Annual Financial Statements 2011 of Bank Austria

Annual Financial Statements 2011 

of Bank Austria

Content 

I. Bank Austria 2 

Bank Austria at a Glance 2 

Management Report of Bank Austria for 2011*) 4 

The banking environment in 2011 4 

Bank Austria in 2011 - overview 10 

Details of the income statement for 2011 14 

Financial position and capital resources 18 

Financial and non-financial performance indicators 23 

Development of business segments 31 

Outlook 50 

Consolidated Financial Statements in accordance with IFRS *) 59 

Statement of comprehensive income 60 

Other comprehensive income 61 

Taxes on items directly recognised in equity 61 

Statement of Financial Position (balance sheet) 62 

Statement of Changes in Equity 63 

Statement of Cash Flows 64 

Notes to the consolidated financial statements incl. risk report 67 

Concluding Remarks of the Management Board 176 

Report of the Auditors 177 

Report of the Supervisory Board 179 

Statement by Management 181 

II. UniCredit Bank Austria AG 183 

Preliminary remarks on the financial statements 

of UniCredit Bank Austria AG for 2011 184 

Management Report of UniCredit Bank Austria AG 185 

Financial Statements of UniCredit Bank Austria AG for 2011 210 

Balance sheet of UniCredit Bank Austria AG as at 31 December 2011 210 

Items shown below the balance sheet 212 

Profit and loss account 2011 213 

Notes to the Financial Statements of UniCredit Bank Austria AG 215 

List of shares in group companies and equity interests 

of UniCredit Bank Austria AG 237 

Supervisory Board and Management Board of UniCredit Bank Austria AG 239 

Auditors’ Report 241 


Investor Relations, ratings, financial calendar, imprint 251 

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

Bank Austria – Annual Financial Statements 2011 1

Bank Austria at a Glance 

Income statement figures 

(€ m) 2011 2010 +/– 

Net interest 4,496 4,543 –1.0% 

Net fees and commissions 1,885 1,990 –5.3% 

Net trading, hedging and fair value income 262 326 –19.8% 

Operating income 6,986 7,208 –3.1% 

Operating costs *) 

–3,903 –3,742 +4.3% 

Operating profit 3,083 3,466 –11.0% 

Net operating profit 1,732 1,626 +6.5% 

Profit before tax 1,291 1,548 –16.6% 

Net profit attributable to the owners of Bank Austria 209 747 –72.1% 

Volume figures 

(€ m) 31 dec. 2011 31 dec. 2010 +/– 

Total assets 199,229 193,049 +3.2% 

Loans and receivables with customers 134,914 130,093 +3.7% 

Primary funds 134,658 127,839 +5.3% 

Equity 17,661 17,476 +1.1% 

Risk-weighted assets (overall) 125,188 127,906 –2.1% 

Key performance indicators 

2 2011 Annual Report · Bank Austria 

2011 2010 

Return on equity after tax (ROE) 1.2% 4.5% 

Cost/income ratio 55.9% 51.9% 

Provisioning charge/avg. lending volume (cost of risk) 1.03% 1.44% 

Marginal Economic Value Added € 129 m € 194 m 

Marginal RARORAC 1.35% 2.28% 

Total capital ratio (based on all risks, end of period) 12.68% 12.13% 

Tier 1 capital ratio 10.88% 10.35% 

Tier 1 capital ratio without hybrid capital (Core Tier 1 capital ratio) 10.55% 10.04% 

Staff **) 

31 dec. 2011 31 dec. 2010 +/– 

Bank Austria (full-time equivalent) 59,345 59,653 –0.5% 

Central Eastern Europe business segment 51,517 51,616 –0.2% 

Other business segments 7,828 8,037 –2.6% 

Austria 7,704 7,889 –2.4% 

Offices **) 

31 dec. 2011 31 dec. 2010 +/– 

Bank Austria 3,040 3,033 +0.2% 

Central Eastern Europe business segment 2,750 2,734 +0.6% 

Other business segments 290 299 –3.0% 

Austria 289 298 –3.0% 

*) Corrected on 2 May 2012. 

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

Management Report 

Management Report of Bank Austria for 2011 

The banking environment in 2011 4 

Bank Austria in 2011 – overview 10 

Details of the income statement for 2011 14 

Financial position and capital resources 18 

Financial and non-financial performance indicators 23 

Development of business segments 31 

Outlook 50 

Bank Austria · Annual Financial Statements 2011 

3


Management Report (CONTINUED) 

The banking environment in 2011 

Overview 

In 2011 the banking sector was under stress in several respects – 

not only in connection with the tests carried out by the European 

Banking Authority (EBA) – and under strong pressure to adjust. 

While the year saw a complete reassessment of risks associated with 

banking business, the reorientation of banking business was also 

making good progress. 

� The global economy entered 2011 with a strong momentum 

gathered in the period of recovery after the recession seen in 

2008/2009. In the first half of 2011, growth was stronger than predicted 

but then weakened in the remaining part of the year. Output in 

the industrial countries stagnated at a high level towards year-end 

without sliding back into recession. This overall picture, widely 

described as “the new normal”, features moderate growth based on 

the sustained upswing in the emerging markets. 

� The main factor burdening economic developments in 2011 was 

not cyclical in nature but came from the government debt crisis 

and its impact on the banking sector. Government debt accumulated 

over several decades, compounded by fiscal-policy measures taken 

to handle the crisis in 2008/2009, was suddenly seen by investors 

as unsustainable, especially against the demographic background 

and structurally weak growth in the mature industrial countries. 

The unprecedented loss of confidence was triggered by the protracted 

controversy over the US debt limit in the first half of 2011 

and by the inclusion, at the end of July 2011, of a partial debt waiver 

by private creditors in the second support package for Greece, which 

Impact of the government debt crisis 

1,200 

1,000 

800 

600 

400 

200 

0 

Credit spreads on GIIPS 

government bonds 

(weighted by outstanding 

government debt) 

Credit spreads on 

West European government 

bonds overall (SovX WE, incl. 

AAA-rated countries) 

Risk premiums on 

bank issues (CDS, average 

subordinated, senior) 

Credit spreads on 

CEEMEA government 

bonds (SovX CE) 

CDS spreads Austria 

2010 2011 2012 

broke further taboos. This quickly led to doubts about the sustainability 

of debt in other highly indebted countries. Irrespective of the fundamentals, 

rolling over government debt of these countries via the market 

became a problem, with interest rate spreads reaching high and 

partly prohibitive levels. In view of the close interdependence of banks 

and their home countries – investors/risk bearers – and given the 

special role government bonds have traditionally played in liquidity 

management and the pricing of many bank products, these developments 

led to a dramatic tightening of funding terms in banking business 

in the second half of the year. 

The European Council decisions of 9 December 2011 on the reinforced 

stability pact introduced fiscal policy rules carrying sanctions, 

and a self-commitment to fiscal sustainability. After these basic 

decisions the ECB intensified its expansionary open-market policy, 

which became fully effective at the beginning of 2012. 

� These developments were accompanied by increasing regulatory 

pressure on banks: implementing a number of precautionary measures 

on which decisions were made in the wake of the 2008 financial 

market crisis – primarily to avoid a crisis – presented a major challenge 

in the already difficult environment. Based on stress tests carried 

out by the European Banking Authority in March/June and October/ 

December, rules under the Basel 3 package were tightened and their 

application was brought forward, including the equity capital definitions 

and the target of a Core Tier 1 capital ratio of 9% to be met by the 

middle of 2012. As a result, banks had to build substantial risk buffers. 

The combined effect of these requirements, in a generally weaker 

economic environment, was to make banks’ liquidity and medium-term 

funding more expensive. The earnings outlook deteriorated on all sides, 

and the prices of bank shares fell to a new all-time low (EuroStoxx/ 

Banks down by 38% year-on-year). However, in 2011 banks started to 

adjust their business models to the new environment. In many cases, 

these efforts involved a targeted reduction of assets and a focus on 

core commercial banking, especially the attraction of deposits. 

Financial markets 

� The stark contrast between the first and the second half-year was 

reflected in all segments and key indicators of financial markets. 

In the first few months of 2011, economic forecasts in Europe were 

revised upwards several times. Coupled with inflationary pressure this 

prompted the European Central Bank to raise key interest rates twice 

– at the beginning of March and as late as the beginning of June – to 

a level of 1.5%. Crude oil prices peaked at US$ 127.02 per barrel on 

11 April 2011, in line with global economic trends, and subsequently 

fell to US$ 107.38 per barrel at the end of the year. Prices for industrial 

raw materials also reached their highest levels in the first quarter 

of 2011, including copper as a consequence of strategic stockpiling by 

China. Uncertainty in the autumn then led to a decline in commodity 

prices – the standard indices at the end of 2011 were below year-end 

2010 levels. At the beginning of the second half of 2011, the Purchasing 


4



Managers’ Indices (PMI) for the industrial sector, which are widely 

seen as important indicators, fell to levels slightly below (global index) 

or significantly below (euro area) the growth threshold, indicating 

stagnation but no return to a strong recession as seen in 2009. 

When the government debt crisis came to a head in July/August, this 

triggered an abrupt trend reversal in all market segments. The 

credit ratings of the GIIPS countries were downgraded, with Greece 

falling to CCC (S&P) on 13 June. On 18 July, the US was placed on 

review for possible downgrade, losing its AAA rating on 6 August, for 

the first time since 1941. The creditworthiness of core European 

countries enjoying the top rating also came to be questioned from 

November/December onwards. Finally, on 13 January 2012, 

Standard & Poor’s downgraded the credit ratings of nine euro area 

members, including France and Austria, the latter with a reference 

to the banks’ large exposure to CEE. 

Following the publication of the stress test results by the EBA on 

15 July 2011, and subsequent to the European Council decisions of 

21 July 2011, which for the first time provided for a voluntary remission 

of debt as part of the second support package for Greece, stock 

markets tumbled worldwide and experienced highly volatile trends 

in the remaining part of the year. By the middle of August, the world 

share index MSCI had fallen by 18%; at the end of 2011 it was 

8.5% lower than a year earlier. The EuroStoxx index was down by 

26% from the end of July to the lowest point in 2011 (and down by 

18% in a comparison of year-end 2011/2010 levels), the ATX index 

lost even 38% (or 36% based on year-end levels). The flight to quality 

saw benchmark bonds (denominated in US dollars and euros) 

gaining in value. The 10-year euro benchmark yield reached its low 

at 1.64% on 23 September 2011 and was only slightly higher at the 

end of the year (1.86% compared with 2.97% at the end of 2010). 

Scepticism spread from debtor countries like Greece and Portugal to 

such highly indebted countries as Italy and Belgium, and later also 

France, which were previously seen as being beyond doubt. This led 

to an unprecedented general rise in credit spreads on government 

bonds over the benchmarks. Prices for Greek government bonds 

(mid-prices, five-year) fell from 75.45 (year-end 2010) via 53.42 

(end of June 2011) and 42.67 (end of September 2011) to 23.25 

(year-end 2011); yields, which are of little informative value, were 

around 50%. The CDS spreads on long-term government bonds of 

the GIIPS group of countries – in pre-Lehman times around 60 basis 

points (bp) and in the middle of 2009 still below 100 bp – rose from 

an average of about 400 bp in the middle of 2011 to 1,200 bp by 

the end of the year, subsequently declining to about 800 bp (see 

chart on page 2). Bank issues were unable to decouple from the 

trend for sovereign bonds. 

� Sentiment in money markets also plummeted at the end of July, 

with spot and forward rates falling far below key interest rate levels, 

which were reduced to 1% much later, at the beginning of November 

and in early December. The confidence crisis was reflected in 

Global economic slowdown 

140 

Purchasing Managers’ 

Index/industry 

130 

120 

110 

100 

90 

Government debt crisis worsening 

100 

90 

80 

70 

60 

50 

40 

30 

20 

110 

105 

100 

95 

90 

85 

80 

Wanted: a safe haven 

1,700 

1,600 

1,500 

1,400 

1,300 

1,200 

1,100 

1,000 

euro area 

ECB key interest rate 

3-month 

EONIA swap 

global 52 

Benchmark 

Italy 

Portugal 

Greece 

Risk aversion: sharp fall in share prices, historically 

low interest rates 

Share prices 

(MSCI, world) 

Gold 

(US$/oz.) 

Counteraction taken by ECB 

1.60 

1.40 

1.20 

1.00 

0.80 

0.60 

0.40 

0.20 

0.00 

ECB: excess liquidity 

(open-market operations minus 

minimum reserve requirements 

minus autonomous factors) 

50 = growth 

threshold 

Prices of 10-year government bonds 

Yield on 5-year 

benchmark bond 

Commodity prices 

(S&P GSCI, spot, US$, 

year-end 2009 = 100 

Swiss francs per euro 

(inverted scale shows appreciation) 

Target 

2010 2011 2012 


62 

60 

58 

56 

54 

50 

48 

46 

3.50 

3.00 

2.50 

2.00 

1.50 

1.00 

0.50 

1.05 

1.10 

1.15 

1.20 

1.25 

1.30 

1.35 

1.40 

700 

600 

500 

400 

300 

200 

100 

0 

5



extremely wide variance of spreads depending on the credit rating. 

At year-end 2011, the cost of three-month interbank money was 

1.36%. The Eonia swap (which limits default risk to compensation 

payments based on the interest rate swap) was almost 1 percentage 

point lower, at 0.38%. The secured interest rate was as low as 

0.14% (repo). Ultimately, three-month Treasury bills (German Bubills) 

even traded at a negative yield of 0.9%. 

The ECB again moved to crisis mode at the beginning of August, 

resuming three-month and six-month long-term tenders with full 

allocation, and increasing purchases of government bonds. An essential 

sign of easing was the first of two announced three-year tenders 

in December (allocation: € 489 bn/net of expiring transactions: 

+€ 194 bn on that day), by which the European Central Bank went 

beyond money market control in a narrower sense. From the middle 

to the end of 2011, the outstanding volume of open-market operations 

rose by 64% or € 233 bn, most recently with the unusual 

extension of the term. Use of the deposit facility was almost equally 

intensive. In the euro system, divergence between countries taking 

and placing funds became more pronounced, reflecting currentaccount/capital-account 

profiles within the euro area. 

� Doubts about the power of determination of EU institutions and 

about the expansionary central bank policy pursued worldwide fuelled 

the strong rise in prices for precious metals and in the Swiss franc. 

In the crisis weeks of the third quarter, gold rose to an all-time high 

of US$ 1,920 per ounce; as institutional investors subsequently 

realised profits, the price of gold fell to US$ 1,564 per ounce at the 

end of 2011 (+10% year-on-year, +83% compared with year-end 

2008). The Swiss central bank succeeded in stopping the rise of the 

Swiss franc (1.0085 CHF/EUR on 9 August) by announcing unlimited 

intervention at a level of below 1.20 CHF/EUR (closing rate at 

the end of 2011: 1.2133 CHF/EUR, +2.9%). The US dollar more or 

less followed the interest rate differential, initially showing a weak 

trend (1.4939 USD/EUR on 4 May 2011). On the basis of expansionary 

central bank measures taken by the ECB, the US dollar strengthened 

to 1.2945 at the end of 2011; at that level it was slightly up on 

a year earlier (+3.3%). At the end of 2011, the euro was only 2.2% 

weaker, in trade-weighted terms against 20 trading partners, than at 

the end of 2010; in annual average terms, however, it remained 

almost constant (–0.2%). 

➔ Short-term and medium/long-term funding conditions for 

banks in the euro area deteriorated. Interbank money and yields on 

bank issues rose in the second half of 2011 while benchmark interest 

rates, which are used as reference rates for many capital marketrelated 

products, declined significantly. Banks’ own issues became 

more expensive the closer the terms and conditions of such issues 

came to those for equity capital. 

➔ Credit demand was weak, reflecting economic trends, and 

securities transactions also resulted in lower demand for banking 

services. Recurrent media reports on the crisis led to widespread 

uncertainty among investors, which further reinforced the shift away 

from investments in mutual funds and shares. Performance of the 

various asset classes provided hardly any incentive for long-term 

investment: for example, the MSCI index of the BRIC stock markets 

at the end of 2011 was 20% lower than at year-end 2010, and the 

MSCI index of CEE stock markets was down by 19%. Jumbo mortgage 

bonds generated a performance of +3.8%, corporate bonds 

were weaker after two good years (+2.5%, non-financial, BBB). 

Commodities also showed a disappointing performance (–6.3%, 

Rogers, euro). 

The environment in our core markets: Austria 

The economy in the euro area again benefited in 2011 from the 

catching-up process in the Asian emerging markets. In China, growth 

again reached 9%, despite restrictive measures. Overall, the emerging 

markets recorded economic growth of over 6%. This trend mainly 

benefited the highly competitive European core countries, including 

Austria, and CEE countries whose industrial sector is closely integrated. 

Developments within the euro area were increasingly disparate 

in 2011. Germany achieved average annual growth of over 3%, 

while the economies of Spain and Italy grew by only ½%. The strong 

increase in core Europe reflected a strong momentum continuing 

from the previous year and an excellent performance in the first 

quarter of 2011. In the euro area as a whole, economic growth 

weakened from an annualised 3.1% in the first quarter to a slight 

decline in the fourth quarter; the average figure for 2011 was 1.6%. 

In Austria, too, economic recovery proceeded at a surprisingly quick 

pace in the first half of 2011. Growth picked up from 2.3% in 2010 

as a whole to over 4% in the first half of 2011. It was driven by 

robust export demand, moderate growth of consumption and highly 

dynamic investment activity fuelled by a backlog of demand accumulated 

during the crisis. In summer, however, the loss of confidence 

caused by the European government debt crisis started to have an 

impact on economic expectations. Capacity utilisation in the Austrian 

economy, which almost matched the multi-year average in the spring 

of 2011, declined as the year progressed. After a strong recovery in 

which investment in equipment rose by an annual average of 8%, 

Austrian companies’ propensity to invest fell significantly. However, 

external uncertainty prevented domestic growth from becoming selfsustaining. 

This time the investment cycle was particularly short. 

Private consumption, on the other hand, increased moderately but 

steadily throughout the year, rising by less than 1 per cent in real 

terms although the labour market situation eased visibly. The number 

of employed persons in Austria was up by 1.8% on the previous 

year, reaching a new record level of over 3.4 million. Thanks to a 

mild winter in 2011, employment trends did not yet reflect the economic 

slowdown. The unemployment rate declined from 4.4% to 

4.2% in 2011, though the improvement has recently come to a halt. 

Factors dampening consumption were the economic slowdown and 


6



the rise in inflation, caused by commodity prices, to an average 

level of 3.3% (2010: 1.9%), which did not ease until the end of 

2011. Global demand, and in its wake also Austrian exports, weakened 

in the course of the year. Production in Austria’s export-oriented 

industrial sector therefore lost momentum and even entered 

a mild recessionary phase before the turn of the year. Based on the 

sharp upturn in 2010 and in the first few months of 2011, however, 

annual average rates of change were high: both exports and industrial 

output rose by over 7% in 2011, strongly supporting the Austrian 

economy. Real GDP grew by 3.3%, making Austria one of the 

euro area countries which recorded the strongest growth in 2011. 

Credit demand in Austria remained weak in 2011. Nevertheless, 

this was the first year after 2009 and 2010 which saw growth 

(adjusted for CHF exchange rate effects) of just under 1.5%. While 

demand for residential construction loans was relatively robust, 

growing by about 4%, the volume of loans to small and mediumsized 

enterprises (SMEs) stagnated. In the area of consumer loans, 

repayments once again exceeded new business, leading to a 

decline of about 3% in total volume. Demand for corporate loans 

was slightly stronger: annual growth rose from 2% to 2.5%, mainly 

driven by developments in the second half of the year. Interest rates 

on deposits and loans in Austria rose in parallel with the increase in 

money market rates in 2011. While margins had narrowed towards 

the end of 2010, this development did not continue in 2011; the 

mark-up on money market rates was therefore lower, in annual 

average terms for 2011, than in the previous year, especially for 

SME and housing loans. The same applies to deposit rates although 

interest rates in customer business rose much more strongly than 

money market rates towards the end of 2011. 

With the economic recovery in 2011, and as there were no major 

insolvencies during the year, insolvency liabilities fell sharply, by 

41%, and the number of insolvencies also declined by 8%. 

While the number of insolvencies of private households increased 

again, the related liabilities were lower than in the previous year. 

In 2011, consumption probably continued to rise more strongly 

than incomes. The savings ratio declined significantly, from 8.4% 

to 7.6%. This means that monetary capital formation of private 

households in the first nine months of 2011 was as weak as in 

2010. While bank deposits accounted for about one half of additions 

to financial assets, the total volume of deposits held by private 

households stagnated after the summer although deposit rates, 

unlike money market rates, increased slightly. Thanks to long-term 

contracts the life insurance sector recorded steady inflows of 

funds, but these were significantly lower than in previous years. 

The strong demand for bonds seen in the first six months of 2011 

did not continue in the second half of the year. Sales of investment 

certificates exceeded purchases in 2011, the net change in total 

volume was negative after two years which saw net inflows. 

2011 timeline 

1 Jan. Estonia becomes the 17th country to introduce the euro. 

14 Jan. Revolutions in Tunisia (14 January), Egypt (25 January) and 

Libya (15 February) – “Arab spring”. 

27 Jan. S&P lowers Japan’s credit rating to AA–. 

7 March Economic trends, commodities: ECB raises key 

interest rate to 1.25%. 

11 March Magnitude-9 earthquake and tsunami in Japan; 

Fukushima disaster. 

18 March EBA: stricter criteria for stress tests in 2011. 

21 March Euro area: euro rescue scheme (ESM) up to € 700 bn. 

6 April Portugal becomes the second country after Ireland to be 

bailed out under the euro rescue scheme (€ 78 bn). 

18 April S&P: US rating put under review for possible downgrade. 

13 June S&P lowers Greece’s rating from B to CCC. 

7 July ECB raises key interest rate to 1.50%. 

15 July EBA bank stress test: 8 out of 90 banks have a Core 

Tier 1 capital ratio (CT1) of below 5%; 16 banks with a 

CT1 between 5% and 6%. 

21 July 2nd support package for Greece (€ 109 bn) – for the 

first time private sector involvement (haircut: 21% of 

net present value). 

31 July USA: debt ceiling raised at the last minute. 

4 Aug. ECB switches to crisis mode: long-term tender, purchases 

of government bonds. 

6 Aug. USA loses AAA for the first time since 1941. 

9 Aug. Swiss franc peaks at € 1.0085. 

31 Aug. IMF: capital gap of € 200 bn at European banks. 

2 Sept. Troika (IMF, European Commission, ECB) leaves Greece. 

6 Sept. SNB exchange rate target: at least 1.20 CHF/EUR. 

7 Sept. German Constitutional Court approves euro rescue scheme. 

15 Sept. ECB: US$ 3-month swaps to address shortage of US dollars. 

20 Sept. S&P downgrades Italy’s rating from A+ to A. 

6 Oct. ECB 1-year tender; 2nd covered bond purchase programme. 

26 Oct. EBA stress test: temporary risk buffers; Core Tier 1 capital 

ratio at least 9%. Equity capital gap of € 106 bn. 

27 Oct. EU summit: voluntarya debt writedown of 50% by private 

creditors announced, discussion on bolstering the EFSF. 

31 Oct. Greece: Prime Minister Papandreou announces referendum. 

3 Nov. First reduction of ECB’s key interest rate from 1.50% to 1.25%. 

4 Nov. G-20 (FSB): additional capital buffers for 29 SIFI banks. 

10 Nov. Expert government in Greece. 

14 Nov. UniCredit makes decision on capital increase of € 7.5 bn. 

16 Nov. Expert government in Italy. 

24 Nov. Hungary’s credit rating downgraded to below investment grade. 

8 Dec. ECB pursues expansionary course: 2nd reduction of key 

interest rate to 1%. Two 3-year tenders (December 2011 and 

February 2012) at 1%. Wider range of instruments accepted as 

collateral for repo transactions; minimum reserve rate halved. 

8 Dec. Quick stress test of the EBA: capital gap of € 114.7 bn. 

9 Dec. EU summit: euro countries and 9 other EU countries 

commit to household rules (debt brake, …). 

13 Jan. S&P lowers ratings of nine European countries, including 

2012 France and Austria for the first time 

21 Feb. Second support package for Greece in the amount of 

2012 € 130 bn; additionally private sector involvement in 

debt restructuring. 


7



Central and Eastern Europe (CEE) 

� Central and Eastern Europe (CEE) did not completely escape the 

two major external influences, namely the economic slowdown in the 

second half of 2011 and the impact of the government debt crisis. 

Sensitivity to cyclical factors and external disruptions have increased 

in the region in line with progress in integration. Structural divergence 

among the various country groups has also become more 

pronounced, however. 

All countries were impacted by the slowdown in the European industrial 

sector in the latter half of 2011, but this development affected in 

particular the Central European countries, which are highly integrated 

in the production network, and to a lesser extent also Bulgaria. 

While exports of these countries rose strongly in the first few months, 

weaker growth in the second half of 2011 failed to be offset by trends 

in domestic demand in view of the fiscal consolidation efforts made in 

all of these countries. In Hungary, special local factors dampened economic 

growth as in the previous year (real GDP 2011: +1.6%). 

Exporters of commodities and basic materials in CEE also recorded 

weaker growth but world market prices for such goods remained 

high compared with the previous year. Expansion in Russia (real GDP 

+4.2%), Ukraine (+4.0%) and Kazakhstan (+6.8%), and also in 

Romania (+2.6%), was additionally driven by real domestic demand, 

but this was accompanied by inflation rates of about 8%, far above 

the average level, and by currency depreciation. 

Among the large markets with a high degree of economic autonomy, 

Turkey was one of the countries which achieved the highest real 

growth rates, at close to 8%, despite adverse economic-policy 

measures. Booming domestic demand (investment and consumption) 

in Turkey resulted in a large current account deficit (of over 

10% of GDP). 

The turnaround in the Baltic countries, with strong GDP growth of 

between 5% and 7%, was based on tough restructuring measures 

of previous years. As oil prices remained high, Kazakhstan was able 

to continue its ambitious investment in infrastructure (GDP +7% in 

real terms). 

➔ For the region as a whole, we had to revise our growth forecast 

for 2011, made in the middle of the year, downwards by only one 

half of a percentage point. In 2011 as a whole, economic growth of 

the CEE region (Bank Austria perimeter, without Poland) probably 

reached about 4.5%, two and a half times the rate achieved in 

Western Europe. 

� Collateral damage of the European debt crisis was limited in 

2011. In contrast to 2008, financial markets did not focus their attention 

on the CEE region. The main reasons for this were the generally 

low levels of government debt in CEE, which averages 41% – calcu- 

lated without the statistical outliers: Hungary (79%) at the upper end, 

and Russia (8%), Kazakhstan (13%), Bulgaria (17%) and Estonia (7%) 

at the lower end; the fact that measures to reduce annual public deficits, 

which rose during the crisis years, were initiated in time; and current 

account surpluses recorded by most CEE countries (with the 

exception of Turkey). The IMF’s presence in five countries was another 

reason for the region’s resilience. Nevertheless, in the third and fourth 

quarters of 2011, the region was affected by the risk aversion of international 

providers of capital; countries with a wide external funding 

gap were hit hardest in this respect. In preceding quarters CEE, like 

other emerging markets, had seen record short-term capital inflows. 

These portfolio investments (which were actually not greeted with 

enthusiasm) suddenly reversed in the second half of 2011 whereas 

direct investment (including reinvested profits) held up fairly well. 

At the same time, risk premiums – measured, for example, by CDS or 

interest rate spreads – rose. Highly exposed countries like Hungary 

and Croatia as well as Ukraine were faced with a stronger increase. 

Overall, however, spreads were lagging well behind those for peripheral 

countries of the euro area and also behind the SovX index for 

Western Europe (including AAA-rated countries, see chart on page 2). 

� In a challenging environment the CEE banking sector continued 

to expand, driven by nominal economic growth, monetary expansion 

and the growing market penetration with banking products. New lending 

business in the CEE market declined recently, reflecting uncertainty 

in financial markets and the rapid slowdown in the funding 

environment. Nevertheless, outstanding volume rose by 9% to a total 

of € 1.5 trn. Growth was disproportionately strong in Turkey (over 

30%) and Russia (over 20%), followed by Ukraine and Kazakhstan 

with over 10%. In most Central and South-East European countries, 

lending volume rose by about 5%. The expansion of lending business 

was driven by corporate banking, which benefited from the cyclical 

upswing in 2010 and in the first half of 2011. In the second half of 

the year, priority was given to attracting deposits as liquidity in CEE 

tightened as a result of lower inflows of external financing. Moreover, 

in some cases central banks pursued a restrictive policy to support 

the local currency. 

Although funding conditions deteriorated in the second half of 2011 

and pressure on earnings increased, the banking sector’s performance 

improved on several counts: in particular, general asset quality 

stabilised. Impaired loans as a proportion of gross lending volume 

(impaired loans ratio) in the region have not increased in average 

terms since the end of 2010; they reached an estimated 14% at the 

end of 2011. In most CEE countries, the impaired loans ratio peaked 

in the middle of 2011 or was at least stabilised. The gradual improvement 

in asset quality was even more visibly reflected in a decline in 

the cost of risk. Provisioning requirements were down in all countries 

except Kazakhstan, the strongest decline was seen in the Baltic 

states, Russia, Bosnia, Hungary and Ukraine. Expressed as a 

proportion of average business volume in 2011, additions to loan 

loss provisions were consequently only half the 2010 figure. 


8



� The long-term outlook for the CEE region is now, after the fundamental 

reappraisal of banking business in 2011, perceived differently. 

The convergence process has made substantial progress in 

the 22 years after the opening of the East, and entails weaker 

growth rates after the boom years – even if these are still double 

the growth rates of Western Europe. This has increased sensitivity to 

cyclical influences and disruptions in capital movements. But in most 

CEE countries, especially in the large economies, the upturn of the 

banking sector remains assured, even if it may be more moderate 

than in the past. 

But there are some countries with a promising economic environment 

where the restructuring of the banking sector is not yet complete, 

or where there is strong dependence on external capital 

inflows. In Kazakhstan NPL ratios (non-performing loans as a percentage 

of gross lending volume) will remain disproportionately high 

for some time, which is partly due to local legislation. Ukraine is suffering 

from a large external funding gap, and the domestic circular 

flow of money is only slowly gaining momentum, not least on account 

of political uncertainty. When, in 2011, international banks reevaluated 

risks and were confronted with the new regulatory requirements 

and more difficult funding conditions, they also adjusted their plans 

for exposed countries to the new scenarios, a process which involved 

impairment losses on goodwill. 

In Hungary, a number of amendments to the Constitution and to the 

legal framework were not entirely acceptable to the EU and the IMF, 

the country’s most important lender. Hungary’s credit rating was 

moreover downgraded to speculative investment, which made the 

rollover of its large foreign debt much more expensive and triggered 

a sharp depreciation of the forint. This led to the adoption of countermeasures 

which aggravated the crisis. Finally, the levy on banks 

introduced in 2010 was compounded by efforts to ease the solvency 

problems of private households through administrative procedures, 

placing a larger burden on banks which acted as lenders. The Home 

Protection Act passed in May 2011 among other things gave mortgage 

debtors the option of rescheduling their debt at fixed exchange 

rates. In September the government went even further with the 

option of early repayment of loans denominated in euro or foreign 

currency at a fixed mandatory conversion rate. In December 2011, 

the government and the Hungarian Banking Association reached 

agreement on easing the burden on banks, permitting the latter to 

offset 30% of the losses thereby incurred against the levy on banks 

in 2012. 

� In the past, CEE integration was accompanied by considerable 

exchange rate stability and occasionally even by strong currency 

appreciation. Movements in CEE currencies in 2011, however, were 

volatile. Especially the shift from long-term capital inflows to shortterm 

portfolio investments increased sensitivity to changes in sentiment 

among international investors. While depreciation of the CEE 

currency basket until the middle of April reflected the euro’s 

strength and the US dollar’s weakness at the time, CEE currencies 

lost ground against both currencies in the third quarter (see chart 

below). Weighted by contributions to operating income of CEE operations, 

CEE currencies (in Bank Austria’s perimeter, without Poland) 

depreciated by about 5 ½% in the reporting period (based on a comparison 

of year-end data) against both the euro and the US dollar. 

It should be noted in this context that this average figure includes 

two euro area countries and three countries with de facto fixed 

exchange rates against the euro. Overall developments were strongly 

influenced by the Turkish lira, which has a strong weight in the 

calculation and showed autonomous depreciation of 15.3% against 

the euro and 18.0% against the US dollar (year-end 2011 compared 

with year-end 2010). The Hungarian forint depreciated at double-digit 

rates against the euro and the US dollar (as the situation in the 

country came to a head in the autumn of 2011). The currencies of 

those countries whose exchange rate regime is also guided by the 

US dollar strengthened against the euro as the year progressed 

(mainly Kazakhstan, Russia and Ukraine). 

A comparison of annual averages for 2011/2010, which are used 

in translating local income statements, shows that CEE currencies 

(Bank Austria-weighted) depreciated by 4.5% against the euro. The 

main factor for this development was exceptionally strong depreciation 

of 14.5% of the Turkish lira. The currencies of Kazakhstan and 

Ukraine also depreciated significantly (by 4.2% and 5.1%, respectively) 

in average terms, whereas changes in year-end exchange 

rates were less pronounced. 

CEE currency movements 

108 

106 

104 

102 

100 

98 

96 

94 

92 

90 

index 2010 average = 100 

avg. 

avg. 

avg. –4.5 % 

Dec –5.3 % 

Appreciation/ 

depreciation 

against the US dollar 

avg. 

Appreciation/depreciation against the euro, 

weighted by countries’ contribution to CEE operating income 

of Bank Austria in 2010 

avg. +0.4 % 

Dec –5.4 % 

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 

2010 2011 2012 


9



Bank Austria in 2011 – overview 

While 2008 and 2009 were marked by economic crisis and recession 

and 2010 saw a renewed upswing, the 2011 financial year presented 

a more moderate scenario, widely referred to as “the new normal”, 

also for Bank Austria. The years in which the Group built its operations 

saw strong expansion through acquisitions and organic growth. 

Over the past two years, the bank has focused on customer centricity 

and its core business, and on strengthening its risk-bearing capacity, 

as its strategic priorities. 

On this basis, Bank Austria achieved a sound operating performance 

in 2011, enabling the bank to absorb exceptionally large charges from 

non-operating items without having to draw on net assets. These 

charges were caused by external factors (government debt crisis) and 

are also to be seen in connection with the reassessment of the bank’s 

own business (impairment losses on goodwill). 

The 2011 consolidated financial statements show a moderate net 

profit of € 209 m after € 747 m for the previous year or € 709 m 

if adjusted to reflect the current consolidation perimeter. With the 

write-downs on equity interests, Bank Austria has removed a burden 

on future profits. Moreover, the structure of current business has 

improved. This is reflected in the reduction of write-downs of loans 

and provisions for guarantees and commitments from the high levels 

recorded in 2008 and 2009. The substantial capital increase carried 

out in 2010 further strengthened Bank Austria’s risk-bearing capacity. 

Net operating profit absorbs exceptional charges 

€ m 

3,500 

3,000 

2,500 

2,000 

1,632 

1,500 

1,000 

500 

0 

1,211 

914 

2,428 

1,713 

1,388 

3,063 

3,292 

1,144 

3,630 

1,102 

3,466 

747 

3,083 

Operating 

profit 

Net operating 

profit 1) 

2,580 

Net write-downs of loans 

and provisions for 

2,254 

2,280 

guarantees and 

commitments 

1,626 

1,732 

1,363 

Non-operating 

deductions 2) 

2005 2006 2007 2008 2009 2010 

Net profit 

2011 

3) 

4) 

209 

1) Operating profit less net write-downs of loans and provisions for guarantees and commitments 

/ 2) Figures for 2011 in brackets: provisions for risks and charges (– € 136 m), 

integration/restructuring costs (– € 28 m), net income from investments (– € 277 m, 

including € 396 m write-downs on Greek government bonds), income tax (– € 261 m), 

non-controlling interests (– € 50 m), Purchase Price Allocation effect (– € 35 m) and 

impairment losses on goodwill (– € 737 m). / 3) Net profit attributable to the owners of 

Bank Austria. / 4) Figures for past years adjusted to the respective most recent 

consolidation perimeter. 2005 and 2006 pro forma corresponding to the CEE perimeter 

of 2007, which is still applicable. 

� In 2011 Bank Austria achieved a moderately positive trend in its 

core commercial banking business. This is a success given the 

difficult environment in which the bank operated: credit demand and 

transaction volume were lower than expected against the background 

of developments in the “real economy”. As explained in the previous 

section, stricter regulatory requirements introduced in the wake of 

stress tests impacted the banking sector at a time when the market 

environment was under severe strain. Bank Austria, too, was faced 

with higher funding costs and rising liquidity costs. Additional 

burdens resulted from ad hoc economic-policy measures and fiscal 

levies in some countries. 

Nevertheless, Bank Austria’s customer business – comprising the 

three Austrian customer segments and the Central Eastern Europe 

(CEE) business segment – continued to grow in 2011. Lending 

volume expanded steadily throughout the year, rising by an annual 

average of close to 2.6%. Operating income increased slightly, by 

1.1%, over the already high level attained. Costs were up by 4.5% 

on the previous year, partly due to the bank levies reflected in this 

item. Operating profit from customer business consequently 

declined by 2.1%, also on account of currency depreciation in CEE 

countries where the bank has large operations. Net write-downs of 

loans and provisions for guarantees and commitments were reduced 

substantially in 2011, as in 2010, across all business segments and 

regions. The lower provisioning charge underlines the strong operating 

performance from customer business. Net operating profit 

generated by the customer business segments rose by € 412 m or 

23.1% to € 2.2 bn. 

Upward trend in customer business driven 

by quality improvement 1) (€ m) 

2011 2010 CHAngE ovEr 2010 2) 

Lending volume, € bn 131.1 127.7 +3.4 +2.6% 

Operating income 7,144 7,063 +81 +1.1% 

Operating profit 3,549 3,623 –74 –2.1% 

Net write-downs of loans and 

provisions for guarantees and 

commitments –1,351 –1,838 +486 –26.5% 

net operating profit 3) 2,197 1,785 +412 +23.1% 

1) Sum total of customer business segments F&SME, PB, CIB (= Austria) and CEE. 

2) Comparative figures for 2010 recast to reflect the current consolidation perimeter (mainly 

determined by deconsolidation of CAIB in 2010). / 3) Operating profit less net write-downs of 

loans and provisions for guarantees and commitments. 

� Overall, the bank’s net operating profit (Bank Austria including the 

Corporate Center) exceeded € 1.7 bn in 2011, an increase of 13% 

over the previous year. non-operating charges to be deducted from 

this amount totalled € 441 m. The main burden from non-operating 

items was the € 396 m write-down on Greek government bonds 

resulting from mark-to-market adjustment (fair value level 1). 

Other items included net additions to staff-related provisions and 

to provisions for litigation risk, reflecting various legacy burdens. 

Profit before tax thus declined to € 1.3 bn, a decrease of 11% or 

€ 165 m from the comparative figure for 2010. 


10



Moreover, the development of earnings expectations in the meantime 

resulted in the recognition of further impairment losses on 

goodwill related to our banking subsidiaries – acquired four years 

ago – in Kazakhstan (€ 350 m) and Ukraine (€ 329 m). These 

impairment losses on goodwill, other valuation adjustments, 

Purchase Price Allocation (PPA) and the deduction of income tax 

and non-controlling interests had a combined impact of € 1,082 m 

in 2011. Net profit was € 209 m, down by 72% from the previous 

year. Without the effects of mandatory FX conversion in Hungary, 

the increase in bank levies and the Greece-related effect, net 

profit for 2011 would have more or less matched the 2010 level, 

at € 720 m (original figure for 2010: € 747 m; recast figure for 

2010: € 709 m). 

Exceptional non-operating charges impacting 

results for the bank as a whole 1) (€ m) 

2011 2010 CHAngE ovEr 2010 

net operating profit 

(incl. Corporate Center) 

Non-operating items including 

1,732 1,535 +197 +12.8% 

Greece-related effect –441 –79 –362 

Profit before tax 

Non-operating items, primarily 

1,291 1,456 –165 –11.3% 

impairment losses on goodwill –1,082 –747 –335 

net profit 2) recast 209 709 –500 –70.6% 

Net profit 2) as reported 209 747 –538 –72.1% 

1) Non-operating items in the income statement below net operating profit, including 

the Corporate Center (incl. funding/liquidity costs and income from equity interest 

management, participation in profits of the UniCredit Markets product line, expenses 

of central Competence Lines and results of Global Banking Services. / 2) Net profit 

attributable to the owners of Bank Austria. 

� In regional terms, both the Austrian business segments and the 

banking subsidiaries in CEE contributed to the favourable operating 

profit. The obvious difference between the mature markets and the 

growth regions is reflected in the development of annual average 

lending volume, which stagnated in Austria (–1%) and rose by over 

6% in Central and Eastern Europe (and by as much as 10% when 

adjusted for exchange rate movements). But operating income generated 

by the three Austrian customer business segments was up 

by 2%, and in CEE it rose by less than 1% (at constant exchange 

rates it grew by 5%). A decisive factor for these developments was 

the interest margin, which improved in Austria but narrowed significantly 

from a high level in CEE. However, in Austria, net fees and 

commissions declined due to trends in securities business and as a 

result of structural factors (derivatives business), but they increased 

in CEE as the modernisation of markets made further progress. 

An analysis of regions reveals that net write-downs of loans and 

provisions for guarantees and commitments declined in all areas of 

the bank’s business; in percentage terms, the decline was more or 

less the same in Austria and in CEE. In Austria, the decline in the 

provisioning charge approached a multi-year low. Although still high 

in CEE, the provisioning charge passed its peak level in 2010. 

With the exception of special cases like Kazakhstan, asset quality 

also started to improve. 

Sound customer business in Austria and CEE (€ m) 

2011 2010 CHAngE ovEr 2010 adj. 1) 

Lending volume, € bn 131.1 127.7 +3.4 +2.6% 

Austrian customer segments 63.8 64.5 –1.1% 

Central Eastern Europe 67.2 63.2 +6.4% +10.2% 

Operating income, 

customer business 2) 7,144 7,063 +81 +1.1% 

Austrian customer segments 2,422 2,373 +49 +2.1% 

Central Eastern Europe 4,722 4,691 +32 +0.7% +5.2% 



commitments –1,351 –1,838 +486 –26.5% 

Austrian customer segments –296 –412 +116 –28.1% 

Central Eastern Europe –1,055 –1,426 +371 –26.0% –23.9% 

Net operating profit, 

customer business 2) 2,197 1,785 +412 +23.1% 

Austrian customer segments 725 648 +77 +11.8% 


1) At constant exchange rates. / 2) Austrian business segments (F&SME, PB, CIB) and CEE. 

In Austria, net operating profit was up by 12%, and in CEE it rose 

by almost 30%. After adjustments for exchange rate movements, 

operating performance in CEE improved by about 38% in 2011 

compared with the previous year. In the CEE region, operating performance 

varied in line with the divergent economic trends, which was 

also reflected in exchange rate movements. The heavy depreciation 

of the Turkish lira had a particularly strong impact in this regard. 

� Trends from quarter to quarter in 2011 (see chart on the following 

page) confirm the improvement in operating performance from 

customer business. Volume in commercial banking business showed 

a stable upward trend, though the objective is to increase the proportion 

of fee and commission income related to lending business. 

The volume of average loans to customers quickly recovered after 

the recession-induced decline in 2009; over the past one and a half 

years, volume has increased, though at more moderate rates. In the 

fourth quarter of 2011, average loans to customers were 3.2% 

higher than a year before and 8.3% higher than at the end of 2009 

(+4.1% p.a.). Growth was mainly driven by the Central Eastern 

Europe (CEE) business segment. As the currencies of large CEE 

countries depreciated, this made the trend in euro terms appear less 

pronounced in 2011. 

Net operating profit also showed a rising trend, the figure for Q4 2011 

was 38% higher than for the same period of the previous year. However, 

the comparative figure was unusually low as the provisioning 

charge in CEE rose strongly in Q4 2010 for the last time. The low 


11



level two years ago also resulted in a 42% increase per year. At 

€ 567 m, net operating profit for Q4 2011 was nevertheless considerably 

lower than in 2007 and 2008, when quarterly averages exceeded 

€ 600 m. Given the stable development of operating profit – in both 

Austria and CEE – the upward trend in net operating profit in the past 

two years was determined by the reduction of the provisioning charge 

from the exceptionally high level of € 659 m in the final quarter of 

2009 to € 317 m in Q4 2011, which was the lowest figure since 

Q3 2008, the last quarter before the collapse of Lehman Brothers. 

Quarterly profit trends at Bank Austria (including the Corporate 

Center) were determined by non-operating deductions, primarily 

impairment losses on goodwill. This reflects the fact that the break 

caused by the financial market crisis and the subsequent recession 

Quarterly trends in the past three years 

132 

809 

129 

126 

123 

Average lending volume 

128 

124 

129 129 

130 

130 

133 

€ bn 

132 

131 

130 

129 

128 

127 

126 

125 

124 

204 3) 

€ m 

547 

500 

450 

400 

350 

300 

250 

200 

286 

242 

217 

302 

341 

299 

Greecerelated 

effect, net 

150 

3) 

100 

139 129 

50 

0 

–50 

–14 

–100 

–150 

–200 

Performance generated by the bank as a whole = 

net profit attributable to the owners of Bank Austria 

–250 

–300 

–350 

–400 

–450 

–500 

–550 

3) 

–600 

–650 

–635 

2009 2010 2011 

2) 

Goodwill 

impairment 3) 

Net operating profit of 

customer business segments 

513 

533 532 

564 567 

467 

326 

282 

392 

470 

3) 

411 

3) 

1) 

1) Customer business segments = Austria (F&SME, PB and CIB) and CEE = Bank Austria 

without Corporate Center. / 2) Difference compared with operating profit of customer 

business segments = operating profit of Corporate Center; recasting difference; provisions 

for risks and charges, integration/restructuring costs, net income from investments and 

goodwill impairment as well as income tax and non-controlling interests. / 3) Impairment 

losses on goodwill 

131 

led to a reassessment of the medium-term and long-term business 

outlook in Central and Eastern Europe, mainly in the CIS countries. 

At the end of 2008, Bank Austria recognised an impairment loss (of 

over € 1 bn) on goodwill related to the banks which it had acquired 

shortly before; further substantial impairment losses on goodwill were 

recognised in the middle and at the end of 2010 and in the third 

quarter of 2011. The goodwill impairment charge in Q3 2011 

absorbed profits accumulated until then. In Q4 2011, Bank Austria 

achieved a net profit of € 204 m; without the additional burdens 

(Greece, bank levy) this would have been the best quarterly performance 

since the beginning of 2009. 

� At Bank Austria and in the entire UniCredit Group, the strategic 

focus after the turning point marked by the financial market crisis 

has been on building customer business in a steady and sustainable 

manner and on widening the funding base and increasing the riskbearing 

capacity. Within Bank Austria this is reflected in a structural 

improvement in the bank’s financial position, in a risk-focused 

employment of funds, and in a higher level of equity capital. 

In a year-end comparison of 2011 with 2010, loans and receivables 

with customers rose faster than total assets, and their share of total 

assets increased to 67.7%. Activity in the area of the bank’s own 

issues was stepped up in 2011 with a view to further reducing funds 

raised via wholesale markets, so that loans to customers were covered 

to the extent of 100% by primary funds (deposits from customers 

and debt securities in issue). The leverage ratio (total assets/ 

equity, pursuant to the cash concept without intangibles) improved 

from 13.8 to 13.3; in 2008 it was still 21.9. Risk-weighted assets 

declined, while customer lending volume increased; in the Austrian 

business segments they are lower than loans to customers, and in 

CEE higher. Thanks to the capital increase in March 2010, the capital 

ratios were well above the required levels: the Core Tier 1 capital 

ratio came to 10.55% as of 31 December 2011. 

Key figures – business volume and capital (€ bn) 

31 dEC. 


31 dEC. 

2010 

CHAngE ovEr 

2010 2) 

Total assets 199.2 193.0 +6.2 +3.2% 

Customer loans 

Primary funds (deposits from 

customers and debt securities in 

134.9 130.1 +4.8 +3.7% 

issue) 134.7 127.8 +6.8 +5.3% 

Loans/primary funds (L/D in %) 100% 102% 

IFRS equity 17.7 17.5 +0.2 +1.1% 

As % of total assets 8.9% 9.1% 

Leverage ratio *) 13.3 13.8 

Risk-weighted assets 125.2 127.9 –2.7 –2.1% 

Capital resources as defined in 

the Austrian Banking Act 15.9 15.5 +0.4 +2.3% 

Core Tier 1 capital ratio 10.55% 10.04% 

Total capital ratio 12.68% 12.13% 

*) Calculated under the cash concept, without intangible assets. 


12



� UniCredit’s business model has proved effective especially in 

the difficult years following the financial market crisis, when customer 

centricity and customer business were the top priorities. 

– In early 2011 we completed organisational projects such as One4C. 

Proximity to customers was also the main idea behind strengthening 

local management in the matrix of Divisions and regions. More specifically, 

we streamlined the organisational structure and more 

clearly defined sub-segments of our sales network based on customer 

proximity, simplicity and specific needs. The main step in 2010 

was to combine customer-driven capital market activities with commercial 

banking business to form the Corporate & Investment Banking 

(CIB) Division and the bundling of proprietary trading activities in 

UniCredit Bank, Munich (previously Bayerische Hypo- und Vereinsbank 

AG), which involved the intra-group sale of UniCredit CAIB. The transfer 

of the SME sub-segment (small and medium-sized enterprises), 

also initiated in 2010, from the CIB Division to the F&SME Banking 

Division took place at the beginning of 2011. For medium-sized 

companies (defined according to qualitative criteria and/or turnover 

between € 3 m and € 50 m), we introduced a targeted service model, 

implementing a decentralised sales network step by step with offices 

in selected locations. At the end of 2011, specialised customer service 

centres were available to this group of customers in 54 locations. 

After defining the target group of the top segment of private customers 

for Private Banking and completing the necessary transfer of customers 

from other segments in 2010, we set up a competence centre 

serving foundations in the Private Banking Division in 2011 and 

transferred customers from other business segments. ➔ For a meaningful 

comparison with the previous year, segment reporting figures 

for 2011 were adjusted to the new structure. 

– Our range of instruments for raising customer satisfaction – 

including customer surveys, feedback talks, mystery shopping, customer 

dialogues, internal standards of service and advice provided, 

training and ongoing measurement of customer satisfaction – is an 

integral part of business and has proved effective. This was confirmed 

in an audit, performed by specialists from the University of St. Gallen 

in 2011, which resulted in Bank Austria being voted “Austria’s most 

customer-oriented service provider”. To maintain reputation levels 

and regain general confidence in banks following the disruptions 

caused by the financial market crisis, we simplified the product range, 

adjusted our internal performance incentives to focus on customer 

satisfaction and revised the way in which the bank presents itself to 

the public. With a number of charitable initiatives and a new overall 

sponsoring strategy, Bank Austria and its employees moreover underlined 

their intention to display solidarity within the community. ➔ 

More details are included in the section on “Financial and non- 

financial performance indicators”. 

– External pressure on the banking sector to build risk buffers, 

increase capital ratios and fund business on a sustainable basis 

from local commercial sources as far as possible also prompted 

Bank Austria to adopt a more restrained approach in the growth 

markets of Central and Eastern Europe (CEE). While the commitment 

of Bank Austria and the entire UniCredit Group to CEE is 

unchanged, we are now differentiating on the basis of criteria such 

as market size and market position, in line with the requirement of 

capital efficiency. We have suspended the ambitious branch expansion 

programme, which started in 2009, for the time being; in 

some cases, e.g. Hungary, the local investment climate was a 

factor considered in this decision. Quite generally, and despite the 

cross-regional approach, the business policy in CEE aimed at funding 

lending business from local sources to the -largest possible 

extent. The focal points of business policy were set out in a new 

multi-year plan in the third quarter of 2011. ➔ See “Outlook for 

Bank Austria’s performance”. 

– In 2011 we made significant progress on the way towards the 

cross-regional bundling of back-office production and settlement 

functions (All4 Quality project) and unlocked cross-regional 

synergies with a view to reducing costs. We combined IT, transaction 

settlement, facility management, security and procurement in 

several steps. The first step was the bundling of the former IT companies 

UGIS (UniCredit Global Information Services) and BAGIS 

(Bank Austria Global Information Services) in UGIS Austria as at 

1 July 2011. In a second step, carried out in the course of 2011, 

some units of Bank Austria Procurement and Security and the Strategic 

Procurement Coordination CEE unit were integrated in UGIS 

Austria. The third step was the integration of the back-office services 

provider UCBP (UniCredit Business Partner GmbH), including 

its branches in Poland and Romania, with UGIS Austria turning into 

UBIS Austria, a subsidiary of the global UniCredit Business Integrated 

Solutions S.C.p.A. based in Milan, as at 1 February 2012. 

This service provider is unique in the European financial sector and 

gives customers – i.e. the banks in UniCredit Group – the required 

local support and international developments using significant 

synergies. In 2011, some units of software devel opment, of the 

computer operations centre and of support functions were outsourced 

to Blue IT Services gmbH, a subsidiary of IBM Austria, 

under a cooperation agreement. 

