmbH 

� Bank Austria Finanzservice GmbH 

� Bank Austria Real Invest GmbH 

� Bank Austria Wohnbaubank AG 

� CABET Holding AG 

� card complete Service Bank GmbH 

� Domus Facility Management GmbH 

� Industrie-Immobilien-Verwaltung GmbH 

� Lassallestraße Bau-, Planungs- und Errichtungs 

GmbH 

� Human Resources Service and Development 

GmbH 

� MC Marketing GmbH 

� MY Beteiligungs GmbH 

� RE St.Marx Holding GmbH 

� UniCredit Turn-Around Management GmbH 

� Z Leasing POLLUX Immobilien Leasing GmbH 

� RIGEL Immobilien GmbH (previously Z Leasing 

RIGEL Immobilien Leasing GmbH) 

� SIRIUS Immobilien GmbH (previously Z Leasing 

SIRIUS Immobilien Leasing GmbH) 

� ZETA Fünf Handels GmbH 



4.5. Related party transactions 

UniCredit Bank Austria AG has issued a guarantee in 

the amount of USD 1.2 bn for loans to customers of 

JSC Ukrsotsbank, for which it does not receive a 

guarantee commission in line with market conditions 

on account of the locally applicable central bank 

regulations. 

As part of the sale of UniCredit CAIB AG, UniCredit 

Bank Austria AG entered into a cooperation 

agreement. Essentially, the cooperation agreement 

provides that UniCredit Bank Austria AG has to use the 

services of UniCredit Bank AG for long-term financing 

purposes. 

4.6. Securities 

Of UniCredit Bank Austria AG’s total holdings of 

securities as at 31 December 2010, financial fixed 

assets accounted for EUR 5,829,037,400.04 (31 

December 2009: EUR 4,821,205 thsd) and current 

assets including the trading portfolio accounted for 

EUR 8,401,187,688.92 (31 December 2009: EUR 

4,707,381 thsd). 

4.6.1. The following breakdown shows securities 

admitted to trading on an exchange: 

Listed Not listed 

31 Dec. 2010 31 Dec. 2009 31 Dec. 2010 31 Dec. 2009 

(in EUR) (in EUR thsd) (in EUR) (in EUR thsd) 


securities 

Shares and other variable-yield 

2,894,892,181.68 1,915,594 6,114,400,781.69 2,671,657 

securities 56,852,735.16 58,127 3,383,261.68 3,313 

Equity interests 280,857,825.85 280,858 0.00 0 

Shares in group companies 3,155,878,444.20 3,535,486 0.00 0 

Total 6,388,481,186.89 5,790,065 6,117,784,043.37 2,674,970 

4.6.2. The following table shows securities 

admitted to trading on an exchange, broken 

down into fixed (long-term) and current 

assets: 

Fixed assets Current assets 

31 Dec. 2010 31 Dec. 2009 31 Dec. 2010 31 Dec. 2009 

(in EUR) (in EUR thsd) (in EUR) (in EUR thsd) 


securities 

Shares and other variable-yield 

3,219,178,106.93 1,975,678 5,790,114,856.44 2,611,573 

securities 0.00 0 60,235,996.84 61,440 

Total 3,219,178,106.93 1,975,678 5,850,350,853.28 2,673,013 

The classification pursuant to Section 64 (1) 11 of the 

Austrian Banking Act is based on resolutions adopted 

by the Management Board. 

4.6.3. Financial instruments carried as financial 

fixed assets for which the carrying amounts 

are higher than their fair values (Section 237a 

(1) 2 of the Austrian Business Code): 

Treasury bills and similar securities 

Bonds and other fixed-income securities 

Shares and other variable-yield securities 

Equity interests 

Shares in group companies 

Book value Unrecognised losses Book value Unrecognised losses 

31 Dec. 2010 31 Dec. 2010 31 Dec. 2009 31 Dec. 2009 

(in EUR) (in EUR) (in EUR thsd) (in EUR thsd) 

447,129,056.00 -103,843,174.52 293,222 -17,687 

1,810,908,054.26 -193,724,236.86 682,159 -84,681 

0.00 0.00 0 0 

212,117,648.54 -66,686,987.84 212,118 -108,644 

0.00 0.00 0 0 

All of the unrecognised losses arising on bonds and 

shares resulted from market price fluctuations. 

There was no indication of a sustained deterioration in 

the issuers’ creditworthiness. 

4.7. Differences between cost and repayable 

amount of bonds and other fixed-income 

securities 

In the case of bonds and other fixed-income securities 

which are held as financial fixed assets and for which 

cost exceeds the amount repayable, the difference is 

amortised over the period to maturity pursuant to 

Section 56 (2) of the Austrian Banking Act. At yearend, 

the difference to be amortised over the remaining 

maturity amounted to EUR 19,058,436.46 (31 

December 2009: EUR 18,773 thsd). 

In the case of bonds and other fixed-income securities 

which are held as financial fixed assets and for which 

cost is lower than the amount repayable, a write-up is 

made for the difference over the period to maturity 

pursuant to Section 56 (3) of the Austrian Banking Act. 

Until the balance sheet date, write-ups made in respect 

of such differences amounted to EUR 43,415,894.85 

(31 December 2009: EUR 10,586 thsd). 

4.8. Differences between cost and market value of 

securities admitted to trading on an 

exchange which are not held as financial 

fixed assets 

As at 31 December 2010, the market value of 

securities held in the trading portfolio was EUR 

19,263.03 (31 December 2009: EUR 15 thsd) higher 

than cost. 



At the balance sheet date, the market value of listed 

securities held to comply with liquidity requirements 

was EUR 52,030,990.42 (31 December 2009: EUR 

47,083 thsd) higher than the carrying amount. 

4.9. Bonds becoming due in the subsequent year 

Assets held in the form of bonds and other fixedincome 

securities in the amount of EUR 

530,763,817.99 

(31 December 2009: EUR 949,925 thsd) will become 

due in 2011. Of the bonds issued, securities in the 

amount of EUR 3,630,706,224.46 (31 December 2009: 

EUR 4,195,577 thsd) will become due in 2011. 

4.10. Trading book 

In the 2010 financial year, UniCredit Bank Austria AG 

maintained a trading book within the meaning of 

Section 22n-q of the Austrian Banking Act. 

The volume of the trading book amounted to EUR 

107,251,490,739.09 (31 December 2009: EUR 

98,731,201 thsd). 

Of this total, securities carried in the balance sheet account 

for EUR 87,404,645.80 (31 December 2009: EUR 12,083 

thsd), money market instruments were EUR 

11,214,319,544.14 (31 December 2009: EUR 8,047,388 

thsd) and other financial instruments accounted for EUR 

95,949,766,549.15 (31 Dec. 2009: EUR 90,671,730 thsd). 

Securities and money market instruments were 

included at book value, and other financial instruments 

(financial derivatives) at the notional amounts. The 

inclusion of financial derivatives complies with the 

reporting guideline applicable to VERA (Report on 

Condition and Income), under which interest rate 

swaps and currency swaps as well as forward foreign 

exchange transactions are to be reported as assets or 

liabilities. Compared with transaction-based inclusion, 

this results in an additional volume of EUR 

38,156,769,779.59. 

4.11. Own shares 

There were no sales or purchases of UniCredit Bank 

Austria AG ordinary shares in 2010 (2009: no sales or 

purchases). 

As at 31 December 2010, UniCredit Bank Austria AG 

did not hold any of its own shares (31 December 2009: 

0). 

4.12. Shares in a controlling company 

In the reporting year, sales or purchases of UniCredit 

S.p.A. ordinary shares involved 5,088,451 shares 

(2009: no sales or purchases). 

At the balance sheet date, UniCredit Bank Austria AG 

did not hold any UniCredit S.p.A. shares (31 December 

2009: 0). 

4.13. Repurchased own subordinated bonds and 

supplementary capital 

As at 31 December 2010, UniCredit Bank Austria AG’s 

own portfolio included subordinated bonds issued by 

the bank itself with a total carrying amount of EUR 

20,815,901.47 (31 December 2009: EUR 13,849 thsd) 

and no supplementary capital (31 December 2009: 

EUR 0 thsd). 

4.14. Trust transactions 



Loans and advances to customers 446,637,076.75 457,290 

Total Loans and advances 446,637,076.75 457,290 

Amounts owed to credit institutions 123,089,700.18 165,187 

Amounts owed to customers 323,547,376.57 292,103 

Total amounts owed 446,637,076.75 457,290 

4.15. Assets sold under repurchase agreements 

As at the balance sheet date, the book value of assets 

transferred under repurchase agreements was 

EUR 321,150,070.68 (31 December 2009: EUR 0 

thsd). The assets continue to be recognised as assets 

in the balance sheet, the consideration received is 

included in liabilities. 



4.16. Subordinated assets 

Loans and advances to credit institutions 

of which: equity interests 

of which: group companies 



of which: group companies 

Bonds and other fixed-income securities 




1,403,962,850.99 1,510,688 

17,416,820.85 17,417 

1,386,546,030.14 1,490,105 

468,035,495.97 469,696 

582,055.00 631 

276,337,790.00 275,202 

30,263,465.86 24,011 

0.00 0 

21,324,393.01 of which: group companies 15,946 

4.17. Intangible fixed assets and tangible fixed 

assets 

The item “Intangible fixed assets” does not include any 

software (2009: EUR 0) that was acquired from a 

group company. 

At the balance sheet date, the land value of property 

was EUR 62,431,497.46 (31 December 2009: EUR 

72,451 thsd). 

4.18. Movements in fixed assets 

Equity interests as shown in the below table 

“Movements in fixed assets of UniCredit Bank Austria 

AG” include those silent holdings which are recognised 

in the item “Loans and advances to customers”. 

Securities comprise those included in the items 

“Treasury bills and other bills eligible for refinancing at 

central banks”, “Bonds and other fixed-income 

securities”, and “Shares and other variable-yield 

securities”. 

4.19. Leasing activities 

While UniCredit Bank Austria AG was not directly 

active as lessor in the leasing business in 2010, its 

activities included the extension of loans to leasing 

companies. 

4.20. Total expenses for the use of tangible fixed 

assets not carried as assets 

Obligations arising from the use of tangible fixed 

assets not carried as assets in the balance sheet 

(under leasing and rent agreements) which will 

become due in the subsequent period and in the 

subsequent five years are indicated in the table below: 

Obligations under leasing and rent agreements 



for the subsequent business 

year 59,727,978.05 58,667 

for the subsequent five 

business years 307,024,841.76 299,684 

4.21. Other assets 

4.21.1. Other assets 

This item includes valuation components, both 

reflected and not reflected in income, of EUR 

689,246,741.87 (31 December 2009: EUR 689,618 

thsd) from derivative products. 