Key figures for the past five years (in per cent) 

2007 2008 2009 2010 2011 

Customer loans/total assets 55.1 60.7 63.6 67.4 67.7 

Customer loans/primary funds 96.4 105.2 89.2 101.8 100.0 

Goodwill/total assets 1.9 1.6 1.8 1.7 1.2 

IFRS equity/total assets 7.3 6.4 7.3 9.1 8.9 

Tier 1 capital ratio under the 

Austrian Banking Act 8.76 6.82 8.68 10.35 10.88 

Operating income/risk-weighted 

assets 6.14 5.59 6.06 5.77 5.62 

Provisioning charge/operating profit 15.8 30.7 62.5 54.5 43.9 

Provisioning charge/lending volume 0.50 0.80 1.78 1.44 1.03 

Return on equity (ROE after tax) 17.0 7.8 8.1 4.5 1.2 

Marginal RARORAC 15.8 12.5 1.3 2.3 1.4 


13



Details of the income statement of Bank Austria for 2011 

The commentary in this Management Report of the Group refers to 

the condensed income statement shown on page 14. The condensed 

format, also used for segment reporting, makes it possible to consistently 

explain the contribution of the various business segments to 

individual items and to Bank Austria’s overall results. A reconciliation 

of the condensed income statement to the income statement which 

is presented as part of the consolidated financial statements and is 

prepared in a different format, is contained in the notes to the consolidated 

financial statements at the beginning of section “D Segment 

reporting” on pages 124 to 125. 

� Since 2009, a year characterised by recession, Bank Austria’s 

revenues have improved – with some fluctuations from quarter to 

quarter – without returning to the pre-crisis level. operating income 

generated by the bank as a whole (see table) almost matched the 

previous year’s *) figure, all of the slight 1.2% decline is due to the 

Corporate Center, where expenses in connection with the funding of 

companies in which the bank holds equity interests were higher and 

the amount of the participation in profits of the UniCredit Markets 

product line was significantly lower, resulting in a net expense 

(Bank Austria is entitled to this participation in profits under the terms 

of the sale of UniCredit CAIB). The customer business segments 

achieved moderate growth of 1.1% in 2011. Within the total figure, 

operating income generated by the three segments of Austrian customer 

business, which accounted for more than one-third (35%), 

increased by a combined 2.1% in 2011, with each segment achieving 

growth. 

Operating income (€ m) 

2011 2010 r CHAngE adj. *) 

Austrian customer business 2,422 2,373 +49 +2.1% 


Corporate Center –158 6 –164 n.m. 

Total operating income 6,986 7,069 –83 –1.2% +1.8% 

r) Recast *) CEE figures translated at constant exchange rates 

n.m. = not meaningful 

Revenue growth in CEE was unusually low (+0.7% compared with 

the previous year), mainly as a result of exchange rate developments. 

Adjusted for exchange rate changes, the increase was 5.2%, significantly 

higher than in euro terms. As the Turkish lira depreciated 

strongly, by 14.6% in annual average terms, this had a particularly 

strong impact on revenues in euro terms of over € 150 m. In local 

currency terms, operating income in Turkey (+5.5%) no longer grew 

as strongly as in previous years because local economic policy measures 

had a dampening effect. 

� net interest – the most important revenue component, accounting 

for 64% of total operating income – hardly changed in 2011. 

This may be seen as a success given the changes in the interest rate 

environment in the reporting year. The total figure for 2011 was 

€ 4,496 m, slightly down by 0.6% from the previous year. Developments 

in Austria and CEE differed: in Austrian customer business, net 

interest rose (+2.3%) while in CEE it declined by 1.8%, based on 

current exchange rates; adjusted for exchange rate movements, net 

interest in CEE was up by only 2.3%. In Austria, while volume stagnated 

(–1.1%), net interest growth resulted from the improvement in 

the interest margin (+8 to 250 basis points), mainly in the F&SME 

and Private Banking Divisions, where business is characterised by a 

large proportion of deposits. The trend in the CEE business segment 

moved in the opposite direction: average loans to customers 

expanded by 6.4%, while the interest margin declined by 40 bp to 

179 bp. An analysis by country shows that the decline is mainly 

explained by developments at the bank in Turkey, which accounts for 

a large proportion of overall net interest in CEE and where net interest 

fell by 16.3% in euro terms and by –1.9% if adjusted for 

exchange rate movements. This is to be seen in connection with local 

economic policy measures dampening growth (e.g. elimination of 

interest payments on minimum reserves, and upper limit on interest 

rates in credit card business). Net interest also declined in Ukraine, 

Russia and Romania, partly on account of methodological changes 

and partly due to interest margins resulting from higher funding 

costs. Pressure on margins in CEE also resulted from the fact that 

competition for deposits, which are still lagging behind the levels in 

other countries, intensified in the latter part of 2011 when local funding 

of business again became a priority in view of the uncertainty 

prevailing in Western Europe. 

dividend income and other income from equity investments in 

2011 was € 207 m, up by € 50 m or 31.7% on a year earlier. 

Con tributions to this favourable development came from our equity 

interest in UniCredit Leasing and from the turnaround in performance 

of consolidated real estate companies. Austrian regional banks and 

specialised banking companies in which Bank Austria holds equity 

interests also had a good year. If dividend income and other income 

from equity investments is added to net interest, net interest 

income in a wider sense for 2011 increased by € 24 m or 0.5% 

to € 4,703 m, which represents 67% of total operating income. 

� As mentioned in the introductory section on the banking environment, 

2011 saw several shock waves of uncertainty. Private and corporate 

customers showed pronounced restraint in their investment 

decisions. This had an impact on fee-based business. Volume and 

turnover in mutual fund savings plans and insurance savings 

schemes declined, and there was a shift in direct investments 

towards low-risk alternatives. Transaction volume in derivatives used 

for hedging purposes and in commercial services, including account 

maintenance and payments, continued to decline. Overall, net fees 

and commissions were € 1,885 m, down by 5.1% from the previous 

year. In Austrian customer business the weak trend observed in 

past years continued (–5.7%), partly for structural reasons (further 

decline in derivatives business) and partly due to the market environment 

(uncertainty among investors and weak securities business). 


14



In CEE net fees and commissions in 2011 rose by only 1.4% in 

euro terms, and by 6.6% if adjusted for exchange rate movements; 

growth was supported by continued market penetration 

with modern banking services including credit cards and electronic 

payments. The strongest contributions to growth – at constant 

exchange rates – came from Turkey (11%, mainly in business with 

private customers) and Russia (+15%, driven by corporate banking 

and capital market activities). In most other countries, growth 

rates were between 3% and 7%, unusually low by CEE standards. 

� Bank Austria’s net trading, hedging and fair value income is 

to be seen in connection with the reorganisation of UniCredit 

Group’s investment banking operations, which took place in 2010 

and has been fully implemented in the meantime. As part of the 

bundling of Group-wide trading activities within UniCredit Bank, 

Munich, UniCredit CAIB was restructured and sold on an intragroup 

basis in June 2010; the comparative figures for 2010 have 

been adjusted to reflect the sale. Under the terms and conditions 

of the sale, Bank Austria participates in profit before tax of Uni- 

Credit’s Markets product line, the profit participation has been 

included in net trading income of the Corporate Center since the 

beginning of 2010. Given the difficult market situation in investment 

banking, this contribution was significantly lower, by € 61 m, 

in 2011 than in the previous year. The net trading result generated 

by CIB was net income of € 5 m compared with a net loss of 

€ 44 m in the previous year; this relieved the burden on the 

income statement by € 49 m. 

Net trading, hedging and fair value income (€ m) 

2011 2010r CHAngE 

Austrian customer business 5 –45 +49 n.m. 

CEE 199 144 +54 +37.7% 

Corporate Center *) 58 144 –86 –59.8% 

Bank Austria as a whole 262 244 +18 +7.3% 

*) primarily participation in profits of Markets product line of UniCredit’s CIB Division 


Net trading, hedging and fair value income in the CEE business 

segment rose by 37.7% to € 199 m. The largest contributions to 

the total figure were generated in Romania (€ 47 m) and Turkey 

(€ 36 m), where trading operations benefited from strong demand 

for inter national capital market transactions and hedging transactions. 

In Russia, where our banking subsidiary is a major player in 

the particularly volatile money market and foreign exchange dealings 

and international capital transactions, there was a significant 

positive swing of € 45 m, from a net loss to net income of € 35 m. 

Overall, net trading, hedging and fair value income was € 262 m, 

up by 7.3% from the adjusted figure for the previous year. In this 

context it should be noted that this item of the income statement 

shows the largest recasting difference (€ 82 m), given the business 

structure of the former UniCredit CAIB. 

� operating costs in 2011 amounted to € 3,903 m, an increase of 

€ 208 m or 5.6% over the previous year (comparative figure adjusted 

to reflect the consolidation perimeter in 2011). Cost growth was due 

to various factors: the bank’s initiatives to expand its market position 

in Austria and in promising CEE countries; higher wage increases in 

the banking sector in a number of CEE countries in response to higher 

local inflation rates; and the bank levies, which are included in the 

item “other administrative expenses”: € 77.5 m is payable in Austria 

for the first time for 2011 (UniCredit Bank Austria AG, Wohnbaubank 

and Schoellerbank). In Hungary, the bank levy paid in 2010 

amounted to € 28.5 m; the amount payable for 2011 is lower, at 

€ 21.6 m, because part of the losses resulting from mandatory conversion 

of foreign currency loans may be offset against the charge. 

Added to this is the new indicator-linked levy in Slovenia (€ 0.8 m). 

Operating costs (€ m) 

2011 2010r CHAngE 

By business segment: 

Austrian customer business 1,401 1,313 +88 +6.7% 

Cost/income ratio 57.8 55.3 

Central Eastern Europe 2,195 2,128 +67 +3.2% 


Corporate Center 307 255 –52 +20.5% 

Total operating costs 3,903 3,695 +208 +5.6% 


By type of cost: 

Payroll costs 2,001 1,913 +88 +4.6% 

Other items, mainly non-staff costs *) 1,901 1,782 +119 +6.7% 

*) Other administrative expenses (2011: € 1,627 m), recovery of expenses (€ 2 m), 

amortisation, depreciation and impairment losses on intangible and tangible assets (€ 277 m). 

In Austrian customer business, operating costs in 2011 were 

€ 1,401 m, up by 6.7% on the previous year. The cost/income ratio 

rose by 2.5 percentage points to 57.8%. Payroll costs increased by 

6.1% as pension provisions were higher and the number of staff 

serving customers in the Austrian branch network rose. In 2011, 

staff numbers (FTEs) were up by 3.5% or 195; this increase also 

reflects the number of trainees employed within the framework of the 

“Best Start” initiative and additions to staff at branches and for investment 

advisory services. In the Corporate Center, costs rose mainly 

as a result of the bank levy payable by UniCredit Bank Austria AG 

(€ 75.5 m) and because of lower internal recovery of expenses. 

Payroll costs in the Corporate Center rose at a disproportionately 

low rate (+3.7%) and remained constant in Global Banking Services 

(GBS), not least on account of IT services outsourcing in the second 

half of 2011. 

Operating costs in the Central Eastern Europe (CEE) business segment 

totalled € 2,195 m, up by 3.2% on the previous year (the 

bank levies in Hungary and Slovenia accounted for 1.0% of total 

costs). Adjusted for exchange rate movements, costs grew by 7.5%. 


15



Condensed income statement of Bank Austria 1) (€ m) 

QUArTErLY 

FIgUrES FULL-YEAr FIgUrES 

CHAngE ovEr 

PrEvIoUS YEAr recast 2) 

cHaNGe OVer 

2010 recast 2) 

Q1 2011 Q2 2011 Q3 2011 Q4 2011 2011 2010 € m In % 2010 € m IN % 

Net interest 1,128 1,120 1,128 1,120 4,496 4,543 –48 –1% 4,521 –26 –1% 

Dividend income and other income 

from equity investments 

50 52 49 56 207 157 +50 +32% 157 +50 +32% 

Net fees and commissions 462 460 479 484 1,885 1,990 –105 –5% 1,987 –102 –5% 

Net trading, hedging and fair value income 114 54 24 70 262 326 –65 –20% 244 +18 +7% 

Net other expenses/income 47 58 38 –7 136 191 –55 –29% 159 –23 –15% 

Operating income 1,801 1,744 1,717 1,723 6,986 7,208 –222 –3% 7,069 –83 –1% 

Payroll costs –496 –512 –499 –494 –2,001 –1,931 –70 +4% –1,913 –88 +5% 

Other administrative expenses –386 –408 –390 –444 –1,627 –1,527 –100 +7% –1,505 –121 +8% 

Recovery of expenses 0 0 1 1 2 2 +0 +8% 2 +0 +8% 

Amortisation, depreciation and impairment 

losses on intangible and tangible assets 

–69 –71 –69 –68 –276 –286 +10 –3% –278 +2 –1% 

Operating costs – 950 – 990 – 957 –1,005 –3,903 –3,742 –161 +4% –3,695 –208 +6% 

Operating profit 851 754 761 718 3,083 3,466 –383 –11% 3,374 –291 –9% 

Net write-downs of loans and provisions 

for guarantees and commitments 

–376 –329 –330 –317 –1,352 –1,839 +488 –27% –1,839 +488 –27% 

net operating profit 475 425 431 401 1,732 1,626 +105 +6% 1,535 +197 +13% 

Provisions for risks and charges –32 1 –100 –5 –136 –136 –0 +0% –136 –0 +0% 

Integration/restructuring costs –1 –1 –15 –11 –28 –4 –24 >100% –4 –24 >100% 

Net income from investments 8 –37 –118 –130 –277 62 –339 n.m. 61 –338 n.m. 

Profit before tax 449 388 197 256 1,291 1,548 –258 –17% 1,456 –165 –11% 

Income tax for the period –89 –24 –141 –7 –261 –356 +95 –27% –301 +41 –13% 

Profit for the period 360 364 57 249 1,030 1,192 –162 –14% 1,155 –124 –11% 

Non-controlling interests –13 –12 –16 –9 –50 –51 +1 –2% –51 +1 –2% 

Net profit before PPA 3) 347 352 41 240 980 1,142 –161 –14% 1,104 –123 –11% 

Purchase Price Allocation effect 4) –4 –3 –24 –4 –35 –17 –19 >100% –17 –19 >100% 

Goodwill impairment –3 –50 –653 –32 –737 –378 –358 +95% –378 –358 +95% 

net profit 3) 341 299 –635 204 209 747 –538 –72% 709 –500 –71% 


1) Bank Austria’s income statement as presented in this table is a reclassified format corresponding to the format used for segment reporting. See pages 123 to 132 of this report./ 

2) Recast: comparative figures adjusted to the consolidation perimeter and the business structure in 2011. / 3) Attributable to the owners of Bank Austria. 4) PPA effects for Kazakhstan, 

Ukraine, Russia and Aton. 


16



As a result of weak revenue growth, the cost/income ratio in CEE 

rose by 1 percentage point to 46.5% while remaining significantly 

lower than the average of 55.9% for the bank as a whole. 

At CEE Division level, the number of branches and employees 

remained more or less unchanged in 2011 (–0.5% and –0.2%, 

respectively) but there were underlying changes and movements: 

staff numbers in several countries were expanded in line with strategy, 

in Turkey they rose by 496 FTEs (from year-end 2010 to yearend 

2011), in Russia by 217 FTEs, and in the Czech Republic by 

179 FTEs. This compares with reductions in regions with a multiple 

presence. Moreover, the restructuring of administrative centres in 

Kazakhstan and Ukraine involved a decline of 317 FTEs and 

666 FTEs, respectively. The branch network expansion plan has 

been suspended, except for key countries. A significant number of 

new branches were added to the networks in Turkey and in the 

Czech Republic, but this effect was offset by network streamlining 

in Kazakhstan and Ukraine. On balance, the number of branches in 

CEE rose by 15 to 2,750. This means that cost growth, adjusted for 

exchange rate movements, was mainly due to inflation-induced 

wage increases in the growth countries Turkey (business trends 

and monetary overheating), Czech Republic (market initiative) and 

Russia (capital market-intensive business). 

� In the past two years, net write-downs of loans and provisions 

for guarantees and commitments declined from the exceptionally 

high level recorded in 2009. This trend relieved the burden on 

results. Since 2009, a year marked by the combined impact of financial 

market crisis and recession, the provisioning charge has fallen 

significantly. This means that the favourable trend in operating performance, 

though comparatively moderate, feeds through to profits 

to a greater extent. 

Multi-year comparison of net write-downs of loans and 

provisions for guarantees and commitments 

2007 2008 2009 2010 2011 



commitments, € m 483 1,012 2,267 1,839 1,352 

Cost of risk (bp) *) 50 80 178 144 103 

*) Provisioning charge as a proportion of annual average loans to customers in basis points 

Net write-downs of loans and provisions for guarantees and commitments 

in 2011 were € 1,352 m, down by € 488 m or 26.5% from 

the previous year. In percentage terms, the decline in Austria more or 

less equalled that in CEE; a comparison of absolute figures shows 

that CEE accounts for about three-quarters (78%) of the total provisioning 

charge, with over one-third of the figure for CEE relating to 

Kazakhstan and Ukraine, where the restructuring of the banking sector 

is not yet complete. Quarterly figures showed a steady trend in 

2011: in the fourth quarter of 2011, the provisioning charge fell to 

€ 317 m, the lowest level since the third quarter of 2008. 

The improvement is discernible across all regions, with few 

exceptions (Serbia, Slovenia and, as a special case, Hungary in 

connection with the conversion of foreign currency loans). The provisioning 

charge is still relatively high as it concentrates on a few 

countries where the situation remains difficult. 

Net write-downs of loans and provisions 

for guarantees and commitments (€ m) 

2011 2010 +/– € m +/– % 

Bank Austria as a whole 1) 1,352 1,839 –488 –26.5% 

… Austria 1) 297 414 –117 –28.3% 

… CEE 1,055 1,426 –371 –26.0% 

Cost of risk (basis points) 2) 

Bank Austria as a whole 103 bp 144 bp –41 bp 

… Austria 1) 47 bp 64 bp –18 bp 

… CEE 157 bp 226 bp –69 bp 

1) Three customer business segments plus Corporate Center (about € 1 m). 

2) Provisioning charge/average loans to customers (net). 

In annual average terms, the cost of risk (= current provisioning 

charge as a proportion of average lending volume) declined by 

41 basis points (bp) to 103 bp (= 1.03%) in 2011; the figure for 

the fourth quarter of 2011 was even lower, at 95 bp. This compares 

with a peak of 215 bp at the end of 2009 and the low level 

of 46 bp seen immediately before the financial market crisis in the 

middle of 2008. 

In Austria, the provisioning charge in 2011 was € 297 m, down 

by 28.3% from the previous year. The CIB Division, which serves 

large corporate customers, recorded a very satisfactory trend 

resulting from overall economic performance and risk management 

in cooperation with customers. Additions to the restructuring 

portfolio declined. In 2011, net write-downs of loans and provisions 

for guarantees and commitments in this business segment 

were € 131 m, down by 10.1% from the previous year. In this 

context it should be noted that large-volume loan loss provisions 

made in preceding years were reduced already in mid-2010. 

In CIB the cost of risk for 2011 declined to a very low level of 

31 bp, from 35 bp in the previous year. 

The provisioning charge in the F&SmE Division for 2011 was 

€ 161 m, down by two-fifths (–39.0%) from the previous year. 

The cost of risk fell to 74 bp (2010: 120 bp). The decline in net 

write-downs of loans and provisions for guarantees and commitments 

is also explained by an adjustment of model parameters 

under Basel 2 (in the calculation of risk weights for business with 

private customers) which has become possible not least on the 

basis of the more favourable risk profile and refined measurement 

methodologies. The F&SME business segment has included small 

and medium-sized enterprises (SMEs) since the beginning of 

2011, figures for 2010 have been adjusted retrospectively. Quality 


17



improvements achieved in the Small Businesses sub-segment in 

the previous year were maintained – the provisioning charge for 

this sub-segment had declined by one-half in 2010. Particular 

attention was given to risk management, together with customers, 

of loans denominated in Swiss francs and this proved very effective 

as the Swiss franc continued to strengthen against the euro until 

the Swiss National Bank took measures to counter this development 

at the beginning of September. 


in the Central Eastern Europe business segment continued 

to decline in 2011, reflecting the more favourable economic 

and monetary environment as well as progress in dealing with legacy 

problems in highly exposed countries. The provisioning charge 

for 2011 was down by 26.0% from the previous year. In annual 

average terms, the cost of risk fell from 226 bp to 157 bp. The 

banking subsidiaries in Kazakhstan, Ukraine and in the Baltic states, 

which accounted for most of the increase in net write-downs of 

loans and provisions for guarantees and commitments in previous 

years, also made the strongest contributions to the decline in 2011, 

with a combined decrease of € 253 m (68%) out of € 371 m. If the 

guarantees assumed by the Vienna-based CEE headquarters are 

included in the calculation, these countries still accounted for 

almost two-fifths (37%) of the total provisioning charge. While 

South-East Europe (SEE) was still lagging behind in the credit cycle, 

the situation in SEE has improved, with the exception of Serbia. 

In average terms, the provisioning charge of this group of countries 

was 15.2% lower than in the previous year, the cost of risk was 

167 bp of average lending volume. Particularly strong improvements 

were seen in Romania and Bulgaria. Central Europe recorded 

the lowest decline in the provisioning charge (–5.6% to € 193 m). 

This was mainly due to the special developments in Hungary, 

where additions to loan loss provisions had to be increased 

(+18.2%) in view of the Early Repayment Programme for foreign 

currency loans. In the Czech Republic, however, the provisioning 

charge declined sharply, by 21.4%. The cost of risk in Central 

Europe averaged 193 bp in 2011. In Russia the situation also 

improved significantly in line with general economic trends (provisioning 

charge down by € 77 m or 56%, cost of risk in 2011: 

61 bp). Turkey, where economic developments are ahead of other 

countries in the cycle, is a special case. Asset quality in Turkey 

improved substantially in 2010 as debt collection efforts were successful. 

The provisioning charge in Turkey continued to decline in 

2011, by 26.1% to € 48 m/cost of risk in 2011: 42 bp). 

Asset quality (€ bn and %) 

End oF PErIod 2011 2010 2009 2008 

Loans to customers (gross) 142.6 137.0 129.3 135.8 

Write-downs (incl. portfolio adjustments) 7.7 6.9 5.7 3.9 

Impaired loans 14.5 12.5 9.4 6.5 

as a percentage of loans to customers 10.1% 9.1% 7.3% 4.8% 

… covered by specific write-downs 47.7% 48.4% 51.9% 49.4% 

of which: non-performing loans 

as a percentage of loans to customers 

7.5 6.4 4.5 3.9 

(NPL ratio) 5.3% 4.6% 3.5% 2.9% 

… covered by specific write-downs 62.5% 62.6% 69.8% 63.5% 

Asset quality trends are lagging behind the improvement in the provisioning 

charge, a development usually seen at the end of a credit 

cycle. Although net additions to loan loss provisions decline, the total 

figure of such provisions still rises. Non-performing loans (NPLs) 

measured as a percentage of gross lending volume therefore rose 

once more in 2011. From year-end 2010 to year-end 2011, Bank 

Austria’s entire exposure increased by 4.1% on a gross basis, and 

by 3.7% net of loan loss provisions. The gross volume of non-performing 

loans rose even more strongly, by 18.4%, in 2011; net of 

loan loss provisions, it increased by 18.6%. For this reason the NPL 

ratio, at 5.3%, was up by 0.6 percentage points on the year-end 

2010 level; 2.1% of the net volume of loans (after deduction of loan 

loss provisions) was non-performing. Specific provisions covered 

62.5% of NPLs, this figure was more or less the same as in 2010. 

At the end of 2011, the proportion of impaired loans, which also 

include loans in better rating categories, was 10.1% on a gross 

basis, up from 9.1% in the previous year, and 5.6% on the basis of 

net volume, up from 4.9%. Almost one-half of this strong increase in 

impaired loans (+16.0% in a year-end 2011/2010 comparison) was 

due to a rule applied for the first time in the CEE countries, namely 

the obligation to continue to report a loan which has been successfully 

restructured as impaired for at least another year. This regulatory 

adjustment in CEE led to a break in the time series of over onehalf 

of a percentage point at the beginning of 2011. Restructured 

loans declined by 1.6% from the level in March 2011. As writedowns 

on such loans represent a considerably lower proportion of 

the gross amount, the coverage ratio also declined. 

In 2011, operating profit for the bank as a whole (€ 3,083 m) 

declined by € 291 m or 8.6% compared with the recast 2010 figure. 

net operating profit, the more meaningful measure of performance, 

was up € 197 m or 12.8% to € 1,732 m as a result of the decline 

in net write-downs of loans and provisions for guarantees and commitments. 


18



� The following non-operating items were deducted from the net 

operating profit in 2011 to obtain the profit before tax: 

Allocations to provisions for risks and charges in 2011 were 

€ 136 m, unchanged over the previous year. This amount was 

mainly set aside for pending legal risks, most of it for the legal 

proceedings in Switzerland which are still under way (formerly 

AKB Privatbank AG/alleged claims by Bundesanstalt für vereinigungsbedingte 

Sonderaufgaben, BvS); further details are provided 

in Section E.10 of the risk report on pages 155 to 156. 

The item net income from investments moved into negative 

territory in 2011 (– € 277 m) from net income of € 61 m (recast) 

in the previous year. In addition to a generally good performance 

of financial and real estate investments, positive factors included 

a one-off effect from a revaluation gain resulting from the restructuring 

of the Moscow Interbank Currency Exchange (MICEX) 

Group, in which our Russian banking subsidiary holds an equity 

interest, and realised gains in connection with an addition to our 

shareholding in CA Immo, a real estate investment company, as 

well as income from the sale of industrial shareholdings held by 

B&C Holding based on the terms and conditions of sale (Lenzing 

AG earn-out); these factors totalled € 154 m. 

The most important factor which had a negative impact were the 

write-downs on holdings of greek government bonds. The European 

Council decisions made on 21 July 2011 to support Greece 

were for the first time accompanied by an offer for the participation 

of private investors, made in the middle of 2011, suggesting an 

impairment of the exposure to Greek government bonds. In the 

consolidated financial statements for the first six months of 2011, 

Bank Austria therefore made a write-down on its holdings of 

Greek government bonds, which the parent company UniCredit 

Bank Austria AG and CEE banking subsidiaries have held in the 

banking book for a long time. The European Council’s statements of 

intent of 26 October 2011 made a more extensive debt restructuring 

appear more likely. Therefore a write-down on the holdings of 

Greek government bonds to the mid-market prices prevailing as 

at 30 September 2011 (fair value level 1) was made in the consolidated 

financial statements for the first nine months of 2011. 

Changes in major items of the income statement for 2011 compared with 2010 (increase/decrease in € m) 

Net interest income 1) 

Net fees and commissions 

Net trading, hedging and fair value income, and net other expenses/income 

Operating income 

Costs: current operating expenses 

Costs: bank levies 


Net operating profit 2) 

Non-operating items 3) 

Greece-related effect 

Profit before tax 

Other items: income tax and non-controlling interests 

Goodwill impairment and PPA 

Recasting difference 4) 

–396 

–377 

Net profit (as published) 

–538 

1) Net interest + dividend income and other income from equity investments. / 2) Operating profit less net write-downs of loans and provisions for guarantees and commitments. / 3) Provisions 

for risks and charges (change: –€ 0 m), integration/restructuring costs (–€ 24 m), net income from investments (without Greece-related effect: +€ 58 m) compared with the previous year. / 

4) All comparative figures for 2010 except net profit (bottom line) have been recast to reflect the current consolidation perimeter. Of the total amount of the change in net profit compared with 

the unadjusted figure for the previous year (–€ 500 m), –€ 38 m relates to changes in the consolidation perimeter (recasting difference). 

–165 

–136 

–102 

–83 

–38 

–71 

–600 –500 –400 –300 –200 –100 0 100 200 300 

400 500 

–6 

+24 

+34 

+42 

+197 

+488 


19



Negotiations for private sector involvement in connection with the 

second bailout measures for Greece, which resulted in specific 

undertakings shortly before the editorial close of this report, involved 

additional price losses in anticipation of the announced debt restructuring 

and the loss in value as a result of the rescheduling of remaining 

bonds (interest rates, extension of the relevant periods). The valuation 

of holdings of Greek government bonds resulted in a writedown 

of € 396 m, which is recognised in the income statement for 

2011. € 257 m of this amount is reflected in the Corporate Center, 

€ 20 m in the CIB Division and € 119 m at banks in the CEE Division. 

➔ Overall, the balance of non-operating income/expenses in 2011 

was a net expense of € 441 m after a net expense of € 79 m in 

2010. When this amount is deducted from net operating profit, profit 

before tax is € 1,291 m. In a comparison with the original figures 

for 2010, this represents a decline of € 258 m or 16.6%; based on 

the comparative figures for 2010 recast to reflect the current consolidation 

perimeter, profit before tax is down by € 165 m or 11.3%. 

The three Austrian customer business divisions generated a combined 

profit before tax of € 672 m (+6.4%) and the CEE business 

segment contributed € 1,462 m (+28.0%), while the Corporate 

Center recorded a negative result (– € 844 m after – € 319 m). 

➔ After deduction of income tax of € 261 m and of non-controlling 

interests (€ 50 m), net profit before Purchase Price Allocation 

amounted to € 980 m. 

As part of the multi-year planning process for all units of UniCredit – 

and ahead of the capital increase of UniCredit SpA – the mediumterm 

scenarios for all business segments and regions were updated 

in the third quarter of 2011 and coordinated with the current plan. 

Performance trends which were below the original assumptions used 

for planning purposes required the recognition of an impairment 

loss of € 350 m on goodwill related to JSC ATF Bank in Kazakhstan 

and the recognition of an impairment loss of € 329 m on goodwill 

related to PJSC Ukrsotsbank in Ukraine as at the end of 2011. 

After the valuation adjustment, and after taking exchange rate 

movements into account, the statement of financial position includes 

residual goodwill for these two group companies of € 129 m and 

€ 168 m, respectively. Impairment losses on goodwill relating to 

UniCredit Securities International Limited Cyprus and CJSC 

UniCredit Securities in Russia, which are currently being restructured, 

totalled € 47 m, reducing the relevant goodwill to nil. 

Net profit (€ m) 

2011 2010 CHAngE 

Bank Austria as a whole 209 747 –538 –72.1% 

Austrian customer busines 503 455 +48 +10.6% 

Central Eastern Europe (CEE) 1,178 850 +329 +38.7% 

Corporate Center –1,473 –595 –877 >100% 

➔ The total charge for goodwill impairment and the Purchase 

Price Allocation effect impacted the consolidated financial statements 

of Bank Austria with € 772 m, corresponding to 60% of 

the profit before tax. net profit attributable to the owners of 

Bank Austria for 2011 was € 209 m, after € 747 m in the previous 

year (original figures). 

The improved operating performance was strong enough to absorb 

the inevitable valuation adjustments and other non-operating 

charges such as the write-downs on Greek government bonds, debt 

restructuring and levies on banks. These valuation adjustments were 

made to relieve any impact on future earnings. 


20



Financial position and capital resources 

Financial position 

As in 2010, the bank’s financial position for 2011 reflected what 

may be perceived as contradictory targets of stepping up business 

with customers while maintaining equity capital efficiency and complying 

with the regulatory requirement for additional risk buffers. 

In this situation, it is clear that structural improvements take priority 

over higher business volume; increases in total assets are no longer 

a quality criterion. 

Bank Austria had total assets of € 199.2 bn as at 31 December 2011, 

an increase of € 6.2 bn or 3.2% on year-end 2010. On the liabilities 

side, almost all of the growth in 2011 resulted from a strong increase 

in primary funds (deposits from customers and debt securities in 

issue). The assets side was characterised by trends which moved in 

opposite directions: loans and receivables with customers continued to 

expand steadily, supported by growth in CEE, although strong depreciation 

of several currencies slowed the momentum. Financial market 

investments, on the other hand, were reduced as in previous periods. 

The strongest increase was seen in loans and receivables with banks 

in connection with liquidity supplies within UniCredit Group. 

On the assets side, the € 6.2 bn increase in total assets was driven 

by loans and receivables with customers, which were up by 

€ 4.8 bn or 3.7%. At € 134.9 bn, they accounted for 67.7% of total 

assets. The rise was attributable to the CEE business segment 

(+8.6%), it would have been 4.5 percentage points higher if calculations 

were based on constant exchange rates. Turkey (almost 30%), 

Russia (over 20%) and Romania (about 15%, non-consolidated data) 

Major items in the statement of financial position – comparison of year-end figures 

31 dEC. 2011 Percentage 

share 

were the countries with the strongest expansion in this area, calculated 

at constant exchange rates. The largest change on the assets 

side was seen in loans and receivables with banks, which rose by 

€ 5.9 bn (+29.7%) to € 25.6 bn; one of the reasons for this increase 

was the reclassification of securities in accordance with IAS 39 and 

IFRS 7 from available-for-sale financial assets to loans and receivables 

with banks (see note A.4 in the notes to the consolidated financial 

statements). As in the previous year, financial assets held for trading 

were reduced in 2011 (– € 1.0 bn/–22.8%) and accounted for only 

€ 3.3 bn or 1.7% of total assets; in 2007 they still made up close to 

10% of total assets. Financial market investments, in particular available-for-sale 

financial assets, were down by a combined € 3.9 bn or 

17.5% to € 18.4 bn (9.2% of total assets). On the assets side, hedging 

derivatives rose strongly, partly due to performance (+€ 1.0 bn to 

€ 3.5 bn). Within the item intangible assets, goodwill was lower than 

in the previous year due to the recognition of goodwill impairment and 

changes related to exchange rate movements – net of write-backs – 

declining by € 0.8 bn or 25.7% to € 2.4 bn (of total intangible assets 

amounting to € 2.9 bn). 

The picture on the liabilities side was quite straightforward: the rise in 

primary funds accounted for the entire increase in total liabilities and 

equity. At the end of 2011, deposits from customers amounted to 

€ 104.7 bn, up by € 4.4 bn or 4.4% on the end of 2010. The increase 

was partly supported by contributions from the Austrian customer business 

segments (+2.3%); strong preference for liquidity was particularly 

apparent in private customer business and Private Banking. The major 

part of the increase in deposits from customers was generated in the 

CEE Division (+6.3%, adjusted for exchange rate changes +11.4%). 

31 dEC. 2010 Percentage 

share 

CHAngE 

€ m in % 

ASSETS 

Financial assets held for trading 3,322 1.7% 4,304 2.2% – 982 –22.8% 

Hedging derivatives 3,466 1.7% 2,449 1.3% +1,017 +41.5% 

Other financial assets *) 18,390 9.2% 22,294 11.5% –3,905 –17.5% 

Loans and receivables with banks 25,621 12.9% 19,749 10.2% +5,871 +29.7% 

Loans and receivables with customers 134,914 67.7% 130,093 67.4% +4,821 +3.7% 

Intangible assets 2,866 1.4% 3,751 1.9% –885 –23.6% 

… other asset items 10,652 5.3% 10,409 5.4% +243 +2.3% 

Total assets 199,229 100.0% 193,049 100.0% +6,180 +3.2% 

LIABILITIES And EQUITY 

Financial liabilities held for trading and financial liabilities 

at fair value through profit or loss 3,597 1.8% 4,099 2.1% –502 –12.2% 

Hedging derivatives 2,591 1.3% 2,909 1.5% –317 –10.9% 

Deposits from banks 32,772 16.4% 33,130 17.2% –358 –1.1% 

Primary funds 134,658 67.6% 127,839 66.2% +6,820 +5.3% 

Equity 17,661 8.9% 17,476 9.1% +185 +1.1% 

… other liability items 7,950 4.0% 7,596 3.9% +353 +4.7% 

Total liabilities and equity 199,229 100.0% 193,049 100.0% +6,180 +3.2% 

*) Financial assets at fair value through profit or loss + available-for-sale financial assets + held-to-maturity investments. 


21



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

240 

220 

200 

180 

230 

221 

209 229 

Total assets 

203 

222 

196 

191 

160 

154 

140 

120 

100 

80 

60 

40 

20 

Leverage ratio 

(without intangible assets) 

0 

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

2007 2008 2009 2010 2011 

214 208 

194 

204 

21.9 

13.3 

201 

200 191 

198 

190 

193 194 

199 

Loans to customers 

Primary funds 

22 

20 

18 

16 

14 

12 

10 

The largest growth in percentage terms was recorded in countries where 

our banking subsidiaries enjoy particularly strong confidence among customers 

because they are international banks, especially in Russia and 

Turkey, as well as in Ukraine and Kazakhstan. debt securities in issue 

rose by € 2.4 bn or 8.6% to € 29.9 bn, mainly through successful 

mortgage bond issues, with high placement rates in Austria making an 

important contribution in this regard. As a result of these developments, 

primary funds (the sum total of deposits from customers and debt 

securities in issue) rose to € 134.7 bn compared with the end of 2010 

(+€ 6.8 bn or +5.3%). This means that customer loans were fully 

funded by customer deposits in a wider sense as of year-end 2011. 

Among the remaining items on the liabilities side, deposits from banks 

were slightly below the previous year’s level (–1.1% to € 32.8 bn). The 

combined sum total of financial liabilities held for trading, financial liabilities 

at fair value through profit or loss and hedging derivatives was also 

lower at the end of 2011 compared with year-end 2010. 

As of 31 December 2011, equity was € 17.7 bn, € 185 m or 1.1% 

above the level at the end of 2010. It accounted for 8.9% of total liabilities 

and equity. This development is explained by two factors: first, the 

net profit included in retained earnings was very low in 2011 (€ 258 m 

after € 798 m) as a result of exceptional non-operating expenses and 

the goodwill impairment charge. Second, the effects from foreign currency 

translation related to capital consolidation were very negative in 

2011 compared with the previous year (– € 571 m). This negative 

impact was not quite offset by an increase in reserves in accordance 

with IAS 39 (amounting to a combined figure of +€ 533 m) and the 

other items directly recognised in equity; the balance of income and 

expenses recognised directly in equity was slightly negative (– € 23 m). 

Together with the net profit and including the changes in the group of 

consolidated companies (– € 28 m) and distributions (– € 23 m) – both 

only concern non-controlling interests – the change in equity amounts 

to € 185 m. 

Capital resources pursuant 

to the Austrian Banking Act 

� Risk-weighted assets (RWAs) as at the end of 2011 were € 125.2 bn, 

down by € 2.7 bn (–2.1%) from the year-end 2010 level. In Austria, 

the change resulted primarily from the adoption of the internal ratingsbased 

(IRB) approach for additional exposures and from the adjustment 

of risk parameters. While several banking subsidiaries switched to the 

IRB approach, this had a very small net effect in terms of RWAs: a 

€ 12.4 bn increase in the IRB portfolio was more or less offset by a 

€ 12.2 bn decrease in the portfolio under the standardised approach. 

On the other hand, business expansion in CEE led to an increase, 

which was partly offset by exchange rate movements. 

The implementation of CRD III, which involved a higher capital requirement 

for stressed value-at-risk and incremental risk charge, led to 

a € 1.3 bn increase in RWAs from the trading book at the end of 

December 2011 compared with the previous year. 

As a result of lower RWAs, the capital requirement for credit risk 

declined to € 8.8 bn (–3.7%) and the capital requirement for all types 

of risk was € 10.0 bn (–2.1%). 

� In 2011, net capital resources rose by € 0.4 bn (+2.3%) to 

€ 15.9 bn. Negative consolidation effects were reduced by write-downs 

on equity interests and capital measures. The shortfall-related deduction 

declined by € 0.2 bn as write-downs rose. Tier 2 capital declined 

by € 0.2 bn as a lower amount of subordinated capital was eligible for 

inclusion in view of its residual maturity. 

� The increase in Tier 1 capital in combination with the RWA reduction 

compared with the end of 2010 resulted in higher Tier 1 capital ratios and 

total capital ratios. The Core Tier 1 capital ratio (Tier 1 capital ratio without 

hybrid capital) based on all risks rose from 10.04% to 10.55%. The Core 

Tier 1 capital ratio based on credit risk rose from 11.33% to 12.10%. 

Capital ratios 

31 dEC. 2011 31 dEC. 2010 

based on all risks 1) 


… without hybrid capital (Core Tier 1 capital ratio) 10.55% 10.04% 


based on credit risk 2) 


… without hybrid capital (Core Tier 1 capital ratio) 12.10% 11.33% 


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, profitability and resources 

Average loans and receivables with customers rose by 2.8% to 

€ 131 bn in 2011, after a decline in the crisis year 2009 and stagnation 

of average volume in 2010. While the CEE business segment 

accounted for all the increase, lending volume in Austrian customer 

business was more or less maintained (see table). In both regions, 

currency movements were a significant factor: at constant exchange 

rates, lending volume in CEE was 4 percentage points higher, and 

fluctuations in Austria during the year were explained by appreciation 

and depreciation of the Swiss franc. The annual averages show an 

underlying upward trend from quarter to quarter, which started at the 

end of 2009; this development also resulted from the growth markets 

in Central and Eastern Europe. Average lending volume in CEE 

was again higher than in the three Austrian customer business segments 

in 2011. But the difference – € 67 bn in CEE compared with 

€ 64 bn in Austria – is not very large given the structure of the loan 

portfolio in Austria and the market position in corporate banking. 

The ratio of average loans to customer deposits is also higher in 

Austria than in CEE. 

Resources and profitability: 2011 compared with 2010 

BAnK 

AUSTrIA AUSTrIA 1) CEE 

relative size 

Average loans to customers (€ bn) 131.0 63.8 67.2 

Change over previous year 2) +2.8% –0.9% +6.4% 

Average customer deposits (€ bn) 100.6 47.2 53.6 


Average risk-weighted assets 

(RWA, € bn) 124.4 38.5 81.5 


results, profitability and value creation 

Operating income (€ m) 6,986 2,422 4,722 

Change over previous year 2) –1.2% +2.1% +0.7% 

Profit before tax (€ m) 1,291 672 1,462 

Change over previous year 2) –11.3% +6.4% +28.0% 

ROE before tax 3) 7.4% 19.6% 12.3% 

Marginal EVA, (€ m) 4) 129.0 234.9 387.0 

Marginal RARORAC 1.35% 8.48% 5.75% 

Equity 

Average equity (€ bn) 5) 17.4 3.4 11.9 

Change over previous year 2) +2.1% +17.0% +8.2% 

1) F&SME, Private Banking and Corporate & Investment Banking (CIB) Divisions, the difference 

of the total amount is shown in the Corporate Center – see “D.2 Description of segment 

reporting” in the notes to the consolidated financial statements, pages 126 to 127 of this 

report. / 2) Adjusted to the consolidation perimeter in 2011. / 3) ROE = profit before tax 

divided by average equity of the business segments. / 4) Calculated on the basis of capital 

allocated under Basel 2. Difference = Corporate Center and intersegment items, sum total 

calculated using bank’s own cost of capital of 10.93%. / 5) Subsidiaries are included at 

actual IFRS capital. 

Trends in risk-weighted assets (RWAs) differed between Austria 

and CEE (see table), mainly due to structural differences but also 

in the context of efforts focusing on (risk-adjusted) equity capital 

efficiency in line with business policy. RWAs in Austria declined 

significantly, by 8.7%; in absolute terms, the figure was considerably 

lower than total customer loans. This reflects the successful 

reduction of risk-weighted assets while volume hardly changed. 

In the CEE business segment, RWAs expanded steadily (year-onyear 

and quarter-on-quarter) and exceeded the total volume of 

loans. Trends in risk-weighted assets over time and in their composition 

by type of risk underline the efforts made to achieve a 

sustainable development of business: in 2011, market risk in 

Bank Austria was reduced by 9.2% in annual average terms and 

by 2.1% in a comparison of year-end data; previous strong 

reductions in 2009 and 2010 resulted from the reorganisation of 

investment banking activities. It should be noted in this context 

that at the end of 2011, the implementation of the new rules 

known as Basel 2.5 (Stressed VaR and Incremental Risk Charge/ 

IRC) led to a sharp increase in market risk RWAs in the CEE 

business segment, which is also reflected in the figures for the 

bank as a whole. Risk-weighted credit risk was more or less 

unchanged (+0.4%). Operational risk showed double-digit 

growth (+16.2%) over the previous year, not least on account 

of methodological progress and more accurate measurement, 

to a level of 9% of total RWAs. 

return on equity (ROE before tax = profit before tax/allocated 

equity, subsidiaries with institutional capital) was 7.4% in 2011, 

down from the previous year’s figure (8.6% recast) and still far 

below the pre-crisis level (average for the period 2005–2007: 

19.1%). ROE after tax – based on profit for the period (including 

non-controlling interests, before deduction of goodwill impairment 

and the Purchase Price Allocation effect) – was also lower, at 

5.9% after 6.8% recast, due to substantially higher non-operating 

income components (the average for the period 2005 to 2007, 

before the collapse of Lehman Brothers, was 15.7%). Measured 

by net profit attributable to the owners of Bank Austria, return on 

equity for 2011 was 1.2% after 4.5% in the previous year. marginal 

Economic value Added (EVA), the long-term indicator used by 

UniCredit Group for value creation, by definition does not include 

impairment losses on goodwill as non-cash items (“marginal” 

refers to the exclusion of goodwill); positive and negative one-off 

effects are also not included in NOPAT (net operating profit after 

tax), which is used for the calculation. At overall bank level, marginal 

EVA in 2011 reached only € 129 m, reflecting weaker current 

results and a higher cost of capital (10.93%). EVA for 2010 

was € 194 m (original figures). Risk-adjusted return on riskadjusted 

capital (RARORAC) declined to 1.35% from 2.88%. 

While marginal EVA for CEE is higher than for the three Austrian 


23



customer business segments, RARORAC for CEE is lower, at 

5.75%, compared with 8.48% for the Austrian customer business 

segments. This reflects the higher equity allocated to CEE and the 

different cost of capital. 

The strong increase in equity in the three segments of Austrian 

customer business reflects the low base figure in the CIB Division 

after deduction of the former UniCredit CAIB at the beginning of 

2010. More importantly, since the beginning of 2011, capital 

allocation has been based on actual risk-weighted assets of the 

preceding quarter (previously on planned RWAs). The increase in 

RWAs resulting from the stronger Swiss franc also led to a significant 

increase in equity allocated to the F&SME Division compared 

with the previous year. 

BAnK 

AUSTrIA 

3 AUSTrIAn 

SEgmEnTS 1) CEE CC 2) 

Branches 

End of 2011 3,040 290 2,750 

End of 2010 3,033 299 2,734 

Change +7 –9 +16 

Employees (FTEs) 

End of 2011 59,345 5,744 51,517 2,083 

End of 2010 (recast) 59,288 5,549 51,598 2,141 

Change +57 +195 –80 –58 

End of 2010 (original) 59,653 5,820 51,616 2,217 

Change –308 –76 – 99 –134 

1) Divisionen PKMB, Private Banking und Corporate & Investment Banking (CIB) 

2) CC = Corporate Center = Global Banking Services plus Competence Lines 

The number of branches of Bank Austria rose by 7 in the period 

since the end of 2010. Net additions to the branch network in Turkey 

(+37), the Czech Republic (+26), Slovenia (+8), Serbia (+5) 

were offset by reductions in Ukraine and Kazakhstan (together 

–62, including the elimination of regional administrative centres); 

there were also minor changes in the other countries. These are 

net changes, i.e. banks in some countries (e.g. Russia) closed 

branches in some locations where they had a multiple presence, 

while new branches were opened in promising locations. In Austria, 

the number of branches declined by 9, in connection with closures 

in Vienna where branches were located very near to each 

other. The expansion of specialised regional centres serving corporate 

customers does not count as additions to the branch network 

because these regional centres use the premises of existing 

Bank Austria branches. 

Staff numbers in Bank Austria were up by 57 full-time equivalents 

(FTEs) from year-end 2010 (in the current consolidation 

perimeter) to the end of 2011. In the CEE business segment, overall 

staff numbers declined by 80 FTEs (–0.2%) with strong underlying 

movements. The above-mentioned restructuring in Ukraine (–666) 

and Kazakhstan (–317) compared with an expansion in Turkey 

(+496) and in the Czech Republic (+179), and additional staff was 

recruited even in Hungary (+45 FTEs). Staff numbers in Austrian 

customer business were up by 195 FTEs on the recast 2010 figure. 

The main reason for the increase was the addition, involving 

118 FTEs, of three smaller services and settlement companies (card 

business and electronic payments) to the consolidation perimeter 

without retrospective adjustment in the income statement (and of 

staff numbers). The remaining part of the increase related to the 

F&SME Division’s initiative to strengthen staffing levels for sales 

activities at branches, including young new entrants under the “Best 

Start” programme, and to Private Banking (net addition of 12 FTEs). 

Staff numbers in the Corporate Center declined by 134 FTEs compared 

with the unadjusted figure at the end of 2010. This was the 

net effect of several major changes: decentralised Competence 

Lines (controlling and communication functions) were retransferred 

from the business divisions to the head office; the number of 

employees in Global Banking Services declined significantly as a 

result of Group-internal transfers and outsourcing to external companies. 

The largest change resulted from the transfer of 254 IT 

experts (243 FTEs) as part of the outsourcing of various software 

development activities and computer centre operations to Blue IT 

Services GmbH, a subsidiary of IBM Austria. 

Relative size Austria/CEE (€ bn and % y/y) 

63.8 –1% y/y 

38.4 –9% 

3.4 +17% 

+6% 67.2 

Austria CEE 

81.5 +8% 

11.9 +8% 

Average loans 

to customers 

Risk-weighted assets 

Allocated equity 


24



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 was obtained 

through more than 43,000 customer interviews conducted by a 

market research institute. 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 the bank to respond 

to the results with a package of measures. In 2011 TRIM, the 

aggregated customer satisfaction index, improved by 4 points to 

69 in Family & SME and by 2 points to 75 in CIB, while remaining 

stable at 69 in Private Banking. Bank Austria thereby clearly 

outperformed the market in several customer segments, underlining 

the quality and competence of our relationship managers 

and customer advisers in all business segments, our service orientation 

and commitment, and the rising frequency of advisory 

services. 

� The customer surveys are complemented by regular mystery 

shopping in the sales units with instant feedback given to 

branches and employees. In 2011, we conducted 1,757 tests of 

service quality. Bank Austria achieved an above-average performance 

in the subsequent benchmarking. 

� “Feedback Kundenerlebnis” (customer experience feedback): 

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. Almost 

60,000 e-mails inviting feedback on advisory-related situations 

were sent out. The response rate of close to 50% shows that 

customers feel it is important to express their opinions and contribute 

to the future development of Bank Austria. Feedback 

received from customers indicates a high level of satisfaction 

with the quality of advisory talks. 

Best service provider: In 2011, Bank Austria was elected from 

among renowned Austrian companies as the “Most customer- 

oriented service provider in Austria”. The competition was based 

on a survey of customer perception and on the overall evaluation 

(by way of an audit) of the company’s and management’s customer 

orientation. The competition was organised by the University of 

St. Gallen in cooperation with Service Rating GmbH and “Die 

Presse”, an Austrian daily newspaper. 

Customer dialogue in 2011: In each of the thirteen Austrian 

regions, a dialogue between customers, their relationship managers 

and the bank’s regional managers was organised in May/June 

2011 to find out what customers expect of Bank Austria. At these 

constructive meetings with over 500 participants, the discussion 

focused on positive aspects and areas where there is a need for 

improvement. The objective is to further enhance Bank Austria’s 

customer centricity. 

Quality of services: We have defined standards of service and 

advice for various customer interactions (service, advice, telephone, 

complaints) to further improve quality. “Der 6. Sinn” (the Sixth 

Sense) is an initiative by which we established these standards of 

service and advice to make contacts with Bank Austria a pleasant 

experience for customers. The programme covered 5,000 employees 

in the F&SME Division in Austria, further sharpening their Sixth 

Sense, the “Bank Austria Kundensinn”. Finding the right words and 

acting in the right way at the right time is essential in providing 

services and advice to customers. With the “Bank Austria Kundensinn” 

we aim to show how we define the “best bank for customers 

in Austria” and make this visible for our customers. A web 

2.0 platform was used for the introduction of this initiative and 

training programmes: the focus was on virtual sharing of experience, 

in real time – discussing, training and learning from each 

other. Moreover, 5 workshops on “Advisory Excellence and Top Service” 

took place with teams at all branches throughout Austria, and 

more than 20,000 electronic FitnessChecks and over 4,000 best 

practice tips on service and advisory excellence were formulated. 

96 branches in Austria, which met their customer satisfaction 

objectives in 2011, successfully took part in the programme and 

received awards as ToP SErvICE branches. 

Comprehensive education programme: Topics related to customer 

satisfaction are discussed in seminars for new entrants and 

managers as well as in regional workshops. Service quality at the 

branches is given particular attention in this context. 

In the area of complaints management we gave customers access 

to all our communications channels (e-mail, website, around-theclock 

service line, branches, ombudsperson) and we improved the 


25



relevant processes with the aim of solving 80% of customer 

complaints within twenty-four hours. Complaints Management 

has been established as one of the core processes in customer 

management, with measurements of various dimensions and 

regular reporting. Ongoing improvements relate to behaviour and 

processes. We have 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. 

People Survey: The key success factor in a company is its committed 

employees. Our “People Survey” programme regularly 

provides us with extensive, important information for planning 

specific measures for improvement. In 2011 we achieved an 

increase of 3 points (in a multi-year comparison, 7 points) in the 

Engagement Index: key areas were Corporate Social Responsibility, 

Client Focus and Leadership. Bank Austria’s attraction as an 

employer has significantly risen among its employees. 

Internal customer satisfaction: Employees in sales units 

should be provided with the products and services they need to 

serve and advise customers in the best possible way. The satisfaction 

of sales staff with the bank’s head-office units and also 

cooperation within head-office units are regularly being analysed. 

In 2011, 29 units received feedback on the quality of their services 

and defined measures to provide even better support to 

their colleagues. After continuous improvements over the past 

years we are now poised to join the top ranks of international 

peer groups as regards internal service quality. A major driver for 

sustainability in this area was the integration of internal service 

quality in the scorecards of managers and employees at the 

head office. The best units received the “Internal Service Award“. 

Internal service quality is measured and taken into account in 

the incentive system for head-office employees. 

Human Resources 

Human Resources management sees its role as initiating and 

driving change processes. We are seeking to create an environment 

in which employees generate sustainable value for our 

customers. The global Job model, a Group-wide personnel 

management system used for defining and classifying all functions 

and activities within UniCredit, and the UniCredit Competency 

model, which defines standards for employee conduct 

in key situations, serve as guiding principles for our human 

resources activities. These activities cover Austria and Central 

and Eastern Europe. We offer our employees a working environment 

with an international flavour while benefiting from diversity 

through international exchange and in daily cooperation. Diversity 

Management in Austria covers all diversity-related issues in 

our company, and it is supported by the work of Human 

Resources and by Corporate Sustainability. 

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 126 

training positions were filled in 2011. A new onboarding process 

is designed to welcome new employees and to make it 

easier for them to find their feet in our company. This includes 

the organisation of a welcome event entitled “Welcome Days”, 

providing employees with all the information they need, and 

a coordinated “Buddy programme”. 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. In addition, 

we support customer sales activities through strategic staff 

planning initiatives, such as the internal “movement management” 

programme that will be implemented in 2012, with valuable 

support provided by the Global Job Model: Bank Austria 

was the first company within UniCredit to successsfully introduce 

this personnel management system in autumn 2010. The 

creation of a comprehensive standardised job catalogue was 

preceded by intensive mapping of all jobs. The job catalogue 

defines and categorises all positions in the company and their 

job profiles. This provides a transparent basis for comparing 

training and career opportunities, and for the strategic filling of 

positions that have become vacant. This ensures the optimum 

deployment of employees while increasing customer centricity. 

� In 2011, the employee training programme focused on three 

areas: all colleagues completed a mandatory e-learning seminar 

on anti-money laundering with a view to creating a uniform 

training standard in regard to legal and compliance-relevant 

issues. Bank-wide training covering specific topics will be continued 

throughout 2012. A second focal point of our training 

programme is to provide thorough, customer-oriented basic 

training for business with private customers in the form of 

standardised training modules (including “First Steps“ and “Next 

Steps”). An essential component is customer centricity, which is, 

for example, reflected in the Private Banking Division’s key 

“analysis of needs” initiative. The third pillar of the bank’s 

training programme consists of various other training initiatives, 

enabling every employee to acquire and further develop the 

expertise which he/she requires for the performance of his/her 

particular tasks. 


26



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 managers. 

Realigned in 2011, the national mentoring programme, through 

networking and an exchange of knowledge, is a further measure 

for supporting young employees in developing their potential in 

terms of career and personal development. 

� With the roll-out of Bank Austria’s new Performance 

management we set new standards for a modern performance 

evaluation system and for planning employees’ future development. 

A group-wide, uniform and more efficient performance 

management process, where information will be electronically 

captured in an online tool, was created by building on experience 

from the proven components of the previous process for setting 

goals and evaluating performance (“scorecards” and “annual 

performance review”). Priority was given to providing greater 

transparency for both managers and employees while giving 

both the possibility to play a more active role in defining further 

potential for development and career opportunities. Performance 

Management thus makes a substantial contribution to the bank’s 

corporate culture based on respect. The goals agreed in a discussion 

between the employee and the manager are captured in 

a Performance Management tool. The employee’s performance is 

evaluated after a period of 12 months. The information thereby 

obtained on an employee’s personal performance serves as a 

basis for further career opportunities and personal development 

potential and for individual remuneration measures. 

� A special information package makes our remuneration system 

transparent while providing information on remuneration 

made by Bank Austria to its employees: every employee receives 

a personal letter (“Salary Transparency Letter”) listing all remuneration 

received by him/her in 2011 from Bank Austria. The 

letter will also include a brochure (“Benefits Folder”) with information 

on voluntary benefits in our company. The purpose of 

these measures is to provide employees with an overview of all 

financial and non-financial compensation while linking this to the 

related compensation processes such as the compensation 

review and bonus payments. 

remuneration of top management is determined within 

UniCredit by way of a clearly-defined Group Compensation System, 

which has been implemented at Bank Austria. 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 III) came 

into effect as at 1 January 2011. It defines a new framework for 

remuneration policies and practices for banks. Bank Austria will 

adjust its remuneration policy to the new legal rules. 

In April 2011, the international CRF Institute presented UniCredit 

with the European Top Employer 2011 award for outstanding 

HR services in five countries in which UniCredit operates: Austria, 

Germany, Italy, Poland and the United Kingdom. 

Sustainability management 

In a challenging environment for sustainability, Corporate Sustainability 

Management is working to help maintain a balance 

between economic and socio-ecological targets, and to provide 

support through specific measures. This is of particular significance 

for the bank’s relations with its stakeholders. To this end, 

Bank Austria has initiated a complex sustainability process with 

the participation of a number of internal and external stakeholders. 

The outcome of this process, involving the definition of specific 

sustainability objectives, is summarised in the brochure 

“Jetzt.”: with this publication, Bank Austria has set an innovative 

standard in communicating sustainability information. 

Sustainability must be firmly embedded within a company’s core 

business, and must be an active component of corporate philosophy, 

permeating all of the company’s operations. The renowned 

rating agency oekom-research awarded Bank Austria a “Prime” 

rating for its activities in the areas of ecology and social responsibility. 

� The sustainability of products is a key consideration. This is 

primarily linked to a product’s specific use: Bank Austria offers its 

customers products which they need, at a fair price. And these 

products should cover all segments of the bank’s business activities. 

In this context, with due consideration to Bank Austria’s 

social responsibility, the bank has, since 2011, offered a special 

account for financially excluded people with either past or current 

financial problems. We want to make a contribution to financial 

inclusion with this “Erfolgskonto light” account. 

� An important component of sustainability is to act responsibly 

within society. Bank Austria is pursuing a clear strategy in the 

area of social support. We primarily support aid projects which 


27



help children and young people in need, and which also focus on 

integration/migration. Every year, Bank Austria presents the “Best 

Start” Sponsorship Award, where customers and employees vote 

for a social project which is then supported by the bank both 

financially and through communication measures. The winning 

project in 2011 was the association “Amber Med”, which offers 

medical assistance to persons in Austria who have no medical 

insurance. 

� Besides pursuing a comprehensive donation policy, Bank Austria 

has been cooperating with social care organisations such as 

Caritas or SOS Children’s Villages, where we act as house sponsor 

for one Children’s Village family in each of Austria’s federal 

provinces. It is not only the financial support but also the active 

involvement of employees which we feel is very important. 

Employees of Bank Austria and its subsidiaries also played an 

active role in many social projects on the “volunteer day 2011”. 

� A further focus in the area of corporate responsibility is the 

“Sharing knowledge” programme. Our cooperation with universities 

and academic organisations, such as the Club of Rome, 

provides a basis for sharing our financial expertise with the interested 

public. This takes the form of lectures, customer events 

and discussion evenings with experts from within and outside 

the bank. 

The website http://meingeld.bankaustria.at is created for people 

who may find it difficult to understand the jargon of the financial 

world. Products are explained in simple terms, and the visitor to 

the site is given tips and other useful information on how to 

safely handle money and financial products. 

With the creation of new school workshops focusing on “financial 

education” Bank Austria has broached new territory in 

knowledge communication techniques: with our renowned partner, 

the Austrian Museum for Social and Economic Affairs, we 

offer interested schools free workshops on “finance”. The topics 

discussed range from money, the role of banks and banking 

products to distributive justice. The objective is to give young 

people an overview of the various types of financial transactions, 

to draw their attention to the opportunities and risks, and to 

inform them of their rights and duties as consumers of financial 

products. In addition to passing on knowledge, the workshops are 

aimed at encouraging young people to critically examine the role 

of money in society and how they themselves handle money. The 

objective is to help youngsters on their way to becoming mature 

consumers, and to induce them to think about their lifestyle by 

linking this topic with all the issues related to sustainability. 

Diversity management 

Bank Austria has been committed to diversity for many years, 

regardless of age, health, sexual orientation, origin and gender. 

As part of a specific diversity management approach – embedded 

in the corporate sustainability strategy – diversity is seen as 

an advantage for the company. For its numerous diversity-related 

measures Bank Austria won various awards in 2011. In the 

spring, the Vienna Economic Chamber voted Bank Austria No. 1 

in the DiversCity competition for its activities in various areas of 

diversity (gender, culture, health/disability, age, lifestyle, sexual 

orientation). 

� Bank Austria has appointed a disability manager, who is 

effectively supported by a team of 40 employees forming a disability 

network. The Disability Manager implements numerous 

measures. Bank Austria aims to be barrier-free for its customers 

and employees in terms of physical access to the bank’s buildings 

and offices by 2015. In 2011, Bank Austria also introduced 

a bank card for visually impaired persons, and the bank’s website 

includes sections enabling customers to listen to spoken 

information and watch videos in sign language as well as reading 

texts in simple language. Moreover, Bank Austria is planning 

to make cash dispensers in the bank’s self-service foyers barrier-free 

so that they can be used by visually impaired persons. 

The shuttle service introduced in 2010 for customers with limited 

mobility has proved very useful. Bank Austria supports 

“shake hands”, a unique sign-language textbook, and cooperates 

with “Arbeit für Behinderte”, the first IT systems house in Europe 

which employs persons with learning difficulties or physical disabilities 

to repair old laptops and PCs and sell them. As part of the 

DiversCity competition, Bank Austria won a special award for its 

efforts in the areas of disability and barrier-free access. 

� “Taten statt Worte” was a competition in which Bank Austria 

was ranked second in the category of large companies for its 

activities relating to families and women. In 2009, Bank Austria 

received the basic “Audit berufundfamilie” certificate from the 

Austrian Federal Minister of Economic Affairs, Family and Youth. 

The bank will undergo a re-audit and an extensive review in 

2012 which will be performed to see if the defined measures 

have been implemented. Beyond ascertaining the status quo, it is 

particularly important to take further measures to improve the 

compatibility of family life and job. In the spring of 2011, a 

rainbow group was set up in Bank Austria which 35 employees 

have joined so far. The bank’s sexual-orientation initiatives were 

awarded the Meritus prize in autumn 2011. 


28



Environmental management 

In May 2011, Bank Austria became the first commercial bank in 

Austria to implement an environmental management system in 

accordance with ISo 14001. The bank also had the system 

audited by Quality Austria, an external organisation; the audit took 

several days to complete. The establishment of the environmental 

management system ensures ongoing monitoring and control of 

major direct and indirect environmental impacts. The fact that the 

Steering Committee is headed by the Chief Executive Officer of 

Bank Austria shows that the bank attaches great importance to 

environmental and climate protection. With our environmental management 

network we have created the organisational structure and 

defined responsibilities to ensure that environment-related issues 

are coordinated and implemented in all banking operations of 

UniCredit Bank Austria AG. The environmental management system 

set up by Bank Austria covers the head office buildings and all 

branches. This provides the basis for continuous improvement. 

Bank Austria is reducing its ecological footprint by drawing up an 

annual environmental programme covering operational and business 

aspects: e.g. further expansion of energy-saving features of IT 

equipment, renewal of refrigerating equipment in head office buildings, 

energy monitoring for branches, installation of photovoltaic 

systems, financial assistance programmes focusing on renewable 

sources of energy, financing initiative for ecologically sound buildings, 

development of sustainable types of investment, and various 

information-related and communication measures. The maximum 

CO2 emission level for cars in the Bank Austria fleet, which currently 

comprises about 130 vehicles, has been set to 100 grams 

per kilometre. The CO2 emission level of the current standard 

model, at 89g CO2/km, is significantly lower than the low maximum 

level set by the bank. New binding rules were introduced for 

the maximum CO2 emission levels for cars used by management. 

Moreover, the basic rule is that the railway is the primary means of 

transport to be chosen for business travel. Bank Austria is also 

encouraging the use of video conferencing facilities to reduce business 

travel to a minimum. 

The range of sustainable products and services was further 

expanded. In addition to sustainable mutual funds, Bank Austria 

also offered a savings product under the name of “Bau(m)sparen”, 

which combines a classic building society savings agreement with 

the possibility of actively contributing to the protection of rainforests. 

The bank continued to organise seminars on “Energy-efficient 

construction and renovation”, which remain very popular. 

Bank Austria aims to offer its customers suitable and attractive 

products and services with a view to gradually reducing indirect 

environmental impacts at bank customers. “KlimaKredit“ is a loan 

product which comes with a cash bonus for customers who want 

to improve the energy efficiency of their real estate. Specific financial 

assistance schemes and financing offers are available to cor- 

porate customers for raising energy efficiency and the use of 

renewable energy. Strengthening sustainable real estate business 

and improving the ecological characteristics of the real estate portfolio 

are also important aspects. 

Building on the structure and results of the environmental management 

system, Bank Austria became one of the six founding members 

of klima:aktiv pakt2020 at the beginning of November 2011. 

klima:aktiv pakt2020 is an alliance created by the Austrian Ministry 

of Life which provides support to companies for operational aspects 

of climate protection. The participating companies undertake, 

through a voluntary agreement on objectives, to at least meet the 

Austrian climate-related targets for 2020. On the basis of data from 

2005, the minimum targets are a 16% reduction of greenhouse 

gases, a 20% increase in energy efficiency and the use of renewable 

energy to meet 34% of total energy needs. 

Key indicators 1) 


Electricity consumption in kWh 

(incl. computer operations centre) 77,000,000 2) Heating in kWh 

80,824,248 

(incl. long-distance heating, oil and gas) 50,000,000 2) CO2 emissions from 

55,248,832 

electricity and heating in t 3) 8,900 9,366 

Business travel in km 24,985,198 24,018,073 

of which: air travel 18,831,252 17,739,435 

by car 5,442,757 5,560,294 

by train 711,189 718,344 

CO2 emissions due to business travel in t 4) 3,180 3,125 

Water consumption in m3 (incl. well water) 232,000 290,000 

Waste in kg 5) 1,560,343 1,845,905 

Paper consumption in kg 896,742 1,021,761 

of which: TCF/ECF 763,864 964,114 

recycling 61,467 21,150 

1) System perimeter: branch network and head office buildings in Austria (incl. Group companies 

located there). / 2) Data for 2011 for head office buildings plus projected data for the 

branch network. / 3) Since the beginning of 2010, electricity supplied to Bank Austria has come 

from renewable sources of energy. / 4) Source of conversion factors: 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. 

Protecting the climate and the environment has been a key issue for 

Bank Austria for many years. UniCredit Group is committed to taking 

measures against climate change. The banking group aims to 

reduce CO2 emissions by 15 per cent in the period to 2012 and by 

30 per cent in the period to 2020. In Austria, Bank Austria aims to 

make an essential contribution to achieving these Group objectives. 

The banking subsidiaries are also implementing projects and measures 

to reach the CO2 reduction target. For example, UniCredit Bank 

Slovakia has also received ISO 14001 certification. UniCredit Business 

Partner (UCBP) with its offices in Austria and Romania has an 

environmental management system certified in accordance with ISO 

14001. The Corporate Sustainability Report of UniCredit Group contains 

full details of key environmental indicators and of ecological 

measures taken by the bank in the entire CEE region. 


29



Research and development, investment 

Bank Austria’s business objective 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 

refined. 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. The go-live is planned 

for the week-end of 21/22 July 2012, with preparations taking 

the form of trial runs and the final test in the preceding months. 

The standardisation of the many systems adopted through previous 

business combinations has cut costs while increasing IT 

efficiency and reducing IT complexity. 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, a webbased 

system harmonised across the different regions. EuroSIG 

moreover facilitates the development and settlement of products 

which are distributed on a cross-border basis. Austria will be the 

fourth country – after Italy, the Czech Republic and Germany – 

to adopt EuroSIG. In 2011, components of software development, 

of the computer operations centre and of support services 

were outsourced to Blue IT Services GmbH. The relevant 

activities will in future be performed in cooperation with IBM. 

A similar service agreement was concluded for the next ten 

years with IBM in Ukraine in February 2012. 

� A personnel-intensive service company seeking to increase 

efficiency needs to make investments in the buildings it uses. 

With the realisation of the Bank Austria Campus project, the head 

office functions currently performed in various locations will be 

concentrated within a single headquarters complex. Bank Austria 

will develop, build and utilise a new business location with workplaces 

for about 4,000 employees of the bank by 2016. Planning 

permission will probably be granted by the authorities in 2012. 

Since 2011, Bank Austria has been building an innovative basic 

and ongoing training centre at Kaiserwasser in Vienna. The training 

centre – with Turin, UniCredit Group’s second international centre 

for management development – will include sports and leisure 

facilities, and facilities for events. After completion, scheduled for 

the end of 2012, it is envisaged that about 4,000 employees from 

all the regions covered by the Group’s operations will participate in 

training courses at the centre each year. 

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-14 

within “F – Additional disclosures” of the notes to the consolidated 

financial statements. 

� The risk report is a separate chapter (“E – Risk report”) in the 

notes to the consolidated financial statements (pages 135 to 163). 

� 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.11 of the risk report (pages 157 to 158). 

� Details of the use of financial instruments are given in the notes 

to the consolidated financial statements. 


30



Development of business segments 

Family & SME Banking (F&SME) 

(€ m) 2011 2010 CHAngE 


Operating costs – 910 –851 –60 +7.0% 

Operating profit 267 300 –33 –11.1% 

Net write-downs of loans –161 –264 +103 –38.9% 

Net operating profit 106 37 +70 >100% 

Profit before tax 112 43 +69 >100% 

Loans to customers (avg.) 21,697 22,028 –331 –1.5% 

Risk-weighted assets (avg.) 2) 13,162 14,335 –1,173 –8.2% 

Average equity 3) 1,137 754 +383 +50.8% 

1) For segment reporting purposes, the comparative figures for 2010 were recast to 

reflect the structure and methodology of the 2011 reporting period (see the segment 

reporting section in the notes to the consolidated financial statements on pages 124 to 

132 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 with the consolidated equity of the Bank Austria Group is shown in 

the Corporate Center. See segment reporting section on pages 126 to 127. 

This information applies to all business segment tables. 

Since the beginning of 2011 the Family & SmE Banking (F&SME) 

business segment has comprised SMEs (small and medium-sized 

enterprises) in addition to the Mass Market, Affluent and Small 

Businesses customer sub-segments. The SME target group includes 

businesses with a turnover between € 3 m and € 50 m, which are of 

special significance for the economy. With total loans of € 21.7 bn 

and deposits totalling € 23.3 bn (annual averages for 2011) and operating 

income of € 1.2 bn, F&SME is a major pillar of Bank Austria. 

The Division’s network of 338 branches and sales units and 

3,976 employees (FTEs) give Bank Austria high visibility. 

� Overall, and measured by results, F&SME had a good year in 

2011. Operating income increased by 2.3% although credit demand 

and transaction volume were low. Profit before tax for 2011 was 

€ 112 m, over two and a half times the 2010 figure and matching 

the 2008 level. The € 69 m improvement resulted from revenue 

growth in current business and from lower net write-downs of loans 

and provisions for guarantees and commitments (down by € 103 m), 

with results again more strongly reflected in profit before tax. 

The market and banking environment varied considerably in 2011 

and this is reflected in divergent trends in income components. The 

major factors – in a generally stagnating and overbanked market – 

were the change from expectations of higher interest rates in the 

early months of the year to an unexpectedly strong decline in interest 

rates across all maturities and the flattening of the yield curve which 

started in the summer. These developments had a widely varying 

influence on interest income from the assets side and the liabilities 

side. There was strong competition for deposits in the entire banking 

sector, leading to favourable terms for customers while also resulting 

in rising interest income from reference rate developments. On the 

lending side, margins remained under pressure. The persistent debt 

crisis and partly also deep fears of expansionary countermeasures 

taken by economic policymakers were the main topic and the major 

source of uncertainty in business with customers, reflected in their 

preference for liquidity, the price of gold and the strong appreciation 

of the Swiss franc. Investors showed a pronounced risk aversion 

and a strong preference for bank deposits and easy-to-understand 

bank bond issues, which enabled us to achieve good placement 

results. 

� operating income in 2011 was € 1,177 m, up by 2.3% on the 

previous year, with the combined increase in net interest and dividend 

income and other income from equity investments more than 

offsetting the decline in net fees and commissions. net interest 

increased by € 20 m or 2.8% to € 724 m. Average lending volume 

was more or less unchanged (down by 1.5% at business segment 

level, unchanged in the Bank Austria sales network). While consumer 

loans were significantly lower, volume was supported by the 

increase in construction and housing loans, which rose by about 

6% as a successful marketing campaign led to lively new business 

(+14%). Terms and conditions for customers remained stable, 

while the interest margin narrowed on the assets side because of 

reference rate developments. At business segment level (including 

subsidiaries), total deposits (direct deposits) declined slightly compared 

with the previous year (–1.2%) while remaining unchanged 

in the branch network. Although interest rates on customer deposits 

were higher, interest margins improved significantly as a result of 

reference rate developments. Sight and savings deposits made the 

strongest contribution to revenue growth; demand for time deposits 

declined in response to lower market interest rates. 

net fees and commissions decreased slightly in 2011, by 1.9% 

to € 434 m, but they still accounted for a substantial 37% of operating 

income. As in previous years, net fees and commissions generated 

by commercial banking services including account maintenance 

and payments as well as safe-custody business were lower. 

Net fees and commissions from share trading and safe-custody 

business in 2011 were also down compared with the previous year. 

Among the investment products, sales of insurance contracts and, 

even more significantly, mutual fund business declined. 2011 was a 

poor year for mutual fund business in Austria. In new business, PIA 

guarantee bonds, PIA Focus Invest products and Real Invest Austria, 

an open-ended real estate fund, were particularly attractive to investors, 

clearly reflecting their current preferences. Good placement 

results for the bank’s own issues strongly supported net fees and 

commissions in 2011. In addition to tax-privileged Wohnbauanleihe 

bonds, the bank issued ErfolgsAnleihe bonds featuring easy-tounderstand 

and transparent terms and conditions, mortgage bonds 

and structured bond issues with an inflation and capital guarantee, 

which took account of the current interest rate environment and 

investors’ strong preference for security. The average volume of 

bonds outstanding in 2011 was up by 9% on the previous year. 


31



While revenues were stable, higher operating costs (+7.0% to 

€ 910 m) had an impact on operating profit. The inclusion of small 

service providers in the group of consolidated companies and in the 

F&SME Banking Division (DC Elektronische Zahlungssysteme GmbH 

and Cards & Systems EDV-Dienstleistungs GmbH) influenced the 

overall picture because the relevant figures for the previous year 

were not recast. On the other hand, initiatives to expand our market 

position became effective: the sales network was strengthened with 

the recruitment of new employees and internal transfers to customer 

service units – especially in the SME sub-segment – of employees 

who received special training for this purpose. More over, young new 

employees joined the Division under the “Best Start” programme. 

This compares with the retransfer of a number of employees from 

support functions to central Competence Lines (Corporate Center). 

On balance, staff numbers rose by 189 FTEs (+5.0%) in 2011. 

In 2011, net write-downs of loans and provisions for guarantees 

and commitments in F&SME were € 161 m, down by 

€ 103 m or 39% from the previous year; this was the main factor 

contributing to profit growth. The cost of risk was as low as 74 basis 

points (bp), substantially lower than in the previous year (120 bp). 

This development is explained by a positive economic trend: default 

rates among private individuals showed a relatively favourable development, 

supported by economic growth and the gradual improvement 

in employment and incomes in Austria over the past few years. 

On the other hand, appreciation and depreciation of the Swiss franc 

had an impact additionally amplified, for methodological reasons, by 

a leverage effect in the development of current net additions to loan 

loss provisions (and in risk-weighted assets). A change in Basel 2 

model parameters and the switch to a quantitative model more 

effectively took account of these special factors. When the Swiss 

central bank announced an intervention threshold of 1.20 CHF/EUR 

on 6 September 2011, exchange rate movements started to reverse. 

After the release of loan loss provisions in the fourth quarter of 

2011, the provisioning charge was very low, further reducing the 

full-year figure. (Average RWAs in 2011 were also significantly lower, 

by 8.2%, than the comparative figure for the previous year, which 

reflected the strength of the Swiss franc at the time.) 

➔ operating profit in the F&SME business segment was down by 

€ 33 m or 11% from the previous year. As the decline in net writedowns 

of loans and provisions for guarantees and commitments was 

even larger (€ 103 m), net operating profit improved by € 70 m to 

€ 106 m compared with the previous year. The balance of non-operating 

items in the income statement had hardly any impact on the 

overall picture: provisions for risks and charges showed net income 

of € 4 m (after a net expense of € 7 m in 2010). Net income from 

investments was down by € 11 m to € 3 m, reflecting the base 

effect of one-off income in the first quarter of 2010 (realised gains 

on the sale of shares held by a subsidiary). Profit before tax rose by 

€ 69 m to € 112 m, an increase more or less matching that in net 

operating profit. 

� A sharp focus on customer needs, products which are easy to 

understand, the employment of new means of communication and, 

quite generally, enhancing customer satisfaction continued to be 

focal areas of our activities in sales, marketing and product development 

in 2011. In business with private customers we successfully 

launched a new service approach – “Smart Banking” – as a pilot 

project for about 60,000 identified target customers in Vienna. 

We are thereby leading customers in real-time contact from the 

Bank Austria app in the Apple, Android or Nokia environment towards 

personal dialogue with relationship managers in OnlineB@nking via 

telephone or SMS – around the clock and independent of branch 

opening hours. In this context Bank Austria achieved high activation 

and cross-selling rates while also relieving the workload at branches 

in standard business. This suggests that the new sales channel will 

be of major significance in the future. 

Other focal areas in 2011 were acquisition efforts based on a structured 

dialogue with new customers, which accompanies customers 

during the first year in which they are served by Bank Austria, and 

advertising campaigns concentrating on such topics as housing and 

provision for the future (insurance products). We use numerous feedback 

instruments aimed at customer retention. Bank Austria was the 

first bank in Austria to introduce feedback loops immediately after 

personal contacts with customers. “Banking without Borders“ is an 

initiative, initially launched at five branches, to serve foreign-language 

customers in their own language; in this context we offered low-cost 

payment solutions in cooperation with UniCredit branches in Serbia, 

Croatia, Bosnia and Turkey (ethnic banking). To further enhance services 

provided by relationship managers to customers in the Affluent 

sub-segment, we made a significant investment in ongoing training 

in investment advisory services in cooperation with national and 

international institutions of higher education; 60% of relationship 

managers at Bank Austria have already obtained a certificate after 

participating in the training programme. Furthermore, we completely 

changed our performance incentives, switching from product- 

oriented sales objectives to customer satisfaction and team performance. 

After the integration of the SmE sub-segment (small and mediumsized 

enterprises) in the Family & SME Division (which was prepared 

in 2010 and completed at the beginning of 2011), we now operate 

31 branches and 23 specialised outlets serving SMEs. The team of 

relationship managers – including specialists in finance, factoring, 

leasing and Treasury operations – use a wide range of products. 

Advisory services with regard to financial planning, liquidity management 

and risk management are an essential component of the customer 

relationship. Subsidised loans, loans under the “SME Billion” 

lending scheme, the “Umbrella Facility”, trade finance and FX risk 

management are tailored to meet the needs of small and mediumsized 

businesses. 


32



Private Banking 


Operating income 149 140 +9 +6.7% 

Operating costs –100 –101 +1 –0.5% 

Operating profit 49 39 +10 +25.3% 

Net write-downs of loans –4 –2 –2 n.m. 

Net operating profit 45 37 +8 +21.5% 

Profit before tax 47 39 +8 +21.4% 

Total financial assets (avg.) 16,995 16,514 +481 +2.9% 

Loans to customers (avg.) 389 369 +19 +5.2% 

Risk-weighted assets (avg.) 484 535 –50 – 9.4% 

Average equity 131 123 +9 +7.3% 


With its two well-known brands – Bank Austria Private Banking, the 

private banking operations of a major bank, and Schoellerbank, a traditional 

private banking institution – the Private Banking Division is 

the third pillar of Austrian customer business. In Private Banking, too, 

the range of services covers all banking services, from account management 

to financing needs. Based on an exclusive advisory strategy, 

these services are tailored to the client’s specific requirements. With 

a presence in 25 locations throughout Austria, the Division’s 556 

employees serve the top segment of private customers. With about 

€ 17 bn in client assets (total financial assets at the end of 2011: 

€ 16.9 bn) and serving almost 36,000 high net worth individuals 

(19% market share), the Private Banking Division is market leader in 

Austria (19% market share). In addition to its day-to-day business, 

the Private Banking Division is important for Bank Austria’s image as 

it has responsibility for the customer segment of high net worth individuals 

and private foundations. 

� The Private Banking business segment was challenged by the 

volatile investment climate in 2011. However, the (temporary) slump 

in prices in the higher risk investment categories, the uncertainty 

prompted by the government debt crisis, and widespread scepticism 

among clients over the long-term consequences of an expansive 

monetary policy were all factors enabling Private Banking to meet 

clients’ needs through the entire range of products and services – 

from special Private Banking expertise through to issues and direct 

deposits. 2011 saw a sharp rise in operating income (+6.7%); with 

costs declining slightly, this boosted operating profit (+25.3%) and 

profit before tax (+21.4%). 

� 2011 was a disappointing year for investors – not catastrophic 

like 2008, but a year in which popular investments failed to deliver 

adequate returns. After a quiet first half-year, volatility as a measure 

of unpredictable movements increased significantly as the government 

debt crisis escalated in the late summer. In the first half of 

2011, equities still held out some hope of adequate returns, before 

being affected by the risk-averse behaviour of investors. At the end 

of 2011, the world share index MSCI (in local currency) was 8.5% 

lower than a year earlier; the performance of the New York Stock 

Exchange prevented a sharper decline. Notwithstanding favourable 

economic growth and occasional strong inflows of capital, the MSCI 

index of the BRIC stock markets was 19.5% lower, and the MSCI 

index of CEE stock markets fell to more or less the same extent 

(–18.6%). The EuroStoxx index was down by 17.7%, and the ATX 

index by 35.7%. Trends in equities were mirrored by bonds, where 

performance in the second half of 2011 was contrary to that of the 

first half. The flight to quality in connection with the government debt 

crisis saw euro-denominated benchmark bonds gain 14.0% in 2011 

as a whole, while non-financial euro-denominated corporate bonds 

delivered a return of 2.5% (price+coupon). In average terms this is 

not much more than that received on cash deposits; at 3.8%, yields 

on jumbo mortgage bonds were higher. Both commodities (–5.3%, 

Rogers, euro-hedged) and hedge funds (–8.7%, HFRX, euro) were 

asset classes which were in negative territory. While gold reached an 

all-time high of US$ 1,920 per ounce at the beginning of September 

2011 (+35% since the beginning of the year), the rate of the 

increase had fallen to 10.2% by the end the year. 

� At the end of 2011, total financial assets (quarterly averages) 

were € 16.9 bn, more or less equal to the level of the previous year 

(–0.1%), despite the slump in market prices in Q3 2011. In average 

terms for the year, total financial assets rose by 2.9% to € 17.0 bn. 

The composition of total financial assets shifted slightly as customers 

showed greater preference for liquidity: direct deposits accounted for 

36%, up from 32% on the previous year. This compared with a slight 

fall in the share of assets under custody (direct investments in securities/safe-custody 

business) to 35% from 38% in the middle of 

2011. The share of assets under management (funds and asset 

management) remained unchanged, which reflects the long-term 

strategy. The – probably temporary – shift of securities investments 

into liquidity reflects the uncertainty given the exceptional conditions. 

Investor restraint was most pronounced in the third quarter of 2011, 

but has since eased somewhat. The structure of revenues shows a 

similar trend. 

� operating income rose steadily from quarter to quarter (fourth 

quarter 2011: +9.3% on the previous year). At € 149 m for 2011 as 

a whole, it was 6.7% up on 2010. Net interest increased by 36.9%, 

driven by an increase in the volume of direct deposits which was 

triggered partly by a successful time-deposit initiative by 

Schoellerbank and by a general wait-and-see attitude of many customers. 

Net interest was also supported by interest rate developments 

(higher margins on deposits as a result of reference rate 

developments). This had a much stronger positive impact than in 

other business segments, especially as the converse, negative 

spread effect does not really affect the results of the Private Banking 

Division on account of the small volume of loans granted. As 

expected, the rise in net interest compared with a lower level of 


33



fee-based income. Net fees and commissions, the most significant 

income component for private banking business, accounted for 

59% of operating income and was 7.3% down on the figure for 

the previous year. While including revenue from fund and asset 

management business, which develops in a more predictable manner, 

they also reflect investment turnover which is a result of investment 

behaviour. This in turn mirrors the mood prevailing in capital 

markets. Brokerage business made a much smaller contribution to 

net fees and commissions. 

While operating income increased by 6.7% despite the difficult 

environment, costs remained stable in 2011. They even fell a little 

(–0.5%) as of the end of 2011, although staffing levels were 

slightly up, by 12 FTEs (+2.2%), on the previous year following the 

recruitment of experts. Less net write-downs of loans and provisions 

for guarantees and commitments (€ 4 m), this resulted in a 

profit before tax of € 47 m (+21.4%) for 2011. As the business 

segment with the most advisory-intensive services and the most 

staff-intensive client relationships, the Private Banking Division had 

a cost/income ratio of 67.4% in 2011, which is an improvement of 

4.9 percentage points in a comparison with 2010. Return on equity 

before tax for 2011 was 35.6% after 31.5% in the previous year. 

Performance of major asset classes in 2011 

170 

160 

150 

140 

130 

120 

110 

100 

90 

80 

70 

60 

50 

40 

30 

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 

2010 


Shares: Euro Stoxx 

10-year € benchmark bond 

10-year Greek bond 

Gold (US$ per ounce) 

Swiss franc in euro 

BBB corporate bonds 

Commodities, Rogers, € 

For bonds and shares: 

total return, i.e. price + reinvested coupon or price + reinvested dividend 

Average for Q1 2010 = 100 

Gold (US$) 

Swiss 

franc/€ 

€ benchmark 

bond 

Corporate 

bonds 

Shares 

Commodities 

Greece 

The Private Banking business segment generated an Economic Value 

Added (EVA) of € 32 m and a risk-adjusted return on risk-adjusted 

capital (RARORAC) of 84%. 

The Private Banking Division’s investment strategy and service 

approach always give priority to preserving wealth over achieving 

short-term performance, and have always managed risk through wide 

diversification. In Private Banking, the process chain starts with the 

professional analysis of needs and transparent contract structures 

throughout the entire spectrum, from client safe-custody accounts to 

discretionary mandates. At the end of the process chain is our financial 

planning advisory strategy, an instrument for providing our 

wealthiest clients with integrated advisory services. At present, there is 

no competitor in the Austrian market capable of offering clients advisory 

services of such a comprehensive nature and such high quality. 

As market leader in the private foundations sub-segment, the Division 

set up a private foundations centre in May 2011. The team of 

experts assigned to this centre supports clients throughout Austria 

with economic and legal issues, and with succession planning in particular. 

Meeting the needs of Austrian private foundations is a strategic 

focus of the Private Banking Division’s activities. 

In the course of 2011, Private Banking took a number of further initiatives 

to expand its position in the market: after implementing an 

ongoing review of portfolio quality by the bank’s own portfolio analysts 

and within the international network of UniCredit experts, the Preferred 

Partners concept has resulted in a simplification of products and 

services, and in quality enhancement. The focus on ten outstanding 

fund management companies as partners provides a basis for optimum 

coordination of current market evaluation by the Division’s 

experts, and for precise quality management and quality control. Asset 

management services benefit from the international dimension provided 

by the global investment strategy (GIS) of UniCredit’s Private 

Banking Division. The 5Invest asset management approach is 

based on these two components. Clients can select the investment 

strategy that best suits their needs, depending on their risk tolerance 

and specific investment goals. The quality of the 5Invest portfolio was 

audited and certified by Institut für Vermögensaufbau, an independent 

institution. 

At the end of November 2011, for the seventh time in succession, 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 five best asset managers in German-speaking 

countries among 349 well-known providers in four 

countries, and as the best private banking institution in Austria. 

Since December 2011, Schoellerbank has been the exclusive contact 

in Austria for high net worth individuals served by UniCredit in Central 

and Eastern Europe (CEE). In this way, Schoellerbank has become the 

Private Banking competence centre for clients from Central and Eastern 

Europe. 


34



Corporate & Investment Banking (CIB) 



Operating costs –390 –361 –29 +8.0% 

Operating profit 705 721 –15 –2.1% 

Net write-downs of loans –131 –146 +15 –10.1% 

Net operating profit 574 574 –1 –0.1% 

Profit before tax 513 550 –37 –6.7% 

Loans to customers (avg.) 41,756 42,132 –376 –0.9% 

Risk-weighted assets (avg.) 24,797 27,232 –2,436 –8.9% 

Average equity 2,171 2,063 +109 +5.3% 

The Corporate & Investment Banking (CIB) business segment coped 

very well with an increasingly difficult environment in 2011. Corporate 

customers enjoyed a strong liquidity position early in the year, and this 

was the reason why credit demand was weak in a good first half-year. 

Given the uncertainty prompted by the escalating government debt 

crisis, and in view of the economic slowdown which started in the 

second half of the year, companies became more and more hesitant 

to implement their corporate plans and investment projects. Foreign 

trade and the related transaction volume also weakened. Companies 

again started to access capital markets as a source of financing, with 

CIB playing a leading role in several corporate bond issues. Changes 

in the interest rate environment, widening risk spreads in capital 

markets and higher liquidity costs presented customers with a new 

situation while also challenging the CIB Division’s Treasury. Net writedowns 

of loans and provisions for guarantees and commitments remained 

at a very low level. While loans and receivables with customers 

were more or less unchanged, average risk-weighted assets were 

reduced significantly (despite the implementation of Basel 2.5). 

➔ Operating income in 2011 was € 1,095 m, up by € 14 m or 

1.3% on the high level of the previous year. Costs grew by 8.0%. As 

the provisioning charge was significantly lower (–10.1%), net operating 

profit (operating profit less net write-downs of loans and provisions 

for guarantees and commitments) reached € 574 m, matching 

the high figure for the previous year. CIB thereby accounted for fourfifths 

(79%) of net operating profit generated by Austrian customer 

business – even after the transfer of the SME sub-segment to the 

F&SME Banking Division – and contributed one-quarter (26%) to net 

operating profit of the bank as a whole (without the Corporate Center). 

The CIB Division was again a major contributor to revenues generated 

by the bank as a whole. Profit before tax amounted to € 513 m, down 

by 6.7% from the previous year due to various one-off effects resulting 

from non-operating items. In 2011, the CIB business segment 

again made a substantial contribution to value creation (Economic 

Value Added, marginal EVA), with € 229 m, and generated a risk-adjusted 

return on risk-adjusted capital (RARORAC) of 13.87%, based 

on improved RWA efficiency. *) 

*) In the calculation of EVA, allocated equity reflects the target Core Tier 1 capital ratio based 

on average risk-weighted assets (RWAs). 

� In the difficult environment, the CIB Division’s core commercial 

banking business performed comparatively well in 2011. 

operating income was slightly above the figure for the previous 

year (+1.3%). Growth was mainly driven by the Finance & 

Advisory (F&A) and Global Transaction Banking (GTB) sub-segments. 

F&A achieved slightly higher net interest while net fees 

and commissions declined. GTB showed a strong net interest 

performance mainly resulting from margin developments on the 

deposits side. The Markets sub-segment recorded a significant 

positive swing in the net trading result, from a net loss to net 

income, and declines in net fees and commissions and in net 

interest. 

Operating income matrix: product view and network view 

€ m 

Finance & 

Advisory 

Markets 

Global 

Transaction 

Banking 


Total 

network 2011 452 54 315 822 

2010 458 67 309 835 

Counterparts 2011 54 219 … 274 

2010 25 222 … 247 

Total 2011 506 274 315 1,095 

2010 483 290 309 1,082 

� net interest, at € 817 m, matched the high level of the 

previous year (+0.1%). It is the most important income component, 

accounting for 75% of operating income. Lending volume, 

which declined in late 2010/early 2011, rose again in the fourth 

quarter of 2011; in annual average terms, it was only slightly 

lower than in the previous year (–0.9%). Within the total, loans 

to real estate customers and public sector entities increased 

strongly. Medium-term and long-term loans declined slightly 

while overdraft loans were significantly reduced as part of companies’ 

stricter cash management. Interest margins improved 

strongly in the second half of 2011, after a decline in the first 

quarter; this reflects movements in the yield curve and in reference 

rates. In 2011 as a whole, the interest margin reached the 

same level as in the previous year. As in the bank’s other business 

segments, interest rate spreads improved significantly on 

the deposits side. This more than offset the decline in volume of 

short-term deposits. The contribution to net interest also rose on 

the lending side; given the large volume, this development was 

due to a minor improvement in spreads on medium-term and 

long-term loans. Dividend income and other income from equity 

investments was € 44 m, matching the previous year’s level. 

35



net fees and commissions were € 220 m for 2011, down by 

11.9% from the previous year. In view of growing market volatility 

and uncertainty over the escalating government debt crisis, the 

decrease reflects restraint on the part of customers in securities 

transactions and hedging operations. The protracted decline in net 

fees and commissions is also due to structural reasons, e.g. less 

intensive use of derivatives and the unsatisfactory earnings position 

of foreign brokerage firms assigned to CIB (e.g. CJSC Securities 

Russia). A methodological factor, i.e. the change in the recognition 

of commitment fees, also affected net fees and commissions. Feebased 

business picked up in the latter part of the year: CIB was 

involved in a leading capacity in capital measures (including OMV, 

Lenzing, Immofinanz) and in launching and placing major corporate 

bond issues (Egger, Alpine, Strabag, Wienerberger), underlining its 

role as a preferred partner in capital markets. CIB’s net trading performance 

swung from a net loss of € 44 m in 2010 to net income 

of € 5 m in 2011. The net loss on trading activities in the previous 

year was mainly due to technical market factors; in this context, 

the first half of 2010 saw large trading-induced interest income. 

In the meantime, proprietary trading activities were transferred from 

Bank Austria to operations in the cross-regional CIB Division. 

operating costs in 2011 were € 390 m, up by 8.0% on the previous 

year (+7.5% without the bank levy payable by the banking subsidiaries 

in the CIB business segment, which are separate legal entities). 

This growth was mainly due to higher payroll costs (+10.8%); 

non-staff expenses rose by 7.6% as IT costs were higher than in the 

previous year. Another factor explaining the increase in operating 

costs is the first-time consolidation of several new subsidiaries 

(Immorating GmbH, BACA Realinvest Client GmbH) in CIB’s income 

statement for 2011; the 2010 figures were not recast retrospectively 

in this respect. Moreover, staff numbers of product units for customer 

business (Finance & Advisory and Global Transaction Banking/GTB) 

were increased on a selective basis. At the end of 2011, the number 

of employees in the CIB business segment was 1,212 (full-time 

equivalents – FTEs), including 211 FTEs at the foreign brokerage 

firms and former CAIB subsidiaries. Staff numbers at the end of 

2011 were down by 6 FTEs from the previous year. As a result of the 

cost increase, the cost/income ratio rose from 33.4% in 2010 to 

35.6% in 2011; at this level, the cost/income ratio is still far below 

the average for the bank as a whole (55.9%). 

net write-downs of loans and provisions for guarantees and 

commitments remained under control in 2011: the provisioning 

charge was € 131 m, down by 10.1% from the 2010 figure. The 

decline in additions to the restructuring portfolio, in particular, had a 

positive effect. The decrease in CIB is less pronounced than in other 

Divisions. It should be noted, however, that net write-downs of loans 

and provisions for guarantees and commitments declined strongly in 

2010, a year which saw releases of large-volume provisions made in 

previous periods. The cost of risk was very low, at 31 basis points 

(bp) of average lending volume (2010: 35 bp), also in a multi-year 

comparison. 

net operating profit for 2011 was € 574 m, matching the high level 

of the previous year. To be deducted from this amount are non-operating 

expenses of € 61 m (2011: – € 24 m). Net additions to provisions 

for risks and charges (€ 19 m for litigation costs and risks) were 

slightly lower than in the previous year. Integration/restructuring costs 

amounted to € 15 m in connection with the restructuring of the 

Russian brokerage firm CJSC Securities Russia (previously ATON), 

which is consolidated in CIB. The net result from investments in 2011 

was a net loss of € 26 m (2010: – € 4 m); this included write-downs 

of € 20 m on Greek government bonds. 

➔ Profit before tax declined by 6.7% to € 513 m, reflecting the 

higher non-operating items to be deducted from net operating profit. 

While lending volume was more or less unchanged, average riskweighted 

assets were reduced by 8.9%. As a result of methodological 

changes, however, allocated equity rose significantly, by 5.3%, 

compared with the previous year. On this basis, return on equity 

(ROE before tax) was 23.6%, down from 2010 (26.7%) but still very 

satisfactory. 

Our strong equity capital base enables us to continue providing Austrian 

companies with loans. In the context of loans as a core product, 

we aim to intensify capital market-related services through cross-selling 

efforts. Overall, we give particular attention to risk-adjusted capital 

efficiency. With a view to expanding its market position and raising 

profitability, the CIB Division focuses on cross selling and intensive use 

of the entire value creation chain covered by the Division’s crossregional 

operations. On the corporate banking side, CIB also aims to 

strengthen its function as strategic financial partner and companies’ 

partner of first choice for structured finance and capital market activities. 

In 2011 we participated in a leading capacity in all major equity 

capital market transactions in Austria. CIB has introduced a Senior 

Banker approach to provide targeted services to CEOs/CFOs of large 

national and international companies. Moreover, we have launched the 

“Strategic Financial Advisory Services” initiative in order to optimise, 

together with customers, the financing structure of companies in line 

with the customer’s specific corporate strategy. Another focus is on 

cross-border business: the “Umbrella Facility” launched in 2011 is 

a cross-border financing facility to which CEE subsidiaries of Austrian 

companies have fast and easy access, initially in ten CEE countries. 

Bank Austria is market leader in export finance, the bank handles 

almost one-half of the export loans covered by Oesterreichische Kontrollbank 

(OeKB), beyond CEE also in the Asian growth markets and 

promising markets in Africa. gTB is making intensive use of the international 

network. Other focal areas are advisory services and finance 

for municipalities (in connection with the “Gemeindemilliarde” lending 

scheme) in the public sector and services for commercial real estate 

customers. Commercial real estate finance once more proved to be 

a stable pillar of CIB’s operations in 2011. The Real Estate department 

maintained the volume of new loans, which doubled from 2009 to 

2010, at a very high level of € 2.2 bn while increasing the proportion 

of CEE financing by 10% compared with 2010, to a total of € 740 m. 


36



Central Eastern Europe (CEE) 

(€ m) 2011 2010 CHAngE adj.*) 

Operating income 4,722 4,691 +32 +0.7% +5.2% 

Operating costs –2,195 –2,128 –67 +3.2% +7.5% 

Operating profit 2,527 2,563 –35 –1.4% +3.2% 

Net write-downs of loans –1,055 –1,426 +371 –26.0% –23.9% 

Net operating profit 1,472 1,137 +335 +29.5% +37.8% 

Profit before tax 1,462 1,143 +319 +28.0% +36.4% 

Loans to customers (avg.) 67,217 63,151 +4,066 +6.4% +10.2% 

Risk-weighted assets (avg.) 81,495 75,226 +6,269 +8.3% +13.1% 

Average equity 11,932 11,027 +904 +8.2% … 

*) adjusted = at constant exchange rates 

The Central Eastern Europe (CEE) business segment saw a continued 

upward trend in 2011, after the economic recession experienced in 

2009, although its results were weighed down by various external 

factors. Profit before tax in CEE was € 1.5 bn, contributing over twothirds 

to the overall figure generated by the customer business segments 

(Bank Austria excluding the Corporate Center). With an increase 

of 28.0% (adjusted for exchange rate movements, +36.4%) the CEE 

business segment was again the main driver of growth. 

This performance is all the more impressive as our banking subsidiaries 

in CEE did not fully escape the impact of the difficult operating 

environment in the second half of 2011. In addition to the economic 

slowdown, the West European government debt crisis also had indirect 

impacts on capital transactions, funding conditions and trends in 

interest rates and exchange rates. Added to this was fiscal or monetary-policy 

intervention (bank levy, increases in minimum reserve 

requirements, product restrictions, interest rate caps, mandatory FX 

conversion …). As in the previous year, the CEE economies showed 

wide regional divergence in 2011, reflecting the specific production 

structure, size and degree of economic autonomy of the various countries 

and the intensity of their international links. Such divergence also 

characterised the performance of our banking subsidiaries. Currency 

movements were a significant factor in this context. Almost all currencies 

depreciated on the basis of annual average exchange rates, 

which are used for currency translation of items in the income statement. 

Exceptions were the Czech crown, the Serbian dinar and countries 

which operate a currency board. The Turkish lira depreciated by 

14.5% against the euro, mainly on account of monetary-policy measures 

to fend off undesirable capital inflows, and as a result of a large 

current account deficit. Based on constant exchange rates, the rates 

of change of income statement items in the CEE business segment 

would have been almost 4 and up to over 5 percentage points higher, 

depending on the respective country group; for large items such as 

operating income, operating costs and risk-weighted assets, the 

exchange rate effect is minus 4.5 percentage points. 

� The strong improvement in profits was based on stable revenues: 

adjusted for exchange rate movements, operating income rose 

by 5.2%; at current exchange rates, the increase was 0.7%. While 

operating costs grew at slightly higher rates than operating income, 

the cost/income ratio remained low in 2011. Operating profit 

improved by 3.2% at constant exchange rates; at current exchange 

rates, operating profit was slightly lower than in the previous year 

(–1.4%). This means that the improvement in operating performance 

in 2011 resulted from net write-downs of loans and provisions for 

guarantees and commitments, which were down by € 371 m or 

–26.0% from 2010. The provisioning charge still absorbed a large 

though significantly lower proportion of the strong operating profit 

(42% in 2011 after 56% in the previous year). 

� A review of developments in the CEE business segment in the 

past five years (see table) shows the build-up phase until 2008 inclusive, 

which was interrupted by recession in the wake of the financial 

market crisis. The setback in 2009 was followed by recovery in the 

past two years. Operating income peaked in 2008 (see colour marking), 

the crisis year did not see a dramatic decline, and the dip was 

almost reversed in 2011. Operating profit for 2009 reached € 2.7 bn, 

supported by sharp cost reductions in that year. In the past two 

years, operating profit remained at a high level, slightly exceeding 

€ 2.5 bn and up on the 2008 figure. Nevertheless, recession in 2009 

marked the beginning of a new era in CEE business. Net write-downs 

of loans and provisions for guarantees and commitments tripled in 

2009; the increase was mainly caused by the acquisitions made 

shortly before that year. The provisioning charge in 2009 was 

€ 1.7 bn, pushing net operating profit down to a very low level. In 

2010 and 2011, net write-downs of loans and provisions for guarantees 

and commitments were reduced by a combined 40%. The 

improvement on both sides – revenues and provisioning charge – 

was not sufficient to return to the level of just under € 2 bn in net 

operating profit achieved in 2008. 

CEE business segment – multi-year review (€ m) 

2006 pf 2007 2008 2009 2010 2011 

Operating income 2,788 3,367 4,732 4,620 4,691 4,722 

Operating costs –1,557 –1,729 –2,224 –1,951 –2,128 –2,195 

operating profit 1,230 1,638 2,508 2,669 2,563 2,527 

Net write-downs of 

loans and provisions for 

guarantees and 

commitments –177 –211 –537 –1,718 –1,426 –1,055 

net operating profit 1,053 1,427 1,971 951 1,137 1,472 

risk-weighted assets 

(rWAs), € bn 42.7 46.6 67.7 70.9 75.2 81.5 

Equity 3.6 7.1 9.4 10.0 11.0 11.9 

pf) 2006 pro forma: retrospectively adjusted to the consolidation perimeter of 2007 

(assumption of the CEE sub-holding function for UniCredit), which is more or less the 

same as the current perimeter. / = peak level 


37



The steady underlying business expansion in CEE continued: average 

risk-weighted assets increased – also over the crisis years – 

by 14% annually. In line with this growth, equity allocated to the 

CEE business segment also rose steadily: at € 11.9 bn (equity allocated 

in 2011) it strongly supports growth. 