Movements in fixed assets of UniCredit Bank Austria AG 

Cost (in EUR) 

31 Dec. 2009 Additions Disposals Transfers 31 Dec. 2010 

Securities 4,622,947,449.90 2,074,083,939.50 1,062,305,000.64 0.00 5,634,726,388.76 

Equity interests 3,311,869,801.06 453,895.34 6,279,000.88 0.00 3,306,044,695.52 

Shares in 

group companies 21,247,512,502.70 6,711,582,559.79 6,081,601,609.15 0.00 21,877,493,453.34 

Intangible 

fixed assets 487,124,440.95 11,938.00 0.00 0.00 487,136,378.95 

Tangible fixed assets 

a) Land and buildings 258,439,709.99 8,438,046.39 51,630,901.79 2,496.00 215,249,350.59 

b) Other tangible fixed assets 418,536,470.44 19,108,259.25 17,842,660.12 -2,496.00 419,799,573.57 

Totals 30,346,430,375.04 8,813,678,638.27 7,219,659,172.58 0.00 31,940,449,840.73 

Carrying value (in EUR) 

Accumulated Write-downs/ 

write-downs/ Carrying value Carrying value depreciation 

Write-ups depreciation 31 Dec. 2010 31 Dec. 2009 in 2010 

Securities 2,983,476.88 1) 3,341,700.02 5,634,368,165.62 4,588,433,546.82 3,341,700.02 

Equity interests 369,804.43 497,686,105.02 2,808,728,394.93 2,813,345,863.37 641,929.35 

Shares in 

group companies 0.00 9,322,196,538.44 12,555,296,914.90 18,143,426,780.78 6,349,023,842.02 

Intangible 

fixed assets 0.00 406,452,920.07 80,683,458.88 105,701,967.88 25,030,447.00 

Tangible fixed assets 

a) Land and buildings 0.00 67,595,809.95 147,653,540.64 190,066,343.64 4,856,783.89 

b) Other tangible fixed assets 9,485.88 310,766,624.62 109,042,434.83 116,032,484.42 24,814,535.51 

Totals 3,362,767.19 10,608,039,698.12 21,335,772,909.80 25,957,006,986.91 6,407,709,237.79 

1) Premiums/discounts are spread over the period to maturity 



Dividends receivable from group companies with which 

there are profit pooling arrangements totalled 

EUR 88,729,195.16 (31 December 2009: EUR 

129,208 thsd). 

Claims against the Austrian tax office for companies 

(Finanzamt für Körperschaften) totalled EUR 

212,651,500.51 (31 December 2009: EUR 235,126 

thsd). 

Other assets also include accrued interest and fee and 

commission income in the amount of EUR 

19,711,267.38 

(31 December 2009: EUR 25,036 thsd). 

4.21.2. Prepaid expenses 

This item includes an advance rent payment of EUR 


for the property in Lassallestrasse 5, 1020 Vienna, and 

advance rent payments of EUR 7,314,072.10 (31 

December 2009: EUR 9,338 thsd) for various 

properties. 

4.22. Other liabilities 

This item includes valuation components, both 

reflected and not reflected in income, in the amount of 

EUR 1,469,595,037.72 (31 December 2009: EUR 

912,590 thsd). 

Liabilities resulting from the settlement of Austrian 

capital yields tax (Kapitalertragsteuer – KESt) totalled 

EUR 14,930,755.15 (31 December 2009: EUR 28,514 

thsd). 

Liabilities arising from short positions amounted to 

EUR 92,369.92 (31 December 2009: EUR 937 thsd). 

Other liabilities also include accrued expenses in the 

amount of EUR 2,663,577.00 (31 December 2009: 

EUR 23,221 thsd). 

The item also comprises liabilities of EUR 


from the assumption of losses. 

4.23. Provisions 

4.23.1. Provisions for pensions and severance 

payments 

The discount rate applied in 2010 was 5.00 %. The 

valuation of provisions results in a deficit of EUR 

630,057,000.00 (31 December 2009: EUR 562,421 

thsd) compared with the amount of pension provisions 

stated in the balance sheet, and a deficit of EUR 


compared with the amount of provisions for severance 

payments stated in the balance sheet. 

The excess amount of EUR 306,644,000.00 resulting 

in the reporting year from the application of the corridor 

method will be spread over the average remaining 

service period in the subsequent year and recognised 

as an expense on this basis [2011: EUR 

58,669,000.00 (pensions) and EUR 2,695,000.00 

(severance payments)]. The amounts recognised as 

expenses in 2010 were EUR 39,284,000.00 (pensions) 

and EUR 1,508,000.00 (severance payments). 

In the financial year, pension provisions increased by 

EUR 32,768,616.51. The regular allocation to pension 

provisions was EUR 6,586,426.49 (2009: EUR 3,501 

thsd). In the balance sheet at 31 December 2010, 

pension provisions were stated at EUR 

2,794,148,607.19 (31 December 2009: EUR 2,761,380 

thsd). 

In the financial year, provisions for severance 

payments rose by EUR 6,328,944.62 (2009: reduction 

of EUR 494 thsd). In the balance sheet at 31 

December 2010, provisions for severance payments 

were stated at EUR 251,509,743.56 (31 December 

2009: EUR 245,181 thsd). 

4.23.2. Other provisions 

Other provisions totalled EUR 1,007,869,585.73 (31 

December 2009: EUR 759,176 thsd), including 

provisions of EUR 756,328,821.02 (31 December 

2009: EUR 500,790 thsd) for pending losses arising 

from lending and securities business, for risks related 

to equity interests, for litigation risks and for guarantee 

obligations, as well as EUR 3,000,000.00 (31 

December 2009: EUR 3,202 thsd) for restructuring. 

Provisions for staff and non-staff expenses amounted 

to EUR 248,540,764.71 (31 December 2009: EUR 

255,184 thsd), including provisions for anniversary 

payments, bonuses for the company’s own employees, 

and legal costs and experts’ fees. 



4.24. Subordinated liabilities assumed 

Subordinated liabilities assumed during the year did 

not exceed 10% of the total amount of existing 

subordinated liabilities. 

As at 31 December 2010, subordinated liabilities 

included 7 schilling-denominated bonds. Also included 

were 45 bonds and 4 time deposits, most of which 

have maturities exceeding ten years. The bonds and 

time deposits are denominated in EUR, USD, JPY and 

GBP. 

The total amount of subordinated capital stated in the 

balance sheet at 31 December 2010 was EUR 

2,794,736,043.68 (31 December 2009: EUR 3,911,837 

thsd), including accrued interest payable and interest 

allocated to zero-coupon bonds. 

The concept of subordination is defined in Section 51 

(9) of the Austrian Banking Act. 

4.25. Equity 

4.25.1. Subscribed share capital 

At the Extraordinary General Meeting of UniCredit 

Bank Austria AG on 4 March 2010, a resolution was 

adopted to increase the company’s share capital by 

EUR 212,262,771.60, from EUR 1,468,770,749.80 to 

EUR 1,681,033,521.40, through the issue of 

29,197,065 no-par value bearer shares and 15 no-par 

value registered shares in the pro-rata amount of EUR 

7.27 per share. The total amount paid in with respect 

to the capital increase, including the share premium, 

was EUR 1,999,999,980.00. 

After the above-mentioned capital increase, the share 

capital of UniCredit Bank Austria AG as at 31 

December 2010 was EUR 1,681,033,521.40, divided 

into 10,115 no-par value registered shares carrying 

voting rights and 231,218,705 no-par value bearer 

shares carrying voting rights, with each no-par value 

share representing the same proportion of the share 

capital. 

4.25.2. Authorised capital 

Pursuant to a resolution adopted at the Annual 

General Meeting on 19 May 2005, the Management 

Board was authorised, in accordance with Section 169 

of the Austrian Joint Stock Companies Act, to increase 

the share capital by up to EUR 534,460,374.90 by 

issuing up to 73,515,870 new no-par value shares 

against contributions in cash or in kind, excluding or 

not excluding subscription rights, until 21 June 2010. 

When the authority expired as at 21 June 2010, the 

amount of additional authorised capital was up to 

EUR 134,610,374.90. 

4.25.3. Capital reserves 

As at 31 December 2010, capital reserves were stated 

at EUR 9,332,128,625.78, up by EUR 

1,787,737,208.40 

(31 December 2009: EUR 7,544,391 thsd). 

4.25.4. Revenue reserves 

As at 31 December 2010, the statutory reserve was 

shown at EUR 14,534,566.84 and other reserves were 

stated at EUR 1,365,180,207.15. 

4.25.5. Reserve pursuant to Section 23 (6) of the 

Austrian Banking Act (BWG) 

The reserve pursuant to Section 23 (6) of the Austrian 

Banking Act (BWG) totalled EUR 2,129,748,409.45 as 

at 31 December 2010 (31 December 2009: EUR 

2,111,291 thsd), an increase of EUR 18,457,327.91 

resulting from the integration of part of the operations 

of UniCredit CAIB AG. 



4.25.6. Untaxed reserves 

The valuation reserve resulting from special 

depreciation was reduced by EUR 21,345.80 to EUR 

77,750,835.75. 

The composition of and changes in untaxed reserves 

are shown in the following table: 

Movement in valuation reserve and other untaxed reserves as at 31 December 2010 in EUR 

31 Dec. 2009 Transfers Allocations Releases 31 Dec. 2010 

Valuation reserve resulting from special 

1. depreciation 

Reserve pursuant to Section 12 of the 

Austrian Income Tax Act (EStG) 

Securities 0.00 0.00 0.00 0.00 0.00 

Equity interests 83,153.22 0.00 0.00 0.00 83,153.22 

Shares in group companies 77,210,933.06 0.00 0.00 0.00 77,210,933.06 

Land and buildings 18,066.47 0.00 0.00 0.00 18,066.47 

Other tangible fixed assets 76,208.80 0.00 0.00 0.00 76,208.80 

Valuation reserve pursuant to 

Sections 8 and 122 of the Austrian 

Income Tax Act (EStG) 

77,388,361.55 0.00 0.00 0.00 77,388,361.55 

Land and buildings 383,820.00 0.00 0.00 -21,345.80 362,474.20 

Other tangible fixed assets 0.00 0.00 0.00 0.00 0.00 

383,820.00 0.00 0.00 -21,345.80 362,474.20 

Total 1 

2. Unversteuerte Other untaxed Rücklagen reserves 

77,772,181.55 0.00 0.00 -21,345.80 77,750,835.75 

Untaxed reserves 0.00 0.00 0.00 0.00 0.00 

Total 2 0.00 0.00 0.00 0.00 0.00 

Aggregate total 77,772,181.55 0.00 0.00 -21,345.80 77,750,835.75 

4.26. Supplementary capital pursuant to Section 23 

(7) of the Austrian Banking Act (BWG) 

As at 31 December 2010, supplementary capital 

amounted to EUR 452,810,398.10 (31 December 

2009: EUR 493,114 thsd). 