� A glance at quarterly trends confirms the overall picture: from 

a low in the third quarter of 2009, average RWAs recovered, offsetting 

the decline within less than a year and subsequently returning 

to more moderate growth. In the fourth quarter of 2011, average 

RWAs were up by 8.0% on the year-end 2010 level and 

almost one-quarter (23.9%) higher than the low figure in Q3 2009 

(giving annual growth of 10.0%). Exchange rate effects – positive 

in 2010, negative in 2011 – were not of major significance over 

time. Since the recovery in 2010, operating income in the CEE 

Division has been moving sideways. In Q4 2011 it was down by 

2.6% from a year earlier, but 6.2% higher than at the end of 

2009. This trend reflects a steady rise in net fees and commissions 

and an increase in net trading, hedging and fair value income; 

quarterly figures for net interest declined slightly from the high 

levels seen in 2010; this was due to various factors including minimum 

reserve policies, rising liquidity costs and intense competition 

for deposits. As costs moved in line with operating income, operating 

profit was maintained at a high level, with some quarterly fluctuations 

(see chart). This means that net write-downs of loans and 


€ m 

1,200 

1,100 

1,000 

900 

800 

700 

600 

500 

400 

300 

200 

100 

0 

Costs 

Provisioning 

charge 

Volume (RWA) 

Operating income 

Operating profit 

Net operating profit 

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 

2007 2008 2009 2010 2011 

€ bn 

80 

70 

60 

50 

provisions for guarantees and commitments were the main factor 

driving the improvement in performance: from a peak of € 510 m in 

Q3 2009 to € 238 m in Q3 2011, the provisioning charge fell by 

one-half. Though rising slightly in Q4 2011 (to € 296 m), the trend in 

net write-downs of loans and provisions for guarantees and commitments 

is improving. Net operating profit (which hardly differs from 

profit before tax) for Q4 2011 was up by one-half on the same 

period of the previous year and triple the figure for Q4 2009. 

� operating income in the CEE business segment in 2011 as 

a whole was € 4,722 m, up by 0.7% (adjusted for exchange rate 

movements, 5.2%) on the previous year. This is a moderate increase 

by CEE standards; underlying risk-weighted assets rose by 8.3% 

(adjusted for exchange rate movements, 13.1%). 

Revenue growth was unusually low because net interest declined 

(– € 60 m or –1.8% to € 3,219 m); at constant exchange rates, net 

interest rose by 2.3%. This reflects divergent regional trends: the 

decline was mainly due to developments at the bank in Turkey, where 

net interest was down by 1.9% in local currency; in euro terms, the 

decline amounted to € 110 m or 16.3%. In this context one should 

note the phase shift in the business cycle in Turkey, where economic 

policy measures dampening growth after the boom year 2010 had 

an impact on net interest (increase of minimum reserve requirement 

and switch from interest-bearing to non-interest-bearing, stricter 

upper limits for interest rates on credit card products, etc.). Net interest 

was also lower in the CIS group of countries, mainly as a result of 

deleveraging in Ukraine and in the Baltic countries. This contrasted 

with a positive trend in Central Europe (although interest rates were 

at a record low in the Czech Republic) and in South-East Europe, 

which partly offset the decline. 

net fees and commissions in 2011 were € 1,210 m, up by 1.4% 

(adjusted for exchange rate movements, 6.6%) on the previous year, 

with growth recorded in all country groups. This reflects increasing 

market penetration with modern banking services. Turnover in securities 

business did not yet reach the pre-crisis level in CEE, either. On 

the other hand, commercial services including credit card business 

and interest-rate and exchange-rate management developed favourably 

across the entire region. A disproportionately strong performance 

in this area was seen in Russia (adjusted for exchange rate 

movements, +15.2%). The high rate of growth (+11.1% at constant 

exchange rates) in Turkey, where our bank is market leader in card 

business and online banking, was offset by currency depreciation 

(–5.1% in euro terms). 

net trading income (€ 199 m) was up by € 54 m or 37.7% 

(adjusted for exchange rate movements, +42.9%) on the previous 

year’s level, reflecting the swing from a net loss of € 9 m to net 

income of € 35 m in Russia, where the local bank recorded high 

activity levels in balance of payments transactions and interest-rate/ 


38



exchange-rate management in business with customers. In Hungary, 

which also experienced significant exchange rate movements, net 

trading income also improved from nil to € 14 m. 

operating costs were € 2,195 m, up by 3.2% (adjusted for 

exchange rate movements, 7.5%) on the previous year. The total 

amount includes the bank levies in Slovenia and Hungary, which 

were lower than in the previous year (€ 22.4 m after € 28.5 m in 

2010) as losses from foreign currency conversion in Hungary are 

permitted to be offset against the bank levy. Cost growth at constant 

exchange rates was strongest in the countries where our banking 

operations achieved the strongest performance: in Turkey (offset by 

depreciation against the euro) and in Russia, operating expenses 

were driven by higher inflation rates and wage/salary increases, 

especially in trading-related areas; in the Czech Republic the bank’s 

relocation to a new head office building was a significant factor. The 

number of branches rose by a net 15 to 2,750, reflecting a larger 

number of new offices opened and branches closed in 2011. The 

large-scale network expansion programme was suspended for the 

time being and replaced by a more targeted approach. At the end of 

2011, the number of branches was significantly higher in Turkey 

(+37), in the Czech Republic (+26) and in Slovenia (+8) and Serbia 

(+5) compared with a year earlier. In several countries the opening of 

new branches was accompanied by closures of branches in regions 

where the bank maintained a multiple presence. The adjustment of 

the branch network and the closure of regional administrative centres 

in Ukraine and Kazakhstan led to a combined decline of 62 offices. 

Investment in mobile sales channels continued (see the country 

reports on the following pages). This was one of the reasons why 

staff numbers at the end of 2011 were down by 80 FTEs from a year 

earlier. As revenue growth was moderate, the cost/income ratio 

increased by 1.1 percentage point to 46.5%. At this level, the cost/ 

income ratio in the CEE business segment is still almost 10 percentage 

points lower than for Bank Austria as a whole (55.9%). 

operating profit for 2011 amounted to € 2,527 m, more or less 

matching the previous year’s level; at current exchange rates, operating 

profit was down by 1.4%; adjusted for exchange rate movements, 

it was 3.2% higher than in the previous year. 

net write-downs of loans and provisions for guarantees and 

commitments in the CEE business segment fell by € 371 m or 

26.0% to € 1,055 m. The cost of risk declined from 226 basis points 

(bp) in 2010 to 157 bp in 2011. The banking subsidiaries in Kazakhstan 

(€ 282 m) 1), in Ukraine (€ 100 m) and in the Baltic countries 

(€ 9 m), which accounted for most of the increase in net write-downs 

of loans and provisions for guarantees and commitments in the past 

1) Including a provisioning charge of € 172 m arising from guarantees assumed by UniCredit 

Bank Austria AG. The provisioning charge at the Vienna-based CEE headquarters, which is 

part of the CEE Division for segment reporting purposes, in 2011 totalled € 232 m (down by 

18% from the previous year), which also includes cross-regional portfolios in commercial real 

estate business and structured financings. 

years, still accounted for about 37% of the provisioning charge. 

But they also made the largest contribution to the decline compared 

with the previous year, with a combined decrease of € 253 m out of 

€ 371 m (68%). While South-East Europe (SEE) was still lagging 

behind in the credit cycle, the situation in SEE has improved in the 

meantime (provisioning charge down by 14.5%). In Romania, net 

write-downs of loans and provisions for guarantees and commitments 

were considerably lower (–20.4%) than in the previous year, 

but the cost of risk in 2011 was still relatively high (338 bp). The 

situation in Bulgaria also improved (provisioning charge down by 

26.8%, cost of risk: 179 bp). In Croatia and Bosnia, the cost of risk 

also declined after a strong temporary increase; at 107 bp in both 

countries, the levels were lower than in the previous year. In Russia 

the situation improved significantly in line with general economic 

trends (provisioning charge down by 55.6%, cost of risk at 61 bp). 

Turkey, which is far ahead of other countries in the cycle, is a special 

case: asset quality in Turkey improved substantially in 2010 as debt 

collection efforts were successful. Net write-downs of loans and provisions 

for guarantees and commitments continued to decline, in 

euro terms even more significantly than in local currency. At 42 bp, 

the cost of risk in Turkey is even below the Austrian level (46 bp), 

which was particularly low in 2011. In the Central Europe (CE) country 

group, Hungary stands out as a special case, with the cost of risk 

reaching 239 bp in 2011. The increase of € 15 m or 18.2% in the 

provisioning charge was caused by provisions for the settlement of 

debt restructuring and mandatory conversion of foreign currency 

loans pursuant to rules defined by the government. 

When analysing the overall picture, one should note that the reduction 

of the provisioning charge – resulting from economic trends, 

local restructuring measures and the gradual improvement, or at 

CEE loan portfolio: exposure by cost of risk 

Customer loans of CEE banking subsidiaries at the end of December 2011 

by cost of risk 

Turkey 19% 

Russia 17% 

Czech Rep. 11% 

Slovakia 4% 

Slovenia 4% 

€ 66.3 bn 

Average 

cost of risk: 

157 bp 

Cost of risk (provisioning charge as a percentage of average loans to customers) 

… below average 

… above average 

Kazakhstan 5% 

Ukraine 4% 

Romania 5% 

Hungary 5% 

Serbia 2% 

Bulgaria 6% 

Baltics 1% 

Bosnia 2% 

Croatia 14% 

*) including the provisioning charge arising from guarantees by UniCredit Bank Austria AG 

in the Vienna-based CEE headquarters 


39



least not continued deterioration, in asset quality – is well-founded. 

However, the decline seen in the past few quarters cannot be 

expected to continue at the same pace. In some countries, methodological 

factors (IFRS harmonisation, Basel 2 implementation) 

also had a non-recurrent favourable effect. Other countries will yet 

experience a turn for the better in terms of asset quality. But the 

favourable effect resulting from the development of the provisioning 

charge will be sustainable. After the improvement in 2011, 

countries where the cost of risk is disproportionately low account 

for 72% of the CEE loan portolio; if Bulgaria, which is close to the 

average, is included in the calculation, the percentage rises to 

78%. At the other end, three countries where the cost of risk 

exceeds 300 bp account for about 15% of the loan portfolio but 

46% of net write-downs of loans and provisions for guarantees 

and commitments. This means that the provisioning charge concentrates 

on a few countries. 

net operating profit (€ 1,472 m) in 2011 was up by € 335 m or 

29.5% (adjusted for exchange rate movements, +37.8%) on the 

previous year. The balance of non-operating items to be deducted 

from this figure to obtain profit before tax was slightly negative 

(– € 10 m, after +€ 6 m in 2010). The swing in net non-operating 

items is explained by net additions to provisions for risks and 

charges (– € 14 m), which were down by € 22 m from the previous 

year’s figure. Net income from investments in the CEE Division 

was € 6 m, compared with € 46 m in 2010. The decline reflects 

various factors: write-downs on the Greek government bonds held 

by our banking subsidiary in the Czech Republic and by a subsidiary 

of the bank in Turkey amounted to € 119 m. This charge 

was almost fully offset by other items including the revaluation 

gain from the restructuring of the Moscow Interbank Currency 

Exchange (MICEX) Group, in which our Russian banking subsidiary 

holds an equity interest, and gains on the sale of administrative 

buildings (Czech Republic) and real estate (Turkey). 

In 2011, CEE generated a profit before tax of € 1,462 m; the 

figure was 28.0% up on the previous year (at constant exchange 

rates, +36.4%). Excluding the write-downs on Greek government 

bonds, the year-on-year increase would have amounted to over 

38%, also in euro terms. As profit before tax increased at a rate 

that was a multiple of the rate of change of average equity 

(+8.2%), return on equity before tax improved by 1.9 percentage 

points to 12.3%. Despite the high level of equity allocated to 

the CEE business segment, its contribution to Bank Austria’s 

overall results for 2011 was both positive and significant in terms 

of value creation: Economic Value Added (marginal EVA) was 

€ 378 m (after € 116 m in the previous year). Risk-adjusted return 

on risk-adjusted capital was 5.75%. 

Countries and country groups 

TUrKEY rUSSIA 

CEnTrAL 

EUroPE1) SoUTH- 

EAST 

EUroPE2) EASTErn 

EUroPE 3) 


CEE 

dIvISIon 4) 

Average riskweighted 

assets (€ bn) 17.4 12.7 17.8 20.6 9.2 81.5 

Change on prev. year 

in % +13% +21% +5% +9% –9% +8% 


in % at constant 

exchange rates +32% +23% +4% +10% –5% +13% 

operating income 

(€ m) 1,016 724 913 1,449 447 4,722 


in % –10% +6% +5% +3% +9% +1% 



exchange rates +6% +8% +5% +4% +5% +5% 

net operating profit 

(€ m) 505 407 275 476 10 1,472 


+€ 196 m 

in % –14% +30% +9% +21% 

5) Change on prev. year 


+29% 

exchange rates +1% +32% +8% +23% +38% 

1) Central Europe (CE) = Czech Republic, Slovakia, Hungary and Slovenia. / 2) Bulgaria and Romania; 

Croatia, Bosnia and Herzegovina, and Serbia. / 3) Kazakhstan, Ukraine and Baltic countries. / 

4) Difference compared with total for banking subsidiaries = CEE headquarters in Vienna. / 

5) Swing of € 196 m from net operating loss to net operating profit. 

Reports on CEE banking subsidiaries 

� Turkey: In 2011, Turkey maintained solid macroeconomic 

fundamentals. Domestic demand continued to be strong, leading 

to 8% 2) GDP growth in 2011, one of the highest in the 

world. On the inflation front, following historically low singledigit 

levels in the first half of the year, inflation increased in the 

last few months and reached 10.4% as of the end of 2011, 

impacted by currency depreciation as well as increased prices 

and taxes on certain consumption goods. Throughout 2011, the 

Central Bank of Turkey adopted an unconventional monetary 

policy which varied significantly from quarter to quarter to 

manage the current account deficit, inflation, currency depreciation 

and growth. As of the end of 2011, the policy rate was 

maintained at its low level of 5.75%. 

Koç Financial Services (KFS), the financial holding company 

controlling 81.8% of Yapı Kredi, achieved healthy growth and 

sustained profitability in 2011 through proactive management 

in a changing and complex operating environment. In 2011, 

KFS recorded 1,960 million Turkish lira (TL) consolidated net 

profit (after minority interests) (8% y/y), reflecting a continued 

focus on customer business, healthy core revenue growth, dis- 

2) Yapı Kredi Economic Research estimate 

40



ciplined cost control and positive asset quality. Return on 

equity was 21%, one of the highest among private banks in 

Turkey. 

Revenues were recorded at TL 5,802 m (5% y/y), driven by 

sustained net interest income, a solid fee performance (11% 

y/y) and positive trading results. Continued tight cost management 

and efficiency initiatives resulted in a cost/income ratio 

of 44%. 

In its lending business, the Group recorded 27% loan growth, 

driven by a strong emphasis on high-margin local currency 

retail loans including general purpose (62% y/y) and SME 

loans (50% y/y). Yapı Kredi increased its support to the economy 

through project finance loans, especially in the energy 

sector, which reached a total volume of US$ 5.8 bn in 2011 

(vs US$ 3.6 bn in 2010). In credit card business, Yapı Kredi 

maintained its leading position with an 18.3% 3) market share 

in outstanding volume and a 13.6% market share in the number 

of credit card holders. As of the end of December 2011, 

the bank had a market share of 10.3% in total loans and 

ranks fifth in the sector. 

In terms of asset gathering, the Group recorded above-sector 

deposit growth of 20%. The bank improved its deposit mix by 

increasing its share of retail deposits and lengthening maturity. 

As of the end of 2011, the Group increased its market 

share in total deposits to 9.2% and ranks sixth in the sector. 

Diversification of funding sources remained a key focus in 

2011. In terms of international funding, the bank successfully 

renewed its syndications totalling US$ 2.7 bn with improved 

pricing and obtained a new long-term securitisation of 

US$ 510 m. In terms of domestic funding, the bank issued 

bonds with a total volume of TL 1.2 bn. 

The Group maintained a positive asset quality trend driven by 

a decline in non-performing loans (NPL), successful loan 

recovery activities, credit infrastructure improvements and 

dynamic portfolio management including the NPL sale of a 

TL 290 m credit card and individual portfolio. As a result, Yapı 

Kredi’s NPL ratio declined to 3.0% from 3.4% at year-end 

2010. 

As of the end of 2011, Yapı Kredi had the fifth-largest branch 

network in Turkey with 907 branches (+39 net new branches 

compared with 868 at year-end 2010) and a 9.2% market 

share. In addition, Yapı Kredi has an effective system of non- 

3) All market shares are sourced from Turkish financial authorities 

branch channels, including the fifth-largest ATM network 

(2,697 ATMs), award-winning internet banking customised for 

retail and corporate clients, and 2 call centres. In mobile banking, 

an area which is becoming an integral part of the service 

network, Yapı Kredi launched new initiatives in 2011 and 

became a leading player in this sector with a 15.3% market 

share. As of the end of 2011, 78% of total banking transactions 

were realised through non-branch channels. 

In 2011, Yapı Kredi received many awards including “Bank of 

the Year in Turkey” (The Banker) and “Turkey’s Best Bank” 

(World Finance). 

� russia: The Russian economy showed a positive economic 

development during 2011. GDP increased by 4.3% y/y and 

inflation slowed to 6.1% y/y. All this led to a growth of the 

banking sector, especially in H2 of the year. The volume of total 

assets grew by 8.3% in Q4 2011 (compared with 0.6% in 

Q1 2011, 3.6% in Q2 2011 and 9.1% in Q3 2011). In 2011 

total assets therefore increased by 23% y/y, with personal loans 

growing by 36% y/y, while the volume of corporate loans 

increased by 26% y/y. The banking sector’s profit before tax 

reached 848 billion Russian rubles (RUR), 48% up on 2010. 

ZAo UniCredit Bank (UCBr) showed a significant y/y increase 

in total assets of more than 34% to RUR 15.8 bn, the highest 

net profit in its history. The bank thus improved its positioning 

within the top 10 banks ranked by profit before tax according 

to local accounting standards (from 8th position as per end of 

2010 to 5th position as per end of 2011). The bank’s revenues 

increased steadily during the year, reaching a total amount of 

RUR 29.5 bn for the full year. At RUR 21.7 bn, net interest 

income remained the main source of the bank’s revenue – 

driven by a strong increase in business volume: more than 

20% y/y growth in loans and an about 40% y/y increase in 

deposits contributed to a significant improvement in the loan/ 

deposit ratio to 102% as of year-end. Operating expenses 

amounted to RUR 10.4 bn and continued to be strictly monitored, 

leading to a very efficient cost/income ratio of 35%. 

This excellent result for 2011, impacted also by a one-off 

effect from the restructuring of investments in CJSC “MICEX” 

(Moscow Interbank Currency Exchange), generated a strong 

return on equity of about 20%. 

In 2011, the CIB Division maintained its position as the leading 

business line in UCBR in terms of revenue generation and contribution 

to the net profit. Customer satisfaction was further 

improved over 2010. CIB managed to reach a well-balanced 

development supported by sustained loan growth and an 

improvement in the loan/deposit ratio. In order to strengthen 

the historical leadership in cash management services the 


41



bank developed several high tech solutions for international 

clients, looking to meet the highest standards of European and 

global markets, and launched two new liquidity management 

products which give customers greater flexibility. Furthermore, 

the CIB Division intensified the promotion of investment banking 

services, enlarged the range of products, and arranged and participated 

in a significant number of landmark deals. 

The Retail Division also achieved considerable growth in its 

sales figures, supported by a co-branded credit card with 

S7 Airlines, a special programme with Mitsubishi Motor Finance, 

and the launch of regular cross-selling activities. As a consequence, 

the total retail loan portfolio rose by 32% y/y, 

while deposit volumes also significantly increased, by almost 

28% y/y. 

The Private Banking business segment reported very good 

results and expanded its customer base by 8%. In 2011, Private 

Banking launched the “Strategy of Capital Diversification” 

initiative that gives clients the opportunity to invest in various 

currencies and to access the international investment arena. 

Furthermore, new insurance and card products were implemented. 

� Croatia: Zagrebačka banka (ZABA) group achieved a solid 

net profit of more than 1.3 billion Croatian kuna (HRK), about 

HRK 100 m (+8.5%) above the 2010 figure. This performance 

was driven by lending to the corporate and public sectors, 

higher operating efficiency and a moderate decline in provisions. 

Total revenues reached more than HRK 4.4 bn – exceeding the 

2010 level by almost HRK 140 m (+3.2%) – as a result of solid 

net interest income growth (+8%), while non-interest income 

declined by 6.6% as a consequence of challenging market conditions. 

Efficiency steadily improved, resulting in a cost/income 

ratio of 45.7%, a notable improvement compared to the 47.1% 

reported in 2010. Despite the unfavourable economic environment, 

the Group reaffirmed its leading position in the retail, private, 

small business and CIB business segments with a leading 

market share in all areas. The bank is pursuing innovative solutions 

to intensify lending and provide high-quality services to its 

clients: 

• Commercial activities aimed to support lendings to the real 

estate market and housing loans were well received by customers: 

special offers referred to as “Green Loans” grew by 

348% in 2011; furthermore, the Group participated to the 

extent of 51% in the subsidised housing loans programme 

initiated by the state. 

• The “Craftsmen&Partner” programme was launched in May 

in cooperation with the Croatian Chamber of Trades and 

Crafts and its partners to support growth in SME. Since the 

summer, when the programme was activated, the sale of giro 

accounts and account packages recorded strong growth of 43% 

and 63%, respectively. 

• The “Multiplus” loyalty programme, launched in cooperation with 

the largest local retailer and telecom company, recorded 

remarkable growth – more than 215,000 individual customers 

participated, contributing significantly to the increase in credit 

card usage. 

• “Duo Protekt”, a term deposit with accident insurance launched 

in Q4, has excellent acceptance by customers. 

• The number of direct channel customers recorded strong 

growth and sales via Internet banking almost doubled; moreover, 

the bank was the first in the market to launch the new 

“m-zaba mobile banking” application for Android users. 

Loans to private individuals and small businesses totalled 

HRK 34 bn at year-end 2011, while deposits amounted to 

HRK 42.7 bn. Market share in retail loans and deposits remained 

stable at 25%. The small businesses segment confirmed its leading 

market position with a 24% market share in terms of the 

number of customers. 

Total loans to corporate clients grew from HRK 35 bn at year-end 

2010 to HRK 41 bn by year-end 2011. Market share in corporate 

loans remained stable at 26%, reflecting the strong market position 

despite fierce competition. Corporate client deposits amounted 

to HRK 14.8 bn, while market share increased to 25.5% at yearend 

2011 from 24.7% at the end of the previous year. 

In 2011, Zagrebačka banka received the EMEA Finance Award as 

Best Investment Bank in Croatia. In the capital markets segment 

the bank acted as Joint Lead Manager in a Government of Croatia 

Eurobond issue in the amount of € 750 m, a domestic Government 

of Croatia bond issue in the amount of € 600 m, and an 

Agrokor Eurobond tap issue in the amount of € 150 m. The bank 

also acted as a Joint Lead Manager and underwriter of the Government 

of Croatia bond issue in the amount of HRK 1.5 bn. 

Corporate Finance was mandated for virtually all significant corporate 

finance advisory transactions in Croatia, Bosnia and Herzegovina, 

Montenegro, Kosovo, Albania and Macedonia. Structured 

Finance arranged a number of deals in 2011, of which the debt 

restructuring for Droga-Kolinska, a Slovenian food producer, is of 

particular importance. 

Markets successfully concluded an outstanding benchmark transaction 

with the Croatian Ministry of Finance, closing the 9-Year 

Cross Currency EUR/USD Swap of US$ 500 m, the first of its kind 

to be executed by a domestic bank. Brokerage, which EMEA 

Finance named “Best Broker in Croatia” for 2011, maintained its 

strong market position on the Zagreb Stock Exchange with an 

11% market share in total turnover. 


42



� Despite an overall slowdown in economic activity in the 

Czech republic with a historic low interest rate environment, 

UniCredit Bank Czech republic reported a 5.8% increase in 

revenues for Q4 compared to Q3 with similar growth on a y/y 

basis. The bank leverages both on the enlarged retail branch 

network as well as on the newly established franchising outlets 

which both already made sound contributions to total revenue. 

Q4 revenues were also supported by trading activities, with the 

trading result up by more than 100% on a quarterly basis. In 

Q4 the bank completed the relocation of its head office, with 

the sale of the building housing the old headquarters making a 

positive contribution to overall results. In light of market price 

developments the bank however had to take further write-downs 

on its Greek bond portfolio. Net profit for the full year is down 

62% y/y; excluding the write-down on Greek bonds it was up 

by almost 12%. Net volume of customer loans was up by 5.6% 

y/y, while customer deposits grew by 2.5% in the same period. 

� The relatively strong growth of the Slovak economy was 

conducive to the growth of the banking sector primarily in the 

first nine months of 2011, with the momentum slowing slightly 

only towards the end of the year. The total assets of the banking 

sector grew by 2% y/y, driven mainly by both gross customer 

loans and deposits. The increasing volume of assets fuelled the 

profitability of the banking sector. Net profit after tax recorded 

double digit growth, driven by net revenue growth (up 9% y/y) 

and limited growth of costs (about 1% y/y). 

The net profit of UniCredit Bank Slovakia grew strongly 

throughout 2011, rising almost threefold from the 2010 figure. 

This remarkable performance comes from an upturn in revenue 

(+11% y/y), boosted by the net interest income contribution 

from all customer business lines. The bank managed to keep 

operating expenses at the level of 2010, while improving efficiency 

(cost/income ratio down to 60% from 66% in 2010) 

despite the negative effect of a high inflationary environment. 

The improved quality of the loan portfolio, reflected in a significant 

decline of loan loss provisions (–47% y/y), underpinned 

the bank’s outstanding results. 

� UniCredit Bank Hungary was successful in handling the 

challenging regulatory (ERP – early repayment programme of FX 

mortgages) and economic (weak domestic demand) environment, 

thus confirming its strong profitability. Total interest revenues 

increased by 6.6% y/y, while fee income rose by 4.3% 

y/y. The other components of operating profit were impacted by 

the actual FX losses from the ERP programme, which amounted 

to 7.16 billion Hungarian forint (HUF) in 2011. These losses are 

however partly offset by a 30% reduction of the special bank 

levy on the cost side, so that operating expenses declined by 

3.5% y/y. As a result, the cost/income ratio remained below 

50%. Net write-downs of loans and provisions for guarantees 

and commitments increased significantly in H2 2011 due to the 

booking of the expected remaining loss from the ERP. However, 

excluding this effect, loan loss provisions relating to regular 

business fell by more than 14% y/y. Net profit as of 31 December 

2011 reached HUF 14.5 bn. Without the effect of the ERP, 

the increase in profit after tax exceeded 30% y/y. Lending 

activity was significantly influenced by FX movements and the 

ERP in the last quarter: despite the net repayments in December, 

net customer loans rose by 4.9% y/y, driven mainly by the 

depreciation of the Hungarian forint. Deposits also showed an 

upward trend of 8.4% y/y, supported by campaigns that targeted 

retail customers. The net loan/deposit ratio dropped to 

108.5% in 2011. 

� The Slovenian economy was adversely affected by the deteriorating 

external environment, which in addition resulted in 

early elections at the end of 2011. Despite difficult market conditions, 

UniCredit Bank Slovenia maintained its revenues in 

Q4 2011 at about the same level as in Q3 2011 (€ 21 m). On 

a y/y comparison, this allowed the bank to surpass the level of 

revenue achieved in 2010 by almost 12%. The main driver of 

this development was the strong growth in net interest income, 

which y/y increased by more than 12%. Operating expenses 

rose by 9% q/q mainly as a result of an increase in staffing 

levels following the opening of new branches, and partly also 

due to the accruals for the new bank levy, which was introduced 

in Slovenia in August 2011 and which amounts to 

€ 0.8 m. The bank’s gross operating profit in 2011 reached a 

level of over € 40 m (+16% compared to 2010). The improved 

operating performance was partly offset by higher risk and 

impairment costs, still however allowing the bank to achieve 

a profit before tax close to the level of the previous year 

(€ 15.3 m compared with € 15.6 m in 2010). Among others, 

a business focus in Q4 was on marketing activities to attract 

new client deposits. Moreover, the bank successfully implemented 

a POS acquiring framework providing increased crossselling 

opportunities for clients. Retail business continued its 

expansion of the branch network by opening 8 (+40%) additional 

branches since the beginning of 2011. As an employer, 

the bank received a prominent award indicating the bank’s 

position as one of the best socially responsible employers in the 

category of large companies. 

� In Bosnia and Herzegovina (B&H), the economic environment 

showed more severe signs of deterioration during the final 

quarter of 2011, mainly caused by a stronger development of 

external constraints (such as reduced external demand leading 

to weaker export activity) accompanied by internal structural 

weaknesses. The Group continued to operate with two banks 

(UniCredit d.d. mostar and UniCredit a.d. Banja Luka), 


43



offering the largest banking network of 134 branches, 278 ATMs 

and 5,858 POS terminals, serving more than 1.2 million customers 

throughout the country. In spite of the numerous economic 

challenges, UniCredit Group B&H successfully maintained its 

leading position in the areas of total assets and deposits. With a 

net profit of close to BAM 60 m in 2011 (+75% y/y), the Group 

is the country’s most profitable banking institution. This financial 

performance is the result of strong growth in revenues (+11% 

y/y) combined with an only slight increase in total costs (+2% 

y/y), especially when taking into account inflation of close to 4%. 

Furthermore, the y/y reduction in loan loss provisions of about 

18% contributed significantly to the overall profitability of the 

Group in B&H. Total loans increased by more than 8% y/y. As of 

the end of 2011, the loan/deposit ratio was 96%. For UniCredit 

Group in B&H, 2011 was characterised by a series of successful 

commercial campaigns aimed at promoting loans and deposits, 

an additional step in improving mobile banking and Internet 

banking services, the implementation of new products in the area 

of card business, the introduction of the first cash/check deposit 

ATM in B&H, activities relating to projects on environmental protection 

and climate change, and other cooperation projects with 

the community in which the two banks operate. All this again led 

to an exceptional customer satisfaction index score for 2011, 

with results surpassing those of the previous year and those for 

the market as a whole. 

Net operating profit of CEE banks (€ m) 

Turkey 26% 

Russia 15% 

Croatia 11% 

Bulgaria 6% 

Hungary 6% 

Czech Rep. 8% 

Serbia 2% 

Ukraine 9% 

Romania 6% 

Slovakia 1% 

Bosnia 1% 

Slovenia 1% 

Baltic states



additional cross-border financings and a capital increase of 

RSD 5.75 bn. During Q4 2011, the bank opened two new 

branches (bringing the total number of new branches in 2011 to 

five) and further enlarged its client base. The bank now provides 

products and services to around 188,000 clients via its network 

of 75 branches. 

� The romanian economy grew by an estimated 2.6% in 

2011, with domestic demand contributing to a pickup in growth 

in H2 2011 following bumper crops (+13% y/y for agriculture) 

and buoyant construction activity (2.4% y/y). Unemployment fell 

to 7% (seasonally adjusted data) and wages grew 7.3% y/y as 

of the end of December, boosting demand. Industrial production 

slowed because of weaker economic growth among the EU 

countries, but contributed 1.5 percentage points to annual 

growth. At the end of 2011, the budget deficit was 4.35% of 

GDP, below the government’s target figure. 

In 2011 UniCredit Tiriac Bank (UCT) recorded a relatively good 

performance. The bank recorded a gross operating profit of 

619 m Romanian leu (RON), making it one of the most profitable 

banks in the Romanian market. 

UCT’s total assets increased by 10% y/y to RON 22.9 bn. 

Total gross loans grew by 16% compared with year-end 2010, 

almost three times faster than the rate for the banking sector as 

a whole, to RON 15.8 bn. A significant increase in year-to-year 

gross loans was recorded in the Corporate (20%) and Retail 

(13%) business segments, while gross loans granted to Private 

Banking clients declined (–7%). Customer deposits grew faster 

than the market, targeting mainly the stable part of the portfolio 

– SMEs, private individuals and medium-sized companies. 

Deposits increased y/y by 2% in the corporate business segment, 

by 12% in the retail segment, and declined by 6% in the 

Private Banking segment, leading to 5% growth in the bank as 

a whole. Compared to the previous quarter, deposits grew by 

16% in Q4 2011. In terms of commercial strategy, the main 

emphasis was on mortgage-backed lending, corporate lending, 

large-scale deposits, a small business model and risk-free 

transactions. 

Revenues declined 8% y/y, mainly due to the impact of statutory 

regulations and narrower interest margins. In 2011 the 

bank continued its strict cost control, achieving a cost/income 

ratio slightly below 50%. The cost of risk dropped by more than 

100 bp y/y as a percentage of total net average loans. 

The number of employees fell slightly to 2,983 although UCT 

enlarged its distribution network by 10 branches in 2011. 

� The Bulgarian economy performed fairly well in 2011, 

despite its proximity to the euro area’s most problematic 

member states and the intensification of the European debt 

crisis in the second half of the year. GDP growth reached 

2.0%, up from 0.2% in 2010, although economic growth 

slowed steadily throughout 2011 as exports, a key engine of 

economic growth, weakened while the domestic economy 

continued to make further progress, albeit at a slower rate. 

Given the challenging economic environment, UniCredit 

Bulbank maintained a vigorous financial profile, building on 

its leading market position, conservative risk profile and efficient 

business and operational model. 

Total assets reached 11.9 billion Bulgarian leva (BGN), up by 

5.7% y/y. Gross loans grew up by 5.4% y/y, to BGN 8.6 bn, 

with a growth rate of 3.5% y/y in retail banking and 6.6% 

y/y in corporate banking, reflecting UniCredit’s commitment 

to support the real economy. The focus on attracting deposits 

resulted in a growth rate of 11% y/y, to BGN 7.3 bn in total 

customer deposits. The bank improved its net loan/deposit 

ratio to 108%, reflecting its strong balance sheet, and it is 

thus well-positioned for business growth in the post-recession 

era. Shareholder’s equity was further strengthened, 

increasing by 14% y/y to BGN 2.0 bn. 

Total revenues reached BGN 632 m, an increase of 6.3% 

y/y, with net interest income growing by 3.9% y/y as a 

result of an increase in the volume of the loan portfolio and of 

7.5% y/y growth in net fee and commission income following 

the focus on fee-generating products. Operating expenses 

reached BGN 244 m, growing marginally by 1.2% y/y. The 

continuing cost containment measures and process adjustments 

offset the costs for the implementation of strategic 

projects (CRM, multichannel approach, etc.). Trends in both 

revenues and costs supported operating performance, with 

gross operating income growing by 9.7% y/y to BGN 388 m 

and the cost/income ratio down to 38.7%, an improvement 

of 1.9 percentage points y/y. 

Given the still unfavourable economic environment, the NPL 

ratio continued to grow, and approached 14% at year-end. 

However, supported by a slowing trend in the deterioration of 

the portfolio and by the implementation of advanced risk 

measurement techniques, net loan loss provisions totalled 

BGN 137 m, down by 27% y/y. 


45



As a result of these developments, net profit grew significantly, 

by 44% y/y, and reached BGN 233 m, which accounts for 

more than 30% of the profit generated by the entire banking 

system. 

The bank’s higher profitability and strong market position is 

supported by the implementation of numerous innovative products 

and projects, which are aimed at customer centricity, and 

at increasing customer satisfaction and efficiency in operations. 

The bank worked at complementing its well-developed and 

enhanced branch network by further investing in integrated 

multichannel banking. A major innovation in 2011 was the 

launch of its mobile banking services, which are unique in the 

Bulgarian market and quickly reaped success. Other accomplishments 

in the alternative channels market were the expansion 

of services offered by the customer contact centre and the 

introduction of second generation ATMs. The corporate service 

model was further improved with the opening of two new Corporate 

Service Centres, thus bringing their number to eight. 

In markets and investment banking, the bank maintained its 

leading position in the money market, capital market, brokerage 

and treasury sales. 

� Ukraine’s real GDP grew by an estimated 5.0–5.2% y/y 

in 2011, outperforming many regional peers, while inflation 

slowed to an eight-year low of 4.6% y-o-y. The low inflation 

rate was mostly the result of a record harvest and a further 

delay in gas price increases. Ukraine’s general government 

deficit contracted to 2.7% of GDP last year, from 5.7% in 

2010. The challenging global environment, domestic concerns 

over the stability of the hryvnia and tight liquidity were the 

main features that determined the operational framework for 

the Ukrainian banking system in 2011. The banking system’s 

net loss for the full year declined to 8 billion Ukrainian hryvnias 

(UAH), also on the back of total assets that grew by 12% due 

to resumed lending mostly to corporate customers. Inflows of 

deposits in late 2011 increased by 19% y/y, thus improving 

the system’s loan/deposit ratio by 12 percentage points, to 

127%. For Ukrsotsbank it was a year of hard work and significant 

achievements. Its integration in the UniCredit brand in the 

context of the UEFA Champions League Trophy Tour and Euro 

2012 sponsorship prompted large-scale promotional campaigns 

all over the country and increased brand awareness and 

customer loyalty to the UniCredit brand. The Retail Division 

focused on mortgage services and car loans, resulting in a significantly 

higher number of new loans compared to 2010. The 

number of new loans to SME customers tripled y/y, with half of 

the new loans being dedicated to investments. 

The development of alternative sales channels led to a 48% 

increase in the number of customers settling their financial 

business via the Internet and mobile banking services. Nonbranch 

transactions via the ATM network grew by 21%, and 

transactions via POS terminals by 69% y/y. The Corporate 

Division introduced a number of initiatives in 2011, developing 

personalised products for its clients. The largest deals in a 

series of Ukrainian transactions which UniCredit successfully 

brought to the market were widely acclaimed by the world’s 

financial community. UniCredit refinanced a pre-export volume 

worth US$ 1 bn that was awarded “The Best Deal of 2011” by 

Global Trade Review. Ukrsotsbank was also named best trade 

finance bank in Ukraine by Global Finance, an award reflecting 

the largest volume of trade finance transactions, the bank’s 

extensive range of services, and its innovative approach to 

financing. A dedicated agricultural unit was created with the 

specific purpose of serving agricultural companies and in 2011 

it had its debut as lead manager of an international Syndicated 

Commodity Facility in pre-export financing provided for a major 

Ukrainian agroholding. The deal became a key milestone in the 

implementation of the bank’s successful business strategy. 

Ukrsotsbank maintained its position as the third largest private 

bank by total assets of UAH 40 bn. In terms of lending, business 

with corporate clients increased 4% y/y and reached 

UAH 16 bn, while loans to retail customers declined 6% y/y 

due to the repayment of loans. The bank improved its loan/ 

deposit ratio significantly by 38 percentage points to 164%. 

The significant increase in total deposits from customers 

of 17% y/y was especially driven by corporate clients 

who increased their deposit base with the bank by 85%. 

In 2011 operating expenses could be contained at a level of 

UAH 1,354 m, allowing for a low cost/income ratio of 46%. 

Together with significantly lower loan loss provisions and a 

positive one-off tax effect, Ukrsotsbank generated net profit of 

UAH 784 m for the full year 2011. 

� Kazakhstan‘s real GDP growth is forecast at 6.8% in 

2011, mainly thanks to favourable oil prices and despite a 

moderate slowdown in industrial growth in Q3 2011. Industries 

such as agriculture, construction and communication made the 

largest contribution to overall growth. In November 2011, S&P 

raised the country rating of Kazakhstan to BBB+, explaining its 

move with the positive effects of the increase in commodities 

exports for the fiscal and current account surpluses. ATF’s 

gross loan portfolio showed stable growth in Q4 2011 in all 


46



segments, and a gradual decrease of the impaired portion of 

the portfolio. In Q4 2011, loans were made mainly to sectors 

such as wholesale trade, agriculture and transportation. There 

was a seasonal outflow of big ticket deposits in Q4 2011 in 

large corporates mainly related to annual tax and dividend payments 

by clients. The retail segment experienced a significant 

increase of almost 10% in the deposit base in Q4 2011. Overall, 

the bank was able to increase customer deposits by about 

9% y/y. Net interest income grew by 18% q/q in Q3 2011 

and by 7% y/y thanks to an increase in the loan books and to 

the further optimisation of the funding base. The increase in 

net fees and commissions in Q4 2011 was generated mainly 

by the retail and Private Banking segments as a result of the 

enlarged client base and an improved range of products. 

Compared to the previous year, the bank increased revenue 

by more than 50% and lowered the cost of risk thanks to the 

improvement of asset quality. 

� In Q4 2011, the 3 Baltic countries (Estonia, Lithuania 

and Latvia), witnessed further signs of economic recovery. 

This was particularly the case in Estonia which has one of 

Europe’s most dynamic GDP growth rates, driven mainly by 

buoyant exports. Estonia has been given the second highest rating 

in Eastern Europe by Standard & Poor’s (AA–). Lithuania was on 

track to post a strong and sustainable recovery in 2011 with 

impressive GDP growth in excess of 5%. Despite some slowdown 

in Q4 2011, the main indicators for consumption continue to show 

strong gains. Latvia’s GDP growth lags behind the other Baltic 

states but it is nonetheless strong and catching up. Inflation, as 

everywhere in the Baltics, remains at a fairly high level y/y on the 

back of energy and food prices. 

Net interest income of UniCredit Bank remained at a high level in 

Q4 2011, thus making a strong contribution to the full-year result; 

fee and commission income also contributed significantly to total 

revenues in Q4 2011, and also throughout 2011. At the same 

time, the bank is continuing to pursue its tight cost discipline, with 

a positive impact on the cost/income ratio. After posting an operating 

loss in 2010, the bank achieved an operating profit in 2011 

and its performance improved significantly in 2011. UniCredit 

Bank is well capitalised, with a capital adequacy ratio of close to 

13%. External funding was also raised via institutions such as the 

European Investment Bank and the Nordic Investment Bank for the 

purpose of diversifying funding sources. 


47



Income statement of the consolidated banking subsidiaries in CEE 1) 

(€ m) 

CEE BUSInESS SEgmEnT 2) CZECH rEPUBLIC SLovAKIA HUngArY 

2011 2010 2011 2010 2011 2010 2011 2010 

Net interest income 3,253 3,290 266 245 86 73 224 214 

Net fee and commission income 1,210 1,193 122 115 29 28 97 94 

Net trading income 199 144 7 10 6 6 14 0 

Net other operating income/expenses 61 63 0 1 1 2 –22 6 

operating income 4,722 4,691 395 371 121 109 313 313 

operating costs –2,195 –2,128 –192 –157 –73 –72 –147 –154 

operating profit 2,527 2,563 204 214 48 37 166 159 

Net write-downs of loans –1,055 –1,426 –54 –68 –11 –22 – 95 –80 

net operating profit 1,472 1,137 150 145 37 15 71 78 

Provisions for risks and charges –14 –36 0 –1 0 –1 –2 –1 

Integration/restructuring costs –2 –4 –2 –4 0 0 0 0 

Net income from investments 6 46 – 93 –3 2 0 –6 8 

Profit before tax 1,462 1,143 54 137 39 15 63 85 

Customer loans 70,352 66,308 7,049 6,866 2,931 2,784 3,630 3,918 

Customer deposits and debt securities in issue 61,010 56,902 8,149 7,934 2,506 3,061 3,393 3,595 

Exchange rate 104.65 3) 100.00 24.590 25.284 Euro Euro 279.37 275.48 

Appreciation/depreciation against the euro –4.4% +2.8% –1.4% 

(€ m) 

SLovEnIA BULgArIA romAnIA BALTICS 


Net interest income 62 55 228 219 188 220 16 13 

Net fee and commission income 22 22 86 80 56 54 0 –4 

Net trading income –1 –2 8 3 47 44 0 4 

Net other operating income/expenses 0 0 2 2 0 1 –1 0 

operating income 83 74 323 304 291 319 16 13 

operating costs –43 –39 –125 –124 –145 –138 –13 –14 

operating profit 41 35 198 181 146 181 3 –1 

Net write-downs of loans –24 –21 –70 – 95 –106 –133 –5 –32 

net operating profit 17 14 128 85 40 48 –2 –33 

Provisions for risks and charges 0 1 –2 2 2 0 0 0 

Integration/restructuring costs 0 0 0 0 0 0 0 0 

Net income from investments –2 1 6 5 0 1 0 0 

Profit before tax 15 16 132 92 42 49 –2 –33 

Customer loans 2,340 2,296 4,026 3,852 3,354 2,969 626 716 

Customer deposits and debt securities in issue 957 783 3,726 3,342 2,655 2,575 306 433 

Exchange rate Euro Euro 1.9558 1.9558 4.2391 4.2122 0.7063 4) 0.7087 

Appreciation/depreciation against the euro +0.0% –0.6% +0.3% 

1) The income statement figures are shown on a consolidated basis at country level. / 2) The CEE business segment for segment reporting purposes comprises the CEE banks shown in this 

table and the Vienna-based CEE headquarters. / 3) Index of the relevant currencies against the euro, weighted by operating income. / 4) Latvian lat (LVL). 


48



(€ m) 

TUrKEY 5) rUSSIA KAZAKHSTAn UKrAInE 


Net interest income 582 675 535 565 151 142 215 235 

Net fee and commission income 364 383 150 132 –4 –35 47 46 

Net trading income 36 32 35 –9 20 20 2 8 

Net other operating income/expenses 34 37 3 –6 0 –18 0 –2 

operating income 1,016 1,127 724 682 167 110 265 287 

operating costs –462 –477 –256 –233 – 93 – 92 –122 –114 

operating profit 553 651 468 450 74 17 143 173 

Net write-downs of loans –48 –65 –60 –136 –110 –188 –100 –156 

net operating profit 505 586 407 313 –36 –171 43 18 

Provisions for risks and charges –10 –34 –1 –1 0 0 1 0 

Integration/restructuring costs 0 0 0 0 0 0 0 0 

Net income from investments 20 19 79 8 –2 6 1 1 

Profit before tax 515 571 485 321 –37 –165 44 18 

Customer loans 12,409 11,438 11,318 9,495 3,607 3,675 2,842 2,906 

Customer deposits and debt securities in issue 11,838 11,300 11,701 8,491 3,974 3,626 1,734 1,446 

Exchange rate 2.3378 1.9965 40.885 40.263 204.104 195.360 11.107 10.539 

Appreciation/depreciation against the euro –14.6% –1.5% –4.3% –5.1% 

(€ m) 

CroATIA BoSnIA SErBIA 

2011 2010 2011 2010 2011 2010 

Net interest income 415 392 89 77 85 64 

Net fee and commission income 122 134 32 31 22 17 

Net trading income 16 18 6 6 4 2 

Net other operating income/expenses 44 46 0 0 0 0 

operating income 597 591 126 114 111 83 

operating costs –272 –278 –77 –76 –36 –33 

operating profit 324 312 49 38 74 50 

Net write-downs of loans –101 –112 –14 –18 –25 –11 

net operating profit 223 200 35 20 50 39 

Provisions for risks and charges 0 –1 0 –1 0 0 

Integration/restructuring costs 0 0 0 0 0 0 

Net income from investments –1 1 0 1 0 –1 

Profit before tax 222 200 35 20 50 38 

Customer loans 9,516 9,240 1,414 1,301 1,246 1,109 

Customer deposits and debt securities in issue 7,837 8,059 1,532 1,644 742 665 

Exchange rate 7.439 7.289 1.956 1.956 101.966 103.043 

Appreciation/depreciation against the euro –2.0% 0.0% +1.1% 

5) pro quota 


49



Outlook 

Economic trends 

� The moderate upturn of the global economy, underway since 

2010, has lost momentum since autumn 2011. According to the 

most recent sentiment indicators and leading indicators, the lacklustre 

performance is likely to be only temporary. But the worse 

than expected economic developments in the second half of 2011, 

and probably also in the first quarter of 2012, have reduced the 

prospects for the economy to get off to a reasonable start in 2012. 

Annual growth rates for 2012 have consequently been revised 

downwards. A number of factors weighed on economic performance 

over the last few quarters: the after-effects of the surge in 

commodity prices in the middle of 2011, the restrictive economic 

policy pursued by many emerging markets (efforts to combat inflation 

and neutralise speculative inflows of capital), and especially 

the uncertainty triggered by the debt crisis of the industrial countries 

which impacted the global economy and subsequently indirectly 

the region from which it emanated. After driving economic 

growth in 2010, global trade slowed towards the end of 2011, but 

still recorded growth in a year-on-year comparison; we expect 

global trade to pick up again as from spring 2012. We think that 

from 3.3% in 2012, global economic growth will return to its 

normal level of 4% in 2013. 

China’s catching-up process again proved to be resilient in the 

second half of 2011, largely as a result of domestic economic 

growth and an easing of the country’s restrictive monetary policy. 

With anticipated growth rates of about 9% and 10% in 2012 and 

2013, respectively, China will provide the main impetus for global 

economic growth. The US economy recorded surprisingly strong 

growth in the third quarter of 2011 (partly on account of changes 

in inventory and the reactivation of previously postponed investments). 

In 2012, the performance of the US economy will fall 

somewhat short of its potential growth (2% after 1.7%). Unlike 

previous cycles, there is now no leverage effect from borrowing 

activity and from the upturn in residential housing construction. 

Supported by a renewed decline in the savings ratio to 4% and by 

household deleveraging, economic growth is driven by consumption, 

which accounts for 70% of overall demand. 

In the euro area, the economy contracted by 0.3% in the fourth 

quarter of 2011 compared with Q3 2011, and will remain weak in 

the first quarter of 2012. In addition to a technical recession (two 

quarters of seasonally-adjusted negative growth) the less favourable 

starting position (negative carry-over effect) will lower the 

growth rate expected for 2012 to 0% to ½% in 2012. This is partly 

attributable to the slow progress made in combating the debt crisis. 

The significant divergence underlying the overall growth rate is 

explained by the stronger emphasis on fiscal consolidation. According 

to the latest EU forecasts, the spectrum ranges from –4.4% 

(Greece) and –3.3% (Portugal) to –1.0% (Spain). 

All forecasts are made on the premise that confidence in the 

debt-bearing capacity of industrial countries will slowly be 

restored, that it will at least not be shaken again (see the 

report later in this section), and that a renewed sharp rise in 

commodity prices (triggered, for example, by a culmination of 

events in the Persian Gulf) can be prevented. 

� Since the beginning of the current year, favourable leading 

indicators and sentiment surveys in Austria have suggested 

that the intermediate low may be coming to an end. We believe 

that the Austrian economy will return to a growth path in the 

first half of 2012, though expansion will be very moderate. 

Weak foreign demand, consumer restraint and a cautious 

approach to business investment will limit economic growth for 

the time being. From the middle of the year, impetus provided 

by the Asian emerging economies should have an indirect 

effect on Austrian industry via Germany, Austria’s main trading 

partner, and this should reinvigorate the economy. Investment 

projects which were postponed should then be carried out and 

consumption should pick up, supported by weakening inflation 

(expected to average 2.2% in 2012) and the resulting slightly 

positive trend in real incomes. Despite the economic revival in 

the course of the year, growth will be moderate, reaching only 

0.8% in our scenario for 2012 as a whole. This also reflects 

the low base before and after the turn of the year. The recovery 

in the labour market is therefore slowing. The unemployment 

rate will rise slightly in 2012, to 4.3 per cent, though remaining 

very low by international comparison. GDP is expected to 

grow by 2% in 2013, when budget consolidation measures will 

become fully effective, but dampening growth only slightly. 

According to preliminary calculations, the direct dampening 

effect for 2013 will be about ¼ percentage point of GDP and 

will be more than offset by stronger global economic trends. 

Uncertainty factors in this scenario are the strength of global 

recovery, trends in commodity prices and the expectation that 

the European confidence crisis will continue to subside. 

Lending volume in Austria grew slightly, by about 2½% 

(adjusted for exchange rate movements), in 2011, the first year 

since 2008 in which such growth was recorded. This means 

that no credit crunch was discernible in the Austrian economy. 

It was only in relative terms, measured against nominal economic 

growth of over 5%, that there was a reduction of borrowing. 

The recovery of lending growth was mainly driven by a 

stronger expansion of housing finance, while corporate loans 

did not grow more strongly than in 2010. Overall, credit expansion 

was clearly lagging behind the growth seen in 2008. In 

view of the moderate economic outlook, credit expansion is 

expected to show hardly any change in the course of 2012, 

with growth again reaching between 2% and 3%. 


50



The major challenges facing the banks (buildup of additional 

risk buffers, difficult funding conditions, management of liquidity 

ratios) led to high and rising interest rates on bank deposits in 

the second half of 2011 (while money market or capital market 

rates recently declined). Given the uncertainty surrounding the 

debt crisis, deposits in Austria rose by over 3%. Deposits from 

private customers increased by close to 2% and accounted for 

about one-half of additions to financial assets held by private 

households, slightly more than a year earlier. In 2012, monetary 

capital formation could be somewhat more pronounced, mainly 

as a result of more favourable trends in real incomes while 

inflation will decline. At the current very low valuation levels in 

some areas, capital markets offer attractive investment opportunities. 

But on the other hand, given the strains on bank funding, 

deposit interest rates are also attractive. 

� Countries in Central and Eastern Europe (CEE) were also 

affected by the deterioration in the global economic environment 

in the second half of 2011 and around the turn of the year. 

Overall, however, the region continued to pursue sound expansion. 

As the European debt crisis escalated, risk aversion again 

became more pronounced. But given the relatively low levels of 

government debt in the region, CEE coped well with this situation. 

CDS spreads on government bonds of CEE countries (Traxx 

SovX CE), which tracked the West European CDS index up to the 

peak of 386 bp in November, have in the meantime decoupled 

from this trend and are now significantly lower, at 282 bp (Traxx 

SovX Western Europe: most recently 353 bp). 

The surprisingly high level of industrial output and expectations 

of an easing of the EMU crisis have prompted our economists to 

raise their growth forecasts for 2012 and 2013 by 0.3 percentage 

points for both years. But developments in the euro area 

will continue to be among the factors determining trends in the 

CEE region, via multiple transmission paths, later in 2012: 

First, via real economy links: we expect that weak economic 

trends in the first half of 2012 will affect regions and countries 

in CEE to varying degrees, depending on their foreign trade 

orientation and product mix, before the second half of the year 

sees a recovery. The closely integrated Central European countries, 

in particular, will have to overcome a period of lower 

growth in the first half of 2012, all the more so as domestic 

demand will also be weak, reflecting pressure to consolidate 

public finances. Slovenia will again slide into recession (2012: 

–0.6%). Hungary – where a new Mercedes car factory, another 

assembly plant exposed to cyclical trends, will start production 

in the next few weeks – was hit hardest, compounding a negative 

external impact by domestic curbs (GDP growth in 2012: 

0%). Nevertheless, growth in this country group will pick up as 

the year progresses, reaching a level of about 2½% in 2013. 

South-East Europe’s (SEE) trading links with Greece (mainly in 

Bulgaria) are acting as a brake. Romania returned to a growth 

path in 2011, not least thanks to a good harvest, and will be 

able to pursue further expansion in the coming years. In 2012 

and 2013, SEE as a whole (together with the Baltic countries, 

which have returned to growth) will expand at a faster pace 

than Central Europe. The strongest economic momentum will be 

seen in Russia and in Kazakhstan, a major exporter of commodities, 

with growth reaching 4% to 6%, though the economy in 

these countries is focused on a narrow range of products. Commodity 

prices remained high during the cooling-off process in 

the past few months and they will persist at high levels. Turkey 

has shown autonomous economic developments over the past 

few years. After a constant risk of overheating in 2010 and 

2011, with real growth rates of 9% and 8.5%, the economic 

momentum is likely to slow to about 5%, also because economic 

policy is having a dampening effect. While most other 

CEE countries recorded current account improvements despite 

weaker exports (which is not always to be seen in a positive 

light because domestic demand is even weaker), Turkey’s main 

problem is its current account deficit. Overall, we expect that 

economic growth in CEE (in Bank Austria’s perimeter) will be 

3.2% (2012) and 3.8% (2013) in real terms, double or triple 

the figure for Western Europe. 

Second, the government debt crisis has significantly lowered 

risk tolerance worldwide while curbing capital flows to emerging 

markets. The first six months of 2011 still saw strong portfolio 

inflows in the CEE region, a trend which reversed in the 

second half of the year. In the third quarter of 2011, the financial 

account reflected a net outflow of funds accompanied by 

downward pressure on currencies, underlining sensitivity to 

financial market fluctuations. The developments affected portfolio 

investments, while direct investments remained at their previous 

levels. However, in our base scenario we assume that the 

impact of the government debt crisis, at least the volatility and 

the unpredictable elements, will ease and that the external 

financing needs of the CEE countries are today lower than they 

were many years ago. For this reason, we believe 2012 will be 

characterised more by currency appreciation than depreciation. 

External financing requirements of governments, banks and 

companies will probably remain within limits in the course of the 

next few quarters. This will in any event apply to the stronger 

CEE economies with adequate reserves, which we believe to 

comprise Turkey, Poland, the Baltic states and the Czech 

Republic. Countries with an inefficient economic policy and/or 

inadequate buffers may experience volatile capital movements. 

In this regard, the risk is highest in Croatia, Hungary, Ukraine 

and possibly Slovenia. The first three countries are likely to 


51



receive assistance under multi-year IMF support programmes. 

The countries with the greatest resilience to external shocks are 

Russia and Kazakhstan. 

Third, the banking sector in the western European countries is 

under pressure (capital requirements imposed by the EBA, funding 

problems). This has triggered fears of a repatriation of capital 

from CEE, of a retrenchment of local investment or a sell-off of 

local assets, and of a curtailing of cross-border lending. Foreignowned 

regional banks account for 46% of the € 2.5 trn in total 

assets of the banking sector in CEE. External funding, with funds 

Economic growth (real GDP, % over the previous year) 

2009 2010 2011 2012 2013 

World (IMF) –0.7 +5.2 +3.8 +3.3 +3.9 

USA –3.5 +3.0 +1.7 +2.3 +2.5 

Euro area –4.2 +1.8 +1.5 +0.6 +1.6 

… Austria –3.8 +2.3 +3.3 +0.8 +2.0 

Czech Republic –4.7 +2.7 +1.7 +0.4 +2.5 

Slovakia –4.9 +4.2 +3.3 +2.4 +3.4 

Hungary –6.7 +1.2 +1.7 –0.0 +1.9 

Slovenia –8.0 +1.4 +0.5 –0.6 +1.1 

Central Europe –5.7 +2.4 +1.9 +0.5 +2.3 

Poland +1.6 +3.8 +4.3 +3.1 +3.5 

Bulgaria –5.5 +0.2 +1.6 +1.2 +1.7 

Romania –7.1 –1.3 +2.5 +1.4 +2.5 

Croatia –6.0 –1.2 +0.0 –0.5 +2.0 

Bosnia and Herzegovina –2.9 +0.7 +1.8 +0.5 +2.5 

Serbia –3.5 +1.8 +1.7 +1.0 +3.0 

Estonia –13.9 +3.1 +7.5 +2.6 +3.8 

Latvia –17.8 –0.6 +5.9 +2.9 +3.5 

Lithuania –14.7 +1.2 +5.2 +2.5 +2.8 

SEE and Baltic states –8.0 –0.2 +2.7 +1.3 +2.6 

Russia –7.8 +4.0 +4.3 +3.9 +4.2 

Turkey –4.8 +9.0 +8.5 +4.8 +4.3 

russia and Turkey –6.9 +5.5 +5.6 +4.2 +4.2 

Kazakhstan +1.2 +7.3 +7.5 +5.5 +5.8 

Ukraine –14.8 +4.2 +5.1 +2.0 +3.9 

Kazakhstan and Ukraine –8.1 +5.5 +6.1 +3.5 +4.7 

CEE (with Poland, GDP-weighted) –5.9 +4.3 +4.7 +3.3 +3.7 

CEE (without Poland, GDP-weighted) –7.0 +4.3 +4.7 +3.2 +3.8 

CEE (Bank Austria-weighted) *) –6.2 +3.6 +4.1 +2.4 +3.3 

Bank Austria market (GDP-weighted) –6.7 +4.1 +4.6 +3.0 +3.6 

Bank Austria market 

(Bank Austria-weighted) –5.5 +3.2 +3.8 +1.9 +2.9 

*) weighted by contribution of Bank Austria’s subsidiaries to operating income in CEE region 

Source: UniCredit Research. Forecasts: 7 March 2012 

being made available primarily by the parent company, has been 

practised in the banking sector in CEE on a large scale for many 

years. But for CEE, the short-term risk related to western European 

banks’ compliance with the capital requirements of the EBA is relatively 

low: on the one hand, a closer look reveals that capital outflows 

were lowest in the banking sectors where foreign banks are 

major players. Major banks moreover pledged themselves to a 

long-term commitment under the Vienna Initiative. On the other 

hand, the large banks announced that they would be able to meet 

the capital requirements by strengthening their capital base (via the 

market or through retention of profits). It has now for some time 

been in the interests of both sides to create a balanced business 

structure featuring a high proportion of funding from local sources. 

In the medium to long term, the CEE banking sector still has the 

potential to achieve growth in terms of turnover and income at a 

level above the EU average in view of the market penetration gap 

which still exists in the area of financial services. Although the 

amount of outstanding loans in the CEE region at the end of 2011 

totalled almost € 1.5 trn, a rise of about 9% compared with the 

previous year, liabilities amounted to an estimated 49% of GDP in 

CEE compared with 120% in the euro area. While opportunities for 

expanding consumer loans are limited, there is potential particularly 

in the area of business loans and mortgage financing. Developments 

among individual countries vary considerably; Russia and 

Turkey are likely to make the largest contribution to lending growth 

in the period 2011–2015. 

Progress in overcoming 

the government debt crisis 

� The second support package for greece: On 21 February 

2012, representatives of the Eurogroup, the EU and the European 

Central Bank reached agreement with Greece on a second support 

package with private sector involvement (PSI). Under the agreement, 

the Eurogroup is prepared to provide additional funds of up 

to € 130 bn (by the end of 2014), with about € 90 bn being earmarked 

for early disbursement. The bulk of the immediate financing 

requirements is accounted for by a recapitalisation of the Greek 

banking sector (€ 50 bn) and an EFSF guarantee facility (€ 30 bn) 

for the remaining claims of the private sector after PSI. The PSI 

programme provides for write-downs of 53.5% on the nominal 

value of sovereign Greek debt held by private creditors, corresponding 

to a reduction of about € 150 bn of the total amount of 

bonds to be redeemed by 2020. 31.5% of the restructuring 

amount will be exchanged (under English law) for new government 

bonds with maturities between 11 and 30 years. The weighted 

average interest rate is envisaged to be 3.65% over the 30-year 


52



term. The present value loss arising from the debt restructuring 

amounts to about 74%. Prices of Greek government bonds 

reflected this level already in December 2011. – According to 

information provided by the Greek government, Greece’s official 

debt restructuring offer concerning € 177 bn in bonds under 

Greek law was accepted by 85.8% of bondholders as at 9 March 

2012. The Greek government has announced that it would 

increase this percentage by applying Collective Action Clauses 

(CAC). For this reason the International Swaps and Derivatives 

Association (ISDA) said that a “restructuring credit event” had 

occurred, triggering credit default swaps (CDSs). 

At the editorial close of this report, the new Greek government 

bonds from the debt restructuring were quoted at large discounts. 

Considerable residual risks remain even after the – successful 

– restructuring. There are plans to set up a European 

team of experts to support the implementation of reforms in 

Greece; escrow accounts are to be used in order to ensure the 

proper use of funds and the debt service of the new bonds, independently 

of the respective decision-makers. The period within 

which Greece will have to achieve a primary surplus is further 

extended. There is uncertainty, however, about the required ratification 

by the parliaments on the creditor and borrower sides. The 

acceptance of the debt restructuring package has also paved the 

way for a large-volume IMF loan. Quite generally, ahead of the 

forthcoming parliamentary elections in Greece, there are doubts 

in the market about the continuity of the austerity programme. 

Political and economic risks exist also in the medium term if 

international aid helps to achieve an initial primary surplus and 

the economy has not recovered by then. 

� Among the other highly indebted countries, Portugal lost 

access to capital markets as early as April 2011, when it became 

the second state after Ireland to be bailed out. As the Greek crisis 

escalated, risk premiums on Portuguese bonds rose. Banks and 

companies have found it difficult to borrow from foreign lenders 

since June 2011. In January 2012, Portuguese bonds were rated 

as speculative investments. The new government implemented a 

consolidation programme totalling 4.8% of GDP (through numerous 

one-off measures), thereby exceeding the target set by the 

IMF/EU programme. Recession reduced external financing 

requirements. The business sector’s low levels of competitiveness 

and administrative efficiency remain the basic problems. 

Therefore Portugal is exposed to a particularly high risk of contagion. 

However, the country has liberalised the labour market, 

implemented a pension reform and initiated privatisations. Portugal 

aims to be able to tap capital markets again in 2013. The 

government debt ratio is about 110% of GDP. European institutions 

emphasise that the Greek model is an isolated case. This 

suggests that the line of defence is set also at the expense of 

international loans and support programmes but with strict conditions 

imposed on Portugal. Interest rate spreads are therefore 

secondary market appraisals, at 1,572 basis points (15.7%) they 

are lower than Greek risk premiums of April 2011. 

� Spain was also targeted by financial markets on account of 

the country’s current budget deficit (most recently about 8% of 

GDP), and not so much because of its public debt which 

amounted to 67% of GDP. The increase in risk premiums on 

Spanish debt (measured by the yield differential between 5-year 

government bonds and the benchmark bond, June 2011 to the 

peak in November, +435 basis points to 522 bp – see chart) 

was narrower, however, than for other countries. The country was 

mainly impacted by the bursting of the real estate bubble. 

Declining property prices, business failures, distressed regional 

savings banks and a downturn in the construction sector ultimately 

led to a recession, with the unemployment rate rising to 

over 20% and youth unemployment soaring to almost 50%. 

Under the “European semester”, the new government is trying to 

defer its deficit targets as recession is deepening and a downward 

spiral should be avoided. Bond issues in 2012 have nevertheless 

so far been successfully placed. The interest rate spread 

declined by 244 bp, from the peak level in November 2011 to 

278 bp on the most recent issue. 

Yield spreads of European government bonds 

Yield spread of five-year government bonds over European benchmark bond 

Basis points 

900 Hungary 

800 

700 

600 

500 

400 

300 

200 

100 

0 

Italy 

Spain 

Austria 

Q1 Q2 


Q3 Q4 Q1 

2012 


Yield spreads of European government bonds 

53



� Italy is an industrial country (and a founding member of 

the G7) and is playing in a different league. The country has 

always been able to access capital markets, even though 

interest rate spreads rose to record levels in autumn 2011 

(+435 bp to 677 bp). This is not explained by country specifics 

but was due to market views that Italy, a large economy, 

shares the typical problems of the “southern peripheral countries”. 

Unit labour costs in industry increased strongly in 

recent years, with an impact on price competitiveness (which 

the new government aims to correct through liberalisation). 

But Italy is a major European trading partner. Italy’s main 

problem is the legacy burden of public debt amounting to 

119% of GDP. Debt accumulated in the 1970s and 1980s, 

reaching a peak ratio of 122% in 1995. Given Italy’s size, this 

requires an annual debt rollover of € 341 bn (in 2012, compared 

with a total amount of € 1,400 bn for the euro area as 

a whole); even a minor widening of spreads has an immediate 

impact on the budget through interest expenditure. The new 

government’s budget consolidation measures and its programme 

to restore growth and improve competitiveness are 

making progress. Even if Italy’s GDP probably contracted by 

1.3% in 2011, according to data issued by the European 

Commission, plans to achieve a balanced budget in 2013 are 

seen as feasible. This would correspond to a large primary 

surplus (balance of revenue and expenditure excluding interest 

payments) of about 4%; in 2011, Italy achieved a primary surplus 

of 1% of GDP. Based on the logic of rating agencies, the 

downgrades of Italy’s credit rating also affected banks and 

ultimately other companies which can tap capital markets. 

Terms and conditions for new issues in the current year have 

improved, and the rollover was based on shorter maturities to 

take advantage of the yield curve. As regards net financing 

flows, Italy is hardly dependent on external financing given the 

high level of private net assets. The consistent implementation 

of reforms which have been initiated, improved governance 

and close cooperation in Europe can restore confidence in 

financial markets. This is also reflected in a decline in interest 

rate spreads (down from the peak level in 2011 by 374 bp to 

304 bp). At 3.8% most recently, yields on 5-year Italian government 

bonds have been lower than those prevailing in the 

years 2006 to 2008, or even in 2002. In the years before the 

collapse of Lehman Brothers, yields even exceeded 5%. 

� Developments in Hungary are of special significance – not 

least for Bank Austria as an Austrian bank. Given the close 

links between the real economy and the banking sector in 

Hungary and neighbouring Austria, Standard & Poor’s used the 

Hungarian crisis of confidence as an important argument for 

downgrading the rating assigned to the Republic of Austria 

shortly after the turn of the year. In Hungary, a number of 

amendments to the Constitution and to the legal framework in 

2011 were not entirely acceptable to the EU and the IMF, the 

country’s most important lender. The levy on banks introduced 

in 2010 was compounded by efforts to ease the solvency 

problems of private households through administrative procedures, 

placing a larger burden on banks which acted as lenders. 

The Home Protection Act passed in May 2011 among 

other things gave mortgage debtors the option of restructuring 

their debt at fixed exchange rates. In September the government 

went even further with the option of early repayment of 

loans denominated in euro or foreign currency at a fixed mandatory 

conversion rate. The rules imply a loss of at least 25% 

on CHF-denominated loans and 15% on the restructuring of 

euro-denominated loans – the total volume of foreign currency 

loans is about € 18 bn. In December 2011, the government 

and the Hungarian Banking Association reached agreement on 

easing the burden on banks, permitting the latter to offset up 

to 30% of the losses thereby incurred against the levy on 

banks in 2012. The unpredictable regulatory intervention in 

2011 (and in the early part of 2012) nevertheless led to a 

sell-off by international investors. Hungary’s country rating 

was moreover downgraded to speculative investment on 

24 November 2011, which made the rollover of its foreign 

debt much more expensive, and the country was faced with a 

downward spiral of currency depreciation. Risk premiums rose 

to a peak of 660 basis points on 4 January 2012 (5-year CDS 

spreads) and a benchmark spread of 992 basis points for 

5-year government bonds (which reflects both a risk premium 

and the generally higher interest rate level). Based on a comparison 

of year-end data, the Hungarian forint depreciated by 

11.7% against the euro and by 14.2% against the Swiss 

franc. Hungary’s economic policymakers responded by taking 

countermeasures at the expense of domestic growth. While 

real economic growth in 2011 was 1.7%, we assume that 

2012 will see stagnation. The deleveraging process in the 

banking sector also contributed to this development. Lending 

volume stagnated in 2011 (+0.4% in euro terms). The proportion 

of non-performing loans (NPL ratio) rose to 14.5%, 

and several banks reported losses. 

From the middle of January 2012, the exaggerated reactions 

seen in financial markets reversed: from the end of 2011 to 

the end of February 2012, the Hungarian forint appreciated 

significantly (+9.0% against the euro/+8.3% against the 


54



Swiss franc), CDS spreads and bond spreads narrowed (to 

456 bp on CDS and 773 bp on 5-year bonds). The stock market 

also made up for lost ground. When the government 

accepted a number of regulatory demands by the EU, the fundamentals-based 

assessment of the highly integrated Hungarian 

economy got the upper hand again: Hungary has an open 

economy, external trade (exports + imports) totals 165% of 

GDP, the large stock of direct investment is a distinct feature 

of the country’s competitive industries, 65% of retail loans 

and 47% of business loans are denominated in foreign currency 

and banks with international owners account for 88% of 

the banking sector’s total assets. All this makes it unlikely that 

the country will go it alone. Hungary’s basic balance is highly 

positive (8.8% of GDP), and its currency reserves of € 37 bn 

are higher than the short-term foreign debt of the entire business 

sector (€ 25 bn). Overall, although there have been occasional 

fears of a default, we think that this is unlikely. In our 

base scenario we assume that Hungary will reach an agreement 

with the EU and the IMF and that the situation will continue 

to ease as the year progresses. The recent suspension 

of € 495 m of Cohesion Fund commitments under the Excessive 

Deficit Procedure (EDP), which represents about one-third 

of the total amount committed for 2013, indicates that Hungary 

is now under stronger pressure to address its problems. 

➔ Our banking subsidiary, UniCredit Bank Hungary Zrt., performed 

strongly in the difficult environment which prevailed in 

2011. Although the provisioning charge rose slightly, and 

despite the bank levy, it generated the largest profit among 

the four Central European countries and achieved the highest 

return on equity. The NPL ratio is below the average for all our 

banks in CEE. The Hungarian banking subsidiary is the seventh-largest 

bank in the country, with a market share of about 

5%. Its business focuses on the less exposed corporate customer 

segment. In our multi-year plan Hungary, an EU member 

country where integration has reached an advanced stage, 

is not among the growth markets. The strategy of expansion 

has been suspended, not least on account of political uncertainty, 

but this decision may be revised in 2013. 

� Improved governance in the euro area … The European 

Union, the Eurogroup and the European Central Bank are 

determined not to let the situation repeat itself, even if there 

are further setbacks caused by Greece, and their determination 

enjoys credibility. On the basis of experience in the past 

year, all European decision-making bodies see the case of 

Greece, and private sector involvement in particular, as a singular 

event. 

In the short term, the crisis instruments will be extended by an 

increase in intervention volume of the ESM and the EFSF, 

respectively; this is not least regarded as a prerequisite to win 

IMF support and access to the IMF’s facilities. 

… effective Eurosystem intervention. A number of longterm 

regulatory measures, which were adopted with the decisions 

made by the European Council on 9 December 2011 

(stability pact, incorporation of a debt brake in the constitutional 

law of nearly all countries), coupled with the processes that 

have already been improved (European semester, deficit procedure, 

reverse majority rule) made it easier for the ECB to play a 

more active role in combating the crisis. In addition to a more 

relaxed monetary policy via standard measures (reducing key 

interest rates, tenders with full allocation and the extension of 

the terms of such tenders, halving of the minimum reserve 

ratio, extending the list of eligible collateral for repo transactions), 

the two large-volume three-year tenders made a significant 

contribution toward easing the general situation. The direct 

purchase of government bonds (and covered bonds) as a market 

support measure did not have sufficient impact and did little 

to influence interest rates. In the first of these longer-term refinancing 

operations (LTRO), launched on 21 December 2011, 

523 banks bid for a total of € 490 bn (when these operations 

are offset against maturing short-term transactions, the net 

amount raised was about € 200 bn). These funds were taken 

up primarily by major banks in highly-indebted countries, and 

their purpose was to support liquidity of banks with an exposure 

to government bonds. January 2012 saw a sharp decline 

in interest rates and the gap between interbank rates and overnight 

swap rates (the risk premium payable by banks) narrowed 

again; in January 2012, lending activity in the euro area picked 

up again after contracting significantly in the previous month. 

The second, and probably last, three-year tender, on 29 February 

2012, allotted an amount of € 530 bn. Net of transactions 

with expiring maturity, this represented a liquidity boost of 

€ 314 bn. With this tender the ECB’s outstanding open market 

operations have reached a record level of € 1.1 trn, with the 

surplus liquidity probably resulting in additional pressure on 

interest rates. 

➔ Overall, these developments helped to ease the general 

situation. Provided there are no major setbacks and the 

anticipated economic recovery starts to make an impact, the 

prospects of a further stabilisation of interest rate patterns and 

credit ratings should improve as the year progresses. But 

government bonds have lost their reputation as a risk-free 

investment once and for all. 


55



Outlook for Bank Austria’s performance 

The outlook for banking business in Bank Austria’s perimeter of 

operations is determined by expectations of low growth in Western 

Europe, at a rate which will be just above zero, and of more moderate 

growth in Central and Eastern Europe, and by the probability of 

a deflationary rather than inflationary monetary environment. The 

foreseeable stricter regulatory requirements are likely to reduce the 

credit multiplier. Given the confidence crisis, and despite ample 

supplies of liquidity by the ECB, the interbank market is still not 

operating effectively; this has an impact on liquidity management 

and also indirectly affects a number of capital market-related 

financing instruments. The operating environment for the banking 

industry means that volume trends and margins in the coming year 

will not enable Bank Austria to generate a level of annual revenue 

growth which was quite normal in the years before 2009; growth 

will be moderate, in line with the overall market. However, after the 

substantial one-off charges absorbed in 2011, we expect that the 

bank’s strong operating performance will again feed through to 

bottom-line profits to a larger extent. 

� The objective of our multi-year plan is to make the bank’s performance 

sustainable in this scenario of what is widely referred to 

as “the new normal”. These are the basic pillars of the plan: targeted 

employment of capital, pursuing a focused growth strategy in 

CEE, simplifying our organisational set-up and processes, and maintaining 

strict cost management. Bank Austria’s strong equity capital 

base enables the bank to pursue further growth and will exclusively 

support commercial banking business with customers. We will give 

close attention in Austria to risk-adjusted capital efficiency down to 

the level of individual transactions. Capital allocation provides CEE, 

one of the few growth regions, with a sound base for further expansion. 

In pursuing expansion, we will focus on countries which are 

ahead in terms of revenue/risk considerations as well as market 

size and growth, and where we hold strong market positions: these 

countries are Turkey, Russia and the Czech Republic. In the other 

countries we will pragmatically focus our business portfolio on a 

case-by-case basis. We seek to achieve a sound balance of local 

credit expansion and local deposit growth in all countries. 

All this does not change our determination to operate as a European 

bank throughout Central and Eastern Europe. Despite regional divergence 

and structural differences, the growth potential of the banking 

sector in CEE countries remains intact. This is based on the 

economic catching-up process and the accelerated monetary cycle, 

and also on convergence in terms of wages, standard of living and 

consumer habits. The latter factors hold out the prospect of gradually 

closing the gap in the supply of modern banking products and 

services. Various cost reduction programmes are under way to 

enhance cost efficiency by redimensioning head offices after the 

numerous integration tasks performed in the past years; this process 

involves the pooling of real estate used by the banks them- 

selves in several countries. The establishment of cross-regional 

infrastructure for transaction settlement, IT and internal services is 

also of great significance in the long term. A major step forward in 

this context was the creation of UBIS, with UBIS Austria as one of its 

components, in 2011 and 2012, which will enable us to unlock synergies 

in the coming years. This is particularly important as demands 

on IT and back-office operations are rising (taxation of capital gains 

on the sale of securities, reporting and regulatory requirements etc.). 

� We expect that the moderate revenue growth planned for 2012 

will be reflected in operating profit to a larger extent. We believe that 

the reduction of net write-downs of loans and provisions for guarantees 

and commitments in the past few years will be sustainable, 

even though fluctuations over time cannot be excluded. While the 

provisioning charge in Austria has declined to a very low level, there 

is further potential for restructuring in CEE, especially in those countries 

which originally caused the strong increase in the provisioning 

charge. This points to a continued upward trend in net operating 

profit. On this favourable basis we assume that the substantial 

goodwill impairment charges which Bank Austria had to absorb in 

2011 will not be repeated in 2012 and 2013. As far as sovereign 

risks are concerned, we expect that there will be no further debt 

restructuring outside Greece. After the lessons learned in the past 

year, the determination of the Eurogroup, the EU and the European 

institutions to avoid contagion enjoys credibility, as does the path 

towards stricter fiscal discipline in Europe. We have adjusted the valuations 

of our subsidiaries and equity interests in other companies 

in CEE to the new business outlook on several occasions since 

2008, most recently in 2011. These adjustments have been substantial, 

so that similar charges should not recur. Apart from any 

unexpected risks which may arise from geopolitical developments, 

for example, we think that a larger proportion of the anticipated stable 

or slightly stronger operating performance is likely to feed 

through to Bank Austria’s net profit. 

� Bank Austria coped well, without state aid, in the crisis years. Its 

strong operating performance enabled the bank to absorb substantial 

burdens arising from adjustments. Over the past few years we 

have aligned our business model with sustainability criteria. The 

main features are the top priority given to customer business and 

the renewed attention to our core economic functions – and this 

includes a permanent commitment to CEE. We are also determined 

to play an active role and share responsibility as a corporate citizen 

in all countries and local communities in which we operate. We want 

to contribute to restoring the reputation of banking operations within 

a short time. 

Developments in the banking sector and at Bank Austria will not only 

reflect economic trends and our response to them. A decisive factor 

will be the regulatory framework in which we operate. We have prepared 

for the regulatory changes arising from Basel 3, including 

capital ratios, SIFI requirements, changes in the definition of equity 


56



capital etc. While other new rules such as liquidity ratios and funding 

rules (LCR and NSFR) are in the process of being tested or calibrated, 

Bank Austria has also made preparations for them. These 

rules support the stability of the financial sector, which is in our own 

interests. 

We are an international bank and it is therefore particularly important 

for us that supervisory authorities take a coordinated approach and 

create rules which are consistent across national borders. Banking 

business – more than other sectors of the economy – needs a reliable 

environment and a level playing field, in the home country and in 

Vienna, 12 March 2012 

The Management Board 

Willibald Cernko 

(Chairman) 

Massimiliano Fossati Francesco Giordano 

Rainer Hauser Dieter Hengl 

the target country. Changes in the general framework should be 

made in a reasonable manner to avoid a situation in which the 

cumulative effect of regulatory restrictions and fiscal burdens 

impacts the banks’ ability to operate effectively. Direct intervention 

such as stress tests with requirements set at short notice, bank levies 

which are seen as ad-hoc fiscal charges, taxes on business volume 

and transactions, or trading restrictions may quickly prove to be 

counterproductive. For us as a European bank, it is of great importance 

that the use of protectionist measures, including efforts to 

restrict the free movement of capital or influence it by bringing moral 

pressure to bear, be prevented from the very start. 

Gianni Franco Papa Doris Tomanek Robert Zadrazil 


57

Consolidated Financial Statements 

in accordance with International Financial Reporting Standards (IFRSs) 

Statement of Comprehensive Income 

for the year ended 31 December 2011 60 

Income statement 60 

Other comprehensive income 61 

Taxes on items directly recognised in equity 61 

Statement of Financial Position at 31 December 2011 62 

Statement of Changes in Equity 63 

Statement of Cash Flows 64 


59

Consolidated Financial Statements in accordance with IFRSs 

Statement of Comprehensive Income 

of the Bank Austria Group for the year ended 31 December 2011 

Income statement for the year ended 31 December 2011 (€ m) 

Notes 2011 2010 

Interest income and similar revenues B.1 8,671 8,386 

Interest expense and similar charges B.1 –4,176 –3,843 

Net interest margin 4,496 4,543 

Fee and commission income B.2 2,383 2,463 

Fee and commission expense B.2 –498 –472 

Net fees and commissions 1,885 1,990 

Dividend income and similar revenue B.3 35 31 

Gains and losses on financial assets and liabilities held for trading B.4 236 301 

Fair value adjustments in hedge accounting B.5 3 –2 

Gains and losses on disposal of: B.6 117 43 

a) loans –23 3 

b) available-for-sale financial assets 140 40 

c) held-to-maturity investments – –1 

d) financial liabilities – – 

Gains and losses on financial assets/liabilities at fair value through profit or loss B.7 22 27 

OperatiNg iNcOme 6,795 6,934 

Impairment losses on: B.8 –1,798 –1,851 

a) loans –1,326 –1,837 

b) available-for-sale financial assets –292 –9 

c) held-to-maturity investments –152 – 

d) other financial assets –29 –5 

Net income from financial activities 4,996 5,083 

Premiums earned (net) B.9 126 118 

Other income (net) from insurance activities B.10 – 98 – 95 

Net income from financial and insurance activities 5,023 5,106 

Administrative costs: –3,638 –3,462 

a) staff expense B.11 –2,008 –1,931 

b) other administrative expense B.12 –1,630 –1,531 

Provisions for risks and charges B.13 –154 –136 

Impairment/write-backs on property, plant and equipment B.14 –193 –200 

Impairment/write-backs on intangible assets B.15 –132 –112 

Other net operating income B.16 137 169 

OperatiNg cOsts –3,981 –3,741 

Profit (loss) of associates B.17 162 126 

Gains and losses on tangible and intangible assets measured at fair value –7 – 

Impairment of goodwill –737 –378 

Gains and losses on disposal of investments B.18 48 33 

tOtal prOfit Or lOss befOre tax frOm cONtiNuiNg OperatiONs 509 1,146 

Tax expense (income) related to profit or loss from continuing operations B.19 –250 –348 

Net prOfit Or lOss fOr the year 258 798 

Attributable to: 

Owners of the parent company 209 747 

Non-controlling interests 50 51 

Earnings per share (in €, basic and diluted) 0.90 3.30 


60


Other comprehensive income (€ m) 


Gains/losses on assets held for sale (available-for-sale reserve) 192 –57 

Gains/losses on cash flow hedges (cash flow hedge reserve) 341 10 

Changes at companies accounted for under the equity method 7 20 

Foreign currency translation – exchange differences –571 392 

Foreign currency translation relating to assets held for sale – – 

Actuarial gains/losses on defined-benefit plans 139 –114 

Taxes on items directly recognised in equity –172 39 

Other changes 41 60 

recognised directly in equity –23 350 

Net profit 258 798 

tOtal Of iNcOme aNd expeNses recOgNised iN the repOrtiNg year 236 1,147 

Attributable to: 

Owners of the parent company 196 1,097 

Non-controlling interests 40 50 

Taxes on items directly recognised in equity (€ m) 


Gains/losses on assets held for sale (available-for-sale reserve) –52 15 

Gains/losses on cash flow hedges (cash flow hedge reserve) –85 –4 

Actuarial gains/losses on defined-benefit plans –35 29 

taxes ON items directly recOgNised iN equity –172 39 


61


Statement of Financial Position 

of the Bank Austria Group at 31 December 2011 

Assets (€ m) 

Notes 31 dec. 2011 31 dec. 2010 

Cash and cash balances C.1 2,919 3,030 

Financial assets held for trading C.2 3,322 4,304 

Financial assets at fair value through profit or loss C.3 214 304 

Available-for-sale financial assets C.4 14,677 17,544 

Held-to-maturity investments C.5 3,498 4,446 

Loans and receivables with banks C.6 25,621 19,749 

Loans and receivables with customers C.7 134,914 130,093 

Hedging derivatives C.8 3,466 2,449 

Changes in fair value of portfolio hedged items (+/–) C.9 30 44 

Investments in associates and joint ventures C.10 2,562 2,518 

Insurance reserves attributable to reinsurers 1 – 

Property, plant and equipment C.11 2,576 2,553 

of which held for investment 721 479 

Intangible assets C.12 2,866 3,751 

of which goodwill 2,397 3,225 

Tax assets C.13 1,389 1,254 

a) current tax assets 282 248 

b) deferred tax assets 1,107 1,006 

Non-current assets and disposal groups classified as held for sale C.14 55 2 

Other assets C.15 1,120 1,008 

tOtal assets 199,229 193,049 

Liabilities and equity (€ m) 

Notes 31 dec. 2011 31 dec. 2010 

Deposits from banks C.16 32,772 33,130 

Deposits from customers C.17 104,728 100,284 

Debt securities in issue C.18 29,931 27,555 

Financial liabilities held for trading C.19 2,554 2,448 

Financial liabilities at fair value through profit or loss C.20 1,042 1,651 

Hedging derivatives C.21 2,591 2,909 

Changes in fair value of portfolio hedged items (+/–) – – 

Tax liabilities C.22 789 543 

a) current tax liabilities 146 126 

b) deferred tax liabilities 643 417 

Liabilities included in disposal groups classified as held for sale C.23 – – 

Other liabilities C.24 2,782 2,573 

Provisions for risks and charges C.25 4,204 4,297 

a) post-retirement benefit obligations 3,664 3,791 

b) other provisions 540 506 

Insurance reserves C.26 175 183 

Equity C.27 17,661 17,476 

of which non-controlling interests (+/–) 534 546 

tOtal liabilities aNd equity 199,229 193,049 


62


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 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 0 4 4 

Shares in controlling companies –1 –1 –1 

Net profit for the period 747 747 51 798 

Recognised income and expenses 79 394 –37 –86 351 –1 350 

Dividend paid 0 –47 –47 

as at 31 december 2010 1,681 7,096 10,121 –1,334 111 –746 16,931 546 17,476 

1 Jan. 31 Dec. 

*) Reserves in accordance with IAS 39 

2010 2010 

Cash flow hedge reserve 62 93 

Available-for-sale reserve 86 18 

Total 148 111 

sub- 

scribed 

capital 

capital 

reserVes 

retaiNed 

earNiNgs 

fOreigN 

curreNcy 

traNslatiON 

reserVes iN 

accOrdaNce 

With ias 39 1) 

actuarial 

lOsses iN 

accOrdaNce 

With ias 19 

share- 

hOlders’ 

equity 

NON-cONtrOlliNg 

iNterests equity 

as at 1 January 2011 1,681 7,096 10,121 –1,334 111 –746 16,931 546 17,476 

Changes in the group of consolidated companies –28 –28 

Shares in controlling companies 0 0 0 0 

Net profit for the period 209 209 50 258 

Recognised income and expenses 51 –564 396 105 –13 –10 –23 

Dividend paid 0 –23 –23 

as at 31 december 2011 1,681 7,097 10,380 –1,898 507 –642 17,127 534 17,661 

1 Jan. 

1) Reserves in accordance with IAS 39 

20112) 31 Dec. 


Cash flow hedge reserve 81 336 

Available-for-sale reserve 30 171 

Total 111 507 

2) Allocation adjusted to ensure full comparability with the previous year. 

63


Statement of Cash Flows 



(€ m) 


Net prOfit 258 798 

Non-cash items included in net profit, and adjustments to reconcile net profit to cash flows from operating activities 

Depreciation, amortisation, net write-downs of loans, and changes in fair values 2,920 2,564 

Increase in staff-related provisions and other provisions 435 385 

Increase/decrease in other non-cash items –573 –577 

Gains/losses on disposal of intangible assets, property, plant and equipment, and investments –182 –76 

sub-tOtal 2,858 3,094 

Increase/decrease in operating assets and liabilities after adjustment for non-cash components 

Financial assets held for trading –56 –16 

Loans and receivables with banks and customers –6,234 –5,046 

Other asset items –1,335 –18,961 

Financial liabilities held for trading –500 1,202 

Deposits from banks and customers 4,640 3,294 

Debt securities in issue 2,478 –348 

Other liabilities items –282 15,886 

cash flOWs frOm OperatiNg actiVities 1,569 –895 

Proceeds from disposal of 

investments 9,505 5,572 

property, plant and equipment 121 70 

Payments for purchases of 

investments –10,602 –11,274 

property, plant and equipment –494 –353 

Proceeds from sales (less cash disposed of) of subsidiaries 16 5,976 

Payments for acquisition (less cash acquired) of subsidiaries –48 – 

Other changes –30 –190 

cash flOWs frOm iNVestiNg actiVities –1,532 –199 

Proceeds from capital increase – 2,000 

Dividends paid – – 

Subordinated liabilities and other financial activities (net) –133 –1,131 

cash flOWs frOm fiNaNciNg actiVities –133 869 

cash aNd cash equiValeNts at eNd Of preViOus periOd 3,030 3,244 

Cash flows from operating activities 1,569 –895 

Cash flows from investing activities –1,532 –199 

Cash flows from financing activities –133 869 

Effects of exchange rate changes –13 11 

cash aNd cash equiValeNts at eNd Of periOd 2,921 3,030 

paymeNts fOr taxes, iNterest aNd diVideNds 

Income taxes paid –57 – 91 

Interest received 8,635 8,481 

Interest paid –4,120 –4,026 

Dividends received 69 66 

64

Notes to the Consolidated Financial Statements 

A – Accounting policies 69 

B – Notes to the income statement 95 

C – Notes to the statement of financial position 107 

D – Segment reporting 123 

E – Risk report 135 

F – Additional disclosures 165 

Concluding Remarks of the Management Board 


Report of the Auditors 177 

Report of the Supervisory Board for 2011 179 


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. 


67

A – Accounting policies 

A.1 – Information on the company 70 

A.2 – Basis for the preparation of the financial statements 70 

A.3 – Consolidation principles 70 

A.4 – Application of amended and new IASs and IFRSs 70 

A.5 – Significant accounting policies 73 

A.6 – Impairment test 84 

A.7 – Group of consolidated companies and changes 

in the group of consolidated companies of the 

Bank Austria Group in 2011 87 


69


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 2011 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 

2011. 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. 

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 

2011 consolidated financial statements. 

A.4.1 – IFRSs which are required to be applied 

IAS 24 Related Party Disclosures 

The revised IAS 24 has been applied for the first time since 1 January 2011. The amendments to IAS 24 simplify the disclosure obligations for entities 

which are controlled, jointly controlled or significantly influenced by a government. The revised IAS 24 also clarifies the definition of a related party. 

The application had no significant effects on the consolidated financial statements. 


70



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. The application had no significant effects on the consolidated financial statements. 

IFRIC 14 Prepayments of a Minimum Funding Requirement (amended) 

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 application of this amendment had no significant effects on the consolidated financial 

statements. 

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments 

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 profit or loss. The application of this interpretation had no effects on the 

consolidated financial statements. 

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. 

In accordance with IAS 39.50E, bonds included in the available-for-sale category were reclassified to the loans and receivables category as at 

1 August 2011. There is the intention to hold these reclassified bonds until maturity. 

Regardless of this fact, the following disclosure table shows the effects of reclassification by item in the statement of financial position and by income 

statement item as at 31 December 2011: 

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 

debt securities –6,045 –5,239 –662 130 – 118 

HFT AFS –2 –2 – – – – 

HFT HTM –43 –45 –1 3 – 2 

HFT Loans to banks – – – – – – 

HFT Loans to customers –1,078 – 912 –19 64 – 44 

AFS Loans to banks –4,921 –4,279 –642 63 – 72 

tOtal –6,045 –5,239 –662 130 – 118 

A.4.2 – New and amended financial reporting standards 

IAS 19 Employee Benefits 

In June 2011 the IASB issued amendments to IAS 19 Employee Benefits (IAS 19 R). IAS 19 R no longer permits deferring changes in the present value 

of pension obligations and in the fair value of plan assets (including the corridor approach, which is not used by the Group). Moreover, IAS 19 R 

requires a net interest approach replacing the expected return on plan assets, and extends the disclosure obligations for defined-benefit plans. The 

amendments are effective for financial years beginning on or after 1 January 2013. Earlier application is permitted. The amendments were issued by 

the IASB but they have not yet been adopted into European law by the EU. At present the Group is examining the possible effects of the application of 

the amendments on the consolidated financial statements. 


71



IAS 1 Presentation of Financial Statements 

In June 2011 the IASB issued amendments to IAS 1 Presentation of Financial Statements. The amendments require the components of other comprehensive 

income to be grouped according to whether such items may be reclassified subsequently to the income statement. Moreover, the amendments 

also reaffirm that the components of other comprehensive income should be presented either in a single statement or in two separate statements. 

The amendments are effective for financial years beginning on or after 1 July 2012. Earlier application is permitted. The amendments were issued by 

the IASB but have not yet been adopted into European law by the EU. The Group is currently examining the possible effects of the application of the 

amended disclosure requirements on the consolidated financial statements. 

IFRS 9 Financial Instruments: Classification and Measurement of Financial Assets and Financial Liabilities 

IFRS 9 was issued in 2009 and revised in 2010. The revised IFRS 9 contains new rules for the classification and measurement of financial assets and 

financial liabilities. The new rules become effective on 1 January 2015, earlier voluntary application is permitted. The Group is currently examining the 

possible effects of the application of the amended disclosure requirements on the consolidated financial statements. 

IFRS 10, IFRS 11, IFRS 12, IAS 27 and IAS 28 

In May 2011 the IASB issued ifrs 10 consolidated financial statements, ifrs 11 Joint arrangements, ifrs 12 disclosures of interests in 

Other entities, a revised IAS 27 Separate Financial Statements, which was amended as IFRS 10 was issued while leaving the existing rules for separate 

financial statements unchanged, and a revised IAS 28 Investments in Associates and Joint Ventures, which was adjusted as IFRS 10 and IFRS 11 

were issued. 

ifrs 10 supersedes IAS 27 Consolidated and Separate Financial Statements and SIC-12 Consolidation – Special Purpose Entities. It contains a standard 

definition of control, which is to be applied to all entities including the special purpose entities previously analysed under SIC-12. An investor controls 

an entity if the investor is exposed to variable returns from involvement with the investee and if the investor has the ability to use power over the 

investee to influence such returns. Control is to be assessed on the basis of all current facts and circumstances and is to be reassessed as facts and 

circumstances change. 

ifrs 11 supersedes IAS 31 Interests in Joint Ventures and SIC-13 Jointly Controlled Entities – Non-Monetary Contributions by Venturers. IFRS 11 distinguishes 

between two types of joint arrangements: joint operations and joint ventures. The definitions of the two types are based on the rights and 

obligations under the arrangement. The previous option of proportionate consolidation for jointly controlled entities, which is not used by the Group, 

was eliminated and the application of the equity method is required. 

ifrs 12 sets out the objective of disclosure requirements with regard to disclosures of the type, associated risks and financial effects of investments 

in subsidiaries, associates and joint arrangements and of unconsolidated structured entities. IFRS 12 requires more extensive disclosures in the notes 

than IAS 27 or SIC-12 and specifies the minimum information to be provided to meet the objective. 

IFRSs 10, 11, 12 are effective for financial years beginning on or after 1 January 2013. Earlier application is permitted if all of these Standards are 

applied earlier. An entity may, however, make individual obligatory disclosures earlier in the notes to its consolidated financial statements without 

earlier application of IFRS 12 in its entirety. IFRSs 10, 11 and 12 were issued by the IASB but have not yet been adopted into European law by the EU. 

The Group is currently examining the possible effects of the application of the Standards on the consolidated financial statements. 

IFRS 13 Fair Value Measurement 

In May 2011 the IASB issued IFRS 13 Fair Value Measurement, which combines the rules for fair value measurement in IFRSs. IFRS 13 amends the 

definition of fair value and provides guidance on fair value measurement in those cases where another IFRS requires or permits measurement at fair 

value. Moreover, IFRS 13 requires more extensive information to be disclosed on fair value measurement. 

IFRS 13 is effective for financial years beginning on or after 1 January 2013. Earlier application is permitted. IFRS 13 was issued by the IASB but has 

not yet been adopted into European law by the EU. The Group is currently examining the possible effects of the application of the Standard on the 

consolidated financial statements. 


72



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 statement of financial position 

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. 

Exchange rates used for foreign currency translation 

aVerage 

(Exchange rate in currency/€) 

2011 2010 chaNge iN % 

eNd Of 

repOrtiNg 

periOd aVerage 

eNd Of 

repOrtiNg 

periOd aVerage 

eNd Of 

repOrtiNg 

periOd 

Azerbaijani manat AZN 1.0992 1.0175 1.0643 1.0674 3.27% –4.67% 

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 1.2326 1.2156 1.3803 1.2504 –10.70% –2.78% 

Czech crown CZK 24.5898 25.7870 25.2840 25.0610 –2.75% 2.90% 

Croatian kuna HRK 7.4390 7.5370 7.2891 7.3830 2.06% 2.09% 

Hungarian forint HUF 279.3730 314.5800 275.4806 277.9500 1.41% 13.18% 

Kyrgyzstan som KGS 64.1775 60.0164 60.8800 62.9508 5.42% –4.66% 

Kazakh tenge KZT 204.1040 191.8850 195.3600 196.9640 4.48% –2.58% 

Lithuanian litas LTL 3.4528 3.4528 3.4528 3.4528 0.00% 0.00% 

Latvian lat LVL 0.7063 0.6995 0.7087 0.7094 –0.34% –1.40% 

Polish zloty PLN 4.1206 4.4580 3.9947 3.9750 3.15% 12.15% 

Romanian leu RON 4.2391 4.3233 4.2122 4.2620 0.64% 1.44% 

Serbian dinar RSD 101.9660 106.1770 103.0434 106.0450 –1.05% 0.12% 

Russian rouble RUB 40.8846 41.7650 40.2630 40.8200 1.54% 2.32% 

Turkish lira TRY 2.3378 2.4432 1.9965 2.0694 17.10% 18.06% 

Ukrainian hryvnia UAH 11.1067 10.3692 10.5386 10.6254 5.39% –2.41% 

US dollar USD 1.3920 1.2939 1.3257 1.3362 5.00% –3.17% 


73



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. 

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. 


74



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. 

If, during the financial year, more than an insignificant amount of held-to-maturity investments are sold or reclassified before maturity, the 

remaining HtM financial assets shall be reclassified as available-for-sale and no financial assets shall be classified as HtM investments for the 

two following financial years, unless the sales or reclassifications: 

• are so close to maturity or the financial asset’s call date that changes in the market rate of interest would not have a significant effect on the 

financial asset’s fair value; 

• occur after substantially all of the financial asset’s original principal has been collected through scheduled payments or prepayments; 

• are attributable to an isolated event that is beyond the reporting entity’s control, is non-recurring and could not have been reasonably anticipated. 

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. 

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. 


75



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 nonobservable 

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 levels (€ m) 

fiNaNcial assets/liabilities measured at fair Value 31 dec. 2011 31 dec. 2010 

leVel 1 leVel 2 leVel 3 leVel 1 leVel 2 leVel 3 

Financial assets held for trading 308 2,924 90 626 3,625 54 

Financial assets at fair value through profit or loss 26 45 143 27 73 204 

Available-for-sale financial assets 5,540 6,979 2,158 4,908 10,654 1,982 

Hedging derivative assets – 3,466 – – 2,448 1 

tOtal 5,874 13,414 2,391 5,560 16,800 2,240 

Financial liabilities held for trading 51 2,493 10 27 2,355 65 

Financial liabilities at fair value through profit or loss – 1,042 – – 1,651 – 

Hedging derivative liabilities – 2,591 – – 2,883 25 

tOtal 27 6,890 91 27 6,890 91 

Annual changes in financial assets at fair value level 3 (€ m) 


fiNaNcial assets 

at fair Value 

thrOugh 

held fOr tradiNg prOfit Or lOss aVailable fOr sale hedgiNg deriVatiVes 

Opening balances 54 204 1,982 1 

increases 124 13 1,144 – 

Purchases 112 – 656 – 

Profits recognised in: 

Income statement 12 10 – – 

of which unrealised gains 6 9 – – 

Equity x x 293 – 

Transfers from other levels – 1 2 – 

Other increases – 2 193 – 

decreases –87 –75 – 967 –1 

Sales –61 –10 –365 – 

Redemptions –5 –43 –408 – 

Losses recognised in: 

Income statement –1 –2 –85 – 

of which unrealised losses –1 – –14 – 

Equity x x –71 – 

Transfers to other levels –3 –17 – –1 

Other decreases –17 –2 –38 – 

closing balance 90 143 2,158 0 


76



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 65 – 25 

increases 6 – – 

Issuance – – – 

Losses recognised in: 

Income statement 6 – – 

of which unrealised losses 6 – – 

Equity X X – 

Transfers from other levels – – – 

Other increases – – – 

decreases –61 – –25 

Redemptions –8 – – 

Purchases –11 – –25 

Profits recognised in: 

Income statement – – – 

of which unrealised gains – – – 

Equity X X – 

Transfers to other levels –24 – – 

Other decreases –18 – – 

closing balances 10 – 0 

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 write-down is made in the amount of the impairment loss thus determined. 

Write-downs 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 write-downs have been made, any impairment losses which have been incurred as at the end 

of the reporting period 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. 


77



If the reason for the impairment ceases to exist, the difference between higher fair value and carrying amount at the end of the last reporting 

period 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 write-down 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. 

Derecognition 

Derecognition is the removal of a previously recognised financial asset or financial liability from an entity’s balance sheet. 

An entity shall derecognise a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the contractual 

rights to receive the cash flows of the financial asset to a non-Group counterparty. 

Recognition is also subject to verification of effective transfer of all the risks and rewards of ownership of the financial asset (true sale). If the entity 

transfers substantially all the risks and rewards of ownership of the financial asset, the entity shall derecognise the asset (or group of assets) 

and recognise separately as assets or liabilities any rights and obligations created or retained in the transfer. 

Conversely, if the entity substantially retains all the risks and rewards of ownership of the asset (or group of assets), the entity shall continue to 

recognise the transferred asset(s). In this case it is necessary to recognise a liability corresponding to the amount received under the transfer and 

subsequently recognise all income accruing on the asset or expense accruing on the liability. 

The main transactions that do not allow, under the above rules, total derecognition of a financial asset are securitisations, repurchase transactions 

(buy-ins) and stock lending. 

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 write-downs 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. 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 

Hedging instruments are those created to hedge market risks (interest-rate, currency and price) to which the hedged positions are exposed. 

In hedge accounting, Bank Austria distinguishes between fair value hedges and cash flow hedges. 

A hedging relationship qualifies for hedge accounting if there is formal designation and documentation of the hedging relationship including the 

risk management objective, the strategy for undertaking the hedge, and how the hedging instrument’s future and retrospective effectiveness will 

be assessed. It is necessary to assess the hedge’s effectiveness, at inception and in subsequent periods, in offsetting the exposure to changes in 

the hedged item’s fair value or cash flows attributable to the hedged risk. 


78



To qualify for hedge accounting in accordance with IAS 39, hedges must be highly effective. A hedge is regarded as highly effective if, at the inception 

of the hedge and in subsequent periods, it is determined prospectively to remain highly effective, i.e. that the hedge ratio is within a range 

of 80–125 per cent. The hedge is assessed on an ongoing basis and thus must prospectively remain highly effective throughout the financial reporting 

periods for which the hedge was designated. The assessment of effectiveness is made at each balance-sheet date or other reporting date. 

If the assessment does not confirm the effectiveness of the hedge, from that time on hedge accounting is discontinued in respect of the hedge 

and the hedging derivative is reclassified as a held-for-trading instrument. 

In addition, the hedging relationship ceases when the hedging instrument expires or is sold, terminated or exercised; the hedged item is sold, 

expires or is repaid; or it is no longer highly probable that the forecast transaction will occur. 

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 profit or loss. 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. 

A portfolio fair value hedge is used by our bank Yapı ve Kredi Bankasi AS and, for the first time from the 2011 financial year, also by our Moscowbased 

banking subsidiary ZAO UniCredit Bank. Yapı ve Kredi Bankasi AS uses cross-currency 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. 

In ZAO UniCredit Bank, portfolio fair value hedge accounting is part of an interest rate risk hedging strategy that helps to avoid discrepancies 

between the economic substance of deals concluded for hedging purposes and their accounting treatment. Interest rate swaps are designated 

as hedging instruments. 