4.27. Cross-holdings 

There are no cross-holdings within the meaning of 

Section 240, item 9, of the Austrian Business Code. 



4.28. Assets pledged as security 

Assets pledged as security pursuant to Section 64 (1) 8 of the Austrian Banking Act (BWG) 



Cover fund for deposits held in trust for wards and included in 

liabilities item 2a) 125,010,154.24 121,163 

Cover fund for mortgage bonds and public sector mortgage 

bonds included in liabilities item 3a) 7,874,462,814.31 6,452,906 

for own bonds and medium-term notes 

included in liabilities item 3a) 104,143,720.06 62,169 

Total 8,103,616,688.61 6,636,238 

Security provided in favour of Oesterreichische Kontrollbank AG 

(OeKB) for the settlement of securities transactions 50,356,387.72 45,205 

Margin requirement in favour of various business partners 1,275,982,175.43 142,223 

Claims etc. assigned in favour of OeKB, security deposit with 

Oesterreichische Nationalbank 3,192,923,207.01 4,921,684 

Claims assigned in favour of European Investment Bank, KfW , 

Oesterreichische Nationalbank; securities pledged 6,844,441,062.60 3,398,979 

Security provided in favour of clearing systems (Cedel, 

Euroclear, Xetra) 128,372,698.18 327,576 

Off-balance sheet transactions 4,706,897,610.07 4,891,361 

Security provided for securities lending 253,952,500.00 0 

Assets pledged in favour of foreign credit institutions and 

financial institutions which are group companies 197,349,602.70 488,918 

Total 16,650,275,243.71 14,215,946 

Aggregate total 24,753,891,932.32 20,852,184 

The balance sheet item “Savings deposits“ includes 

deposits held in trust for wards in the amount of 

EUR 111,990,194.35 (31 December 2009: EUR 

114,762 thsd). 

4.29. Derivatives business 

Derivatives shown in the following tables are 

classified as financial derivatives and credit 

derivatives, according to the underlying financial 

instrument. In these categories, a distinction is made 

between trading book and banking book and between 

different counterparties. UniCredit Bank Austria AG’s 

business volume in derivatives focuses on interest 

rate contracts. 

Over-the-counter transactions are individual 

agreements concerning volume, maturities and 

underlying instrument. In large-volume interbank 

trading, these agreements reflect international 

practice, while in customer business they are usually 

adjusted to specific needs. Exchange-traded 

contracts are always standardised in respect of 

volume and maturity date. 

Derivatives are mainly used by the bank itself for 

hedging market risk and credit spread risk arising 

from new issue activities. In customer business, 

market participants include banks, securities houses, 

mutual funds, pension funds and corporate 

customers. 

Trading in derivatives at Bank Austria is primarily 

related to the hedging of positions entered into vis-àvis 

customers. 

For the purposes of portfolio and risk management, 

contracts are valued at current prices using 

recognised and tested models. Market values show 

the contract values as at the balance sheet date, 

positive market values indicate the potential default 

risk arising from the relevant activity. 

For the purposes of portfolio management and risk 

limitation in the derivatives business with banks and 

customers, UniCredit Bank Austria AG uses a Monte 

Carlo path simulation to estimate the potential future 

exposure at portfolio level for each counterparty. The 

calculations are based on market volatility, 

correlations between specific risk factors, future cash 

flows and stress considerations. Netting agreements 

and collateral agreements are also taken into account 

for simulation purposes. 

The simulation calculations are performed for all 

major types of transactions, e.g. forward foreign 

exchange transactions, commodity futures 

transactions, interest rate instruments, securities 

lending transactions and repurchase agreements, 

equity-related, commodity-related or inflation-related 

instruments and credit derivatives. Other (exotic) 

products are taken into account with an add-on factor 

(depending on volatility and maturity). The bank 

applies a confidence interval of 97.5%. 



In addition to determining the potential future 

exposure for the purpose of internal risk 

management, the path simulation also enables the 

bank to calculate the mean exposure and the Basel 2modified 

mean exposure as well as the effective term 

of the exposure for each counterparty. In this way, 

counterparty risk can be taken into account in a Basel 

2-compliant internal model for the calculation of 

capital requirements. In 2009, the bank obtained 

approval from the Austrian regulatory authorities for 

the use of the relevant model. 

Line utilisation for derivatives business is available 

online in WSS (“Wallstreet”), the central treasury 

system, on a largely Group-wide basis. For smaller 

units not connected to the central system, separate 

lines are allocated and monitored. Group-wide 

compliance with lines approved in the credit process 

is thus ensured at any time. 

UniCredit Bank Austria AG additionally limits the 

credit risk arising from its derivatives business 

through strict use of master agreements, through 

collateral agreements and break clauses. In 

combination with the very good average credit rating 

of our business partners in the derivatives business, 

management takes proper account of default risk. 



Details of derivatives transactions and of the uniform Group-wide method of recording them for risk measurement and risk 

management purposes are given in the following tables. 

Trading book (in EUR) 

Notional amount 

Positive fair 

value 

Negative fair 

value 


Positive fair 

value 

Negative fair 

value 

Trading book 61,127,732,816 1,416,793,096 1,419,247,092 61,379,970,388 1,264,405,341 1,275,542,647 

Financial derivative contracts on debt 

securities and interest rates 40,466,559,610 805,537,814 805,756,151 42,225,318,796 729,600,849 728,473,198 

Options 17,652,478,534 217,605,834 138,518,168 16,264,895,870 208,017,419 118,903,988 

Swaps 22,814,081,076 587,931,980 667,237,983 25,960,422,926 521,583,430 609,569,211 

Forwards 0 0 0 0 -0.3 0 

Futures 0 0 0 0 0 0 

Other derivative contracts 0 0 0 0 0 0 

Financial derivative contracts on equity 

securities and share indices 584,944,052 112,683,784 34,551,316 533,163,732 49,559,900 36,672,804 

Options 535,644,052 36,228,099 17,009,868 486,863,732 49,559,900 22,753,144 

Swaps 0 0 0 0 0 0 

Forwards 49,300,000 76,455,684 17,541,448 46,300,000 0 13,919,660 

Futures 0 0 0 0 0 0 


Financial derivative contracts on exchange 

rates and gold 17,712,321,287 482,354,305 472,356,284 14,791,242,267 429,867,361 411,234,202 

Options 2,856,119,724 139,797,247 139,797,248 3,348,569,658 133,052,235 133,052,235 

Swaps 1,331,608,916 183,886,487 175,049,297 1,759,977,695 174,913,166 157,864,315 

Forwards 13,524,592,646 158,670,572 157,509,740 9,682,694,914 121,901,961 120,317,652 

Futures 0 0 0 0 0 0 


Financial derivative contracts on other 

underlying assets 344,933,867 13,817,282 10,071,281 1,649,261,593 47,812,610 47,241,214 

Options 279,222,408 9,921,097 6,175,096 1,605,048,837 38,949,417 38,378,020 

Forwards 65,711,459 3,896,186 3,896,186 44,212,756 8,863,194 8,863,194 

Futures 0 0 0 0 0 0 


Credit derivative contracts 2,018,974,000 2,399,912 96,512,060 2,180,984,000 7,564,620 51,921,229 

Credit Default Swaps 2,018,974,000 2,399,912 96,512,060 2,180,984,000 7,564,620 51,921,229 


Banking book - hedging derivatives (in EUR) 


31 December 2010 31 December 2009 

31 December 2010 31 December 2009 

Positive fair 

value 

Negative fair 

value 


Positive fair 

value 

Negative fair 

value 

Banking book - hedging derivatives 159,099,915,850 2,288,077,286 2,585,153,553 119,458,680,695 2,217,591,886 1,926,731,734 

Financial derivative contracts on debt 

securities and interest rates 131,769,445,459 2,070,529,361 1,464,644,649 104,074,227,718 2,052,210,515 1,373,806,240 

Options 2,948,266,679 18,732,104 95,921,318 2,388,006,896 15,670,516 150,451,274 

Swaps 128,821,178,780 2,051,797,257 1,368,723,331 101,686,220,822 2,036,540,000 1,223,354,966 

Forwards 0 0 0 0 0 0 

Futures 0 0 0 0 0 0 


Financial derivative contracts on equity 

securities and share indices 0 0 0 0 0 0 

Options 0 0 0 0 0 0 

Swaps 0 0 0 0 0 0 

Forwards 0 0 0 0 0 0 

Futures 0 0 0 0 0 0 


Financial derivative contracts on exchange 

rates and gold 27,330,470,391 217,547,926 1,120,508,904 15,384,452,977 165,381,371 552,925,494 

Options 0 0 0 0 0 0 

Swaps 27,330,470,391 217,547,926 1,120,508,904 15,384,452,977 165,381,371 552,925,494 

Forwards 0 0 0 0 0 0 

Futures 0 0 0 0 0 0 


Financial derivative contracts on other 

underlying assets 0 0 0 0 0 0 

Options 0 0 0 0 0 0 

Forwards 0 0 0 0 0 0 

Futures 0 0 0 0 0 0 


TOTAL of trading book and 

banking book - hedging derivatives 220,227,648,666 3,704,870,383 4,004,400,645 180,838,651,083 3,481,997,226 3,202,274,381 



31 Dec. 2010 

Derivatives by residual life (EUR) Up to 1 year From 1 to 5 years Over 5 years Total 

Trading book 19,571,472,607 22,485,026,117 19,071,234,092 61,127,732,816 

Financial derivative contracts on debt securities and interest rates 3,798,746,974 18,996,217,501 17,671,595,135 40,466,559,610 

Financial derivative contracts on equity securities and share indices 94,995,000 291,000,000 198,949,052 584,944,052 

Financial derivative contracts on exchange rates and gold 14,836,816,120 2,052,415,261 823,089,905 17,712,321,287 

Financial derivative contracts on other underlying assets 144,540,512 200,393,355 0 344,933,867 

Credit derivative contracts 696,374,000 945,000,000 377,600,000 2,018,974,000 

Banking book 64,439,594,853 44,230,963,420 50,429,357,577 159,099,915,850 


Financial derivative contracts on equity securities and share indices 0 0 0 0 

Financial derivative contracts on exchange rates and gold 5,446,378,089 11,479,058,189 10,405,034,113 27,330,470,391 

Financial derivative contracts on other underlying assets 0 0 0 0 

Total 84,011,067,460 66,715,989,537 69,500,591,669 220,227,648,666 

31 Dec. 2009 

Derivatives by residual life (EUR) Up to 1 year From 1 to 5 years Over 5 years Total 

Trading book 17,449,933,466 25,888,141,648 18,041,895,273 61,379,970,388 


Financial derivative contracts on equity securities and share indices 5,212,858 339,767,872 188,183,002 533,163,732 

Financial derivative contracts on exchange rates and gold 10,632,118,705 3,277,221,666 881,901,896 14,791,242,267 

Financial derivative contracts on other underlying assets 1,485,626,672 163,634,921 0 1,649,261,593 

Credit derivative contracts 105,610,000 1,323,374,000 752,000,000 2,180,984,000 

Banking book 25,762,993,778 26,411,810,470 67,283,876,447 119,458,680,695 


Financial derivative contracts on equity securities and share indices 0 0 0 0 

Financial derivative contracts on exchange rates and gold 1,923,140,849 5,837,178,467 7,624,133,661 15,384,452,977 

Financial derivative contracts on other underlying assets 0 0 0 0 

Total 43,212,927,244 52,299,952,118 85,325,771,720 180,838,651,083 



4.30. Market risk 

Market risk management at UniCredit Bank Austria 

AG encompasses the identification, measurement, 

monitoring and 

management of all market risks resulting from the 

banking business. The processes and methods used 

for measuring risk, defining and reviewing limits and 

for trading activities have been summarised in the 

Financial Markets Rulebook, which is available via the 

Intranet. 

UniCredit Bank Austria AG uses uniform Group-wide 

risk management procedures. These procedures 

provide aggregate data and make available the major 

risk parameters for the various trading operations at 

least once a day. Besides Value at Risk (VaR; for 

internal risk measurement on the basis of a one-day 

holding period and a confidence interval of 99%), 

other factors of equal importance are stress-oriented 

volume and position limits. Additional elements of the 

limit system are loss-warning level limits and 

sensitivity limits. 

In August 2010, UniCredit Bank Austria applied to the 

Austrian supervisory authority to replace the risk 

model developed by the bank itself ("NoRISK"), which 

has been used for many years, with the new "IMOD" 

model used within the entire UniCredit Group. This 

switch constitutes a significant change of model in 

accordance with Section 21e of the Austrian Banking 

Act. Regulatory approval by the college of supervisors 

(Italy, Germany, Austria) is expected for the first 

quarter of 2011. The new model is based on historical 

simulation with a 500-day market data time window 

for scenario generation. It is currently used on a 

uniform basis by many UniCredit Group subsidiaries. 

The model is applied by Market Risk within Bank 

Austria and is being further developed in cooperation 

with the UniCredit holding company. In 2010, parallel 

operation for VaR limiting was gradually reduced in 

favour of the new model. Moreover, the bank 

continued to make preparations for taking account of 

the new CRD3 rules for the trading book which will 

have to be applied from December 2011 onwards. 

This applies in particular to the stressed VaR and IRC 

(incremental risk charge), while CRM (comprehensive 

risk measure) is not applicable to UniCredit Bank 

Austria for lack of credit-tranche holdings in the 

trading book. 

As at 31 December 2010, VaR at UniCredit Bank 

Austria AG for the respective risk categories was as 

follows: 

(in EUR) 

Exchange rate risk, overall -1,459,037.84 

Equity position risk, trading book 0.00 

Equity position risk, banking book -8,034,187.93 

Interest rate position risk, trading and banking books -237,540.93 

Credit spread risk (VaR limit scope) -22,522,916.91 

Overall market risk (VaR limit scope) -23,714,956.38 

Overall market risk arising from the above components -39,006,917.16 

The above figures are based on the new internal 

model because this is now relevant for limit 

management. 

For the purpose of determining capital requirements, 

the old model is still used until approval is obtained 

for the new model. The parameters used in this 

context are a 10-day holding period, a confidence 

level of 99% and a multiplier of 3. As at 31 December 

2010, the amount at risk was EUR 79,098,672.42. 

After taking account of the default risk surcharge, the 

capital requirement was EUR 96,359,809.62. 

Within the Bank Austria Group, the reliability and 

accuracy of the internal model is monitored by daily 

backtesting, comparing the VaR amounts with the 

actually observed fluctuations in market parameters 

and in the total value of the trading books. In 2010, 

there was no backtesting excess. This applies to the 

old and the new market risk models. The results of 

backtesting have thus confirmed the accuracy and 

reliability of both models. The multiplier of the old 

model therefore remains unchanged, while a decision 

on the multiplier of the new model is expected to be 

made by the college of supervisors towards the end 

of the first quarter of 2011. 

Value-at-risk calculations are complemented by 

various stress scenarios to identify the potential 

effects of stressful market conditions on the Group’s 

earnings. The assumptions made under such stress 

scenarios include extreme movements in prices or 

rates and a dramatic deterioration in market liquidity. 



Market risks resulting from the general balance sheet 

structure and the positioning of asset-liability 

management are additionally determined and 

regularly analysed by means of simulations of net 

interest income volatility. In addition to the business 

volume at the reporting date, these simulations are 

based on various interest rate scenarios, assumptions 

regarding new business, demand behaviour and 

general developments affecting margins in those 

market segments which are of greatest importance to 

UniCredit Bank Austria AG. Modelling over the 

projection period provides indications of trends in net 

interest income and enables the bank to identify risks 

at an early stage and to take appropriate measures. 

In addition to calculating VaR for trading activities, the 

bank uses the Value-at-Risk method for measuring 

market risk in the banking book. 

4.31. Contingent liabilities 

Contingent liabilities of UniCredit Bank Austria AG 

shown below the line in item 1 on the liabilities side 

amounted to EUR 14,171,106,055.40, a decrease of 

EUR 996,153,418.05 or 6.57 % compared with the 

previous year. 



Acceptances and endorsements 0 0 

Guarantees and assets pledged as 

collateral security 14,171,106,055.40 15,167,259 

Guarantees in connection with retirement 

planning products benefiting from a state 

premium pursuant to Section 108 h (1) 3 and 

subsequent sections of the Austrian Income Tax 

Act (Einkommensteuergesetz – EStG) 

In connection with retirement planning products 

benefiting from a state premium, UniCredit Bank 

Austria AG has incurred nominal capital guarantee 

obligations defined by law. Under the “VorsorgePlus- 

Plan” product (a mutual fund managed by Pioneer 

Investments Austria GmbH), the bank guarantees the 

investor that in the case of repayment through regular 

payments to the investor, the amount available for 

repayment will not be lower than the sum of amounts 

paid in plus premiums (variable in a range between 

8.5% and 13.5%, and index-linked) credited to the 

account pursuant to Section 108 g of the Austrian 

Income Tax Act. 

As at 31 December 2010, amounts paid in for 

retirement planning products benefiting from a state 

premium totalled EUR 108,923,529.36 (including 

state premiums credited for the years 2003 to 2009 in 

the amount of EUR 7,099,350.12, but excluding 

premiums for 2010); this compares with the fund’s net 

asset value of EUR 111,862,376.18. This means that 

the guarantee obligation, which amounted to EUR 

108,923,529.36, was covered as at the relevant date. 

Risk management is based on a CPPI model 

reflecting the stochastic characteristics of the 

proportions of equity and bond investments. Daily 

marking to market of the related options carried in the 

bank’s trading book ensures that, if necessary, a 

sufficient provision is made immediately for any 

losses. The valuation functions are integrated in the 

OPUS system. Risk indicators are determined by the 

Credit Structured Products unit. 

4.32. Letters of comfort and undertakings 

In addition to the contingent liabilities shown below 

the balance sheet in item 1 on the liabilities side, 

there are the following letters of comfort and 

undertakings: 

For 9 subsidiaries of UniCredit Bank Austria AG, 

guarantees were issued in favour of S.W.I.F.T. 

Letters of comfort for a total amount of EUR 

1,195,122,461.60 were issued in connection with 

international leasing transactions; given the nature of 

collateral for these transactions, it is not expected that 

claims will be lodged against UniCredit Bank Austria 

AG because the rights to payment undertaking 

amounts serving as collateral and held with the 

leasing companies or with UniCredit Bank Austria AG, 

or the rights to other security of stable value, have 

been transferred to the leasing companies. 

The following five letters of comfort are included at a 

value of EUR 1 in the item below the balance sheet: 

A letter of comfort was issued for BA-CA Wien Mitte 

GmbH / Salima Wien-Mitte Projektentwicklung GmbH 

in favour of the Austrian Federal Railways (ÖBB) in 

connection with the redesign of the former Wien Mitte 

bus terminal. 



Two additional letters of comfort were issued for the floating of hybrid capital of BA-CA Finance (Cayman) Limited as well 

as of BA-CA Finance (Cayman 2) Limited. 

An arrangement for interest-free repayment was made in connection with a subordinated loan to B&C 

Beteiligungsverwaltungs GmbH. 

We also issued a letter of comfort for borrowings by some of our units in Central and Eastern Europe from the European 

Bank for Reconstruction and Development, London. 

Furthermore, a commitment has been imposed on UniCredit Bank Austria AG under its membership, as prescribed in 

Sections 93 and 93a of the Austrian Banking Act, in Sparkassen Haftungs AG, a company which is the deposit insurance 

institution of the Austrian savings bank sector. 

4.33. Commitments 

Commitments 



Liabilities arising from sales with an option to repurchase pursuant to 

Section 50 (3) and (5) of the Austrian Banking Act (BWG) 3,633,641.74 5,450 

Underwriting commitments in respect of securities 55,852,279.90 70,846 

Call/put options sold (pursuant to Annex 1 to Section 22, item 1 j) 

Irrevocable loan commitments not yet utilised (credit facilities, 

commitments to lend, obligations to purchase securities, obligations to 

568,328,000.00 583,406 

provide guarantees or acceptance facilities) 1,797,048,668.62 2,023,829 

Securities borrowed – own account 253,940,440.00 1,797 

Obligations under rent and lease agreements 

Any other irrevocable transactions that may give rise to credit risk and 

59,727,978.05 58,667 

have not been mentioned above 18,956,248.30 14,749 

TOTAL COMMITMENTS 2,757,487,256.61 2,758,744 

5. Notes to the profit and loss account 

5.1. Breakdown of income at foreign permanent 

establishments 

On 29 December 2006, UniCredit Bank Austria AG 

set up a permanent establishment in Milan, Via 

Tortona 33, which is 

exclusively engaged in the management and 

controlling of the equity interests of UniCredit that 

were transferred by way of contribution in kind. 