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 profit or loss. 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 profit 

or loss 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 profit 

or loss. 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: 

prOperty, plaNt aNd equipmeNt (taNgible assets) useful life 

Land unlimited 

Buildings max. 50 years 

Office furniture and fittings max. 25 years 

Electronic systems max. 15 years 

Other max. 10 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. 


79



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. 

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 statement of financial position 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 24 group members, tax compensation agreements have been reached with 19 companies and there are 3 joint 

control arrangements. These agreements and arrangements do not include foreign companies. 

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. 


80



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: 5.25 % p.a. (2010: 5.00 % p.a.) 

• increases under collective bargaining agreements: 2.45 % p.a. (2010: 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. (2010: 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. 


81



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. 


82



Impairment losses on loans/Impairment losses on other financial transactions 

These items include write-downs of loans, write-offs and additions to provisions for guarantees and commitments, and income from write-backs as 

well as recoveries of loans previously written off. 

Impairment/write-backs on property, plant and equipment and on intangible assets 

Write-downs 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 recognised 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 2011. 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. 


83



A.6 – Impairment test 

Goodwill: annual changes (€ m) 


Opening balance 3,225 3,415 

Goodwill arising out of acquisitions made in the year – – 

Permanent reductions (impairment) –737 –378 

Disposals – – 

Net exchange differences – 91 184 

Transfer to/from non-current assets held for sale – – 

Other changes – 4 

closing balance 2,397 3,225 

The main changes in accumulated goodwill in 2011 were: 

• Impairment loss on goodwill relating to JSC ATF Bank, Kazakhstan: € 350 m 

• Impairment loss on goodwill relating to PJSC Ukrsotsbank, Ukraine: € 329 m 

• Impairment loss on goodwill relating to UniCredit Securities International Limited, Cyprus: € 42 m and CJSC UniCredit Securities (previously ATON): € 5 m 

• Net exchange differences due to currency depreciation: – € 91 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 2011. 

The cash-generating unit is defined as the lowest level within the Group at which 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. 

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. In accordance with IAS 36, an impairment 

test of the ATF brand name was carried out as part of the impairment test of the Kazakhstan CGU. 

Impairment test – cash-generating units (€ m) 

gOOdWill 


Other 

iNtaNgibles *) tOtal gOOdWill 

Other 

iNtaNgibles 1) tOtal 

retail – – – – – – 

private banking 39 – 39 39 – 39 

Schoellerbank 39 – 39 39 – 39 

corporate & investment banking – – – 51 – 51 

Russia – – – 51 – 51 

central eastern europe 2,321 50 2,371 3,088 76 3,164 

eu member states 

Bulgaria 159 – 159 159 – 159 

Czech Republic 308 – 308 311 – 311 

Hungary 118 – 118 118 – 118 

Romania 137 – 137 139 – 139 

Slovakia 88 – 88 88 – 88 

Other 

Bosnia 39 – 39 39 – 39 

Croatia 50 – 50 52 – 52 

Kazakhstan 129 50 179 481 49 530 

Russia 767 – 767 785 – 785 

Serbia 20 – 20 20 – 20 

Turkey 338 – 338 399 – 399 

Ukraine 168 – 168 497 28 525 

corporate center 37 – 37 47 – 47 

tOtal 2,397 50 2,447 3,225 76 3,301 

*) Indefinite useful life 


84



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 following valuation calculations are based on the 2012 budget and the current five-year plan. According to current information available to the 

Management Board of Bank Austria, the 2012 budget and the assumptions for the years 2013 to 2021 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 (2011): the figures are based on year-end projections for net profit and risk-weighted assets of the respective cash-generating units. 

• Phase 2 (2012–2021) 

– Phase 2a – planning period (2012–2015): the 2012 budget figures for net profit and RWAs were used for 2012, and multi-year planning figures 

were used for subsequent years. 

– Phase 2b (2016–2021): in this phase the growth rates of net income and risk-weighted assets converge towards 2%. The discount rate in the 

form of cost of equity (Ke) declines to the corresponding terminal value level (for details see page 86). 

• 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%). 

Phase 2a is the result 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. 


85



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: The terminal value cost of equity of CGUs in the euro area was set at 10%. For CGUs which will join the euro area 

by 2018, the rate is 10.35%. The terminal value cost of equity for all other CGUs was set at 11.85%. Exceptions are Kazakhstan and Ukraine, 

where the terminal value cost of equity was set at 12%. 

It should also be noted 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 2011 consolidated financial statements. 

A sensitivity analysis was carried out for selected CEE CGUs (see table below; for CEE CGUs not included in the table, 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 0.25% –0.33% 

Ukraine n.m. n.m. 1) 

Turkey 1.30% –3.18% 

Serbia n.m. n.m. 1) 

Slovakia 0.64% –1.70% 

Russia 5.87% –15.72% 

Romania 2.81% –8.74% 

Hungary 6.21% –17.09% 

Czech Republic 1.97% –5.44% 

Bulgaria 10.29% n.m. 2) 

Bosnia 2.82% –7.96% 

Croatia 1.36% –3.43% 

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. 


86



A.7 – Group of consolidated companies and changes in the group of 

consolidated companies of the Bank Austria Group in 2011 

Consolidated companies 

cOmpaNy city cOuNtry 

dOmicile iNterest iN % VOtiNg rights 

direct 

OWNership 

iNdirect 

OWNership tOtal tOtal 

UniCredit Bank Austria AG Vienna Austria 

AI Beteiligungs GmbH Vienna Austria 100.00 0.00 100.00 

Alpine Cayman Islands Ltd. George Town Cayman Islands 100.00 0.00 100.00 

Arany Penzügyi Lizing Zrt. Budapest Hungary 0.00 100.00 100.00 

Artist Marketing Entertainment GmbH Vienna Austria 0.00 100.00 100.00 

AS UniCredit Bank Latvia Riga Latvia 100.00 0.00 100.00 

ATF Capital B.V. Rotterdam Netherlands 0.00 99.74 99.74 

ATF Finance JSC Almaty Kazakhstan 0.00 99.74 99.74 

ATF Inkassatsiya Ltd Almaty Kazakhstan 0.00 99.74 99.74 

AWT Handels Gesellschaft m.b.H. Vienna Austria 0.00 100.00 100.00 

AWT International Trade GmbH Vienna Austria 100.00 0.00 100.00 

BA Alpine Holdings Inc. Wilmington 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 99.00 0.00 99.00 

BA Private Equity GmbH Vienna Austria 100.00 0.00 100.00 

BA-CA Finance II Limited George Town Cayman Islands 0.00 100.00 100.00 

BA-CA Finance Limited George Town Cayman Islands 0.00 100.00 100.00 

BA-CA Infrastructure Finance Advisory GmbH Vienna Austria 0.00 100.00 100.00 

BA-CA Markets & Investment Beteiligung Ges.m.b.H. 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 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 

Bank Austria Wohnbaubank AG Vienna Austria 100.00 0.00 100.00 

CABET-Holding AG Vienna Austria 100.00 0.00 100.00 

CABO Beteiligungsgesellschaft m.b.H. Vienna Austria 0.00 100.00 100.00 

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 

CBD International Sp.z.o.o. Warsaw Poland 0.00 100.00 100.00 

CEAKSCH Verwaltungs G.m.b.H. Vienna Austria 0.00 100.00 100.00 

Centar Kaptol doo Zagreb Croatia 0.00 84.47 84.47 

Center Heinrich-Collin Straße1 Verm. GmbH u Co KEG Vienna Austria 0.00 79.34 79.34 46.53 

DC Elektronische Zahlungssysteme GmbH Vienna Austria 0.00 50.10 50.10 

Christoph Reisegger Gesellschaft m.b.H. Vienna Austria 0.00 99.00 99.00 100.00 

CJSC Bank Sibir Omsk Russian Federation 0.00 100.00 100.00 

Closed Joint Stock Company UniCredit Securities Moscow Russian Federation 0.00 100.00 100.00 

DBC Sp.z.o.o. Warsaw Poland 0.00 100.00 100.00 

Diners Club CEE Holding AG Vienna Austria 99.80 0.00 99.80 

Diners Club CS s.r.o. Bratislava Slovakia 0.00 99.80 99.80 

Diners Club Polska Sp.z.o.o. Warsaw Poland 0.00 99.80 99.80 

DiRana Liegenschaftsverwertungsgesellschaft m.b.H. Vienna Austria 0.00 100.00 100.00 

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 Real-Estate Investment Fund Budapest Hungary 0.00 100.00 100.00 


87





direct 

OWNership 

iNdirect 


Europa Investment Fund Management Ltd. Budapest Hungary 0.00 100.00 100.00 

Euroventures-Austria-CA-Management GesmbH Vienna Austria 0.00 100.00 100.00 

FactorBank Aktiengesellschaft 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 

HypoVereins Immobilien EOOD Sofia Bulgaria 0.00 96.46 96.46 

Immobilien Rating GmbH Vienna Austria 19.00 63.91 82.91 

ISB Universale Bau GmbH Brandenburg Germany 0.00 100.00 100.00 

ISTRA D.M.C. d.o.o. Umag Croatia 0.00 60.65 60.65 

ISTRATURIST UMAG, hotelijerstvo, turizam i turisticka agencija d.d. Umag Croatia 0.00 60.65 60.65 

IVONA Beteiligungsverwaltung GmbH Vienna Austria 0.00 94.95 94.95 

JOHA Gebäude-Errichtungs- und Vermietungsges.m.b.H. Leonding Austria 0.00 94.03 94.03 

JSC ATF Bank Almaty Kazakhstan 99.74 0.00 99.74 

Kaiserwasser Bau- und Errichtungs OG Vienna Austria 99.80 0.00 99.80 

KLEA ZS-Immobilienvermietung G.m.b.H. Vienna Austria 99.80 0.00 99.80 100.00 

KLEA ZS-Liegenschaftsvermietung G.m.b.H. Vienna Austria 99.80 0.00 99.80 100.00 

KSG Karten-Verrechnungs- und Servicegesellschaft m.b.H. Vienna Austria 0.00 50.10 50.10 

Lassallestraße Bau-, Planungs-, Erricht.- u. Verw.ges.m.b.H. Vienna Austria 99.00 0.00 99.00 100.00 

Limited Liability Company AI Line Moscow Russian Federation 0.00 99.90 99.90 

LDT SI&C AMC Ukrsots real estate Kiev Ukraine 0.00 95.34 95.34 95.36 

LLC Ukrsotsbud Kiev Ukraine 0.00 94.38 94.38 94.41 

Lowes Limited Nicosia Cyprus 0.00 100.00 100.00 

M.A.I.L Beteiligungsmanagement Ges. m.b.H. & Co KG Vienna Austria 0.00 100.00 100.00 

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 84.47 84.47 

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 62.18 

MY Beteiligungs GmbH Vienna Austria 100.00 0.00 100.00 

Palais Rothschild Vermietungs GmbH Co OG Vienna Austria 0.00 100.00 100.00 

POLLUX Immobilien GmbH Vienna Austria 99.80 0.00 99.80 

Pominvest dd Split Croatia 0.00 74.89 74.89 75.14 

Privat JSC Ferrotrade International Kiev Ukraine 100.00 0.00 100.00 

Prva Stambena Stedionica dd Zagreb Zagreb Croatia 0.00 84.47 84.47 

Public Joint Stock Company Ukrsotsbank Kiev Ukraine 26.19 69.15 95.34 95.36 

RAMSES Immobilien Gesellschaft m.b.H. & Co OG Vienna Austria 99.30 0.20 99.50 

RANA-Liegenschaftsverwertung GmbH Vienna Austria 0.00 99.90 99.90 

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 

Schoellerbank Invest AG Salzburg 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 

Treuconsult Beteiligungsgesellschaft m.b.H. Vienna Austria 0.00 94.95 94.95 

Uctam Baltics SIA Riga Latvia 0.00 100.00 100.00 

UCTAM d.o.o. Beograd Belgrade Serbia 0.00 100.00 100.00 

UCTAM RU Limited Liability Company Moscow Russian Federation 0.00 100.00 100.00 

UCTAM RO S.R.L. Bucharest Romania 0.00 100.00 100.00 

UCTAM RK Limited Liability Company Almaty Kazakhstan 0.00 100.00 100.00 

UCTAM Ukraine LLC. Kiev Ukraine 0.00 99.90 99.90 

Uctam upravljanje d.o.o. Ljubljana Slovenia 0.00 100.00 100.00 

UniCredit Bank a.d. Banja Luka Banja Luka Bosnia and Herzegovina 92.92 0.00 92.92 

UniCredit Bank Slovakia 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 55.40 79.80 79.78 


88





direct 

OWNership 

iNdirect 


UniCredit Bank Hungary Zrt. Budapest Hungary 100.00 0.00 100.00 

UniCredit Bank OJSC Bishkek Kyrgyzstan 0.00 96.89 96.89 

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 96.46 0.00 96.46 

UniCredit CA IB Czech Republic a.s. Prague Czech Republic 100.00 0.00 100.00 

UniCredit CA IB Hungary Ltd. Budapest Hungary 100.00 0.00 100.00 

UniCredit CAIB Poland S.A. Warsaw Poland 100.00 0.00 100.00 

UniCredit CA IB Romania SRL Bucharest Romania 99.99 0.01 100.00 

UniCredit CAIB Securities Romania SA Bucharest Romania 0.00 90.13 90.13 

UniCredit CA IB Serbia Ltd. Belgrade Serbia 100.00 0.00 100.00 

UniCredit CA IB Slovakia a.s. Bratislava Slovakia 100.00 0.00 100.00 

UniCredit CA IB Slovenija d.o.o. Ljubljana Slovenia 100.00 0.00 100.00 

UniCredit Factoring EAD Sofia Bulgaria 0.00 96.46 96.46 

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 CEE GmbH Vienna Austria 0.00 100.00 100.00 

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 

VIENNA DC Bauträger GmbH Vienna Austria 0.00 67.80 67.80 

VIENNA DC Tower 1 Liegenschaftsbesitz GmbH Vienna Austria 0.00 67.80 67.80 

VIENNA DC Tower 2 Liegenschaftsbesitz GmbH Vienna Austria 0.00 67.80 67.80 

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 Entwicklungsgesellschaft für den Donauraum AG Vienna Austria 38.00 29.80 67.80 

Zagreb Nekretnine doo Zagreb Croatia 0.00 84.47 84.47 

Zagrebacka banka dd Zagreb Croatia 84.47 0.00 84.47 

Zane BH doo Sarajevo Bosnia and Herzegovina 0.00 84.47 84.47 

Zapadni Trgovacki Centar d.o.o. Rijeka Croatia 0.00 100.00 100.00 

ZAO UniCredit Bank Moscow Russian Federation 100.00 0.00 100.00 

ZB Invest d.o.o. Zagreb Croatia 0.00 84.47 84.47 

ZETA Fünf Handels GmbH Vienna Austria 100.00 0.00 100.00 

Investments in companies accounted for under the proportionate consolidation method 


dOmicile iNterest iN % 

direct 

OWNership 

iNdirect 

OWNership tOtal 

Koc Finansal Hizmetler AS Istanbul Turkey 50.00 0.00 50.00 

Stichting Custody Services YKB Amsterdam Netherlands 0.00 40.90 40.90 

UniCredit Menkul Degerler AS Istanbul Turkey 0.00 50.00 50.00 

Yapi Kredi Azerbaijan Closed Joint Stock Company Baku Azerbaijan 0.00 40.90 40.90 

Yapi Kredi Bank N.V. Amsterdam Netherlands 0.00 40.90 40.90 

Yapi ve Kredi Bankasi AS Istanbul Turkey 0.00 40.90 40.90 

Yapi Kredi Diversified Payment Rights Finance Georgetown Cayman Islands 0.00 40.90 40.90 

Yapi Kredi Emeklilik AS Istanbul Turkey 0.00 38.42 38.42 

Yapi Kredi Faktoring AS Istanbul Turkey 0.00 40.88 40.88 

YAPI Kredi Finansal Kiralama AO Istanbul Turkey 0.00 40.43 40.43 

Yapi Kredi Holding BV Amsterdam Netherlands 0.00 40.90 40.90 

Yapi Kredi Invest Limited Liability Company Baku Azerbaijan 0.00 40.90 40.90 

Yapi Kredi Bank Moscow Moscow Russian Federation 0.00 40.90 40.90 

Yapi Kredi Portföy Yönetimi AS Istanbul Turkey 0.00 40.88 40.88 

Yapi Kredi Sigorta AS Istanbul Turkey 0.00 38.42 38.42 

Yapi Kredi Yatirim Menkul Degerler AS Istanbul Turkey 0.00 40.89 40.89 

Yapi Kredi B Tipi Yatirim Ortakligi AS Istanbul Turkey 0.00 22.93 22.93 


89



Investments in associated companies accounted for under the equity method 

dOmicile tOtal assets 

OperatiNg 

iNcOme equity capital 

Name Of cOmpaNy city cOuNtry add-% iN € thsd iN € thsd iN € thsd 

ADF Service, Wien, AT Vienna Austria 23.86 285 0 285 

Air Plus Air Travel Card Vertreibsgesellschaft m.b.H., Wien, AT Vienna Austria 33.27 102,035 23,489 25,664 

Anger Machining GmbH, Traun, AT Traun Austria 48.02 15,347 14,069 1,965 

Allianz ZB D.O.O. Drustvo za Upravljanje Dobrovoljnim, 

Zagreb, HR Zagreb Croatia 41.39 3,542 2,258 1,921 

Allianz ZB D.O.O. Drustvo za Upravljanjie Obveznim, 

Zagreb, HR Zagreb Croatia 41.39 14,795 14,947 12,283 

BA GebäudevermietungsgmbH, Wien, AT Vienna Austria 70.00 16,742 2,232 663 

Bank fur Tirol und Vorarlberg Aktiengesellschaft, Innsbruck, AT Innsbruck Austria 47.39 9,230,952 156,050 728,302 

Banque de Commerce et de Placements SA, Genf, CH Geneva Switzerland 12.54 2,163,969 56,583 255,842 

BKS Bank AG, Klagenfurt, AT Klagenfurt Austria 36.03 6,420,878 143,179 650,333 

CA Immobilien Anlagen Aktiengesellschaft, Wien, AT Vienna Austria 18.16 5,578,930 153,517 1,454,573 

Österreichische Clearingbank AG, Wien, AT Vienna Austria 18.51 210 1,963 103 

Cash Service company AD, Sofia, BG Sofia Bulgaria 19.29 6,853 87 6,188 

Forstinger Handel und Service GmbH, Wien, AT Vienna Austria 31.36 36,054 131,950 3,143 

Kapital-Beteiligungs Aktiengesellschaft, Wien, AT Vienna Austria 20.00 7,967 325,615 6,867 

Marina City Entwicklungs GmbH, Wien, AT Vienna Austria 25.00 11,571 6 453 

Marina Tower Holding GmbH, Wien, AT Vienna Austria 25.00 1,516 0 1,481 

Multiplus Card D.O.O za Promidzbu I Usluge, Zagreb, HR Zagreb Croatia 21.12 3,162 –162 –1,454 

Notartreuhandbank AG, Wien, AT Vienna Austria 25.00 1,093,158 14,026 21,603 

Oberbank AG, Linz, AT Linz Austria 33.33 17,105,000 343,200 1,248,489 

Oesterreichische Kontrollbank Aktiengesellschaft, Wien, AT Vienna Austria 49.15 37,165,361 124,411 603,320 

Österreichische Wertpapierdaten Service GmbH, Wien, AT Vienna Austria 29.30 1,268 33 75 

Österreichische Hotel- und Tourismusbank Ges.m.b.h., 

Wien, AT Vienna Austria 50.00 1,038,724 5,747 25,486 

Papcel a.s., Litovel, CZ Litovel Czech Republic 33.07 33,100 –7 17,029 

Pay Life Bank GmbH, Wien, AT Vienna Austria 23.87 434,170 44,832 143,317 

UNI Gebäudemanagement GmbH, Linz, AT Linz Austria 50.00 2,199 55 –194 

SP Projektentwicklung Schönefeld GmbH & Co KG, 

Stuttgart, DE Stuttgart Germany 50.00 16,394 59 15,405 

UniCredit Leasing SPA, Mailand, IT Milan Italy 31.01 30,377,139 530,685 2,572,449 

OOO UniCredit Leasing Company, Moskau, RUS Moscow Russian Federation 40.00 218,309 9,582 1,562 

V.A. Holding GmbH, Wien, AT Vienna Austria 43.68 992 –10 –3,313 

Wiener Kreditbürgschaftsgesellschaft m.b.H., Wien, AT Vienna Austria 24.49 7,537 414 5,996 

Wien Mitte Immobilien GmbH, Wien, AT Vienna Austria 50.00 320,377 1,647 107,190 

Yapi Kredi Koray Gayrimenkul Yatirim Ortakligi AS, Istanbul, TR Istanbul Turkey 12.45 42,990 –1,846 26,709 

Investments in other controlled and associated companies 

Aggregate total assets of unconsolidated companies which are controlled by UniCredit Bank Austria AG amounted to € 6.4 m. Aggregate total assets 

of associated companies in which Bank Austria holds investments which were not accounted for under the equity method were € 16.7 m. Aggregate 

equity capital amounted to € 1.4 m for controlled companies and € 8.6 m for associated companies. Controlled companies generated a combined net 

loss of € 1.2 m and associated companies reported a combined net loss of € 407 thsd. 


90



Changes in consolidated companies, in companies accounted for under the proportionate 

consolidation method and in companies accounted for under the equity method 


Opening balance 124 

additions 11 

Newly established companies 5 

Companies newly added to the group of consolidated companies 5 

Acquired companies 1 

disposals 6 

Companies sold or liquidated 4 

Mergers 2 

Other changes *) 10 

clOsiNg balaNce 139 

*) These changes relate to companies which were previously included in a sub-group and are now reported separately. 

Companies accounted for under the proportionate consolidation method 


Additions – 

Disposals 1 

Other changes *) 1 


*) These changes relate to companies which were previously included in a sub-group and are now reported separately. 

Companies accounted for under the equity method 


additions 11 


Newly added companies 10 

disposals 4 


Additions 


Name Of cOmpaNy dOmicile additiON as at 

UCTAM RK Limited Liability Company *) Almaty 1 Jan. 2011 

UCTAM Ukraine LLC *) Kiev 1 Jan. 2011 

UniCredit Turn-Around Management GmbH *) Vienna 1 Jan. 2011 

VIENNA DC Bauträger GmbH Vienna 1 Jan. 2011 

VIENNA DC Tower 1 Liegenschaftsbesitz GmbH Vienna 1 Jan. 2011 

VIENNA DC Tower 2 Liegenschaftsbesitz GmbH Vienna 1 Jan. 2011 

Center Heinrich-Collin-Straße 1 Vermietungs GmbH u. Co KG Vienna 30 June 2011 

DC elektronische Zahlungssysteme GmbH Vienna 30 June 2011 

UCTAM RO S.R.L. *) Bucharest 30 June 2011 

Europa Investment Fund Management Budapest 1 September 2011 

UCTAM d.o.o. Beograd Belgrade 31 December 2011 

*) The objectives 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. 


Number 

Number 

Number 

91



In 2011, 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 € 1 m that are members of the group of non-banks under regulatory supervision were included. 


Name Of cOmpaNy dOmicile additiON as at 

BA GebäudevermietungsgmbH Vienna 30 June 2011 

Cash Service Company AD Sofia 30 June 2011 

Kapital-Beteiligungs Aktiengesellschaft Vienna 30 June 2011 

MARINA CITY Entwicklungs GmbH Vienna 30 June 2011 

MARINA TOWER Holding GmbH Vienna 30 June 2011 

Wiener Kreditbürgschaftsgesellschaft m.b.H. Vienna 30 June 2011 

SP Projektentwicklung Schönefeld GmbH & Co KG Stuttgart 30 September 2011 

V.A. Holding GmbH Vienna 30 September 2011 

UNI Gebäudemanagement GmbH Linz 30 September 2011 

Österreichische Wertpapierdaten Service GmbH Vienna 30 September 2011 

ADF Service GmbH Vienna 31 December 2011 

Companies newly added to those accounted for under the equity method did not meet the materiality criterion before 2011. 

Disposals 

Consolidated companies (€ thsd) 

sales/liquidatiON 

Name Of cOmpaNy dOmicile dispOsal as at 

prOceeds 

Bank Austria Global Information Service GmbH Vienna 30 June 2011 – 

ZAO IMB Leasing Moscow 31 August 2011 741 

UPI poslovni Sistem DOO Sarajevo 3 November 2011 –312 

Limited Liability Company B.A. Real Estate Moscow 1 December 2011 225 

Companies accounted for under the proportionate consolidation method 



prOceeds 

Informations Technologie Austria GmbH in liquidation Vienna 29 December 2011 –3 




prOceeds 

RCG Holding LLC (previously Ramius LLC) New York 31 May 2011 –11,259 

UniCredit Business Partner S.p.A. Cologno Monzese 31 May 2011 – 

Credanti Holdings Limited Nicosia 31 August 2011 1,887 

Moll Holding GmbH Munich 31 December 2011 – 

Mergers 


Name Of merged cOmpaNy 

UniCredit Factoring Penzügyi 

dOmicile Name Of absOrbed cOmpaNy dOmicile merger 

Szolgoltato Zrt. Budapest UniCredit Bank Hungary Zrt. Budapest 1 January 2011 

Teledata Consulting und 

Systemmanagement GesmbH Vienna 

Treuconsult Beteiligungs- 

gesellschaft m.b.H. Vienna 14 July 2011 


92



Effects of changes in the group of consolidated companies 

in the statement of financial position at 31 December 2011 

The following table shows the aggregate total assets and aggregate total liabilities and equity of additions and disposals reflected in the consolidated 

financial statements in 2011. 

Assets (€ m) 

31 dec. 2011 

Of Which: 

additiONs iN 2011 31 dec. 2010 

Of Which: 

dispOsals iN 2011 

Cash and cash balances 2,919 – 3,030 – 

Financial assets held for trading 3,322 – 4,304 – 

Financial assets at fair value through profit or loss 214 – 304 – 

Available-for-sale financial assets 14,677 – 17,544 – 

Held-to-maturity investments 3,498 – 4,446 – 

Loans and receivables with banks 25,621 3 19,749 4 

Loans and receivables with customers 134,914 – 130,093 – 

Hedging derivatives 3,466 – 2,449 – 

Changes in fair value of portfolio hedged items (+/–) 30 – 44 – 

Investments in associates and joint ventures 2,562 15 2,518 – 

Insurance reserves attributable to reinsurers 1 – – – 

Property, plant and equipment 2,576 150 2,553 38 

of which held for investment 721 – 479 – 

Intangible assets 2,866 1 3,751 3 

of which goodwill 2,397 – 3,225 – 

Tax assets 1,389 3 1,254 1 

a) current tax assets 282 – 248 – 

b) deferred tax assets 1,107 3 1,006 1 

Non-current assets and disposal groups classified as held for sale 55 – 2 – 

Other assets 1,120 11 1,008 18 

tOtal assets 199,229 184 193,049 63 

Liabilities and equity (€ m) 


Of Which: 

additiONs iN 2011 31 dec. 2010 

Of Which: 

dispOsals iN 2011 

Deposits from banks 32,772 114 33,130 2 

Deposits from customers 104,728 2 100,284 – 

Debt securities in issue 29,931 – 27,555 – 

Financial liabilities held for trading 2,554 – 2,448 – 

Financial liabilities at fair value through profit or loss 1,042 – 1,651 – 

Hedging derivatives 2,591 – 2,909 – 

Changes in fair value of portfolio hedged items (+/–) – – – – 

Tax liabilities 789 1 543 1 

a) current tax liabilities 146 – 126 – 

b) deferred tax liabilities 643 1 417 1 

Liabilities included in disposal groups classified as held for sale – – – – 

Other liabilities 2,782 19 2,573 31 

Provisions for risks and charges 4,204 – 4,297 4 

a) post-retirement benefit obligations 3,664 – 3,791 4 

b) other provisions 540 – 506 – 

Insurance reserves 175 – 183 – 

Equity 17,661 47 17,476 26 

of which non-controlling interests (+/–) 534 – 546 – 

tOtal liabilities aNd equity 199,229 184 193,049 63 


93

B – Notes to the income statement 

B.1 – Interest income/Interest expense 96 

B.2 – Fee and commission income/ 

Fee and commission expense 97 

B.3 – Dividend income and similar revenue 98 

B.4 – Gains and losses on financial assets and 

liabilities held for trading 98 

B.5 – Fair value adjustments in hedge accounting 98 

B.6 – Gains and losses on disposals/repurchases 99 

B.7 – Net change in financial assets and liabilities 

at fair value through profit or loss 99 

B.8 – Impairment losses 100 

B.9 – Premium earned (net) – breakdown 101 

B.10 – Other income (net) from insurance business 101 

B.11 – Payroll 101 

B.12 – Other administrative expenses 102 

B.13 – Net provisions for risks and charges 102 

B.14 – Impairment on property, plant and equipment 103 

B.15 – Impairment on intangible assets 103 

B.16 – Other net operating income 103 

B.17 – Profit (Loss) of associates 104 

B.18 – Gains and losses on disposal of investments 104 

B.19 – Income tax from continuing operations 104 

B.20 – Earnings per share 105 

B.21 – Appropriation of profits 105 


95


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 52 – 92 144 223 

Financial assets at fair value through profit or loss 5 – – 5 8 

Available-for-sale financial assets 672 – – 672 523 

Held-to-maturity investments 229 – – 229 297 

Loans and receivables with banks 73 362 – 436 286 

Loans and receivables with customers 77 6,606 – 6,683 6,480 

Hedging derivatives X X 497 497 564 

Other assets X X 5 5 5 

tOtal 1,108 6,968 595 8,671 8,386 

Within this item, total interest income from financial assets that are not at fair value through profit or loss was € 7,353 m (2010: € 7,068 m). 


Other 

traNsactiONs tOtal tOtal 

Deposits from central banks –1 X – –1 –17 

Deposits from banks –806 X – –806 –707 

Deposits from customers –2,259 X – –2,259 –2,082 

Debt securities in issue X – 926 – – 926 –809 

Financial liabilities held for trading – –1 –63 –63 – 91 

Financial liabilities at fair value through profit or loss – –27 – –27 –28 

Other liabilities X X –1 –1 –1 

Hedging derivatives X X – 93 – 93 –108 

tOtal –3,066 – 953 –157 –4,176 –3,843 

Within this item, total interest expense for liabilities that are not at fair value through profit or loss was € 3,993 m (2010: € 3,616 m). 


96



B.2 – Fee and commission income/Fee and commission expense 

Fee and commission income (€ m) 


guarantees given 209 203 

credit derivatives 5 5 

management, brokerage and consultancy services: 753 831 

securities trading 43 63 

currency trading 248 262 

portfolio management 167 187 

custody and administration of securities 101 107 

custodian bank 60 58 

placement of securities 22 29 

reception and transmission of orders 5 9 

advisory services 28 30 

distribution of third party services 80 87 

collection and payment services 837 781 

securitisation servicing – – 

factoring 19 33 

tax collection services – – 

management of multilateral trading facilities – – 

management of current accounts 220 209 

Other services 340 400 

tOtal 2,383 2,463 

Fee and commission expense (€ m) 


guarantees received –76 –37 

credit derivatives –26 –37 

management, brokerage and consultancy services: –105 –119 

trading in financial instruments –6 –9 

currency trading –1 –1 

portfolio management –18 –24 

custody and administration of securities –48 –51 

placement of financial instruments –1 –3 

off-site distribution of financial instruments, products and services –32 –31 

collection and payment services –249 –229 

Other services –42 –50 

tOtal –498 –472 


97



B.3 – Dividend income and similar revenue 

diVideNds 

B.4 – Gains and losses on financial assets and liabilities held for trading (€ m) 

uNrealised 

prOfits 


iNcOme frOm 

uNits iN 

iNVestmeNt 

fuNds tOtal diVideNds 

realised 

prOfits 


uNrealised 

lOsses 

2010 

realised 

lOsses Net prOfit Net prOfit 

financial assets held for trading 36 373 –10 –502 –103 295 

Debt securities 10 38 –9 –48 –9 95 

Equity instruments – 19 –1 –18 – 5 

Units in investment funds – – – – – – 

Loans – – – – – – 

Other 25 316 – –435 – 94 194 

financial liabilities held for trading – 2 –7 –1 –6 –11 

Debt securities – – – – – – 

Deposits – – – – – – 

Other – 2 –7 –1 –6 –11 

Other financial assets and liabilities: exchange differences x x x x 273 162 

derivatives 508 904 –516 –770 72 –145 

Financial derivatives 505 904 –396 –770 190 –117 

on debt securities and interest rates 465 867 –359 –734 239 11 

on equity securities and share indices 31 8 –29 –6 4 56 

on currency and gold X X X X –53 –184 

other 10 28 –8 –30 – – 

Credit derivatives 2 – –120 – –118 –28 

tOtal 544 1,279 –533 –1,273 236 301 

B.5 – Fair value adjustments in hedge accounting (€ m) 


gains on: 

Fair value hedging instruments 42 9 

Hedged asset items (in fair value hedge relationship) 45 17 

Hedged liability items (in fair value hedge relationship) – – 

Cash-flow hedging derivatives – – 

total gains on hedging activities 87 26 

losses on: 

Fair value hedging instruments –66 –22 

Hedged asset items (in fair value hedge relationship) –11 –5 

Hedged liability items (in fair value hedge relationship) –6 –1 

total losses on hedging activities –84 –28 

Net hedgiNg result 3 –2 


(€ m) 

iNcOme frOm 

uNits iN 

iNVestmeNt 

fuNds tOtal 

Financial assets held for trading 1 – 1 1 – 1 

Available-for-sale financial assets 21 5 26 13 8 22 

Financial assets at fair value through profit or loss – – – – – – 

Investments 9 X 9 9 X 9 

tOtal 31 5 35 23 8 31 

98



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 7 –30 –23 21 –19 3 

Available-for-sale financial assets 161 –21 140 54 –14 40 

Debt securities 31 –20 10 23 –13 10 

Equity instruments 126 –1 126 28 –1 27 

Units in investment funds 4 – 4 3 – 3 

Loans – – – – – – 

Held-to-maturity investments – – – 2 –2 –1 

tOtal assets 168 –51 117 77 –34 43 

financial liabilities 

Deposits with banks – – – – – – 

Deposits with customers – – – – – – 

Debt securities in issue – – – – – – 

tOtal liabilities – – – – – – 

tOtal 168 –51 117 77 –34 43 

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 10 9 –6 – 13 42 

Debt securities 1 3 –3 – – 1 

Equity instruments – – – – – – 

Units in investment funds 9 6 –3 – 13 41 

Loans – – – – – – 

financial liabilities 130 25 –5 –5 145 23 

Debt securities 130 25 –5 –5 145 23 

Deposits from banks – – – – – – 

Deposits from customers – – – – – – 

credit and financial derivatives 17 3 –131 –25 –136 –39 

tOtal 157 37 –142 –30 22 27 

99



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 – – – – – – 17 

Loans and receivables with customers –42 –1,944 –182 632 209 –1,325 –1,854 

tOtal –42 –1,944 –182 632 209 –1,326 –1,837 

Impairment losses on available-for-sale financial assets (€ m) 

Impairment losses on other financial transactions (€ m) 

specific 






Guarantees given – –48 –5 20 3 –31 –1 

Credit derivatives – – – – – – – 

Commitments to disburse funds – –5 –2 5 3 1 –4 

Other transactions – –4 – 5 – 1 – 

tOtal – –57 –7 30 6 –29 –5 

specific 

Write-Offs Other specific tOtal tOtal 

Debt securities –15 –239 1 –253 *) –8 

Equity instruments –1 –18 x –18 – 

Units in investment funds – –20 – –20 –1 

Loans to banks – – – – – 

Loans to customers – – – – – 

tOtal –15 –277 1 –292 –9 

*) Including write-downs of € 243 m on bonds of the Republic of Greece. 

Impairment losses on held-to-maturity investments (€ m) 

specific 




Debt securities – –152 – – – –152 *) – 

Loans to banks – – – – – – – 

Loans to customers – – – – – – – 

tOtal – –152 – – – –152 – 

*) Including write-downs of € 152 m on bonds of the Republic of Greece. 


100



B.9 – Premium earned (net) – breakdown 

direct 

busiNess 

B.10 – other income (net) from insurance business 


(€ m) 


Net change in insurance provisions –10 –2 

Claims paid pertaining to the year –102 –100 

Other income and expense from insurance business 13 7 

tOtal – 98 – 95 

(€ m) 


iNdirect 

busiNess tOtal tOtal 

life business 

Gross premiums written (+) 28 – 28 12 

Reinsurance premiums paid (–) –5 – –5 –3 

total 23 – 23 9 

Non-life business 

Gross premiums written (+) 151 – 151 146 

Reinsurance premiums paid (–) –38 – –38 –26 

Change in gross value of premium reserve (+/–) –23 – –23 –11 

Change in provision for unearned premiums ceded to reinsurers (–/+) 11 – 11 – 

total 102 – 102 109 

tOtal Net premiums 126 – 126 118 

B.11 – Payroll 


employees –1,958 –1,895 

Wages and salaries –1,423 –1,374 

Social charges –288 –276 

Provision for retirement payments and similar provisions –248 –246 

Defined contribution –2 –4 

Defined benefit –245 –243 

Payments to external pension funds –30 –30 

Defined contribution –28 –28 

Defined benefit –2 –2 

Costs related to share-based payments –6 –1 

Other employee benefits –102 –106 1) 

Recovery of compensation 2) 139 139 

Others –50 –37 

tOtal –2,008 –1,931 

1) Figures for the previous year adjusted to changes in presentation. 

2) This includes recovery of staff costs relating to Bank Austria employees who are not active within the Group. 

(€ m) 

101



Defined-benefit company retirement funds: total costs (€ m) 


pension and similar funds allowances – with defined benefits 

Current service cost –63 –51 

Interest cost –183 –186 

Expected return on plan assets – – 

Net actuarial gain/loss recognised in the year 4 –5 

Past service cost – – 

Gains/losses on curtailments and settlements –3 – 

expeNses recOgNised iN prOfit Or lOss –245 –243 

Other employee benefits (€ m) 

2011 2010 *) 

Seniority premiums –7 –8 

Leaving incentives –12 –7 

Other –84 – 91 

tOtal –102 –106 

*) Figures for the previous year adjusted to changes in presentation. 

B.12 – other administrative expenses 

B.13 – Net provisions for risks and charges 

prOVisiONs 


(€ m) 


reallOcatiON 

surplus tOtal tOtal 

Other provisions 

Legal disputes –152 10 –141 –108 

Staff costs – – – – 

Other –64 51 –13 –28 

tOtal –216 61 –154 –136 

(€ m) 


indirect taxes and duties –146 –77 

miscellaneous costs and expenses –1,484 –1,454 

Advertising, marketing and communication –139 –126 

Expenses related to credit risk –33 –35 

Expenses related to personnel –62 –60 

Information and communication technology expenses –387 –383 

Consulting and professional services –87 –69 

Real estate expenses –341 –332 

Other functioning costs –437 –448 

tOtal –1,630 –1,531 

102



B.14 – Impairment on property, plant and equipment 

depreciatiON 


(€ m) 


impairmeNt 

lOsses Write-bacKs Net prOfit 

property, plant and equipment 

Owned –187 –9 5 –191 –199 

used in the business –183 –5 5 –183 –192 

held for investment –4 –3 – –8 –8 

finance lease –2 – – –2 –1 

used in the business –1 – – –1 –1 

held for investment –1 – – –1 – 

tOtal –190 –9 5 –193 –200 

B.15 – Impairment on intangible assets 

amOrtisatiON 

(€ m) 


impairmeNt 

2010 

lOsses Write-bacKs Net prOfit 

intangible assets 

Owned –106 –27 – –132 –112 

generated internally by the company –5 – – –5 –6 

other –101 –27 – –128 –106 

finance leases – – – – – 

tOtal –106 –27 – –132 –112 

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 –2 –1 

Writedowns on improvements of goods owned by third parties –2 –2 

Costs related to the specific service of financial leasing – – 

Other – 94 –108 

tOtal Other OperatiNg expeNses – 98 –111 

Other operating income (€ m) 


recovery of costs 2 2 

Other income 233 279 

Revenue from administrative services 84 130 

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) 18 16 

Revenues from operating leases 3 2 

Recovery of miscellaneous costs paid in previous years 3 2 

Revenues from finance lease activities – – 

Others 126 129 

tOtal Other OperatiNg iNcOme 235 281 

Other Net OperatiNg iNcOme 137 169 

103



B.17 – Profit (Loss) of associates 

B.18 – Gains and losses on disposal of investments 


(€ m) 


property 

Gains on disposal 46 20 

Losses on disposal –1 –2 

Other assets 


Losses on disposal –3 –3 

tOtal 48 33 

B.19 – Tax expense (income) related to profit or loss from continuing operations 

(€ m) 


Current tax (–) –293 –356 

Adjustment to current tax of prior years (+/–) –16 31 

Reduction of current tax for the year (+) –3 5 

Changes to deferred tax assets (+/–) 162 – 

Changes to deferred tax liabilities (+/–) –101 –28 

tax expeNse fOr the year (–) –250 –348 

(€ m) 


companies subject to significant influence 

income 206 146 

Revaluations 178 144 


Writebacks – – 

Other gains – – 

expense –44 –20 

Writedowns –6 –18 

Impairment losses –27 –3 

Losses on disposal –11 – 

Other negative changes – – 

Net profit 162 126 

tOtal 162 126 

104



Reconciliation of theoretical tax charge to actual tax charge (€ m) 


total profit or loss before tax from continuing operations 509 1,146 

Applicable tax rate 25% 25% 

theoretical tax –127 –286 

Different tax rates 115 70 

Non-taxable income 23 6 

Non-deductible expenses –82 – 94 

Prior years and changes in tax rates 45 13 

a) effects on current tax –26 14 

b) effects on deferred tax 72 –1 

Valuation adjustments and non-recognition of deferred taxes –34 27 

Write-downs on goodwill –175 –84 

Non-taxable foreign income – 1 

Other differences –16 – 

recOgNised taxes ON iNcOme –250 –348 

Effective tax rate 49.2% 30.4% 

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 (2011: 231.2 million shares; 2010: 226.3 million shares). 

B.21 – Appropriation of profits 

After movements in reserves in the amount of € 485,833,511.33 the profit of UniCredit Bank Austria AG for the financial year beginning on 

1 January 2011 and ending on 31 December 2011 was € 100,000.00. The profit brought forward from the previous year was € 2,314,164.75. Thus 

the profit available for distribution was € 2,414,164.75. 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 € 2,414,164.75 available for distribution be carried forward to new account. 


105

C – Notes to the statement of financial position 

Assets 

C.1 – Cash and cash balances 108 

C.2 – Financial assets held for trading 108 

C.3 – Financial assets at fair value through profit or loss 109 

C.4 – Available-for-sale financial assets 109 

C.5 – Held-to-maturity investments 110 

C.6 – Loans and receivables with banks 110 

C.7 – Loans and receivables with customers 111 

C.8 – Hedging derivatives 111 

C.9 – Changes in fair value of portfolio hedged items 112 

C.10 – Equity investments 112 

C.11 – Property, plant and equipment 112 

C.12 – Intangible assets 114 

C.13 – Tax assets 115 

C.14 – Non-current assets and disposal groups 

classified as held for sale 115 

C.15 – Other assets 116 

Liabilities and equity 

C.16 – Deposits from banks 116 

C.17 – Deposits from customers 116 

C.18 – Debt securities in issue 117 

C.19 – Financial liabilities held for trading 117 

C.20 – Financial liabilities at fair value 

through profit or loss 117 

C.21 – Hedging derivatives 118 

C.22 – Deferred tax liabilities 118 

C.23 – Liabilities included in disposal groups 

classified as held for sale 118 

C.24 – Other liabilities 119 

C.25 – Provisions for risks and charges 119 

C.26 – Insurance provisions 120 

C.27 – Equity 120 

Bank Austria · Annual Financial Statements 2011 107


C – Notes to the statement of financial position (CoNTINuED) 

C.1 – Cash and cash balances 

C.2 – Financial assets held for trading 


(€ m) 

31 dec. 2011 31 dec. 2010 

Cash 1,451 1,325 

Demand deposits with central banks 1,468 1,705 

tOtal 2,919 3,030 

fair Value 

leVel 1 

fair Value 

leVel 2 


fair Value 

leVel 3 tOtal 

fair Value 

leVel 1 

fair Value 

leVel 2 

(€ m) 

fair Value 

leVel 3 tOtal 

financial assets (non-derivatives) 307 604 80 992 625 1,246 15 1,886 

Debt securities 293 604 80 977 604 1,245 14 1,863 

Structured securities 9 – – 10 11 – – 11 

Other debt securities 283 604 80 968 593 1,245 14 1,852 

Equity instruments 7 – – 7 9 1 1 11 

Units in investment funds 6 – – 7 11 1 – 11 

Loans 1 – – 1 – – – – 

Reverse repos – – – – – – – – 

Other 1 – – 1 – – – – 

derivative instruments – 2,320 9 2,330 1 2,378 39 2,418 

Financial derivatives – 2,318 9 2,328 1 2,374 39 2,414 

Trading – 2,317 9 2,327 1 2,374 39 2,414 

Related to fair value option – – – – – – – – 

Other – 1 – 1 – – – – 

Credit derivatives – 2 – 2 – 4 – 4 

Trading – 2 – 2 – 4 – 4 

Related to fair value option – – – – – – – – 

Other – – – – – – – – 

tOtal 308 2,924 90 3,322 626 3,625 54 4,304 

108



C.3 – Financial assets at fair value through profit or loss 

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. 

Financial assets at fair value through profit or loss: annual changes (€ m) 

debt securities 

equity 

iNstrumeNts 


uNits iN 

iNVestmeNt 

fuNds lOaNs tOtal 

Opening balance 131 15 158 – 304 

increases 5 – 20 – 24 

Purchases 1 – 9 – 10 

Positive changes in fair value 2 – 9 – 11 

Other increases 2 – 1 – 3 

decreases –44 –15 –55 – –113 

Sales –4 – –9 – –13 

Redemptions –32 –15 –42 – –89 

Negative changes in fair value –7 – –2 – –9 

Other decreases –1 – –2 – –3 

clOsiNg balaNce 92 0 122 – 214 

C.4 – Available-for-sale financial assets 


fair Value 

leVel 3 tOtal 

fair Value 

leVel 1 

fair Value 

leVel 2 


(€ m) 

fair Value 

leVel 3 tOtal 

Debt securities 11 45 36 92 12 73 46 131 

Structured securities – – – – – – – – 

Other debt securities 11 45 36 92 12 73 46 131 

Equity instruments – – – – 15 – – 15 

Units in investment funds 15 – 106 122 – – 157 158 

Loans – – – – – – – – 

Structured – – – – – – – – 

Other – – – – – – – – 

tOtal 26 45 143 214 27 73 204 304 

cOst 23 45 143 211 27 73 201 301 

fair Value 

leVel 1 

fair Value 

leVel 2 


fair Value 

leVel 3 tOtal 

fair Value 

leVel 1 

fair Value 

leVel 2 

(€ m) 

fair Value 

leVel 3 tOtal 

Debt securities 5,464 6,876 1,449 13,789 4,844 10,441 1,606 16,892 

Structured securities – 24 419 443 – 1 419 420 

Other 5,464 6,852 1,030 13,346 4,844 10,440 1,187 16,472 

Equity instruments 45 15 623 684 53 113 295 461 

Measured at fair value 45 15 594 655 53 113 256 421 

Carried at cost – – 29 29 – – 40 40 

Units in investment funds 31 87 86 205 11 99 81 191 

Loans – – – – – – – – 

tOtal 5,540 6,979 2,158 14,677 4,908 10,654 1,982 17,544 

109



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 3,498 2,347 913 288 4,446 2,896 1,543 180 

Structured securities – – – – – – – – 

Other securities 3,498 2,347 913 287 4,446 2,896 1,543 180 

Loans – – – – – – – – 

tOtal 3,498 2,347 913 288 4,446 2,896 1,543 180 

Held-to-maturity investments: annual changes (€ m) 



increases 721 986 

Purchases 430 650 

Write-backs – – 

Transfers from other portfolios – – 

Other changes and positive exchange differences 290 336 

decreases –1,669 –1,607 

Sales –7 –81 

Redemptions –1,099 –1,458 

Write-downs –152 –3 

Transfers to other portfolios –20 –41 

Other changes and negative exchange differences –390 –23 

clOsiNg balaNce 3,498 4,446 

C.6 – Loans and receivables with banks 

(€ m) 


loans to central banks 5,726 6,155 

Time deposits 335 975 

Compulsory reserves 5,007 4,511 

Reverse repos 343 628 

Other 41 42 

loans to banks 19,895 13,594 

Current accounts and demand deposits 1,908 3,527 

Time deposits 8,216 6,569 

Other loans 3,846 3,498 

Reverse repos 1,409 951 

Finance leases – – 

Other 2,437 2,547 

Debt securities 5,924 – 

Structured – – 

Other 5,924 – 

tOtal (carryiNg amOuNt) 25,621 19,749 

tOtal (fair Value) 24,745 19,836 

Loan loss provisions deducted from loans and receivables 49 61 

110



C.7 – Loans and receivables with customers 

Finance leases: customers (€ m) 


preseNt Value Of 

miNimum lease paymeNts 

preseNt Value Of 

miNimum lease paymeNts 

amounts receivable under finance leases: 

Up to 12 months 166 163 

From 1 to 5 years 258 212 

Over 5 years 36 12 

preseNt Value Of miNimum lease paymeNts receiVable (Net iNVestmeNt iN the lease) 460 387 

C.8 – Hedging derivatives 


perfOrmiNg impaired tOtal perfOrmiNg impaired tOtal 

Current accounts 12,105 308 12,413 11,764 325 12,089 

Reverse repos 230 – 230 385 – 385 

Mortgages 23,039 1,967 25,005 23,056 1,695 24,751 

Credit cards and personal loans, including wage assignment loans 9,629 126 9,755 8,703 154 8,856 

Finance leases 441 19 460 363 24 387 

Factoring 1,132 10 1,142 997 8 1,005 

Other transactions 79,559 5,116 84,675 76,694 4,167 80,861 

Debt securities 1,212 23 1,235 1,694 65 1,759 

Structured securities – – – – – – 

Other debt securities 1,212 23 1,235 1,694 65 1,759 

tOtal (carryiNg amOuNt) 127,347 7,567 134,914 123,655 6,438 130,093 

tOtal (fair Value) 127,819 7,536 135,355 124,477 6,391 130,868 

Loan loss provisions deducted from loans and receivables 810 6,903 7,713 896 6,040 6,936 

fair Value 

leVel 1 

fair Value 

leVel 2 


fair Value 

leVel 3 tOtal 

fair Value 

leVel 1 

fair Value 

leVel 2 


(€ m) 

(€ m) 

fair Value 

leVel 3 tOtal 

financial derivatives – 3,466 – 3,466 – 2,448 1 2,449 

Fair value – 770 – 770 – 495 – 495 

Cash flows – 2,696 – 2,696 – 1,953 1 1,954 

Net investment in foreign subsidiaries – – – – – – – – 

credit derivatives – – – – – – – – 

Fair value – – – – – – – – 

Cash flows – – – – – – – – 

tOtal – 3,466 – 3,466 – 2,448 1 2,449 

111



C.9 – Changes in fair value of portfolio hedged items 

C.10 – Equity investments 


(€ m) 



increases 406 277 

Purchases 80 42 

Writebacks – – 

Revaluation 172 126 

Other changes 153 109 

decreases –362 –185 

Sales – 92 –16 

Write-downs –23 –3 

Other changes –247 –166 

clOsiNg balaNce 2,562 2,518 

C.11 – Property, plant and equipment 

(€ m) 


assets for operational use 1,855 2,074 

Owned 1,799 2,025 

Land 147 199 

Buildings 1,258 1,393 

Office furniture and fittings 147 147 

Electronic systems 141 180 

Others 106 105 

leased 56 49 

Land 13 – 

Buildings 42 48 

Office furniture and fittings – – 

Electronic systems – – 

Others 1 1 

held-for-investment assets 721 479 

Owned 721 479 

Land 289 243 

Buildings 432 237 

leased – – 

tOtal 2,576 2,553 

(€ m) 


positive changes 30 44 

loans and receivables 30 44 

Negative changes – – 

tOtal 30 44 

112



Property, plant and equipment used in the business (€ m) 

laNd buildiNgs 

Office 

furNiture 

aNd fittiNgs 


electrONic 

systems Other tOtal 

gross opening balance 199 2,197 478 760 345 3,980 

Total net reduction in value – –757 –330 –580 –239 –1,906 

Net opening balance 199 1,441 148 180 106 2,074 

increases 1 149 33 68 69 320 

Purchases – 115 31 62 52 260 

Capitalised expenditure on improvements – 3 – 3 – 7 

Write-backs – 5 – – – 5 

Increase in fair value – – – – – – 

Positive exchange differences – 6 – – 1 8 

Transfer from properties held for investment – – – – – – 

Other changes – 19 1 2 17 40 

reductions –40 –290 –34 –107 –68 –539 

Disposals –18 –15 – –5 –4 –42 

Depreciation – –63 –31 –56 –28 –178 

Impairment losses – –5 – – – –5 

in equity – – – – – – 

through profit or loss – –5 – – – –5 

Reductions of fair value – – – – – – 

Negative exchange differences –7 –39 –2 –6 –5 –58 

Transfers –15 –159 – –1 – –174 

property, plant and equipment held for investment –14 –136 – – – –150 

assets held for sale –1 –22 – –1 – –24 

Other changes – –9 –1 –39 –31 –81 

Net fiNal balaNce 161 1,300 147 141 107 1,855 

Property, plant and equipment held for investment: annual changes (€ m) 


laNd buildiNgs tOtal 

Opening balances 243 237 479 

increases 62 313 376 

Purchases 18 107 125 

Capitalised expenditure on improvements 1 8 9 

Increases in fair value – – – 

Write-backs – – – 

Positive exchange differences 1 2 3 

Transfer from properties used in the business 14 136 150 

Other changes 28 60 88 

reductions –16 –118 –134 

Disposals –2 –21 –23 

Depreciation – –5 –5 

Reductions in fair value – –7 –7 

Impairment losses – –3 –3 

Negative exchange differences –3 –10 –13 

Transfers to –10 –42 –52 

properties used in the business – – – 

non-current assets classified as held for sale –10 –42 –52 

Other changes – –30 –31 

clOsiNg balaNces 289 432 721 

measured at fair Value 271 373 645 


113



C.12 – Intangible assets 


(€ m) 


goodwill 2,397 3,225 

Other intangible assets 469 526 

Assets carried at cost 469 526 

Intangible assets generated internally 43 39 

Other assets 426 487 

Assets valued at fair value – – 

tOtal 2,866 3,751 

Intangible assets – annual changes (€ m) 

gOOdWill 


Other iNtaNgible assets 

geNerated 

iNterNally Other tOtal 

gross opening balance 5,241 69 1,320 6,630 

Net reductions –2,017 –30 –833 –2,879 

Net opening balance 3,225 39 487 3,751 

increases 2 24 90 116 

Purchases – 22 71 94 

Increases in intangible assets generated internally X – – – 

Write-backs X – – – 

Increase in fair value – – – 

Positive exchange differences 2 – 8 10 

Other changes – 1 11 12 

reductions –830 –20 –152 –1,001 

Disposals – –3 –6 –8 

Write-downs –737 –5 –127 –868 

Amortisation X –5 –100 –105 

Write-downs –737 – –27 –763 

in equity X – – – 

through profit or loss –737 – –27 –763 

Reduction in fair value – – – 

Transfers to non-current assets held for sale – – – – 

Negative exchange differences – 93 –2 –14 –109 

Other changes – –10 –5 –16 

Net clOsiNg balaNce 2,397 43 426 2,866 

114



C.13 – Tax assets (€ m) 


deferred tax assets related to: 

Assets/liabilities held for trading 52 46 

Other financial instruments 66 71 

Property, plant and equipment/intangible assets 33 17 

Provisions 453 446 

Write-downs on loans 76 69 

Other assets/liabilities 153 32 

Loans and receivables with banks and customers 10 39 

Tax losses carried forward 247 269 

Other 18 17 

tOtal 1,107 1,006 

In 2011, deferred taxes were also recognised directly in equity. € 52 m (2010: € 20 m) was credited to the available-for-sale reserve and € 86 m 

(2010: € 24 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 € 28 m (2010: € 63 m) were offset against equity in UniCredit Bank Austria AG. 

As a result of the first-time consolidation of the subsidiaries referred to in section A.7, 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 2011. 

The assets include deferred tax assets arising from the carryforward of unused tax losses in the amount of € 247 m (2010: € 269 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 € 739 m (2010: € 585 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 55 2 

Intangible assets – – 

Other non-current assets – – 

total 55 2 

asset groups classified as held for sale – – 

assets 55 2 

This item includes the UNO Shoppingcenter, Linz, which is intended to be repositioned and sold in cooperation with a strategic partner. 

Negotiations are currently under way in this regard and should be completed within a year. 

New office buildings were constructed for UniCredit Bank Czech Republic a.s. in Prague. The bank has already relocated to the new buildings. 

The office buildings used by the bank so far are intended to be sold. 


115



C.15 – other assets 

C.16 – Deposits from banks (€ m) 


deposits from central banks 2,454 757 

deposits from banks 30,318 32,373 



Loans 17,498 16,002 

Repos 2,361 967 

Other 15,137 15,034 

Liabilities in respect of commitments to repurchase treasury shares – – 

Other liabilities 165 115 

tOtal 32,772 33,130 

fair Value 33,234 33,782 


(€ m) 


Margin with derivatives clearers (non-interest bearing) 11 14 

Gold, silver and precious metals 125 70 

Positive value of “servicing contracts” for financial assets sold and derecognised – – 

Accrued income other than capitalised income 36 51 

Cash and other valuables held by cashier 1 1 

Interest and charges to be debited to 23 23 

customers 21 20 

banks 2 4 

Items in transit between branches not yet allocated to destination accounts – – 

Items in processing 197 193 

Items deemed definitive but not attributable to other items 119 169 

Securities and coupons to be settled 1 1 

Other transactions 118 167 

Adjustments for unpaid bills and notes 13 8 

Other taxes 5 3 

Other items 591 476 

tOtal 1,120 1,008 

As at 31 December 2011, the total amount of assets which are attributable to the “loans and receivables” category was € 164,574 m 

(2010: € 153,880 m). 

C.17 – Deposits from customers (€ m) 




Loans 927 893 

Repos 757 590 

Other 170 302 

Liabilities in respect of commitments to repurchase treasury shares 605 565 

Other liabilities 1,447 5,042 

tOtal 104,728 100,284 

fair Value 105,616 100,762 

116



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 28,496 1,343 25,627 1,124 24,913 1,094 23,305 390 

Structured 187 – – 187 130 – – 130 

Other 28,309 1,343 25,627 938 24,783 1,094 23,305 261 

Other securities 1,435 5 579 850 2,642 23 1,498 1,119 

Structured 5 5 – – 23 23 – – 

Other 1,429 – 579 850 2,620 – 1,498 1,119 

tOtal 29,931 1,348 26,206 1,974 27,555 1,117 24,803 1,510 

C.19 – Financial liabilities held for trading 

fair Value 

leVel 1 

fair Value 

leVel 2 


fair Value 

leVel 3 tOtal 

fair Value 

leVel 1 

C.20 – Financial liabilities at fair value through profit or loss 

fair Value 

leVel 2 

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 2011 changes in fair values resulting from changes in our own credit rating were € 125.1 m 

(2010: € 39.2 m). 


(€ m) 

fair Value 

leVel 3 tOtal 

financial liabilities 50 5 – 55 9 30 – 39 

deposits from banks 1 – – 1 – – – – 

deposits from customers 49 5 – 54 9 30 – 39 

debt securities – – – – – – – – 

Bonds – – – – – – – – 

Other securities – – – – – – – – 

derivative instruments 1 2,489 10 2,500 18 2,326 65 2,409 

financial derivatives 1 2,266 10 2,277 18 2,252 42 2,312 

Trading 1 2,254 10 2,265 – 2,249 42 2,291 

Relating to fair value option – 4 – 4 18 – – 18 

Other – 8 – 8 – 4 – 4 

credit derivatives – 223 – 223 – 73 23 97 

Trading derivatives – 223 – 223 – 73 23 97 

Relating to fair value option – – – – – – – – 

Other – – – – – – – – 

tOtal 51 2,493 10 2,554 27 2,355 65 2,448 

fair Value 

leVel 1 

fair Value 

leVel 2 


fair Value 

leVel 3 tOtal 

fair Value 

leVel 1 

fair Value 

leVel 2 

(€ m) 

fair Value 

leVel 3 tOtal 

Deposits from banks – – – – – – – – 

Deposits from customers – – – – – – – – 

Debt securities – 1,042 – 1,042 – 1,651 – 1,651 

Structured – 1,042 – 1,042 – 1,651 – 1,651 

Others – – – – – – – – 

tOtal – 1,042 – 1,042 – 1,651 – 1,651 

117



C.21 – Hedging derivatives 

fair Value 

leVel 1 

fair Value 

leVel 2 


fair Value 

leVel 3 tOtal 

fair Value 

leVel 1 

fair Value 

leVel 2 

C.22 – Deferred tax liabilities (€ m) 


deferred tax liabilities related to: 

Loans and receivables with banks and customers 54 35 

Assets/liabilities held for trading 104 43 

Other financial instruments 240 182 

Property, plant and equipment/intangible assets 80 106 

Other assets/liabilities 127 24 

Deposits from banks and customers 1 1 

Other 38 27 

tOtal 643 417 

Pursuant to IAS 12.39, no deferred tax liabilities were recognised for temporary differences in connection with investments in domestic group 

companies and foreign subsidiaries amounting to € 1,281 m because from a current perspective, they are not intended to be sold. 

The statement of financial position at 31 December 2011 does not include any “Liabilities included in disposal groups classified as held for sale”. 


(€ m) 

fair Value 

leVel 3 tOtal 

financial derivatives – 2,591 – 2,591 – 2,883 25 2,909 

Fair value – 178 – 178 – 185 – 185 

Cash flows – 2,413 – 2,413 – 2,698 25 2,723 

Net investment in foreign subsidiaries – – – – – – – – 

credit derivatives – – – – – – – – 

Fair value – – – – – – – – 

Cash flows – – – – – – – – 

tOtal – 2,591 – 2,591 – 2,883 25 2,909 

C.23 – Liabilities included in disposal groups classified as held for sale 

118



C.24 – other liabilities 

C.25 – Provisions for risks and charges (€ m) 


pensions and other post-retirement benefit obligations 3,664 3,791 

Other provisions for risks and charges 540 506 

Legal disputes 258 197 

Staff expenses 15 5 

Other 268 304 

tOtal 4,204 4,297 


(€ m) 


Liabilities in respect of financial guarantees issued – – 

Impairment of financial guarantees issued, of credit derivatives, of irrevocable commitments to distribute funds 249 205 

Accrued expenses other than those to be capitalised for the financial liabilities concerned 113 90 

Share-based payments classified as liabilities under IFRS 2 – – 

Other liabilities due to employees 384 371 

Other liabilities due to other staff 9 6 

Other liabilities due to directors and statutory auditors – – 

Interest and amounts to be credited 43 63 

Items in transit between branches and not yet allocated to destination accounts 2 – 

Available amounts to be paid to others 53 18 

Items in processing 1,128 1,051 

Entries related to securities transactions – 1 

Items deemed definitive but not attributable to other lines 290 269 

Liabilities for miscellaneous entries related to tax collection service – – 

Adjustments for unpaid portfolio entries – – 

Tax items different from those included in tax liabilities 56 49 

Other entries 453 448 

tOtal 2,782 2,573 

As at 31 December 2011, the total amount of liabilities which are attributable to “deposits from banks/customers, debt securities in issue and other 

liabilities” was € 170,213 m (2010: € 163,542 m). 

Provisions for risks and charges: annual changes (€ m) 


peNsiONs aNd pOstretiremeNt 

beNefit 

ObligatiONs Other prOVisiONs tOtal 

Opening balance 3,791 506 4,297 

increases 247 182 430 

Provisions for the year 66 167 233 

Changes due to the passage of time 180 – 180 

Other increases 2 15 16 

decreases –374 –148 –523 

Use during the year –224 –100 –324 

Other decreases –151 –48 –199 

clOsiNg balaNce 3,664 540 4,204 

119



C.26 – Insurance provisions 

C.27 – Equity 

direct busiNess 

From 1 January 2011 to 31 December 2011, the number of shares was 231,228,820, of which 10,115 were registered shares. 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 Region 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. 


(€ m) 


iNdirect 

31 dec. 2010 

busiNess tOtal tOtal 

Non-life business 80 1 81 81 

Provision for unearned premiums 60 – 61 59 

Provision for outstanding claims 19 1 20 22 

Other provisions – – – – 

life business 94 – 94 102 

Mathematical provisions 86 – 86 98 

Provisions for amounts payable 3 – 3 2 

Other insurance provisions 5 – 5 2 

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 174 1 175 183 

120

D – Segment reporting 

D.1 – Reconciliation of reclassified accounts 

to mandatory reporting schedule 124 

D.2 – Description of segment reporting 126 

D.3 – Segment reporting 1–12 2011/1–12 2010 128 

D.4 – Segment reporting Q1–Q4 2011/Q1–Q4 2010 129 



D – Segment reporting (CoNTINuED) 

D.1 – Reconciliation of reclassified accounts to mandatory reporting schedule (€ m) 


Net interest 4,496 4,543 

Dividends and other income from equity investments 207 157 

Dividend income and similar revenue 35 31 

minus: dividends from equity instruments held for trading 0 –1 

Profit (loss) of associates – of which: income (loss) from equity investments valued at net equity 172 126 

Net fees and commissions 1,885 1,990 

Net trading, hedging and fair value income 262 326 

Gains (losses) on financial assets and liabilities held for trading 236 301 

plus: dividends from equity instruments held for trading 0 1 

Fair value adjustments in hedge accounting 3 –2 

Gains (losses) on disposal or repurchase of financial liabilities 0 0 

Gains (losses) on financial assets and liabilities designated at fair value through profit or loss 22 27 

Net other expenses/income 136 191 

Gains (losses) on disposals/repurchases of loans and receivables – not impaired –25 1 

Premiums earned (net) 126 118 

Other income (net) from insurance activities – 98 – 95 

Other net operating income 137 169 

minus: other operating income – of which: recovery of expenses –2 –2 

plus: impairment on tangible assets – other operating leases 0 0 

OperatiNg iNcOme 6,986 7,208 

Payroll costs –2,001 –1,931 

Administrative costs – staff expenses –2,008 –1,931 

minus: integration/restructuring costs 6 0 

Other administrative expenses –1,627 –1,527 

Administrative costs – other administrative expenses –1,630 –1,531 


Recovery of expenses = Other net operating income – of which: Other operating income – recovery of costs 2 2 

Amortisation, depreciation and impairment losses on intangible and tangible assets –276 –286 

Impairment/Write-backs on property, plant and equipment –193 –200 

minus: impairment losses/write-backs on property owned for investment 3 1 

minus: impairment on tangible assets – other operating leases 0 0 

Impairment/Write-backs on intangible assets –132 –112 


minus: Purchase Price Allocation effect 45 24 

OperatiNg cOsts –3,903 –3,742 

OperatiNg prOfit 3,083 3,466 


124




Net write-downs of loans and provisions for guarantees and commitments –1,352 –1,839 

Gains (losses) on disposal and repurchase of loans 3 2 

Impairment losses on loans –1,326 –1,837 

Impairment losses on other financial assets –29 –5 

Net OperatiNg prOfit 1,732 1,626 

Provisions for risks and charges –136 –136 

Net provisions for risks and charges –154 –136 

less: integration/restructuring costs 18 0 

Integration/restructuring costs –28 –4 

Net income from investments –277 62 

Gains (losses) on disposal and repurchase of available-for-sale financial assets 140 40 

Gains (losses) on disposal and repurchase of held-to-maturity investments 0 –1 

Impairment losses on available-for-sale financial assets –292 –9 

Impairment losses on held-to-maturity investments –152 0 

plus: impairment losses/write-backs on property owned for investment –3 –1 

Profit (loss) of associates 162 126 

minus: profit (loss) of associates – income (loss) from equity investments valued at net equity –172 –126 

Gains and losses on tangible and intangible assets –7 0 

Gains (losses) on disposal of investments 48 33 

prOfit befOre tax 1,291 1,548 

Income tax for the period –261 –356 

Tax expense (income) related to profit or loss from continuing operations –250 –348 

minus: taxes on Purchase Price Allocation effect –10 –8 

prOfit (lOss) fOr the periOd 1,030 1,192 

Non-controlling interests –50 –51 

Net prOfit attributable tO the OWNers Of the pareNt cOmpaNy befOre ppa 980 1,142 

Purchase Price Allocation effect –35 –17 

Impairment of goodwill –737 –378 

Net prOfit attributable tO the OWNers Of the pareNt cOmpaNy 209 747 


125



D.2 – Description of segment reporting 

The segment reporting format is based on the internal reporting structure of business segments, which reflects management responsibilities in the 

Bank Austria Group in 2011. 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. 

Starting with the reporting period in 2011, segment reporting was adjusted to the new structure of the Group’s income statement. Goodwill impairment 

and the Purchase Price Allocation effect are now shown immediately before net profit attributable to the owners of Bank Austria. 

The definition of business segments is primarily based on organisational responsibility for customers. 

Family & SME Banking 

Responsibility for the Family & SME Banking segment covers Bank Austria’s business with private customers (except Private Banking customers) and 

small and medium-sized enterprises (SMEs) with a turnover of up to € 50 m. Also included in this Division are the credit card business and factoring 

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 product lines Financing & Advisory (classic and structured lending business and capital market 

advisory services), Global Transaction Banking (including payment transactions, trade finance, cash management) and Markets (Treasury). Control is 

performed through a matrix organisation based on customer segments: international corporates, corporate customers whose turnover exceeds € 50 m, 

real estate, public sector and financial institutions. 

The Corporate & Investment Banking segment includes a number of subsidiaries – e.g. the Bank Austria Real Invest Group, Bank Austria Wohnbau- 

bank AG and smaller subsidiaries in CEE countries with a focus on investment banking – as consolidated companies. 


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). 

Corporate Center 

The Corporate Center comprises all equity interests that are not assigned to other segments and it also includes the contribution from UniCredit 

Leasing, in which Bank Austria has a shareholding interest of 31.01% accounted for under the equity method. Funding costs relating to consolidated 

subsidiaries and equity not allocated to business segments are also assigned to the Corporate Center. Also included are inter-segment eliminations, 

other items which are not to be assigned to other business segments, and impairment losses on goodwill. 

Methods 

Net interest 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 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. 

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 2011, capital allocated to the business segments in UniCredit Bank Austria AG, based on the Tier 1 capital ratio, is 7% of risk-weighted assets of 

the preceding quarter. 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. 


126


Recasting: 

A number of structural changes took place within the business segments and in the group of consolidated companies. This means that results 

for 2011 are not fully comparable with those for 2010. For this reason, the segment results for 2010 have been adjusted to the new structure. 

The difference compared with Bank Austria’s overall results is presented in a separate column showing “Recasting differences”. 

The main pro-forma adjustments are as follows: 

• UniCredit CAIB AG and UniCredit CAIB Securities UK Ltd. were sold to UniCredit Bank AG (the former Bayerische Hypo- und Vereinsbank AG), 

Munich, in June 2010. The result of the Corporate & Investment Banking segment for 2010 was therefore adjusted for this effect. 

• UniCredit CAIB Securities Romania SA was transferred from CEE to Corporate & Investment Banking. 

• In January 2011, business with small and medium-sized enterprises (SMEs) with a turnover between € 3 m and € 50 m was transferred from the 

Corporate & Investment Banking segment to Family & SME Banking. As part of this transfer of customers, FactorBank AG was also transferred from 

Corporate & Investment Banking to Family & SME Banking. The relevant comparative figures for 2010 were also recast. 

• Bank Austria Global Information Services GmbH was sold to UniCredit Global Information Services in June 2011. Bank Austria Global Information 

Services is therefore also no longer included in the segment result of the Corporate Center in the third and fourth quarters of 2010. 


127



D.3 – Segment reporting 1–12 2011/1–12 2010 (€ m) 

family & sme 

baNKiNg 

(f&sme) 

priVate 

baNKiNg 

cOrpOrate & 

iNVestmeNt 

baNKiNg (cib) 

ceNtral 

easterN 

eurOpe (cee) 

cOrpOrate 

ceNter 

recastiNg 

differeNces 1) 

baNK austria 

grOup 

Net interest 1–12 2011 724 58 817 3,219 –323 – 4,496 

1–12 2010 704 43 816 3,279 –320 22 4,543 

Dividends and other income 1–12 2011 7 – 44 34 122 – 207 

from equity investments 1–12 2010 4 – 44 11 97 – 157 

Net fees and commissions 1–12 2011 434 88 220 1,210 –67 – 1,885 

1–12 2010 442 95 250 1,193 6 3 1,990 

Net trading, hedging and 1–12 2011 –1 1 5 199 58 – 262 

fair value income/loss 1–12 2010 –2 2 –44 144 144 82 326 

Net other expenses/income 1–12 2011 13 1 10 61 51 – 136 

1–12 2010 2 – 16 63 79 31 191 

OperatiNg iNcOme 1–12 2011 1,177 149 1,095 4,722 –158 – 6,986 

1–12 2010 1,151 140 1,082 4,691 6 139 7,208 

OperatiNg cOsts 1–12 2011 – 910 –100 –390 –2,195 –307 – –3,903 

1–12 2010 –851 –101 –361 –2,128 –255 –47 –3,742 

OperatiNg prOfit 1–12 2011 267 49 705 2,527 –465 – 3,083 

1–12 2010 300 39 721 2,563 –249 92 3,466 

Net write-downs of loans and provisions 1–12 2011 –161 –4 –131 –1,055 – – –1,352 

for guarantees and commitments 1–12 2010 –264 –2 –146 –1,426 –1 – –1,839 

Net OperatiNg prOfit 1–12 2011 106 45 574 1,472 –466 – 1,732 

1–12 2010 37 37 574 1,137 –250 92 1,626 

Provisions for risks and charges 1–12 2011 4 2 –19 –14 –109 – –136 

1–12 2010 –7 1 –20 –36 –74 – –136 

Integration/restructuring costs 1–12 2011 – – –15 –2 –10 – –28 

1–12 2010 – – – –4 – – –4 

Net income from investments 1–12 2011 3 – –26 6 –259 – –277 

1–12 2010 14 – –4 46 6 1 62 

prOfit befOre tax 1–12 2011 112 47 513 1,462 –844 – 1,291 

1–12 2010 43 39 550 1,143 –319 93 1,548 

Income tax for the period 1–12 2011 –26 –12 –123 –224 124 – –261 

1–12 2010 –10 –10 –142 –228 89 –55 –356 

prOfit (lOss) fOr the periOd 1–12 2011 86 35 390 1,238 –720 – 1,030 

1–12 2010 33 29 408 915 –230 38 1,192 

Non-controlling interests 1–12 2011 –9 – 1 –60 19 – –50 

1–12 2010 –14 – –2 –56 20 – –51 

Net prOfit attributable tO the 1–12 2011 77 35 391 1,178 –701 – 980 

OWNers Of the pareNt cOmpaNy 

befOre ppa 

1–12 2010 20 29 406 859 –210 38 1,142 

Purchase Price Allocation effect 1–12 2011 – – – – –35 – –35 

1–12 2010 – – – – –17 – –17 

Goodwill impairment 1–12 2011 – – – – –737 – –737 

1–12 2010 – – – –9 –369 – –378 

Net prOfit attributable tO the 1–12 2011 77 35 391 1,178 –1,473 – 209 

OWNers Of the pareNt cOmpaNy 1–12 2010 20 29 406 850 –595 38 747 

risk-weighted assets (rWa) (avg.) 1–12 2011 13,162 484 24,797 81,495 4,405 34 124,377 

1–12 2010 14,335 535 27,232 75,226 5,199 760 123,287 

Equity (avg.) 2) 1–12 2011 1,137 131 2,171 11,932 1,983 – 17,354 

1–12 2010 754 123 2,063 11,027 3,013 10 16,989 

Cost/income ratio in % 1–12 2011 77.3 67.4 35.6 46.5 n.m. n.m. 55.9 

1–12 2010 73.9 72.3 33.4 45.4 n.m. n.m. 51.9 

Risk/earnings ratio in % 3) 1–12 2011 22.0 n.m. 15.3 32.4 n.m. n.m. 28.7 

1–12 2010 37.3 n.m. 17.0 43.3 n.m. n.m. 39.1 

1) The segment results for 2010 have been recast. The difference compared to Bank Austria’s results for 2010 is presented in a separate column showing “Recasting differences”, which 

mainly relate to the sale of UniCredit CAIB AG and Bank Austria Global Information Services GmbH. 

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. Starting 2011 capital allocation is based on actual RWAs of the previous quarter (until 2010 based on 

budget RWAs). 

3) Risk/earnings ratio: net write-downs of loans and provisions for guarantees and commitments measured against net interest and dividends and other income from equity investments 



128



D.4 – Segment reporting Q1– Q4 2011/Q1– Q4 2010 

family & sme 

baNKiNg 

(f&sme) 

priVate 

baNKiNg 

cOrpOrate & 

iNVestmeNt 

baNKiNg (cib) 

ceNtral 

easterN 

eurOpe (cee) 

cOrpOrate 

ceNter 

recastiNg 



(€ m) 

baNK austria 

grOup 

Net interest Q4 2011 183 17 213 796 –89 – 1,120 

Q3 2011 182 16 208 797 –75 – 1,128 



Q4 2010 171 12 210 820 –69 – 1,142 

Q3 2010 174 11 212 846 –59 – 1,183 

Q2 2010 180 10 206 827 – 94 8 1,137 

Q1 2010 179 10 189 787 – 98 15 1,081 

Dividends and other income Q4 2011 5 – 9 19 23 – 56 

from equity investments Q3 2011 – – 6 2 41 – 49 

Q2 2011 – – 9 10 32 – 52 

Q1 2011 3 – 20 2 26 – 50 

Q4 2010 3 – 13 2 27 – 45 

Q3 2010 – – 5 5 19 – 30 

Q2 2010 1 – 17 3 25 – 46 

Q1 2010 – – 9 1 27 – 36 

Net fees and commissions Q4 2011 106 24 57 314 –16 – 484 

Q3 2011 107 20 56 310 –14 – 479 



Q4 2010 108 27 63 313 – – 511 

Q3 2010 106 19 64 305 –2 – 492 

Q2 2010 118 25 64 301 7 3 518 

Q1 2010 111 25 58 275 2 1 470 

Net trading, hedging and Q4 2011 –1 – 11 78 –18 – 70 

fair value income/loss Q3 2011 – – –13 48 –11 – 24 


Q1 2011 – – 4 38 72 – 114 

Q4 2010 –1 – 3 69 –21 – 49 

Q3 2010 –1 – –23 42 25 – 43 

Q2 2010 – 1 –8 14 113 38 158 

Q1 2010 – – –17 20 28 45 76 

Net other expenses/income Q4 2011 6 1 1 –16 1 – –7 

Q3 2011 4 – 3 40 –9 – 38 



Q4 2010 1 –1 1 19 12 23 54 

Q3 2010 –1 – 5 28 10 16 57 

Q2 2010 1 1 5 15 30 –2 48 

Q1 2010 2 – 5 1 28 –5 31 

OperatiNg iNcOme q4 2011 299 42 292 1,190 –100 – 1,723 

q3 2011 292 37 259 1,197 –68 – 1,717 

q2 2011 290 35 264 1,174 –20 – 1,744 

q1 2011 296 35 280 1,161 29 – 1,801 

q4 2010 282 38 290 1,222 –52 23 1,802 

q3 2010 277 30 263 1,226 –8 16 1,804 

q2 2010 300 37 284 1,160 80 45 1,906 

q1 2010 292 35 245 1,083 –14 55 1,695 

OperatiNg cOsts q4 2011 –241 –25 –104 –568 –66 – –1,005 

q3 2011 –228 –25 – 98 –541 –66 – – 957 



q4 2010 –217 –27 – 90 –561 –61 –22 – 978 

q3 2010 –215 –25 – 93 –533 –55 –15 – 936 

q2 2010 –211 –25 – 90 –530 –70 8 – 918 

q1 2010 –208 –24 –88 –503 –69 –19 – 911 



129



family & sme 

baNKiNg 

(f&sme) 

priVate 

baNKiNg 

cOrpOrate & 

iNVestmeNt 

baNKiNg (cib) 

ceNtral 

easterN 

eurOpe (cee) 

cOrpOrate 

ceNter 

recastiNg 


baNK austria 

grOup 

OperatiNg prOfit q4 2011 57 17 187 622 –166 – 718 

q3 2011 65 12 162 656 –134 – 761 



q4 2010 65 11 200 661 –113 1 824 

q3 2010 62 5 171 693 –63 1 869 

q2 2010 90 11 194 630 10 53 988 

q1 2010 84 11 157 580 –83 36 784 

Net write-downs of loans and provisions Q4 2011 –3 –1 –16 –296 – – –317 

for guarantees and commitments Q3 2011 –55 – –36 –238 – – –330 

Q2 2011 –47 –1 –34 –246 – – –329 

Q1 2011 –55 –1 –46 –274 – – –376 

Q4 2010 –57 –2 –18 –449 – – –526 

Q3 2010 –68 – –14 –337 – – –418 

Q2 2010 –70 – –61 –324 –1 – –457 

Q1 2010 –69 – –53 –316 – – –439 

Net OperatiNg prOfit q4 2011 54 16 171 326 –166 – 401 




q4 2010 8 9 182 212 –113 1 299 

q3 2010 –6 5 157 356 –63 1 451 

q2 2010 20 12 133 306 9 53 532 

q1 2010 15 11 103 263 –83 36 345 

Provisions for risks and charges Q4 2011 –3 – 1 2 –5 – –5 

Q3 2011 –4 – –21 –7 –70 – –100 

Q2 2011 10 1 1 –8 –3 – 1 

Q1 2011 – 1 – –2 –31 – –32 

Q4 2010 –7 1 –20 –7 –1 – –33 

Q3 2010 1 – – –13 – – –13 

Q2 2010 –1 – – –11 –8 – –19 

Q1 2010 – – – –6 –65 – –71 

Integration/restructuring costs Q4 2011 – – – – –10 – –11 

Q3 2011 – – –15 – – – –15 

Q2 2011 – – – –1 – – –1 

Q1 2011 – – – –1 – – –1 

Q4 2010 – – – –1 – – –1 

Q3 2010 – – – –1 – – –1 

Q2 2010 – – – –1 – – –1 

Q1 2010 – – – –1 – – –1 

Net income from investments Q4 2011 – – –32 – – 98 – –130 

Q3 2011 1 – –2 –39 –78 – –118 

Q2 2011 – – 4 43 –85 – –37 


Q4 2010 1 – –6 7 –1 – 1 

Q3 2010 1 – 1 19 – – 22 

Q2 2010 1 – – 8 6 – 16 

Q1 2010 10 – 1 11 – 1 22 

prOfit befOre tax q4 2011 52 16 140 328 –280 – 256 




q4 2010 2 11 156 211 –115 1 266 

q3 2010 –4 5 158 361 –63 1 459 

q2 2010 20 11 132 302 8 54 528 

q1 2010 25 11 104 267 –148 37 296 




130



family & sme 

baNKiNg 

(f&sme) 

priVate 

baNKiNg 

cOrpOrate & 

iNVestmeNt 

baNKiNg (cib) 

ceNtral 

easterN 

eurOpe (cee) 

cOrpOrate 

ceNter 

recastiNg 


baNK austria 

grOup 

Income tax for the period Q4 2011 –12 –4 –34 –63 105 – –7 

Q3 2011 –2 –3 –25 –63 –48 – –141 

Q2 2011 –6 –3 –29 –31 45 – –24 

Q1 2011 –6 –2 –34 –67 21 – –89 

Q4 2010 –1 –3 –51 –38 37 – –56 

Q3 2010 1 –1 –47 –76 5 –15 –133 

Q2 2010 –8 –3 –26 –72 4 –26 –132 

Q1 2010 –2 –3 –18 –42 42 –13 –36 

prOfit (lOss) fOr the periOd q4 2011 40 12 106 265 –175 – 249 




q4 2010 1 8 104 173 –78 1 210 

q3 2010 –2 4 111 286 –58 –14 326 

q2 2010 12 8 106 231 12 28 396 

q1 2010 23 8 87 225 –106 23 260 

Non-controlling interests Q4 2011 –4 – – –9 4 – –9 

Q3 2011 –2 – – –19 5 – –16 



Q4 2010 –5 – –1 –4 –3 – –13 

Q3 2010 –2 – 1 –24 7 – –17 

Q2 2010 – – – –16 9 – –7 

Q1 2010 –7 – –1 –13 7 – –14 

Net prOfit attributable tO the q4 2011 36 12 106 257 –171 – 240 

OWNers Of the pareNt cOmpaNy q3 2011 3 9 63 290 –324 – 41 

befOre ppa q2 2011 18 7 110 360 –143 – 352 


q4 2010 –3 8 103 170 –81 1 197 

q3 2010 –4 4 112 262 –50 –14 310 

q2 2010 12 8 106 215 21 28 389 

q1 2010 16 8 85 212 – 99 23 246 

Purchase Price Allocation effect Q4 2011 – – – – –4 – –4 

Q3 2011 – – – – –24 – –24 



Q4 2010 – – – – –2 – –2 

Q3 2010 – – – – –5 – –5 

Q2 2010 – – – – –5 – –5 

Q1 2010 – – – – –4 – –4 

Goodwill impairment Q4 2011 – – – – –32 – –32 




Q4 2010 – – – –9 –200 – –208 

Q3 2010 – – – – –3 – –3 

Q2 2010 – – – – –167 – –167 

Q1 2010 – – – – – – – 

Net prOfit attributable tO the q4 2011 36 12 106 257 –206 – 204 

OWNers Of the pareNt cOmpaNy q3 2011 3 9 63 290 –1,000 – –635 



q4 2010 –3 8 103 161 –283 1 –14 

q3 2010 –4 4 112 262 –58 –14 302 

q2 2010 12 8 106 215 –151 28 217 

q1 2010 16 8 85 212 –103 23 242 




131



family & sme 

baNKiNg 

(f&sme) 

priVate 

baNKiNg 

cOrpOrate & 

iNVestmeNt 

baNKiNg (cib) 

ceNtral 

easterN 

eurOpe (cee) 

cOrpOrate 

ceNter 

recastiNg 


baNK austria 

grOup 

risk-weighted assets (rWa) (avg.) q4 2011 12,622 450 23,486 83,939 3,962 – 124,459 

q3 2011 13,085 447 24,156 82,553 4,217 – 124,459 

q2 2011 12,513 491 25,211 80,708 4,694 – 123,616 

q1 2011 14,429 548 26,334 78,778 4,749 137 124,976 

q4 2010 17,374 552 26,619 77,718 5,079 166 127,508 

q3 2010 16,046 556 27,118 77,120 5,385 42 126,267 

q2 2010 13,079 534 27,037 75,210 5,107 1,480 122,446 

q1 2010 10,840 497 28,156 70,856 5,226 1,352 116,927 

Equity (avg.) 2) Q4 2011 801 134 2,128 12,343 1,555 – 16,961 

Q3 2011 1,255 139 2,004 11,935 1,932 – 17,265 



Q4 2010 768 118 2,232 11,287 3,025 14 17,444 

Q3 2010 748 125 2,068 11,088 3,520 14 17,562 

Q2 2010 745 128 2,167 10,878 3,384 14 17,316 

Q1 2010 754 119 1,785 10,856 2,121 – 15,635 

Cost/income ratio in % Q4 2011 80.8 59.5 35.8 47.7 n.m. n.m. 58.3 

Q3 2011 77.9 67.4 37.7 45.2 n.m. n.m. 55.7 



Q4 2010 77.0 70.5 31.1 45.9 n.m. n.m. 54.3 

Q3 2010 77.7 82.8 35.2 43.5 n.m. n.m. 51.8 

Q2 2010 70.2 68.6 31.7 45.7 n.m. n.m. 48.2 

Q1 2010 71.2 69.0 36.0 46.5 n.m. n.m. 53.7 

Risk/earnings ratio in % 3) Q4 2011 1.6 n.m. 7.2 36.4 n.m. n.m. 26.9 

Q3 2011 30.4 n.m. 17.0 29.8 n.m. n.m. 28.0 



Q4 2010 32.7 n.m. 8.1 54.6 n.m. n.m. 44.3 

Q3 2010 39.1 n.m. 6.3 39.5 n.m. n.m. 34.5 

Q2 2010 38.5 n.m. 27.5 39.1 n.m. n.m. 38.6 

Q1 2010 38.6 n.m. 27.0 40.2 n.m. n.m. 39.3 



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. Starting 2011 capital allocation is based on actual RWAs of the previous quarter (until 2010 based on 

budget RWAs). 

3) Risk/earnings ratio: net write-downs of loans and provisions for guarantees and commitments measured against net interest and dividends and other income from equity investments 



132

E – Risk report 

E.1 – Overall risk management including Basel 2 136 

E.2 – Market risk 138 

E.3 – Liquidity risk 144 

E.4 – Counterparty risk 145 

E.5 – Country risk and sovereign risk 146 

E.6 – Credit risk 148 

E.7 – Operational risk 154 

E.8 – Business risk 155 

E.9 – Financial investment risk and real estate risk 155 

E.10 – Legal risks 155 

E.11 – Report on key features of the internal control and 

risk management systems in relation to the financial 

reporting process 156 

E.12 – 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 158 

E.13 – Financial derivatives 159 



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 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). Liquidity risk control is performed by a separate committee which was set up in 2008 and meets once a 

week to deal with current liquidity-related topics. These include 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 within the CIB Division 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 units. ALCO performs analyses and makes decisions with regard to business activities closely connected with 

customer business (in particular, balance sheet structure 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 April 2011, the IMOD market risk model used across UniCredit Group was approved by the regulatory authorities. It also replaced UniCredit 

Bank Austria’s model, used for many years, for the calculation of regulatory capital. The Stressed VaR and Incremental Risk Charge (IRC) models were 

also approved for regulatory purposes in 2011; in December they started to be used for the calculation of capital resources in the trading book. 

The Bank Austria Group applies the principle of value-based management. In line with this principle, for pricing purposes in business and customer 

relations (micro control), capital employed is expected to yield a specific return. 

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). Under the risk-taking capacity concept, economic capital is 

compared with available financial resources and monitored on an ongoing basis. 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. 


136



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). 

The bank is planning to introduce various other Group-wide models 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 takes 

place at the relevant CEE subsidiaries step by step. Most subsidiaries 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, UniCredit Bank Czech Republic, a.s., and UniCredit Bank Slovenija d.d., the application of the F-IRB 

approach was approved as at 1 January 2011. The application of the F-IRB approach at UniCredit Bank Hungary Zrt. was approved as at 1 July 

2011. Further approvals for the application of the F-IRB approach at the CEE subsidiaries UniCredit Tiriac Bank S.A. and UniCredit Bank Slovakia 

a.s. are expected for 2012. 

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 available for the banking subsidiaries in the Czech Republic, 

in Slovakia, Hungary, Slovenia, Croatia, Bulgaria and Romania. In the next few years, AMA preparations will concentrate on ZAO UniCredit 

Bank Russia, Yapı ve Kredi Bankasi AS and UniCredit Bank Serbia JSC. 


137



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 2.5/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 – have imposed 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 (IRC) and the new requirements concerning structured securitisations (the latter are not applied in 

UniCredit Bank Austria for lack of relevant positions in the trading book). As at year-end 2011, capital requirements for “stressed VaR” and “incremental 

risk charge” were for the first time calculated and covered as part of market risk for the Bank Austria Group. A reporting procedure for these 

new parameters was set up in MACO, which meets once a week. Moreover, separate IRC limits were introduced for the relevant risk-takers in the 

Bank Austria Group. At the global level, besides detailed VaR limits, an S-VaR limit was also implemented for the regulatory trading book 

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 stressed 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 (CVA market risk charge), 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 and/or was 

set out in more detail in the course of 2011 in CAD IV, which is now available. This applies, for example, to the implementation of stress analyses and 

regular reviews of model quality as part of backtesting. 

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 

made the necessary extensions to the liquidity monitoring system in the course of 2011 and integrated 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 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. Most of the positions held in Bank Austria are attributable to the banking book as Bank Austria continued to 

reduce positions attributable to the trading book in the course of 2011. 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 April 2011, Bank Austria AG was granted permission by the Austrian supervisory authorities to use the new IMOD model, which is applied within the 

entire UniCredit Group, for the purpose of limiting market risk. The new model has been used for reporting regulatory capital requirements since the 

end of April 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 and Risk Integration within Bank Austria and is 

being further developed in cooperation with the UniCredit holding company. Further development includes reviewing the model as part of backtesting 

procedures, integrating new products, implementing requirements specified by the Management Board and the Market Risk Committee, and adjusting 

the model to general market developments. 


138


In 2011, the new CRD III rules for the trading book were implemented in Bank Austria in cooperation with UniCredit. This included, in particular, 

the implementation of “stressed VaR” and “incremental risk charge” (IRC) in the Bank Austria Group. The college of supervisors (Italy, Germany 

and Austria) gave its regulatory approval in December 2011. The values for “stressed VaR” and “IRC” are included in regulatory reporting as at 

the end of 2011. 

A product introduction process has been established for the introduction of new products in the area of market risk in which risk managers play 

a decisive role in approving products. When the new model was approved by the college of supervisors (Italy, Germany and Austria) in April 2011, 

a multiplier of 3.5 was set and this is used for calculating the capital requirement.The new model is 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, and utilisation levels in the areas of IRC and S-VaR (both for the regulatory trading books). 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 Widespread Contagion 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 all CEE banking subsidiaries with market risk 

activities. Since 2010 the MARCONIS system has been extended to include another module, and the tool is also used to address the topic of 

price transparency (determining minimum margins and maximum hedging costs for Corporate Treasury Sales). 

The chart below shows the VaR in 2011 calculated on the basis of the new market risk model, which has also been used since the end of April 

2011 for regulatory reporting of capital requirements for market risk. 

VaR of the Bank Austria Group in 2011 calculated on the basis of the new IMOD market risk model (€ m) 

–120 

–110 

–100 

–90 

–80 

–70 

–60 

–50 

–40 

–30 

–20 

–10 0 

IMOD-VaR 

Jan. 11 Feb. 11 March 11 April 11 May 11 June 11 July 11 Aug. 11 Sept. 11 Oct. 11 Nov. 11 Dec. 11 

IMOD-VaR Trading 

IMOD-VaR Limit scope 

At the end of 2011, market risk of the Bank Austria Group (top line) was about € 90 m (confidence interval of 99%; 1-day holding period). 

The decline in the first quarter of 2011 was mainly due to the fact that the time window (500 days) for historical simulations no longer included 

extreme scenarios. The renewed increase in the third quarter of 2011 was caused by increasing credit spread volatility (triggered by the mounting 


139



European government debt crisis). Market risk managed by VaR limits (represented by the red line in the middle) was slightly below € 70 m at the end 

of 2011: loans to the public sector in the form of private placements, equity holdings in the banking book and private equity are excluded here because 

these are not managed via VaR limits. This compares with a VaR of the trading book of below € 3 m at the end of 2011. The regulatory trading 

book was further reduced in CEE and in UniCredit Bank Austria AG in the course of the year. 

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. 

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. 

As at 31 December 2011, 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 €) 

as at 31 december 2011 aNNual aVerage, miNimum/maximum 

up tO 1 mONth tO 3 mONths 1 year tO OVer 

absOlute 

1 mONth 3 mONths tO 1 year 5 years 5 years tOtal maximum miNimum aVerage 

Europe EUR 84,952 –46,628 –88,129 –460,086 844,056 334,165 618,020 –509,959 333,163 

CHF –8,140 70,497 18,989 –35,772 –78,719 –33,145 26,084 –116,385 45,756 

GBP –1,595 1,971 13,083 5,782 1,613 20,854 50,458 –58,169 19,092 

NOK 192 102 672 212 4 1,183 1,243 –440 259 

New EU countries BGN 714 1,498 14,372 –31,644 –16,450 –31,510 –20,188 –37,485 28,686 

CZK –2,539 –21,893 –23,586 3,310 33,386 –11,320 72,897 –54,633 27,105 

HUF –2,347 612 13,871 –2,963 10,876 20,049 82,068 –31,119 26,739 

PLN –704 – 978 –248 –650 – –2,580 2,242 –10,851 1,057 

RON –741 –4,854 –10,083 –23,624 –10,794 –50,095 –46,889 –74,722 56,776 

HRK 1,905 –2,305 –5,742 –64,816 –21,298 – 92,256 –35,919 –128,518 74,270 

Central and Eastern AZN 67 –64 –514 –2,535 –40 –3,086 –231 –3,958 2,011 

Europe incl. Turkey BAM –145 –816 –805 –1,684 –13,256 –16,706 1,803 –17,720 2,037 

KGS –17 –72 171 –1,273 – –1,191 – 94 –10,612 590 

KZT 1,531 –3,562 18,429 7,654 –65,893 –41,841 80,973 –103,352 24,563 

LTL –40 74 1,833 – – 1,867 2,040 –289 388 

LVL 106 –83 –5,557 –679 – –6,214 –1,545 –6,434 3,998 

RSD – 907 –1,008 –4,611 –2,199 –180 –8,904 18,507 –12,687 5,529 

RUB –446 –33,238 –63,279 61,132 –60,735 – 96,566 50,513 –258,255 93,120 

TRY –3,128 –30,967 –70,355 53,241 –249,852 –301,061 91,295 –367,654 180,271 

UAH 2,035 587 –19,746 –23,210 –6,407 –46,742 –26,392 –77,441 50,314 

Overseas – highly USD 1,086 –22,685 –120,349 307,082 –1,647,486 –1,482,352 –1,332,519 –1,951,624 1,628,979 

developed countries CAD 789 –718 8,196 4 – 8,271 16,613 –3,409 6,332 

AUD –169 218 5,089 1,332 – 6,470 9,253 397 3,780 

NZD 2 –2 107 – – 107 127 –5,385 1,221 

JPY –503 5,527 –1,220 –2,252 –3,570 –2,017 5,648 –10,253 2,984 

Other countries AED –35 – – – – –35 – –637 142 

XAU –7 534 1,753 – – 2,280 3,100 97 1,481 

ZAR –437 –17 9 – – –444 88 –11,015 3,492 

BPV



By analogy to the detailed presentation of basis point positions in the interest rate sector, daily reporting presents details of credit spread by curve and 

maturity band. 

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 –1,906,260 –2,353,176 2,143,286 

ABSs and MBSs –374,143 –586,643 455,816 

Corporates Industrial – 904 –39,453 4,910 

Automobiles –1,410 –13,323 2,511 

Consumer goods –3,213 –27,108 10,152 

Pharmaceutical –41 –18,363 1,039 

Telecommunications 8,406 –18,952 5,373 

Energy & utilities –13,916 –41,432 22,271 

Other (e.g. indices) –17,867 –264,745 136,524 

Treasury-near Treasuries – EU & European industrial nations –1,222,070 –1,599,400 1,430,504 

Treasuries – new EU countries –879,162 –1,096,125 1,029,142 

Treasuries – CEE & emerging markets –2,086,069 –2,420,979 2,268,368 

Treasuries – developed countries overseas 4,744 –710 620 

Treasuries – agencies & supranationals –3,432 –10,785 5,671 

Municipals & German Jumbo –161,063 –222,959 184,474 

tOtal *) –5,788,160 –8,185,258 7,614,339 

*) The maximum/minimum CPVs in the various sectors occur at different points in time and are therefore not added up in the aggregate total. 

Measured by the total basis-point value, the Bank Austria Group’s credit spread position in 2011 ranged between – € 5.8 m and – € 8.2 m. On an 

annual average, the long position increased by about 1.3 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, followed by financials, which include intra-group funding bond positions. The corporates exposure is very low by comparison. 

The positions of asset-backed securities (ABSs) and mortgage-backed securities (MBSs) were further reduced in 2011, primarily through redemptions. 

The average CPV also continued to decline in this sector. Overall, the ABS book developed favourably in 2011 in terms of total return in the year. 

Measured by redemption behaviour, the entire ABS/MBS book is to be classified as performing in 2011. 

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 2011, there was no negative backtesting excess. A positive backtesting excess occurred from 8 to 9 August, which was caused by 

significant depreciation of the Russian rouble against the euro. As a result, transactions serving as a hedge against rouble depreciation gained in value. 

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 –1.3 m CPVs). 


141



The chart below shows the backtesting results for the regulatory trading book, on the basis of clean hypothetical backtesting. 

Backtesting results for the regulatory trading book, 2011 (€ m) 

20 

15 

10 

5 

0 

–5 

–10 

–15 

–20 

Jan. 11 Feb. 11 March 11 April 11 May 11 June 11 July 11 Aug. 11 Sept. 11 Oct. 11 Nov. 11 Dec. 11 

IMOD-VaR mirrored 

Hyp P&L 

new IMOD-VaR 

Since April 2011, the new model has been used for the purposes of calculating capital requirements. The relevant parameters are a 10-day holding 

period, a confidence level of 99% and a multiplier of 3.5. As at 30 December 2011, the capital requirement was € 61.4 m. 

The following capital requirements result for the Bank Austria Group in connection with “stressed VaR” (S-VaR) and “incremental risk charge” (IRC): 

€ 159.4 m for S-VaR and € 88.0 m for IRC. 

Market risk management in CEE 


20000000 

15000000 

10000000 

5000000 

0 

-5000000 

-10000000 

-15000000 

-20000000 

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; moreover all units also have technical access to the central market risk platform. 

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 will be implemented by 2013; 

the other relevant banking subsidiaries will undergo the approval process for the risk model from 2014 onwards. 

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. 

142



Value at Risk of banks in CEE (€ m) 

year–eNd 2011 figures 

aVerage Var 2011 Var miNimum fx Var ir Var spread Var 

Bulgaria –3.4 –3.3 0.0 –2.4 –2.2 

Baltics –0.7 –0.5 0.0 –0.5 0.0 

Czech Republic –5.8 –6.7 –0.1 –0.3 –6.2 

Croatia (incl. Bosnia) –2.2 –1.8 –0.1 –1.6 –0.6 

Hungary –2.2 –2.0 –1.8 0.0 –0.7 

Kazakhstan –3.7 –2.5 –0.1 –2.5 –0.1 

Romania –3.6 –3.5 0.0 –0.7 –3.2 

Russia –8.5 –5.0 –0.4 –4.1 –3.3 

Serbia –1.2 –1.0 –0.1 –1.0 0.0 

Slovakia –1.6 –2.1 0.0 0.0 –2.0 

Slovenia –2.8 –3.5 0.0 –0.3 –1.9 

Turkey –34.3 –37.3 –0.3 –15.5 –42.5 

Ukraine –8.2 –6.3 –2.8 –6.4 –0.8 

cee –40.8 –41.5 –3.4 –21.1 –57.9 

The new IMOD methodology based on historical simulation has been used for internal risk control since January 2011. After a higher value-at-risk 

exposure at the beginning of the year, the figure remained at a stable level from January onwards, with a limit utilisation of about 30% even during the 

period of strain in financial markets. 

At the end of 2011, value at risk of all CEE banks was about € 42 m (limit: € 125 m), with open interest rate positions in the banking books and 

credit-spread positions of securities still accounting for the largest risk contributions. 

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 Corporate & 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 Austria and CEE and have remained at a high level on account of the persistent government debt crisis. 

Products for which the material interest-rate and capital maturity is not defined, such as variable-rate sight and savings deposits, are modelled in 

r espect 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 2011 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%. 


143



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 2011 was 0.99 for >1 year and 0.98 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 although the liquidity situation in financial markets deteriorated significantly in the second half of the year, not 

least on account of the persistent government debt crisis in Europe. 

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. 

The tight liquidity situation in financial markets (especially in the interbank market) put a strain on these crisis scenarios, but the existing pool of collateral 

was sufficient to cover liquidity outflows. 

The extreme scenario (combining an extreme market crisis and a name-driven crisis) calculated on the basis of the strained liquidity situation is below 

the one-month liquidity horizon. However, measures have been taken to strengthen the liquidity buffer for unexpected liquidity outflows. 

Quantitative information 

The breakdown by contractual residual maturity is shown in section F.1. 

Funding plan and liquidity costs in pricing 

Financing that part of credit growth which is not covered by deposits and funding the CEE subsidiaries is one of the main functions of the Group’s 

liquidity management. Financing requirements for the coming year and the short-term and long-term funds made available to the subsidiaries for 

their business are defined on the basis of a funding plan, and a strategy for raising the required funds is drawn up. As financial markets in Central and 

Eastern Europe were under greater strain, closer attention was given in 2011 to the financial independence of the CEE subsidiaries. The focus is on 

a well-balanced financial position, which reduces dependence on financial markets. 

Part of the country risks in connection with financing the CEE subsidiaries out of Austria 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). 

To ensure the correct settlement of liquidity premiums payable by the Bank Austria Group to external market participants, liquidity costs are charged. 

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. 


144



E.4 – Counterparty risk 

UniCredit Bank Austria AG has made further efforts to refine the risk management model for derivatives, securities lending and repurchase agreements. 

For the purposes of portfolio management and risk limitation in the derivatives and security financing business with banks and customers, 

the bank 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. 

The counterparty risk model (NORISK CR), which was approved by the Austrian supervisory authority in 2009, was extended in 2011 to include 

further CEE countries for risk management aspects; special mention should be made of the subsidiaries in Croatia and Russia because of their 

size. In this context the focus is 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 and Risk Integration 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 2011, derivative transactions, repurchase agreements and securities lending transactions resulted in the following exposures: 

Exposures (€ bn) 

Austria 3.05 

CEE 3.56 

tOtal 6.61 

In addition to further refinement of the model, which is currently in conformity with Basel 2 standards, we are now concentrating on preparations 

for adjusting the existing model to the new Basel 3 rules concerning counterparty credit risk. A project was initiated in Market Risk and Risk Integration 

for this purpose. 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. 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. 


145



E.5 – Country risk and sovereign risk 

Risk associated with cross-border transactions with all customer groups is reflected in country risk (“transfer and convertibility risk”; country risk includes, 

for example, loans to foreign corporate customers or banks). Risk associated with the state itself (e.g. the purchase of government bonds) is 

reflected in sovereign risk, irrespective of whether such risk is cross-border or local risk. Both risks are assessed via a groupwide credit process. 