Therefore these activities are not banking activities. In 

2010, net interest income amounted to EUR 

391,739.74 (2009: EUR 712 thsd) and other operating 

income was EUR 47,362.92 (2009: EUR 19 thsd). 

5.2. Income from equity interests and group 

companies 

The item “Income from shares in group companies” 

included income from profit-pooling arrangements in 

the amount of EUR 181,601,918.04 (2009: EUR 

271,672 thsd). 

Within income and expenses arising from the 

valuation and disposal of equity interests, group 

companies accounted for a balance of minus EUR 

435,881,911.34 (2009: minus EUR 1,055,115 thsd). 

No income was realised on the sale of shares in 

profit-pooling arrangements. 



5.3. Income from administrative and agency 

services provided to third parties 

In 2010, income from safe-custody services and from 

intermediary services relating to insurance, buildingsociety 

savings agreements and real estate totalled 

EUR 82,031,731.86 (2009: EUR 78,682 thsd). 

5.4. Other operating income 

Other operating income included compensation for 

group services, releases of provisions for litigation 

risks, gains on other assets and rent income from real 

estate as well as all income not directly related to 

banking operations. 

5.5. Expenses for subordinated liabilities 

In the reporting year, the total amount of expenses for 

subordinated liabilities and supplementary capital was 

EUR 173,514,901.17 (2009: EUR 213,572 thsd). 

5.6. Expenses for severance payments 

The item “Expenses for severance payments and 

payments to severance-payments funds” included 

mainly expenses for severance payments under the 

old severance payments scheme in the amount of 

EUR 27,805,617.95 (2009: EUR 27,880 thsd). 

5.7. Other operating expenses 

Other operating expenses related primarily to 

expenses on banking operations not arising from 

lending business, and expenses arising from 

provisions for risks. 

5.8. Extraordinary income 

No extraordinary income was recorded in the 

reporting year (2009: EUR 935,562 thsd). 

5.9. Write-ups omitted 

In 2010, no write-ups (2009: EUR 0 thsd) were 

omitted to avoid tax consequences. 

5.10. Effects of the change in untaxed reserves 

The release of valuation reserves resulted in a small 

income tax expense of EUR 1,334.00 in the 2010 

financial year (2009: EUR 0 thsd). 

5.11. Taxes on income 

Pursuant to the provisions on group taxation in 

Section 9 of the Austrian Corporation Tax Act 

(Körperschaftsteuergesetz – KStG), a group of 

companies existed as at 31 December 2010 which 

consisted of UniCredit Bank Austria AG as group 

holding company and 44 companies as group 

members (28 companies with profit and loss transfer 

agreements and 16 companies with tax compensation 

agreements) as well as 4 group members included 

via joint control arrangements. Under these 

agreements and arrangements, the amount of EUR 

5,322,126.01 (2009: EUR 1,726 thsd) was charged to 

individual companies in 2010. 

As a result of the above-mentioned tax compensation 

payments being charged to group members, the item 

“Taxes on income” shows a net expense of EUR 

20,930,001.47 for the 2010 financial year (2009: net 

tax income of EUR 12,763 thsd). 

5.12. Deferred tax 

No use was made of the option to carry deferred 

taxes as an asset. 

In 2010, the amount of deferred taxes which may be 

carried as an asset pursuant to Section 198 (10) of 

the Austrian Business Code but is not separately 

shown in the balance sheet and which will probably 

reduce the tax charge in future years was EUR 

214,262,000.00 (2009: EUR 139,421 thsd). 

5.13. Allocation to reserves 

In the 2010 financial year, the amount of EUR 

21,345.80 (2009: EUR 82 thsd) was already allocated 

to reserves in the balance sheet. 



6. Information on staff, Management Board and 

Supervisory Board 

6.1. Staff 

The average number of salaried staff (full-time 

equivalent) employed in 2010 was 6,381 (2009: 

6,083) and the average number of other employees 

was 0 (2009: 0). 

6.2. Expenses for severance payments and 

pensions 

Expenses for severance payments and pensions 

relate to the items “expenses for retirement benefits“, 

“allocation to the pension provision“ and “expenses 

for severance payments and payments to severancepayment 

funds“. In the 2010 financial year, allocations 

and payments for members of the Management 

Board and former members of the Management 

Board as well as their surviving dependants totalled 

EUR 10,607,769.23 (2009: EUR 10,023 thsd); 

allocations and payments for other employees and 

their surviving dependants totalled EUR 

277,858,736.90 (2009: EUR 277,369 thsd). The 

amounts include payments to pension funds 

amounting to EUR 110,264.96 (2009: EUR 79 thsd) 

for active members of the Management Board and 

EUR 1,300,000.00 (2009: EUR 10 thsd) for former 

members of the Management Board. 

6.3. Emoluments of Management Board members 

and Supervisory Board members 

The emoluments paid in the 2010 financial year by 

UniCredit Bank Austria AG to Management Board 

members (excluding payments into pension funds) 

totalled EUR 1,704,722.64 (comparable emoluments 

in 2009 totalled EUR 1,792 thsd). Of this total, EUR 

1,273,695.47 (2009: EUR 1,792 thsd) related to fixed 

salary components and EUR 431,027.17 related to 

variable salary components (2009: none). Several 

Management Board members receive their 

emoluments from companies outside the Bank 

Austria group of consolidated companies. These 

emoluments, which Management Board members 

were granted for activities in UniCredit Bank Austria 

AG and in group companies in the 2010 financial 

year, amounted to EUR 2,817,891.21 (2009: EUR 

6,759 thsd). These Management Board members 

also received compensation for activities not 

associated with the Bank Austria Group, but which 

are in the interest of UniCredit Group. 

Payments to former members of the Management 

Board and their surviving dependants (excluding 

payments into pension funds) totalled EUR 

8,609,438.27 (of this total, EUR 4,975,028.86 was 

paid to former Management Board members of 

Creditanstalt AG, which merged with Bank Austria in 

2002, and their surviving dependants; 

EUR 1,771,867.09 was paid to former Management 

Board members of Österreichische Länderbank AG, 

which merged with Zentralsparkasse in 1991, and 

their surviving dependants). The comparative figure 

for the previous year was 

EUR 9,024 thsd. Emoluments for activities in group 

companies paid to this group of persons amounted to 

EUR 422,857.05 (2009: EUR 940 thsd). 

The emoluments of the Supervisory Board members 

active in the 2010 financial year totalled EUR 

315,892.25 (2009: EUR 359 thsd) for UniCredit Bank 

Austria AG and EUR 2,060.00 (2009: EUR 2 thsd) for 

the two credit associations. 

6.4. Loans and advances to Management Board 

members and Supervisory Board members 

Loans to Management Board members are stated at 

EUR 1,044,862.93 (2009: EUR 732 thsd). Account 

overdrafts granted to members of the Management 

Board amounted to EUR 28,171.13 (2009: EUR 80 

thsd). Repayments during the business year totalled 

EUR 37,084.92 (2009: EUR 19 thsd). 

Loans to Supervisory Board members amounted to 

EUR 551,697.09 (2009: EUR 519 thsd). Account 

overdrafts granted to members of the Supervisory 

Board totalled EUR 274,029.59 (2009: EUR 168 

thsd). Repayments during the business year totalled 

EUR 43,634.78 (2009: EUR 24 thsd). 

Loans and advances to the Supervisory Board 

include those made to members of the Employees’ 

Council who are members of the Supervisory Board. 

The maturities of the loans range from five to twentyfive 

years. The rate of interest payable on these loans 

and advances is the rate charged to employees of 

UniCredit Bank Austria AG and/or a rate in line with 

market conditions. 

6.5. Share-based payments 

The Management Board and selected executives of 

UniCredit Bank Austria AG participate in the UniCredit 

share-based payment scheme of UniCredit Group. 

The share-based payment arrangements relate to 

Stock Options and Performance Shares for activities 

in UniCredit Bank Austria AG, based on shares in the 

parent company UniCredit S.p.A. 



UniCredit calculates the economic value of the share-based payment arrangements on a uniform basis for the entire Group 

(Hull & White evaluation model) and provides the Group companies with relevant information. In UniCredit Bank Austria 

AG, the total amount recognised in the profit and loss account as at 31 December 2010 was EUR 396,256.34 (2009: EUR 

2,849 thsd). 

No new Stock Option Plans were granted during 2010; a cash-based payment model was adopted in 2009. 

The number and distribution of Stock Options granted to Management Board members in the respective financial years, 

the exercise price, the maturity, the periods during which Stock Options may be exercised, the transferability of Stock 

Options, the minimum holding period (blocking period), the conditions of transferability and exercise, and the fair value as 

at 31 December 2010 can be seen from the following table: 

1. Stock options 

Year in which stock 

options were granted 

Number of shares that may be Exercise price or basis 

Number of options granted 

purchased 

or formula 

Maturity 

Period during which stock 

options may be exercised 

Management Board 2004 160,500 180,884 4.018 03.09.2008 9 years 

2005 479,000 539,835 4.817 25.11.2009 9 years 

2006 410,400 462,522 5.951 28.06.2010 9 years 

2007 592,018 667,207 7.094 13.07.2011 6 years 

2008 1,902,632 2,144,275 4.185 25.06.2012 6 years 

2009 0 0 0.00 

In 2010, no stock options were exercised by members of the Management Board. 

2. Performance Shares 

Year in which 

performance shares 

were granted 

Number of allocated 

performance shares 

Management Board 2005 290,763 

2006 198,462 

2007 175,644 

2008 466,694 

2009 0 

Conditions Maturity 

3) 

4) 

5) 

7) 

Period for which 

performance shares are 

allocated 

Transferability Blocking period 


1) 

1) 

1) 

1) 

1) 

Fair value as at 

31 Dec.2009 

in EUR 9) 

No 160,179.00 

No 505,249.20 

No 520,797.60 

No 786,910.33 

No 1,246,604.49 


31 Dec.2009 

in EUR 9) 

31.12.2008 unlimited No No 146.663 

31.12.2009 unlimited 

31.12.2010 unlimited 

31.12.2011 unlimited 

In 2010, 11,300 Performance Shares of the year 2006 were allocated to members of the Management Board. 

The remaining 366,432 Performance Shares of the year 2006 expired. 

3. Cash plan 

2) 

6) 

8) 

No 948,251 

No 947,424 

No 1,441,151 

Year in which cash plan 

was granted 

EUR Conditions Maturity 

Period for which cash plan 

was allocated 



31 Dec. 2010 in EUR 

Management Board 2009 2,930,000 

11) 

31.12.2012 unlimited No No 2,930,000 

Conditions of transferability and exercise 

1) Stock options are restricted to the beneficiary's name and cannot be sold, assigned, pledged or transferred in any way. In the event of the beneficiary's 

death, claims under Stock Options may be transferred in full or in part to the beneficiary's heirs. 

2) The rights under Performance Shares are restricted to the beneficiary's name and cannot be assigned, pledged or transferred in any way. These rights 

terminate automatically in the event of the beneficiary's death in the 3-year Performance Period (2007-2009). 

3) 

4) 

5) 

6) 

7) 

8) 

9) 

10) 

11) 

These rights become vested only if 3 out of 5 internal key indicators of UniCredit Group or of the relevant Division are met in the year of allocation/maturity 

(2006-2008). The targets of UniCredit Group include the EVA (Economic Value Added), the cost/income ratio, ROE (return on equity), total customer assets 

and liabilities, and the doubtful loans/loans ratio. The key indicators of the Divisions differ according to Division. 


(2007-2009). The targets of UniCredit Group include the EVA (Economic Value Added), EPS (earnings per share), the cost/income ratio, the 

revenues/RWA ratio (RWA = risk-weighted assets) and the loan loss provisions/RWA ratio. Fair values can only be determined in the respective year of 

allocation/maturity. The key indicators of the Divisions differ according to Division. 


(2008-2010). The targets of UniCredit Group include the EVA (Economic Value Added), the cost/income ratio, EPS (earnings per share), total revenues and 

the cost of risk. The key indicators of the Divisions differ according to Division. Fair values can only be determined in the respective year of 

allocation/maturity. 

The rights under Performance Shares are restricted to the beneficiary's name and cannot be assigned, pledged or transferred in any way. In the event of 

the beneficiary's death, claims under Performance Shares may be transferred in full or in part to the beneficiary's heirs. 

These rights become vested depending on the degree to which 3 internal key indicators of UniCredit Group are met in the year of allocation/maturity (2009- 

2011). 

These key indicators are TSR (Total Shareholder Return), relating to 50% of the Performance Shares; EVA (Economic Value Added), relating to 25% of the 

Performance Shares; and EPS (earnings per share), also relating to 25% of the Performance Shares. Fair values can only be determined in the respective 

year of allocation/maturity. 

The rights under Performance Shares are restricted to the beneficiary's name and cannot be assigned, pledged or transferred in any way. In the event of 

the beneficiary's death, the beneficiary's heirs are entitled to a cash payment amounting to the market value of the Performance Shares on the date of the 

beneficiary's death, on the assumption that the conditions to be met for receiving Performance Shares were met to the extent of 100%. 

The fair value was determined based on the fair value as at 31 December 2009. 

Year Fair Value Stock Fair Value Performance 

Option 

Share 

LTIP 2004 0.998 

LTIP 2005 1.0548 

LTIP 2006 1.269 4.778 

LTIP 2007 1.3292 5.394 

LTIP 2008 0.6552 3.088 

The valuation is based on the closing price on 30 June 2009 = date of delivery of the shares, EUR 1.795, and the number of 81,706 Performance Shares 

actually allocated. 

The Performance Period for the LTI 2009 commences on 1 January 2010 and ends on 31 December 2012. 

Payment will probably be made in June 2013, but not later than December 2013. 

Payment is dependent on various factors: 

- performance conditions have been fulfilled 

- contract of employment is still effective 

- compliance guidelines are met 

The beneficiaries have been communicated an Incentive Opportunity – with the minimum payment being 0, the maximum being 125% of the Incentive 

Opportunity. 

10) 



6.6. Names of Management Board members and 

Supervisory Board members 

A list of the members of the Supervisory Board and of 

the members of the Management Board is given on 

pages 212 and 213. 


Shares in group companies and equity interests of UniCredit Bank Austria AG 

List of shares in group companies and equity interests pursuant to Section 238 of the Austrian Commercial Code (UGB) 

Shares in group companies (consolidated) 

Name and domicile of company 

Total 

interest in 

% 

Equity (in EUR) 

Net income/loss 

(in EUR) 

Total assets 

(in EUR) 

Bank Austria – Annual Financial Statements 2010 210 

Balance sheet 

date 

"Diners Club CEE Holding AG", Vienna, AT 99.80 4,516,771.00 546,849.00 31,245,848.68 31.12.2010² 

AI Beteiligungs GmbH, Vienna, AT 100.00 79,507,321.00 3,933,150.00 91,769,715.06 31.12.2010² 

Alpine Cayman Islands Ltd., Grand Cayman, KY 100.00 104,446,317.33 994,061.72 507,702,740.76 31.12.2010² 

AS UniCredit Bank, Latvia, Riga, LV 100.00 64,366,294.05 -44,920,217.08 992,920,241.05 31.12.2010² 

AWT International Trade GmbH, Vienna, AT 100.00 165,606,838.00 1,525,974.00 168,727,494.00 31.12.2010² 

BA Alpine Holdings, Inc., Wilmington County, New Castle, USA 100.00 22,099,946.12 -3,911,893.43 98,703,650.65 31.12.2010² 

BA Betriebsobjekte GmbH, Vienna, AT 1) 100.00 16,903,872.00 580,990.00 28,043,124.00 31.12.2010² 

BA GVG-Holding GmbH, Vienna, AT 100.00 278,671.00 0.00 1,234,440.00 31.12.2010² 

BA Private Equity GmbH, Vienna, AT 100.00 1,433,779.99 0.00 1,492,739.00 31.12.2010² 

BA-CA Markets & Investment Beteiligung Ges.m.b.H., Vienna, AT 1) 100.00 329,828,476.00 51,155,961.00 6,187,019,021.00 31.12.2010² 

BA-CA Vienna Mitte Holding GmbH, Vienna, AT 100.00 52,840,175.00 6,305.00 52,853,337.00 31.12.2010² 

Bank Austria Finanzservice GmbH, Vienna, AT 1) 100.00 3,059,927.00 12,561.00 5,860,684.00 31.12.2010² 

Bank Austria Global Information Services GmbH, Vienna, AT 100.00 14,097,758.46 1,616,362.57 51,477,077.16 31.12.2010² 

Bank Austria Real Invest GmbH, Vienna, AT 1) 94.95 112,991,727.00 12,665,002.00 119,807,740.00 31.12.2010² 

Bank Austria Wohnbaubank AG, Vienna, AT 1) 100.00 47,822,140.00 3,715,888.00 4,260,858,864.00 31.12.2010² 

CABET-Holding-Aktiengesellschaft, Vienna, AT 1) 100.00 690,364,412.00 18,770,514.00 690,428,919.00 31.12.2010² 

card complete Service Bank AG, Vienna, AT 1) 50.10 56,427,488.15 25,208,966.10 521,351,883.23 31.12.2010² 

Cards & Systems EDV-Dienstleistungs GmbH, Vienna, AT 58.00 4,781,331.00 0.00 12,511,383.00 31.12.2010² 

Domus Clean Reinigungs GmbH, Vienna, AT 100.00 1,262,568.52 1,079,543.51 3,078,469.33 31.12.2010² 

DOMUS FACILITY MANAGEMENT GmbH, Vienna, AT 1) 100.00 664,873.86 -237,517.44 11,307,202.35 31.12.2010² 

EK Mittelstandsfinanzierungs AG, Vienna, AT 98.00 29,851,147.00 -2,605,111.00 30,193,903.00 31.12.2010² 

FactorBank Aktiengesellschaft, Vienna, AT 100.00 8,136,267.17 3,206,351.34 189,845,239.68 31.12.2010² 

GUS Consulting GmbH, Vienna, AT 100.00 1,735,766.00 0.00 16,117,709.00 31.12.2010² 

Human Resources Service and Development GmbH, Vienna, AT 1) 100.00 55,147.93 0.00 1,966,894.73 31.12.2010² 

Immobilien Rating GmbH, Vienna, AT 85.89 679,549.00 0.00 1,467,521.00 31.12.2010² 

JSC ATF BANK, Almaty, KZ 99.71 168,093,249.22 -153,667,595.41 4,792,501,562.19 31.12.2010² 

Kaiserwasser Errichtungs- und Betriebsgesellschaftm.b.H. , Vienna, AT 99.80 -518,766.00 0.00 1,590,782.00 31.12.2010² 

KLEA ZS-Immobilienvermietung G.m.b.H., Vienna, AT 99.80 2,630,070.26 113,375.44 4,585,446.86 31.12.2010² 

KLEA ZS-Liegenschaftsvermietung G.m.b.H., Vienna, AT 99.80 1,333,640.40 49,348.59 6,790,868.44 31.12.2010² 

Lassallestraße Bau-, Planungs-, Errichtungs- und Verwertungsgesellschaft m.b.H., Vienna, AT 1) 99.00 -329,848.13 1,332,009.55 142,480,878.53 31.12.2010² 

MC Marketing GmbH, Vienna, AT 1) 100.00 148,474,026.00 4,826,527.00 148,789,232.00 31.12.2010² 

Mezzanin Finanzierungs AG, Vienna, AT 56.67 24,664,774.00 433,331.00 31,263,321.00 31.12.2010² 

MY Beteiligungs GmbH, Vienna, AT 1) 100.00 60,007,607.00 1,289,543.00 60,015,711.00 31.12.2010² 

Private Joint Stock Company "Ferrotrade International", Kiev, UA 100.00 82,793,360.39 -24,332.99 82,793,454.25 31.12.2010² 

Public Joint Stock Company "Ukrsotsbank", Kiev, UA 95.34 495,998,568.93 12,913,006.29 3,783,197,853.68 31.12.2010² 

RAMSES Immobilien Gesellschaft m.b.H. & Co OG, Vienna, AT 99.50 15,427,078.00 1,461,885.00 54,332,760.00 31.12.2010² 

RIGEL Immobilien GmbH, Vienna, AT 1) 99.80 3,220,732.61 104,298.61 11,186,033.63 31.12.2010² 

Schoellerbank Aktiengesellschaft, Vienna, AT 100.00 99,563,553.19 14,038,900.42 2,036,902,553.95 31.12.2010² 

SIRIUS Immobilien GmbH, Vienna, AT 1) 99.80 101,676.77 57,913.77 6,768,003.51 31.12.2010² 

UniCredit Bank a.d. Banja Luka, Banja Luka, BA 90.92 36,352,977.81 25,265.36 294,575,395.23 31.12.2010² 

UniCredit Bank Czech Republic, a.s., Praha 1, CZ 100.00 1,246,357,900.40 109,717,259.89 10,780,710,442.16 31.12.2010² 

UniCredit Bank d.d., Mostar, BA 89.98 212,962,254.32 17,160,858.47 1,840,622,535.54 31.12.2010² 

UniCredit Bank Hungary Zrt., Budapest, HU 100.00 598,925,731.40 -1,829,689.38 5,655,589,395.04 31.12.2010² 

UniCredit Bank Serbia JSC, Belgrade, RS 100.00 303,471,637.11 36,993,073.24 1,582,642,929.76 31.12.2010² 

UniCredit Bank Slovakia a.s., Bratislava, SK 99.03 421,550,420.00 17,987,389.00 4,221,709,991.00 31.12.2010² 

UniCredit Banka Slovenija d.d., Ljubljana, SL 99.99 197,049,096.57 12,120,440.36 2,996,485,923.48 31.12.2010² 

UniCredit Bulbank AD, Sofia, BG 92.86 874,599,074.04 74,391,435.22 5,725,104,039.27 31.12.2010² 

UniCredit CAIB Czech Republic a.s., Praha 2, CZ 100.00 4,115,571.57 -1,019,407.61 4,623,859.62 31.12.2010² 

UniCredit CAIB Hungary Ltd., Budapest, HU 100.00 874,365.55 -91,196.55 1,045,220.15 31.12.2010² 

UniCredit CAIB Poland S.A., Warsaw, PL 100.00 105,717,562.01 14,399,267.42 156,239,252.33 31.12.2010² 

UniCredit CAIB Romania SRL, Bucharest, RO 100.00 -831,978.41 -322,901.92 191,812.76 31.12.2010² 

UniCredit CAIB Serbia Ltd. Belgradee, Belgrade, RS 100.00 365,286.76 -116,108.43 537,501.66 31.12.2010² 

UniCredit CAIB Slovakia a.s., Bratislava 1, SK 100.00 973,733.00 -381,853.00 1,034,000.00 31.12.2010² 

UniCredit CAIB Slovenija, d.o.o., Ljubljana, SL100.00 784,373.00 693,412.00 1,044,242.00 31.12.2010² 

UniCredit Tiriac Bank S.A., Bucharest, district 1, RO 50.57 562,175,359.40 39,824,508.45 4,887,126,418.79 31.12.2010² 

UniCredit Turn-Around Management GmbH, Vienna, AT 1) 100.00 9,880,268.00 -1,290,983.00 10,940,951.00 31.12.2010² 

UNIVERSALE International Realitäten GmbH, Vienna, AT 100.00 151,471,352.00 -34,460,447.00 299,522,211.00 31.12.2010² 

WED Holding Gesellschaft m.b.H., Vienna, AT 48.06 9,269,293.12 21.12 9,466,406.27 31.12.2010² 

WED Viennaer Entwicklungsgesellschaft für den Donauraum Aktiengesellschaft, Vienna, AT 100.00 16,045,764.10 3,486,902.10 17,000,432.23 31.12.2010² 

Z Leasing POLLUX Immobilien Leasing Gesellschaft m.b.H., Vienna, AT 1) 99.80 3,734,186.46 -360,484.54 5,803,003.14 31.12.2010² 

Zagrebacka Banka d.d., Zagreb, HR 84.21 1,983,196,106.60 153,122,615.87 13,027,962,124.88 31.12.2010² 

ZAO UniCredit Bank, Moscow, RU 100.00 1,687,097,903.28 188,580,927.67 14,065,491,897.24 31.12.2010² 

ZETA Fünf Handels GmbH, Vienna, AT 1) 100.00 403,272,237.00 -20,770,315.00 404,644,798.00 31.12.2010² 

Interests in companies accounted for under the proportionate consolidation method 


Total 

interest in 

% 



(in EUR) 

Total assets 

(in EUR) 

Balance sheet 

date 

Informations-Technologie Austria GmbH, Vienna, AT 50.00 3,971,510.81 -18,011.12 4,546,468.83 31.12.2010² 

Koc Finansal Hizmetler AS, Istanbul, TR 50.00 2,095,692,294.38 964,160.63 2,122,410,850.00 31.12.2010²

Shares in group companies and equity interests of UniCredit Bank Austria AG 

Interests in associated companies accounted for under the equity method 


Total 

interest in 

% 



(in EUR) 

Total assets 

(in EUR) 

Bank Austria – Annual Financial Statements 2010 211 

Balance sheet 

date 

Bank für Tirol und Vorarlberg Aktiengesellschaft, Innsbruck, AT 47.38 684,737,000.00 51,828,000.00 8,865,100,000.00 31.12.2010² 

BKS Bank AG, Klagenfurt, AT 36.03 618,692,000.00 45,963,000.00 6,358,300,000.00 31.12.2010² 

CREDANTI HOLDINGS LIMITED, Nicosia, Capital Center,floor 9, CY 30.00 50,909,588.00 1,053,229.00 51,325,725.00 31.12.2010² 

NOTARTREUHANDBANK AG, Vienna, AT 25.00 20,393,000.00 6,325,000.00 1,076,223,000.00 31.12.2010² 

Oberbank AG, Linz, AT 33.33 1,165,090,000.00 94,592,000.00 17,002,818,000.00 31.12.2010² 

Oesterreichische Kontrollbank Aktiengesellschaft, Vienna, AT 49.15 558,724,000.00 72,949,000.00 35,000,000,000.00 31.12.2010² 

Österreichische Hotel- und Tourismusbank Gesellschaft m.b.H., Vienna, AT 50.00 26,870,000.00 2,460,000.00 985,000,000.00 31.12.2010² 

UniCredit Business Partner SCPA, Cologno Monzese, IT 28.81 60,449,000.00 -994,000.00 293,090,000.00 31.12.2010² 

UniCredit Leasing SPA, Bologna, IT 31.01 2,572,449,000.00 74,498,000.00 30,377,139,000.00 31.12.2010² 

Unconsolidated companies 


Total 

interest in 

% 



(in EUR) 

Total assets 

(in EUR) 

Balance sheet 

date 

A) Group companies 

Alfa Holding Ingatlanszolgaltato Kft., Györ, HU 95.00 -5,921.93 -1,410.33 600.83 31.12.2009 

Baltic Business Center Sp.z.o.o., Gdynia, PL 62.00 -23,589,312.25 -1,126,475.66 2,980,245.05 31.12.2009 

Bank Austria Creditanstalt Versicherungsdienst GmbH, Vienna, AT 81.00 181,663.22 18,444.46 1,775,200.14 31.12.2009 

Bank Austria Immobilien Entwicklungs- und VerwertungsgmbH, Vienna, AT 1) 100.00 24,500.00 75,061.73 516,110.76 31.12.2009 

Bank Austria-CEE BeteiligungsgmbH, Vienna, AT 100.00 48,692.78 -3,800.98 49,952.78 31.12.2009 

Bank Rozwoju Energetyki i Ochrony Swodowiska S.A. MEGABANK in Liquidation, Warsaw, PL 100.00 -5,111,149.21 16,356.46 894.18 31.12.2009 

BFAG - Holding Gesellschaft m.b.H., Vienna, AT 100.00 21,554.59 -1,207.79 22,574.59 31.12.2009 

Buchstein Immobilienverwaltung Gesellschaft m.b.H., Vienna, AT 100.00 40,155.10 2,769.95 60,455.10 31.12.2009 

CA - Gesellschaft zum Schutz der Marke "Creditanstalt" GmbH, Vienna, AT 100.00 6,966.89 -16,979.71 18,847.89 31.12.2009 

Erzet-Vermögensverwaltungsgesellschaft m.b.H., Vienna, AT 100.00 212,645.79 -234.72 213,905.79 30.11.2009 

Financial Risk Management GmbH, Vienna, AT 100.00 494,795.33 242,233.42 915,899.43 31.12.2009 

FONTANA Hotelverwaltungsgesellschaft m.b.H., Vienna, AT 100.00 -32,628.72 -7,593.37 0.00 31.12.2009 

Gründerfonds GmbH & Co KEG, Vienna, AT 100.00 6,470,482.78 -1,014,572.38 6,553,562.66 31.12.2009 

Industrie-Immobilien-Verwaltung Gesellschaft m.b.H., Vienna, AT 1) 99.90 142,859.05 153.91 147,859.05 31.12.2009 

Infrastruktur Holding GmbH, Vienna, AT 100.00 2,427.62 -3,121.26 3,687.62 31.12.2009 

MY Drei Handels GmbH, Vienna, AT 100.00 36,295.85 6,994.71 38,178.65 31.12.2009 

Paytria Unternehmensbeteiligungen GmbH, Vienna, AT 100.00 287,844.37 -9,259.66 296,278.17 31.12.2009 

RAMSES-Immobilienholding GmbH, Vienna, AT 99.80 27,321.11 -3,217.36 27,339.11 31.12.2009 

RE-St.Marx Holding GmbH, Vienna, AT 1) 100.00 20,955.18 -2,360.63 22,875.18 31.12.2009 

Sigma Holding Ingatlanszolgaltato Kft., Budapest, HU 95.00 -415,337.29 7,285.48 429,339.81 31.12.2009 

Sinera AG, Zug, CH 100.00 73,981.93 -14,733.69 74,672.90 31.12.2009 

THETA Fünf Handels GmbH, Vienna, AT 100.00 -15,960.80 -3,675.56 1,000,000.00 31.12.2009 

UniCredit CAIB Bulgaria EOOD, Sofia, BG 100.00 127,313.63 4,090.40 127,824.93 31.12.2009 

Wirtschaftsverein der MitarbeiterInnen der UniCredit Bank Austria e.Gen., Vienna, AT 54.66 262,348.56 -1,396,986.32 3,632,356.12 31.12.2009 

B) Associated companies 

"Gesfö" Gemeinnützige Bau- und Siedlungsgesellschaft m.b.H., Vienna, AT 25.00 6,869,012.96 447,257.05 14,709,866.58 31.12.2009 

"Sparkassen-Haftungs Aktiengesellschaft", Vienna, AT 28.26 217,868.96 -881.66 220,519.96 31.12.2009 

2020 Medici AG, Vienna, AT 25.00 6,093,237.59 -2,570,799.16 19,825,509.79 31.12.2008 

Mizuho Corporate Bank - BA Investment - ConsultingGmbH, Vienna, AT 50.00 1,005,655.78 513.27 1,127,422.98 31.12.2009 

MY Fünf Handels GmbH, Vienna, AT 50.00 28,290.39 -35,136.44 66,103.08 31.12.2009 

Österreichische Wertpapierdaten Service GmbH, Vienna, AT 29.30 36,336.41 0.00 1,657,647.65 31.12.2009 

Viennaer Kreditbürgschaftsgesellschaft m.b.H., Vienna, AT 24.49 5,089,892.07 6,445.38 7,780,870.65 31.12.2009 

C) Other companies 

Banco Interfinanzas S.A., Buenos Aires, AR 50.00 5,413,645.69 252,349.30 58,998,512.27 31.12.2009 

bareal Immobilientreuhand GmbH, Vienna, AT 50.00 40,445.94 3,415.67 450,699.16 31.12.2009 

Kapital-Beteiligungs Aktiengesellschaft, Vienna, AT 20.00 6,665,070.59 -419,298.28 7,664,482.10 30.09.2010 

Projektentwicklung Schönefeld Verwaltungsgesellschaft mbH, Stuttgart, DE 50.00 27,878.64 153.83 28,749.27 31.12.2009 

SP Projektentwicklung Schönefeld GmbH & Co.KG, Stuttgart, DE 50.00 15,215,945.18 -155,970.36 16,660,365.01 31.12.2009 

The total percentage held comprises all shares held by consolidated companies and other group companies but not shares held on a trust basis. 

Equity: equity pursuant to Section 229 of the Austrian Commercial Code. 

1) Profit pooling arrangement with UniCredit Bank Austria AG 

²) Figures in accordance with IFRS 

³) Shares held via UniCredit Leasing S.p.A. are taken into account in proportion to UniCredit Bank Austria AG's ownership interest in UniCredit Leasing S.p.A.

Supervisory Board and Management Board of UniCredit Bank Austria AG 

Supervisory Board – 1 January 2010 – 31 December 2010 

Chairman: Alessandro PROFUMO (until 21 September 2010) 

Deputy Chairman: Erich HAMPEL 

Members: Sergio ERMOTTI 

Paolo FIORENTINO 

Candido FOIS 

Roberto NICASTRO 

Vittorio OGLIENGO 

Franz RAUCH 

Karl SAMSTAG 

Gerhard SCHARITZER (until 15 February 2010) 

Wolfgang SPRIßLER 

Ernst THEIMER (from 7 July 2010) 

Changes in 2011: 

Chairman: Paolo FIORENTINO (from 21 January 2011) 

Member: Karl GUHA (from 19 January 2011) 

Delegated by the Wolfgang HEINZL 

Employees’ Council: Chairman of the Employees’ Council 

Adolf LEHNER 

First Deputy Chairman of the Employees’ Council 

Emmerich PERL 

Second Deputy Chairman of the Employees’ Council 

Barbara WIEDERNIG 

Third Deputy Chairwoman of the Employees’ Council 

Josef REICHL 

Member of the Employees’ Council 

Robert TRAUNWIESER 

Member of the Employees’ Council 


Supervisory Board and Management Board of UniCredit Bank Austria AG 

Management Board – 1 January 2010 – 31 December 2010 

Chairman/ 

Chief Executive Officer: Willibald CERNKO 

Deputy Chairman: Federico GHIZZONI 

Members: Helmut BERNKOPF 

Jürgen DANZMAYR 

Massimiliano FOSSATI (from 8 June 2010) 

Rainer HAUSER 

Doris TOMANEK (from 7 May 2010) 

Carlo VIVALDI 

Stephan WINKELMEIER 

Changes in 2011: 

Deputy Chairman: Federico GHIZZONI (until 21 January 2011) 

Gianni Franco PAPA (from 22 January 2011) 

Mitglieder: Francesco GIORDANO (from 1 February 2011) 

Carlo VIVALDI (until 31 January 2011) 


Financial Statements for 2010 



Translation of the facsimile on pages 218 to 219 / Auditors’Report on the Financial Statements 




Preamble 

The Austrian Savings Bank Auditing Association and KPMG Austria GmbH Wirtschaftsprüfungs- und 

Steuerberatungsgesellschaft, Vienna, have audited the financial statements of UniCredit Bank Austria AG for the financial year 

from 1 January 2010 to 31 December 2010 including the accounting records. These financial statements comprise the balance 

sheet as at 31 December 2010, the income statement for the financial year ended 31 December 2010, and the notes. 

Management’s Responsibility for the Financial Statements and for the Accounting 

UniCredit Bank Austria AG’s management is responsible for the accounting system and the preparation of financial statements 

which present fairly, in all material respects, the financial position of UniCredit Bank Austria AG and its financial performance in 

accordance with Austrian Generally Accepted Accounting Principles. This responsibility includes: designing, implementing and 

maintaining internal control relevant to the preparation and fair presentation of financial statements of UniCredit Bank Austria AG 

that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; 

and making accounting estimates that are reasonable in the circumstances. 

Auditors’ Responsibility and Description of the Type and Scope of the Statutory Audit 

The responsibility of the Austrian Savings Bank Auditing Association and of KPMG Austria GmbH Wirtschaftsprüfungs- und 

Steuerberatungsgesellschaft, Vienna, is to express an opinion on these financial statements based on our audit. We conducted 

our audit in accordance with laws, regulations and principles governing an audit of financial statements which are applicable in 

Austria and Austrian Standards on Auditing. Those standards require that we comply with professional guidelines and that we 

plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. 

The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the 

financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control 

relevant to the preparation and fair presentation of the financial position and financial performance of UniCredit Bank Austria AG 

in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on 

the effectiveness of UniCredit Bank Austria AG’s internal control. An audit also includes evaluating the appropriateness of 

accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the 

overall presentation of the financial statements. 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 

This report has been translated from German into English for reference purposes only. Please refer to the official legally binding version as written and signed 

in German. Only the German version is definitive. 



Opinion 

Our audit did not give rise to any objections. Based on the results of our audit in our opinion, the financial statements comply with 

the legal provisions and present fairly, in all material respects, the financial position of UniCredit Bank Austria AG as of 

31 December 2010, and the financial performance of UniCredit Bank Austria AG for the financial year from 1 January 2010 to 31 

December 2010 in accordance with Austrian Generally Accepted Accounting Principles. 

Statement on the Management Report 

Laws and regulations require us to perform audit procedures to determine whether the management report is consistent with the 

financial statements and whether the other disclosures made in the management report are not misleading with respect to 

UniCredit Bank Austria AG’s position. The auditors’ report must also contain a statement as to whether the management report is 

consistent with the financial statements and whether the disclosures pursuant to Section 243a UGB (Austrian Commercial Code) 

are appropriate. In our opinion, the management report is consistent with the financial statements. The disclosures pursuant to 

Section 243a UGB (Austrian Commercial Code) are appropriate. 

Friedrich O. Hief 

Certified Accountant 

Walter Reiffenstuhl 



Austrian Savings Bank Auditing Association 

Auditing Board 

(Bank Auditor) 

KPMG Austria GmbH 

Wirtschaftsprüfungs- und Steuerberatungsgesellschaft 

Reinhard Gregorich 

Auditor 

Bernhard Gruber 


*) The report (in the German language, or translations into another language, including shortened or amended versions) may not 

be made public or used by third parties, when reference is made in whole or in part to the auditors’ report, without the express 

written consent of the auditors. 

This report has been translated from German into English for reference purposes only. Please refer to the official legally binding version as written and signed 

in German. Only the German version is definitive. 



Prüfung des Jahresabschlusses 2010 


Sparkassen-Prüfungsverband KPMG Austria GmbH 

Grimmelshausengasse 1 Wirtschaftsprüfungs- und 

1030 Wien Steuerberatungsgesellschaft 

AUSTRIA Porzellangasse 51 

1090 Wien 

AUSTRIA 








Translation of the facsimile on page 221 




We state to the best of our knowledge that the financial statements prepared in accordance with the relevant 

financial reporting standards provide a true and fair view of the financial position and performance of the 

issuer, and that in the Management Report the business trends including business results and the position of 

the issuer have been presented in such a way as to provide a true and fair view of the financial position and 

performance of the issuer, and that it describes the material risks and uncertainties to which the issuer is 

exposed. 


The Management Board: 

Cernko Papa 

CEO Support Services CEE Banking Division 

(Chairman) (Deputy Chairman) 

Bernkopf Danzmayr Fossati 

Corporate & Investment Private Banking Division CRO Risk Management 

Banking Division 

Giordano Hauser Tomanek 

CFO Finance Family & SME Banking Division Human Resources Austria & CEE 





Investor Relations 

UniCredit Bank Austria AG/Corporate Relations 

Lassallestrasse 5, 1020 Vienna, Austria 

Tel: (+43) (0)5 05 05-57232 Fax: (+43) (0)5 05 05-89572 32 

e-mail: investor.relations@unicreditgroup.at Internet: http://ir.bankaustria.at 

Günther Stromenger 

Tel: (+43) (0)5 05 05-572 32 

Thomas Kirin 

Tel: (+43) (0)5 05 05-527 74 

Andreas Petzl 

Tel: (+43) (0)5 05 05-595 22 

Ratings 

Moody`s 1) 

Standard & Poor`s 2) 

Public-sector motgage bonds of Bank Austria are rated Aaa by Moody's 

1) Grandfathered debt is rated Aa2, subordinated debt rating is Aa3. 

2.) Grandfathered debt remains rated AA+, subordinated debt rating is AA+. 

Financial Calendar 

13 May 2011 Results for the first three months of 2010 

4 August 2011 Results for the first six months of 2010 

15 November 2011 Results for the first nine months of 2010 

All Information is available electronically at http://ir.bankaustria.at 

Imprint Note and disclaimer 

Publisher: 


A-1010 Vienna, Schottengasse 6-8 

Tel.: +43 (0)5 05 05-0 

Fax: +43 (0)5 05 05-56155 

Internet: www.bankaustria.at 

e-mail: info@unicreditgroup.at 

BIC: BKAUATWW 

Austrian routing code: 12000 

Austrian Register of Firms: FN 150714p 

VAT registration number: ATU 51507409 

Long-Term Subordinated Liabilities Short term 

A1 A2 P-1 

A A- A-1 

This edition of the Consolidated Financial Statements and 

Management Report of the Group and of the Financial Statements 

and Management Report of UniCredit Bank Austria AG is prepared for 

the convenience of our English-speaking readers. It is based on the 

German original which is the authentic version and takes precedence 

in all legal aspects.

Annual Financial Statements 2010 of Bank Austria

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