Country limits and sovereign limits are assessed by the responsible risk management team, approved by the relevant body having approval authority, 

and assigned to UniCredit subsidiaries according to business needs. In general, cross-border business is not limited for countries which are presumed 

less risky, e.g. the US, Japan, core EU countries; for all other countries, cross-border business is limited via the assigned country limit. Sovereign risk 

is in each case limited via counterparty limits. The overall bond exposure is monitored via nominal credit risk limits and market risk limits. Impairment 

losses are recognised, if necessary, according to international standards. 

Greek bond exposure has been impaired based on a conservative approach and impairment losses will be further recognised using international 

standards. Business with Greek banks has been reduced to an absolute minimum and is restricted via a watch list strategy. 

Due to the challenging political and economic situation in Hungary, UniCredit Group has taken prudent risk mitigating measures and is actively 

monitoring the situation and its portfolio. UniCredit Group has also limited business via a watch list strategy. Apart from the current credit risk valuation 

reflected in mark to market valuation an impairment is – in line with international standards – currently not foreseen. 

The Italian risk is also centrally monitored and has also been adjusted via a watch list strategy, mainly focusing on UniCredit, tier 1 banks and the 

sovereign within assigned counterparty credit and market risk limits. 

Large sovereign exposures for other countries (e.g. Russia, Romania, Croatia) mainly result from excess liquidity management of Bank Austria banking 

subsidiaries or guarantees from the respective sovereign granted to support local (i.e. Bank Austria banking subsidiaries in e.g. Serbia, Croatia) corporate 

business. Both are monitored closely by FIBS CRO and CEE underwriting and captured under credit risk and market risk limits (for bonds). 

Breakdown of sovereign debt securities by country and portfolio (€ m) 

cOuNtry / pOrtfOliO NOmiNal Value 


bOOK Value fair Value 

turkey 2) 3,177 3,168 3,533 

HFT financial assets/liabilities (net exposures) 1) 29 28 28 

Financial assets at FV through P&L – – – 

Available for sale 998 1,028 1,028 

Loans and receivables – – – 

Held-to-maturity investments 2,150 2,112 2,477 

austria 2,111 2,226 2,234 

HFT financial assets/liabilities (net exposures) 1) – – – 


Available for sale 1,868 2,039 2,039 


Held-to-maturity investments 243 187 195 

czech republic 1,720 1,660 1,660 


Financial assets at FV through P&L 4 4 4 



Held-to-maturity investments – – – 

italy 1,116 1,109 1,107 







146




cOuNtry / pOrtfOliO NOmiNal Value bOOK Value 

fair Value 

hungary 1,100 1,090 1,090 



Available for sale 992 983 983 

Loans and receivables 27 27 27 


romania 802 802 801 






russia 627 644 644 





Held-to-maturity investments – – – 

croatia 732 645 645 






slovakia 478 470 470 






bulgaria 354 363 361 


Financial assets at FV through P&L 6 5 5 


Loans and receivables 5 5 5 


Other countries 1,519 1,109 1,106 



Available for sale 1,128 965 865 



tOtal 13,737 13,286 13,652 

thereof: 

greece 498 129 129 

ireland – – – 

portugal 70 50 46 

spain 16 16 15 

1) Including exposures in credit derivatives 

2) Amounts recognised using proportionate consolidation with reference to the ownership percentage for exposures held by joint ventures. 

# 

Sovereign exposures are bonds issued by and loans granted to central banks, governments and other public sector entities. ABSs are not included. 


147



Breakdown of sovereign debt securities by portfolio (€ m) 

held fOr tradiNg 

(Net expOsures) 

fiNaNcial assets at 

fair Value 


aVailable-fOr-sale 

fiNaNcial assets lOaNs 

held-tO-maturity 

iNVestmeNts tOtal 

Book value of sovereign 

portfolio 844 10 9,580 32 2,821 13,286 

Total portfolio of debt securities 926 92 13,789 7,159 3,498 25,464 

% Portfolio 91.16% 10.43% 69.48% 0.45% 80.65% 52.18% 

Sovereign exposures are bonds issued by and loans given to central banks, governments and other public sector entities. ABSs are not included. 

Breakdown of sovereign loans by country (€ m) 


cOuNtry bOOK Value 

Austria 6,256 

Croatia 1,882 

Indonesia 599 

Slovenia 289 

Hungary 257 

Serbia 191 

Romania 122 

Philippines 120 

Bosnia 116 

Turkey *) 96 

Others 349 

tOtal ON-balaNce sheet expOsure 10,276 

*) Amounts recognised using proportionate consolidation with reference to the ownership percentage for exposures held by joint ventures. 

Sovereign exposures are loans granted to central banks, governments and other public sector entities. 

E.6 – Credit risk 

Breakdown of financial assets by portfolio and credit quality (carrying value) (€ m) 

baNKiNg grOup Other cOmpaNies 

NONperfOrmiNg 

dOubtful restructured 

Other 

pOrtfOliO/quality 

lOaNs assets expOsures past-due assets impaired Other tOtal 

Financial assets held for trading 1 7 – – 3,296 – 4 3,307 

Available-for-sale financial assets – 66 – 13 13,163 – 546 13,789 

Held-to-maturity financial instruments – 69 – – 3,429 – – 3,498 

Loans and receivables with banks 4 5 – – 25,585 – 27 25,621 

Loans and receivables with customers 2,820 3,066 1,246 436 127,276 – 71 134,914 

Financial assets at fair value through profit or loss – – – – 92 – – 92 

Financial instruments classified as held for sale – – – – – – – – 

Hedging instruments – – – – 3,466 – – 3,466 

tOtal 31 december 2011 2,824 3,213 1,246 450 176,307 – 647 184,687 

Impaired loans are divided into the following categories: 

• Non-performing loans – formally impaired loans, being exposure to insolvent borrowers, even if the insolvency has not been recognised in a court of law, or borrowers in a similar situation. 

Measurement is on a loan-by-loan or portfolio basis. 

• Doubtful loans – exposure to borrowers experiencing temporary difficulties, which the Group believes may be overcome within a reasonable period of time. Doubtful loans are valued on 

a loan-by-loan basis or portfolio basis. 

• Restructured loans – exposure to borrowers with whom a rescheduling agreement has been entered into including renegotiated pricing at interest rates below market, the conversion of 

loans/reduction of principal etc.; measurement is on a loan-by-loan basis or portfolio basis. 

• Past-due loans – total exposure to any borrower not included in the other categories, who at the balance-sheet date has expired facilities or unauthorised overdrafts that are more than 

90 days past due. 


148



Breakdown of financial assets by portfolio and credit quality (gross and net values) (€ m) 

pOrtfOliO/quality 

grOss 

expOsure 

impaired assets perfOrmiNg 

specific 

Write-dOWNs 

Net 

expOsure 

grOss 

expOsure 

pOrtfOliO 

adJustmeNts 

Net 

expOsure 

tOtal (Net 

expOsure) 

Financial assets held for trading 8 – 8 X X 3,300 3,307 

Available-for-sale financial assets 321 241 80 13,709 – 13,709 13,789 

Held-to-maturity financial instruments 221 153 69 3,429 – 3,429 3,498 

Loans and receivables with banks 58 49 9 25,612 – 25,612 25,621 

Loans and receivables with customers 14,470 6,903 7,567 128,157 810 127,347 134,914 

Financial assets at fair value 

through profit or loss – – – X X 92 92 

Financial instruments classified 

as held for sale – – – – – – – 

Hedging instruments – – – X X 3,466 3,466 

tOtal 31 december 2011 15,078 7,345 7,733 170,907 810 176,954 184,687 

On-balance sheet and off-balance sheet exposure to banks: gross and net values (€ m) 

expOsure types/amOuNts grOss expOsure Write-dOWNs Net expOsure 

On-balance sheet exposure 

Non-performing loans 35 31 4 

Doubtful loans 11 6 5 

Restructured exposures 12 12 – 

Past due – – – 

Other assets 31,414 X 31,414 

total 31,472 49 31,423 

Off-balance sheet exposure 

Impaired 11 10 1 

Other 22,824 X 22,824 

total 22,835 10 22,825 

tOtal 31 december 2011 54,307 59 54,248 

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 7,523 4,703 X 2,820 

Doubtful loans 5,025 1,824 X 3,201 

Restructured exposures 1,864 618 X 1,246 

Past due 600 151 X 450 

Other assets 140,504 X 810 139,694 

total 155,516 7,296 810 147,409 

Off-balance sheet exposure 

banking group 

Impaired 702 199 X 503 

Other 52,501 X 45 52,455 

total 53,203 199 45 52,958 

tOtal 31 december 2011 208,719 7,495 856 200,368 


149



On-balance sheet exposure to customers: gross change in impaired exposures (€ m) 

sOurce/categOries 

chaNges iN 2011 

NON-perfOrmiNg 

lOaNs dOubtful assets 

restructured 

expOsures past-due expOsures 

Opening balance – gross exposure 6,357 5,207 710 242 

Sold but not derecognised – – – – 

increases 2,940 3,482 1,929 1,085 

Transfers from performing loans 714 1,940 480 366 

Transfers from other impaired exposure 1,636 676 399 20 

Other increases 589 866 1,050 698 

reductions –1,773 –3,664 –775 –726 

Transfers to performing loans –62 –173 –59 –135 

Derecognised items –328 – 94 –17 –2 

Recoveries –272 –226 –191 –48 

Sales proceeds –51 –113 –11 –28 

Transfers to other impaired exposure –232 –1,697 –403 –399 

Other reductions –828 –1,361 – 94 –115 

closing balance – gross exposure 7,523 5,025 1,864 600 


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 write-downs 3,978 1,606 434 28 


increases 2,060 1,543 394 292 

Write-downs 1,040 1,062 138 135 

Transfers from other impaired exposure 804 186 136 11 

Other increases 217 296 121 145 

reductions –1,335 –1,325 –210 –169 

Write-backs from assessments –148 –108 –10 –20 

Write-backs from recoveries –182 –89 –22 –23 

Write-offs –328 – 94 –17 –2 

Transfers to other impaired exposure –111 –766 –144 –115 

Other reductions –566 –268 –18 –9 

final gross write-downs 4,703 1,824 618 151 


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. 2011 

class 1 class 2 class 3 class 4 class 5 class 6 

NO ratiNg tOtal 

On-balance sheet exposures 29,231 13,995 30,953 23,515 6,729 8,755 65,655 178,832 

derivative contracts 

Financial derivative contracts 3,922 13,699 803 356 82 287 7,030 26,179 

Credit derivatives contracts – – – – – – 3 4 

guarantees given 961 1,027 3,754 1,833 364 362 11,087 19,388 

Other commitments to disburse funds 534 2,054 1,398 976 110 198 24,943 30,212 

tOtal 34,649 30,775 36,908 26,680 7,284 9,602 108,718 254,616 

Class 1 (AAA/AA–), 2 (A+/A–), 3 (BBB+/BBB–), 4 (BB+/BB–), 5 (B+/B–), 6 (impaired exposures are included in class 6) 

40% of rated counterparties were investment grade (from class 1 to 3), 

43% of customers were not rated due to the considerable share of customers in the segment comprising private individuals and SMEs. 


150



Banking group – On-balance sheet and off-balance sheet exposure by internal rating class (book values) (€ m) 


iNterNal ratiNg classes 

1 2 3 4 5 6 

On-balance sheet exposures 1,606 10,732 30,337 42,097 32,429 19,943 


Financial derivative contracts 139 812 17,223 1,806 1,764 1,264 

Credit derivatives contracts – – – – – – 

guarantees given 25 359 2,101 6,034 5,796 2,104 

Other commitments to disburse funds 15 121 2,930 6,111 3,489 2,237 

tOtal 1,785 12,024 52,592 56,049 43,478 25,547 

iNterNal ratiNg classes 

7 8 9 


impaired 

expOsures 

NO 

ratiNg tOtal 

On-balance sheet exposures 11,244 4,040 1,677 7,725 17,002 178,832 


Financial derivative contracts 380 126 69 252 2,344 26,179 

Credit derivatives contracts – – – – 3 4 

guarantees given 1,394 289 222 134 930 19,388 

Other commitments to disburse funds 677 240 37 118 14,237 30,212 

tOtal 13,694 4,696 2,005 8,229 34,516 254,616 

The mapping to the internal rating masterscale considers the PD ranges mentioned below: 

iNterNal ratiNg classes pd miN pd max 

1 0.0000% 0.0036% 

2 0.0036% 0.0208% 

3 0.0208% 0.1185% 

4 0.1185% 0.5824% 

5 0.5824% 1.3693% 

6 1.3693% 3.2198% 

7 3.2198% 7.5710% 

8 7.5710% 17.8023% 

9 17.8023% 99.9999% 

10 impaired 

Credit risk 

Net write-downs of loans and provisions for guarantees and commitments in 2011 continued to improve across all segments compared with the 

previous year. This development reflected significantly higher economic stability, especially in the first half of the year, and the fact that the economic 

slowdown which started in the second half of 2011 did not yet have a strong impact. 

In the Corporate & Investment Banking segment (CIB), the decline in the number of new cases requiring corporate restructuring activities had a positive 

influence on additions to loan loss provisions. At € 131.5 m, net write-downs of loans and provisions for guarantees and commitments in this 

business segment were further reduced, by more than 20%, from the previous year’s level. 

In the Family & SME Banking segment (F&SME), net write-downs of loans and provisions for guarantees and commitments continued to decline 

even after the inclusion of the sub-segment comprising small and medium-sized businesses with a turnover of up to € 50 m. Overall, the provisioning 

charge in this business segment amounted to € 161.1 m, an improvement of 24% over the previous year which was mainly due to significantly 

lower additions to loan loss provisions in the sub-segments of Mass Market and Affluent customers. The additional write-down on foreign currency 

loans in these sub-segments was further increased to take adequate account of the risk associated with loans with final maturity. Quite generally, as 

in the previous year, a large number of additional 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. 


151



CEE 

The favourable trend in net write-downs of loans and provisions for guarantees and commitments seen at the subsidiaries in CEE in 2010 continued 

in 2011. The provisioning charge declined to about € 1,055 m (2010: € 1,426 m). 

While net write-downs of loans and provisions for guarantees and commitments in 2010 showed a very favourable trend especially in the second 

half of the year, 2011 saw a positive development throughout the year. The figure for each quarter was significantly lower than that for the comparative 

period in 2010; the downward trend was most pronounced in the second quarter of 2011, with € 246 m (2010: € 324 m), and in the fourth 

quarter, with € 296 m (2010: € 449 m). 

A regional analysis shows that as in the previous year, the provisioning charge further declined especially in the difficult CIS region, where it fell to 

€ 442 m (2010: € 719 m). The strong decline in net write-downs of loans and provisions for guarantees and commitments in 2011 was mainly 

driven by Kazakhstan with a provisioning charge of € 282 m 2) (2010: € 425 m), Russia with € 60 m (2010: € 138 m) and Ukraine with € 100 m 

(2010: € 156 m). 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. 

On the positive side, it should also be mentioned that the Baltic states and Romania, which were the main drivers of the provisioning charge in the 

previous year, recovered from the crisis, recording a significant decline in net write-downs of loans and provisions for guarantees and commitments 

in 2011, to € 9 m 3) (2010: € 65 m) and € 85 m 4) (2010: € 115 m), respectively. 

On the negative side, net write-downs of loans and provisions for guarantees and commitments in Hungary were up by € 15 m on the previous 

year, reaching € 95 m in 2011 mainly as a result of the Early Repayment Programme (ERP) introduced by the Hungarian government. Before the 

ERP was announced, the provisioning charge was expected to be significantly lower than in the previous year. The country’s unforeseeable fiscalpolicy 

rules and a partial loss of credibility in financial markets are significant factors in Hungary. 

Impaired loans and the impaired loans ratio (impaired loans as a percentage of total loans to customers) at the CEE banking subsidiaries in the 

2011 financial year showed a continued increase over the previous year. A significant portion of the increase is due to a methodological change in 

the classification of impaired loans in the first quarter. The new classification (five risk classes instead of previously three) – a change required by 

Austria’s central bank and by Banca d’Italia, Italy’s central bank – creates a standard framework for all CEE units but resulted in an increase of 

€ 848 m in impaired loans. Based on the “real risk trend” (i.e. if the original classification is used for the calculation), impaired loans would have 

increased by € 849 m instead of the actual € 1,697 m. On this basis, impaired loans in the 2011 financial year as a whole would have increased 

at a significantly lower rate, by 40 bp to 14.0%, rather than the actual 165 bp. 

Kazakhstan and Ukraine were again the main drivers in 2011 while the Baltic states (one of the main drivers in 2010) recorded a marked decline. 

Another positive feature was the recovery in Turkey and Russia in the area of impaired loans, with the impaired loans ratio further declining 

compared with the previous year. 

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 (probability of default), LGD (loss given default) and EAD (exposure at default) – 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. 

2) Of which € 110 m booked locally and € 172 m booked in Vienna. 

3) Of which € 5 m booked locally and € 4 m booked in Vienna. 

4) In addition, € 21 m provisions for guarantees were booked for loans transferred to Vienna. 


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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. Credit risk stress calculations for the entire Group are based on 

a credit portfolio model developed in-house and are analysed for their impact on regulatory and economic capital. 

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. 

Four CEE banking subsidiaries switched from the standardised approach to the Foundation 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. 


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E.7 – 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 2011 concentrated on further developing OpRisk management with a focus on mitigation actions to reduce future losses and involving 

OpRisk in relevant projects to a greater extent. A focal area in CEE was the analysis of derivatives sale processes by a working group established 

jointly with Market Risk. In this context the CEE banking subsidiaries were reviewed for compliance with the rules of the Derivatives Policy CEE rolled 

out in 2010 in order to identify and mitigate potential operational risk. The OpRisk soft limits for the Bank Austria Divisions and all major banking 

subsidiaries, introduced in 2010, 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 the 

extensive and complete operational risk data collection. A Permanent Working Group (PWG) was established in UniCredit Bank Austria AG to identify 

and implement possible measures to address existing and potential operational risk on the basis of an analysis of factors including loss events, key 

risk indicators, scenarios, projects and new products. In 2011, implementation of the PWG concept started at all AMA-compliant banking subsidiaries 

in CEE. 

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 2012, activities with regard to operational risk will focus on 

• monitoring 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, 

• supporting the holding company in implementing measures resulting from the review by Banca d’Italia, 

• working to ensure that the Permanent Working Group becomes firmly established in UniCredit Bank Austria AG and completing the PWG rollout in 

major CEE legal entities with a view to better analysing loss events, indicators and scenarios through cooperation with the relevant functions and 

defining mitigation actions to reduce operational risk, 

• validating the implementation of the Derivatives Policy CEE at the CEE banking subsidiaries, 

• developing a process to identify OpRisk-relevant projects, 

• creating, firmly establishing and rolling out the reputational risk function in Bank Austria and in major CEE banking subsidiaries. 


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E.8 – 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.9 – 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.10 – 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, provisions have 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. In November 2011 the Court of Cassation granted Bank 

Austria’s appeal, revoked the judgment for the plaintiff issued by the Court of Appeal of Zurich and remanded the case back to the Court of Appeal 

(= second instance) for reconsideration. 

• the madoff fraud 

Several customers addressed enquiries and complaints against Bank Austria in connection with certain funds related to the fraudulent actions by 

Mr. Bernard L. Madoff. The following proceedings are relevant: 

austrian civil proceedings: In connection with the funds linked to the activities of Mr Madoff, many legal actions are pending with Austrian courts 

to date, with the claimed amount totalling € 130.5 million. In nine lawsuits Bank Austria succeeded at first instance, five at second instance as well 

and two overall are already legally binding. In one of those cases the Supreme Court revoked the judgment issued by the court of second instance in 

favour of the plaintiffs and remanded the case back to the court of first instance. Two interim judgments were handed down in favour of the plaintiffs, 

in one of those cases the claim has since been withdrawn and in the other case Bank Austria has appealed the interim judgment. 

criminal proceedings: Bank Austria has been named as a defendant in criminal proceedings in Austria which concern the Madoff case. These proceedings 

were initiated by a complaint filed by the FMA (the Austrian Financial Market Authority) to the Austrian prosecutor. Subsequently complaints 

were filed by purported investors in funds which were invested, either directly or indirectly, in Bernard L. Madoff Investments Securities LLC and 

Bernard L. Madoff Securities LLC (collectively referred to as “BMIS”). These complaints allege, amongst other things, that Bank Austria breached 

provisions of the Austrian Investment Fund Act as prospectus controller of the Primeo Fund. These criminal proceedings are still at the pre-trial 

stage. 


155



u.s. securities class actions in the u.s.: Bank Austria 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 Bank Austria has also been named in two putative class 

action suits filed in the United States District Court for the Southern District of New York. In each of the suits, the class action plaintiffs claim to represent 

investors whose assets were invested in BMIS, directly or indirectly. 

Proposed amended complaints have been filed; one of which purports to include allegations that the defendants, including Bank Austria, 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 and seeks treble damages under RICO, i.e., three times US$ 2 billion. 

On 29 November 2011, the Court dismissed the actions as against Bank Austria and its liquidated indirect subsidiary, among others, and denied 

plaintiffs’ motion to amend the complaints. The plaintiffs in those actions have filed notices of appeal of that decision. 

The united states bankruptcy court appointed Irving H. Picard as Trustee (the “SIPA Trustee”) for the liquidation of BMIS. 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 

Bank Austria and a liquidated indirect subsidiary of Bank Austria, to recover amounts to be determined at trial. 

One complaint (the “First Trustee Complaint”) seeks to recover so-called avoidable transfers to initial transferees of funds from BMIS, subsequent 

transfers of funds originating from BMIS (in the form of alleged management, performance, advisory, administrative and marketing fees, among 

other such payments, said to exceed US$ 400 million in the aggregate for all defendants), and compensatory and punitive damages against certain 

defendants alleged to be in excess of US$ 2 billion. 

The other complaint (the “Second Trustee Complaint”) further alleges defendants violated RICO by allegedly participating in a plan to enrich themselves 

by feeding investors’ money into Madoff’s Ponzi scheme. In this latter complaint, 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. 

On 28 July 2011, the Court granted the motion to dismiss the First Trustee Complaint with respect to the claims for aiding and abetting Madoff’s 

fraud, breach of fiduciary duty, unjust enrichment and contribution. The Court’s decision did not address the claims to recover avoidable transfers. 

The SIPA Trustee has filed a notice of appeal of the decision. 

Bank Austria has moved to dismiss the Second Trustee Complaint with respect to the RICO claims and the claims for unjust enrichment, conversion 

and money had and received. On 21 February 2012, the Court granted the motion to dismiss the Second Trustee Complaint with respect to the 

RICO claims and the claims for unjust enrichment, conversion and money had and received. The Court’s decision did not address the claims to 

recover avoidable transfers which are now returned to the bankruptcy court. Although the decision may be appealed, the timing of that appeal has 

not been determined. 

All pending U.S. actions are in their initial phases. 

Bank Austria intends to defend itself vigorously against the Madoff-related claims and charges. 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. In addition to the proceedings outlined 

above, additional actions arising out of Madoff’s activities have been threatened and may be filed in the future by private investors or local authorities; 

in this context the question of whether these cases fall under the statute of limitations will have to be examined. Pending or future actions may 

have negative consequences for Bank Austria. 

In line with the above policy, no provision has 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. 


156



E.11 – 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 in addition to the existing internal control system. 

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 maintain effective 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. 

The implementation of the internal control system in relation to the financial reporting process is also 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. IT access authorisation is handled on a very restrictive basis. The operation of the 

financial reporting system is also assured through automated IT controls included in the system. 


157



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. 

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.12 – 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 been appointed in these proceedings to review the amount of the cash compensation paid; 

the expert report is now available and essentially confirms the adequacy of the cash compensation paid in connection with the squeeze-out. A decision 

by the court of first instance in this case is not yet available. 


158



E.13 – 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. 

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. 


159



Regulatory portfolio: end of period notional amounts (€ m) 

deriVatiVe iNstrumeNt types/uNderlyiNgs OVer the cOuNter cleariNg hOuse 

debt securities and interest rate indexes 72,630 3,012 

Options 20,440 – 

Swap 47,262 162 

Forward 4,923 – 

Futures – 2,850 

Others 5 – 

equity instruments and stock indexes 1,262 – 

Options 968 – 

Swap 28 – 

Forward 49 – 

Futures – – 

Others 217 – 

gold and currencies 32,897 69 


Swap 10,728 – 


Futures – 69 

Others – – 

commodities 702 – 

Other underlyings 16 – 

tOtal 107,506 3,081 

Banking book: end of period notional amounts – Hedging derivatives (€ m) 


debt securities and interest rate indexes 126,289 – 


Swap 122,305 – 

Forward 175 – 



equity instruments and stock indexes – – 

Options – – 

Swap – – 

Forward – – 



gold and currencies 35,298 – 


Swap 32,448 – 




commodities – – 

Other underlyings – – 

tOtal 161,587 – 


160



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 140 71 

debt securities and interest rate indexes 33 – 


Swap – – 




equity instruments and stock indexes 107 – 


Swap – – 



Others 5 – 

gold and currencies – 71 


Swap – 71 




commodities – – 


tOtal 140 71 


161



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 2,334 – 2,269 1 

Options 418 – 356 – 

Interest rate swaps 1,135 – 1,179 1 

Cross currency swap 390 – 367 – 

Equity swaps – – – – 

Forward 382 – 359 – 

Futures – – – – 

Others 9 – 8 – 

banking book – hedging derivatives 3,466 – 2,591 – 

Options 39 – 84 – 

Interest rate swaps 3,012 – 1,977 – 

Cross currency swap 383 – 512 – 


Forward 31 – 18 – 


Others – – – – 

banking book – Other derivatives – – 2 4 

Options – – – – 

Interest rate swaps – – – – 

Cross currency swap – – – 4 


Forward – – – – 


Others – – 2 – 

tOtal 5,800 – 4,863 5 

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 41,943 42,267 23,296 107,506 

Financial derivative contracts on debt securities and interest rates 13,609 37,459 21,562 72,630 

Financial derivative contracts on equity securities and stock indexes 556 645 61 1,262 

Financial derivative contracts on exchange rates and gold 27,398 3,825 1,673 32,897 

Financial derivative contracts on other values 380 338 – 718 

banking book 44,442 74,370 42,914 161,726 

Financial derivative contracts on debt securities and interest rates 38,275 56,073 31,973 126,321 

Financial derivative contracts on equity securities and stock indexes – 102 5 106 

Financial derivative contracts on exchange rates and gold 6,167 18,195 10,937 35,298 

Financial derivative contracts on other values – – – – 

tOtal 86,385 116,637 66,210 269,232 


162



Credit derivatives – breakdown by product (€ m) 

pOrtfOliOs/deriVatiVe iNstrumeNt types pOsitiVe fair Value NegatiVe fair Value 

regulatory trading portfolio 2 223 

Credit default products – 218 

Credit spread products 1 5 

Total rate of return swap – – 


banking book – – 

Credit default products – – 

Credit spread products – – 

Total rate of return swap – – 


tOtal 2 223 

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 10 – – – 

Credit spread products – – – – 

Total rate of return swap – – – – 

Other – – – – 

tOtal 10 – – – 

protection seller’s contracts 

Credit default products 1,239 68 – – 

Credit spread products 234 – – – 

Total rate of return swap – – – – 

Other – – – – 

tOtal 1,473 68 – – 

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: 239 945 367 1,551 

Credit derivatives with qualified reference obligation 234 – – 234 

Credit derivatives with not qualified reference obligation 5 945 367 1,317 

banking book: – – – – 

Credit derivatives with qualified reference obligation – – – – 

Credit derivatives with not qualified reference obligation – – – – 

tOtal 239 945 367 1,551 


163

F – Additional disclosures 

F.1 – Time breakdown by contractual residual maturity 

of financial assets and liabilities 166 

F.2 – Geographical distribution 166 

F.3 – Related party disclosures 167 

F.3.1 – Information on members of the 

Management Board, the Supervisory Board 

and the Employees’ Council of 

uniCredit Bank Austria AG 167 

F.3.2 – Relationships with unconsolidated subsidiaries 

and other companies in which an equity 

interest is held 167 

F.3.3 – other information on related party relationships 168 

F.4 – Auditors’ fees 168 

F.5 – Assets pledged as security 169 

F.6 – Subordinated assets/liabilities 169 

F.7 – Assets and liabilities in foreign currency 169 

F.8 – Trust assets and trust liabilities 169 

F.9 – Repurchase agreements 170 

F.10 – Guarantees given and commitments 170 

F.11 – Employees 170 

F.12 – Supervisory Board and Management Board 171 

F.13 – Share-based payments 171 

F.14 – Events after the reporting period 173 

F.15 – Consolidated capital resources and 

regulatory capital requirements 174 



F – Additional disclosures (CoNTINuED) 

F.1 – Time breakdown by residual contractual 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 100,220 1,784 98,309 1,969 

Total European countries 94,278 4,765 89,676 4,718 

Western Europe 840 15 919 22 

Central and Eastern Europe 93,439 4,750 88,757 4,695 

America 58 –6 81 –11 

Asia 4,673 253 4,982 258 

Rest of the world – – – – 

tOtal 199,229 6,795 193,049 6,934 

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 17,840 4,218 1,655 11,607 13,128 13,427 16,511 43,152 55,634 

Government securities 38 43 31 54 449 561 1,397 2,903 2,348 

Other debt securities 18 522 181 246 669 372 3,901 5,887 5,358 

Units in investment funds 113 – – – – – – – – 

Loans 17,671 3,653 1,443 11,307 12,010 12,494 11,212 34,361 47,928 

Banks 4,159 1,425 790 2,320 3,289 521 955 4,653 1,618 

Customers 13,512 2,228 653 8,987 8,721 11,973 10,258 29,708 46,310 

liabilities 47,731 5,718 4,914 17,659 14,365 10,660 10,924 36,958 17,719 

Deposits and current accounts 47,178 3,905 4,470 16,431 11,304 7,909 6,577 14,408 2,316 

Banks 1,678 1,552 979 2,900 713 260 225 2,684 1,619 

Customers 45,500 2,354 3,491 13,531 10,591 7,649 6,352 11,723 697 

Debt securities – 105 89 292 778 1,010 2,863 16,642 9,099 

Other liabilities 553 1,708 355 936 2,283 1,741 1,484 5,909 6,304 

Off-balance sheet transactions 1,794 –396 –3 –173 –151 –791 –366 –1,886 –1,276 

Physically settled financial derivatives 

long positions 109 1,581 1,419 1,474 4,027 2,854 2,062 6,125 1,075 

short positions 111 1,585 1,419 1,475 4,030 2,816 2,091 6,125 1,075 

Cash settled financial derivatives 

long positions 804 1,783 784 2,824 5,466 4,332 5,552 22,663 13,516 

short positions 814 1,783 784 2,824 5,466 4,332 5,552 22,668 13,513 

Deposits to be received 

long positions – – – – – – – – – 

short positions – – – – – – – – – 

Irrevocable commitments to disburse funds 

long positions 150 16 210 467 581 1,926 7,891 3,518 997 

short positions 1,969 13 209 330 622 1,308 7,794 2,573 940 

Written guarantees 36 397 1 37 194 135 297 947 1,216 

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 

166



F.3 – Related party disclosures 

Related party disclosures as at 31 December 2011 (€ 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 2011 financial year (excluding payments into pension 

funds) totalled € 1,901,324.91 (comparable emoluments in 2010 totalled € 1,705 thsd). Of this total, € 1,238,880.39 (2010: € 1,274 thsd) related to 

fixed salary components and € 662,444.52 were variable salary components (2010: € 431 thsd). 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 2011 financial year amounted to € 2,984,659.47 

(2010: € 2,818 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 

€ 8,459,928.63. (Of this total, € 5,032,052.57 was paid to former Management Board members of Creditanstalt AG, which merged with Bank Austria 

in 2002, and their surviving dependants; € 1,604,062.70 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 2010 was € 8,609 thsd. Emoluments paid to this 

group of persons for activities in subsidiaries amounted to € 334,980.49 (2010: € 423 thsd). 

The emoluments of the Supervisory Board members active in the 2011 business year totalled € 345,475.04 (2010: € 316 thsd) for 

UniCredit Bank Austria AG, and € 1,880 (2010: € 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 € 1,689,335.02 (2010: € 1,045 thsd), overdrafts granted to them were € 2,865.75 

(2010: € 28 thsd). Repayments during the business year totalled € 71,467.88 (2010: € 37 thsd). 

Loans to members of the Supervisory Board amounted to € 360,414.62 (2010: € 552 thsd). Overdrafts granted to Supervisory Board members 

totalled € 45,225.68 (2010: € 274 thsd). Repayments during the business year totalled € 21,657.32 (2010: € 44 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. 

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 17,131 1,055 2 462 

Equity instruments 172 7 – – 

Other receivables 8,004 55 – 2 

tOtal assets 25,307 1,116 2 464 

Deposits 15,232 11,377 8 86 

Other financial liabilities 4,248 – – 15 

Other liabilities 670 – – 16 

tOtal liabilities 20,150 11,377 8 118 

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 Region Wien” (“Betriebsratsfonds”). 


167



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 2011, UniCredit held a direct interest of 99.996% in UniCredit Bank Austria AG. 

As at 31 December 2011, there were the following interlocking relationships with UniCredit S.p.A.: 

• Four 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. 

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 2011 financial year in the following 

categories: 

Auditors’ fees (€ thsd) 


fees for the audit of the financial statements and the consolidated financial statements 4,041 4,174 

KPMG Austria (including the audit of subsidiaries) 2,569 2,869 

Austrian Savings Bank Auditing Association 1,472 1,305 

Other services involving the issuance of a report 841 623 

KPMG Austria 834 623 

Austrian Savings Bank Auditing Association 7 – 

tax consulting services – – 

KPMG Austria – – 

Austrian Savings Bank Auditing Association – – 

Other services 1,254 1,539 

KPMG Austria 79 209 

Austrian Savings Bank Auditing Association 1,175 1,330 

tOtal 6,136 6,336 


168



F.5 – Assets pledged as security 

Assets used to guarantee own liabilities and commitments (€ m) 

F.6 – Subordinated assets/liabilities 

F.7 – Assets and liabilities in foreign currency 


Financial instruments held for trading 11 36 

Financial instruments designated at fair value 30 63 

Financial instruments available for sale 4,340 1,855 

Financial instruments held to maturity 2,120 415 

Loans and receivables with banks 230 1,670 

Loans and receivables with customers 19,323 16,630 

Property, plant and equipment 2 – 


(€ m) 


Financial assets held for trading – – 

Financial assets designated at fair value – – 

Available-for-sale financial assets 75 81 

Held-to-maturity investments – – 

Loans and receivables with banks 553 555 

Loans and receivables with customers 315 496 

subordinated assets 944 1,132 

Deposits from banks 223 218 

Deposits from customers 99 85 

Debt securities in issue 3,926 4,078 

subordinated liabilities 4,249 4,381 


(€ m) 

assets liabilities assets liabilities 

USD 23,885 20,973 23,158 20,968 

JPY 1,171 517 958 737 

CHF 16,451 2,149 16,513 2,095 

Other 53,579 42,439 51,852 39,626 

tOtal 95,085 66,078 92,481 63,426 

F.8 – Trust assets and trust liabilities (€ m) 


Loans and receivables with banks 6 – 

Loans and receivables with customers 612 866 

Equity securities and other variable-yield securities 7,039 7,686 

Debt securities 8,085 7,572 

Other assets 1,248 1,071 

trust assets 16,990 17,196 

Deposits from banks 4,910 190 

Deposits from customers 11,900 16,618 

Debt securities in issue – – 

Other liabilities 180 388 

trust liabilities 16,990 17,196 

169



F.9 – Repurchase agreements 

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 € 3,447 m (2010: € 1,558 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. 

F.10 – Guarantees given and commitments (€ m) 


financial guarantees given to: 4,828 6,195 

Banks 410 550 

Customers 4,418 5,645 

commercial guarantees given to: 14,552 13,145 

Banks 803 1,442 

Customers 13,749 11,703 

Other irrevocable commitments to disburse funds 17,312 14,737 

Banks 2,147 650 

Usage certain 58 55 

Usage uncertain 2,088 596 

Customers 15,165 14,086 

Usage certain 6,336 6,637 

Usage uncertain 8,829 7,449 

underlying obligations for credit derivatives: sales of protection 666 869 

assets used to guarantee others’ obligations 228 – 

Other commitments 11,994 3,807 

tOtal 49,580 38,754 

The amount of contingent claims in Bank Austria is equal to the amount of contingent liabilities. 

F.11 – Employees 

In 2011 and 2010, the Bank Austria Group employed the following average numbers of staff (full-time equivalents): 

Employees 


Salaried staff 59,409 59,591 

Other employees 86 104 

tOtal *) 59,495 59,695 

of which: in Austria 7,812 7,815 

of which: abroad 51,683 51,880 

*) 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 employees on unpaid sabbatical or maternity/paternity leave 


170



F.12 – Supervisory Board and Management Board 

The following persons were members of the Management Board of UniCredit Bank Austria AG in 2011: 

chairman and chief executive Officer: Willibald CERNKO 

deputy chairman: Federico GHIZZONI (until 21 January 2011), Gianni Franco PAPA (from 22 January 2011) 

members: Helmut BERNKOPF (until 31 July 2011), Jürgen DANZMAYR (until 30 June 2011), Massimiliano FOSSATI, Francesco GIORDANO (from 

1 February 2011), Rainer HAUSER, Dieter HENGL (from 1 August 2011), Doris TOMANEK, Carlo VIVALDI (until 31 January 2011), Robert ZADRAZIL 

(from 1 October 2011) 

the following persons were members of the supervisory board of unicredit bank austria ag in 2011: 

chairman: Erich HAMPEL (from 2 November 2011), Paolo FIORENTINO (from 21 January 2011 until 2 November 2011) 

deputy chairman: Paolo FIORENTINO (from 2 November 2011), Erich HAMPEL (until 2 November 2011) 

members: Sergio ERMOTTI (until 23 February 2011), Candido FOIS, Karl GUHA (from 19 January 2011), Jean Pierre MUSTIER (from 20 April 2011), 

Roberto NICASTRO, Vittorio OGLIENGO, Franz RAUCH, Karl SAMSTAG, Wolfgang SPRISSLER, Ernst THEIMER, Wolfgang HEINZL, Adolf LEHNER, 

Emmerich PERL, Josef REICHL, Robert TRAUNWIESER, Barbara WIEDERNIG 

F.13 – Share-based payments 

Description of share-based payments 

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 stock Options & performance shares allocated to selected Top & Senior Managers and Key Talents of the Group and represented 

respectively by options and free UniCredit ordinary shares that the Parent Company undertakes to grant, conditional upon achieving performance 

targets 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. 

• group executive incentive system that offers to eligible Group Executives a variable remuneration for which payment will be made in four years. 

For the first two years the beneficiaries will receive the payment by cash and for the second two years they will receive the payment by UniCredit 

shares; the payment is related to the achievement of performance conditions (other than market conditions) stated in the Plan Rules. 

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. 


171



The following table shows the measurements and parameters used in relation to the Performance Stock Options granted in 2011: 

Measurement of Performance Stock Options 2011 

perfOrmaNce stOcK OptiONs 2011 

Exercise price [€] 18.07 

UniCredit share market price [€] *) 18.07 

Date of granting Board resolution (grant date) 22 March 2011 

Vesting period start-date 1 January 2011 

Vesting period end-date 31 December 2013 

Expiry date 31 December 2020 

Exercise price-multiple (M) 1.5 

Post-vesting exit rate (E) 3.73% 

Dividend yield 2.583% 

Volatility 42.755% 

Risk-free rate 3.314% 

performance stock Options’ fair value per unit at the grant date [€] 

*) The data was adjusted after regrouping operation. 

6.019 

Parameters are calculated as follows: 

• exit rate: annual percentage of Stock Options forfeited due to termination; 

• dividend yield: next four years average dividend yield; 

• Volatility: historical daily average volatility for a period equal to four years; 

• exercise price: arithmetic mean of the official market price of UniCredit shares during the month preceding the granting Board resolution; 

• unicredit share market price: set equal to the exercise price, in consideration of the “at-the-money” allocation of Stock Options at the grant date. 

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. 

The following table shows the measurements and parameters used in relation to the Performance Shares granted in 2011: 

Measurement of Performance Shares 2011 

perfOrmaNce shares 2011 

Date of granting Board resolution (Grant Date) 22 March 2011 



UniCredit share market price [€] 18.07 

Economic value of vesting conditions [€] –1.272 

performance shares’ fair value per unit at the grant date [€] 16.798 

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 tables show 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 2010. 

Measurement of Discount Shares ESOP 2010 

discOuNt shares 

Date of Discount Shares delivery to Group employees 10 January 2012 


Vesting period end-date 31 December 2011 

Discount Shares’ fair value per unit [€] 11.687 


172



Measurement of Matching Shares ESOP 2010 

matchiNg shares 

Date of Matching Shares (or related rights) delivery to Group employees 10 January 2012 

Vesting period start-date 1 January 2012 


Matching Shares’ (or related rights) fair value per unit [€] 11.687 

Within the limits of the “Employee Share Ownership Plan” approved in 2010: 

• all profit-and-loss and net equity effects related to Discount Shares were booked during 2011 (excepting adjustments, according to Plan Rules, 

that will be booked during 2012); 

• 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 

2012–2014. 

Group Executive Incentive System 

The amount of the incentive will be determined on a basis of the achievement of quantitative and qualitative goals stated by the plan. In particular, 

the overall evaluation of the employee’s relevant manager shall be expressed as a percentage, from a minimum of 0% to a maximum of 150% 

(non-market vesting conditions). 

This percentage, adjusted by the application of a risk/opportunity factor – Group Gate – at first payment, multiplied by the Bonus Opportunity will 

determine the effective amount that will be paid to the beneficiary. 

The economic and equity effects will be recognised on the basis of the instrument vesting period. 

Other information 

Employee Share Ownership Plan 2011 

In April 2011 the Ordinary Shareholders’ Meeting approved the “UniCredit Group Employee Share Ownership Plan 2011” (“Let’s Share 2011”) that 

offers eligible Group employees the opportunity to purchase UniCredit ordinary shares at favourable conditions, starting from January 2012, in order 

to reinforce employees’ sense of belonging and commitment to achieving the corporate goals. 

The Plan 2011: 

1. During the “enrolment period” (from January 2012 to December 2012) participants can buy UniCredit ordinary shares (“Investment Shares”) by 

means of monthly or one-off contributions (via one to three instalments in March, May and/or October 2012) taken from their current account. In 

the event that a participant leaves the Plan during the Enrolment Period, he/she will lose the right to receive any free ordinary shares at the end of 

the Enrolment Period; 

2. at the end of the Enrolment Period (January 2013), each participant will receive one free share for every three shares purchased; the Free Shares 

will be locked up for three years. The participant will lose the entitlement to the Free Share if, during the three-year holding period, he/she is no 

longer an employee of a UniCredit Group company unless the employment contract was terminated for one of the specific reasons stated in the Plan 

Rules. In some countries, for fiscal reasons, it will not be possible to grant the Free Shares at the end of the Enrolment Period: in that case an alternative 

structure is offered that gives the Participants in those countries the right to receive the Free Shares at the end of the holding period (“alternative 

structure”); 

3. during the holding period (from January 2013 to January 2016), the participants can sell the Investment Shares purchased at any time, but they 

will lose the corresponding Free Shares (or right to receive them). 

The Free Shares qualify as “Equity Settled Share-based Payments” as participants, according to the Plan Rules, will receive UniCredit equity instruments 

as consideration for services rendered to the legal entity where they are employed. The fair value will be measured at the end of the Enrolment 

Period according to the weighted average price paid by participants to acquire the Investment Shares on the market. 

All profit-and-loss and net equity effects related to “Let’s Share 2011” will be booked during the four-year period 2012–2015. 

Payroll costs in 2011 included share-based payments of € 6 m. 

F.14 – 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. 


173



F.15 – 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 2011 and 2010, as well as the various components of Bank Austria’s capital resources as at the end of 2011 and 

2010: 

Net capital resources of the Bank Austria group of credit institutions (€ m) 


Paid-in capital (less own shares) 1,681 1,681 

Reserves and minority interests 13,118 12,951 

Intangible assets –500 –557 

Deductions from Tier 1 capital (in particular 50% deduction pursuant to Section 23 (13) 3 to 4d 

of the Austrian Banking Act) –684 –833 

core capital (tier 1) 13,616 13,242 

Net subordinated liabilities 2,567 2,857 

Revaluation reserves and undisclosed reserves 180 167 

Deductions from Tier 2 (50% deduction pursuant to Section 23 (13) 3 to 4d) –684 –833 

supplementary capital resources (tier 2) 2,064 2,191 

Deductions from Tier 1 and Tier 2 (deduction pursuant to Section 23 (13) 4a) –132 –140 

Net capital resources (excl. tier 3) 15,547 15,293 

Tier 3 (re-assigned subordinated capital) 331 228 

Net capital resOurces (iNcl. tier 3) 15,878 15,520 

Capital requirements of the Bank Austria group of credit institutions (€ m) 


capital requirements of 

a) Credit risk pursuant to standardised approach 5,539 6,201 

b) Credit risk pursuant to internal ratings-based (IRB) approach 3,194 2,866 

Credit risk 8,733 9,067 

Operational risk 951 938 

Position risk – debt instruments, equities, foreign currencies and commodities 331 228 

Settlement risk – – 

capital requiremeNt 10,015 10,232 

Total RWA 125,188 127,906 

Capital ratios 


Tier 1 capital ratio, based on all risks 10.88% 10.35% 

Total capital ratio, based on all risks 1) 12.68% 12.13% 

Tier 1 capital ratio, based on credit risk 12.47% 11.68% 

Total capital ratio, based on credit risk 2) 13.37% 12.67% 

1) Net capital resources (incl. Tier 3) as a percentage of the risk-weighted assessment basis for all risks 

2) 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 


174


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 2011 and ending on 31 December 2011 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. 



176


Report of the Auditors 

Independent auditors’ report *) 

Report on the 

consolidated financial statements 

We have audited the accompanying consolidated financial statements 

of UniCredit Bank Austria AG for the financial year from 

1 January 2011 to 31 December 2011. 

These consolidated financial statements comprise the statement of 

financial position as at 31 December 2011, the statement of comprehensive 

income, the statement of cash flows and the statement 

of changes in equity for the year ended 31 December 2011, and 

the notes to the consolidated financial statements. 

Management’s responsibility for the 

consolidated financial statements and 

for the consolidated accounting 

UniCredit Bank Austria AG’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 2011, and its financial 

performance and its cash flows for the financial year from 

1 January 2011 to 31 December 2011 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. 


177


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 not 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) 

Gerhard Margetich Reinhard Gregorich 

Certified Accountant Auditor 

KPMG Austria GmbH 

Wirtschaftsprüfungs- und Steuerberatungsgesellschaft 

Walter Reiffenstuhl ppa. Philip Kudrna 

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. 


178


Report of the Supervisory Board for 2011 

In the 2011 financial year the Supervisory Board again maintained 

good and effective cooperation with the Management Board. In this 

context 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. The Supervisory 

Board held five meetings and passed ten resolutions by written circular 

vote. It dealt with the current situation of the bank’s business, focusing 

on issues which are of special operational and strategic significance, 

and with risk-related issues. Moreover, major issues and forthcoming 

decisions were discussed in talks between the Chairman of the Supervisory 

Board and the Chairman of the Management Board. 

Focus of the Supervisory Board’s activity 

In performing its advisory and supervisory functions, the Management 

Board regularly informed the Supervisory Board, in writing and 

orally and in a timely and comprehensive manner, on business policy, 

business management issues, the financial position and performance, 

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 Supervisory Board issued a statement of compliance with the 

Austrian Code of Corporate Governance. The rules of procedure for 

the Supervisory Board were modified to reflect the establishment of 

the Remuneration Committee and the rules of procedure for the 

Remuneration Committee were approved. The rules of procedure for 

the Audit Committee were also modified. Furthermore, the applicability 

of UniCredit Governance Rules on Complaint Management to members 

of the Supervisory Board was formalised. 

The Supervisory Board closely monitored the challenging environment 

in European and international financial markets and discussed the 

development of the exposure to Greece in particular. 

Periodical reports dealt with the measures derived from the review of 

credit risk by Oesterreichische Nationalbank, Austria’s central bank, 

pursuant to Section 70 of the Austrian Banking Act; with the performance 

of Ramius; and with the activities of UniCredit Turn-Around 

Management CEE GmbH, the special assets holding company for 

repossession of assets and equity. 

From a legal perspective, the Supervisory Board obtained information on 

developments of the Madoff case and on the status of the legal proceedings 

concerning Bundesanstalt für vereinigungsbedingte Sonderaufgaben 

versus AKB Privatbank Zürich AG. The Supervisory Board was also provided 

with a report on Corporate Treasury Sales business in Austria. 

Other analyses related to the EuroSIG and All4Quality Austria projects and 

the UniCredit Bank Austria Town building project. In this connection, the 

Supervisory Board gave its approval to the acquisition of a property. 

The Supervisory Board repeatedly dealt with the funding plan of the 

Bank Austria Group, reports on restructured loans in CEE, trends in staff 

costs, the Group Compensation Policy, and the termination of existing profit 

transfer agreements and the conclusion of tax compensation agreements. 

Capital measures included capital increases at UniCredit Banka 

Slovenija d.d., UniCredit Bank a.d. Banja Luka, PJSC Ukrsotsbank, 

UniCredit Securities Group and the acquisition of additional shares in 

Zagrebačka banka and in UniCredit Bulbank. Other focal points were a 

resolution concerning the recapitalisation of banks of Bank Austria in 

CEE and the issue of comfort letters. 

Resolutions passed by the Supervisory Board also included those approving 

powers to represent and act on behalf of the bank and those giving 

advance approval to loans to, and transactions with, members of the 

Supervisory Board and of the Management Board as well as other related 

parties as defined in Section 28 of the Austrian Banking Act. 

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 optimising organisational arrangements and in 

its future activities. 

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. 

Committee activities 

The Credit Committee held five meetings in 2011 and passed eleven 

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 the past year, the Committee also 

intensively discussed CEE funding considerations and passed resolutions 

concerning impairment losses on Greek government bonds. 

The Audit Committee held four meetings in 2011, with representatives 

of the auditors regularly taking part in the meetings. It discussed 

the separate financial statements and the consolidated financial statements 

as well as the audit reports, including the report on the effectiveness 

of risk management, and provided the Supervisory Board with 

information on these topics. The Audit Committee also dealt with the 

proposal concerning the election of the auditors of the separate financial 

statements and of the consolidated financial statements for the 

2012 financial year. On the basis of regular reporting, the Audit Committee 

satisfied itself about the effectiveness of the internal control and 

audit systems and monitored the financial reporting process with due 


179


regard to “262 Savings Law”. The Audit Committee carried out 

detailed analyses of the Corporate Governance reports, of various 

extensive compliance-related topics and of a report on the implementation 

of CEE Credit Risk Policies. Intensive deliberations focused on 

the management letter of the auditors including the subsequent status 

report on measures taken in this connection, and on the remuneration 

of the auditors and their engagement letter. 

The Strategy and Nominations Committee dealt with the preparation 

of appointments to the Management Board. 

Management Board 

In the 2011 financial year, Federico Ghizzoni resigned from the Management 

Board with effect from 21 January 2011 and Carlo Vivaldi resigned 

from the Management Board with effect from 31 January 2011. Gianni 

Franco Papa was appointed to the Management Board, and as Deputy 

Chairman of the Management Board, with effect from 22 January 2011, 

and Francesco Giordano was appointed to the Management Board with 

effect from 1 February 2011. Jürgen Danzmayr and Helmut Bernkopf 

resigned from the Management Board with effect from 30 June 2011 

and 31 July 2011, respectively. Dieter Hengl was appointed to the Management 

Board with effect from 1 August 2011 and Robert Zadrazil was 

appointed to the Management Board with effect from 1 October 2011. 

Supervisory Board 

Paolo Fiorentino was elected Chairman of the Supervisory Board on 

21 January 2011, succeeding Alessandro Profumo, who resigned from 

the Supervisory Board with effect from 21 September 2010. Karl Guha 

was elected to the Supervisory Board at the Extraordinary General 

Meeting on 19 January 2011 and Jean Pierre Mustier was elected to 

the Supervisory Board at the Annual General Meeting on 20 April 

2011. At the Supervisory Board meeting on 2 November 2011 the 

Chairman of the Supervisory Board resigned from this function, 

Erich Hampel was elected Chairman of the Supervisory Board and Paolo 

Fiorentino was elected Deputy Chairman of the Supervisory Board. 

Details of the composition of the Supervisory Board and the Supervisory 

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 2011 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 2011 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 2011 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 2011, and of the results of the 

Group’s operations and its cash flows for the financial year beginning 

on 1 January 2011 and ending on 31 December 2011, 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 commitment 

in the challenging 2011 financial year. With their strong dedication 

they made a decisive contribution to the bank’s favourable 

performance. 


The Supervisory Board 

Erich Hampel 

Chairman of the Supervisory Board 


180


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. 



181

II. UniCredit Bank Austria AG 

Preliminary remarks on the financial statements 

of UniCredit Bank Austria AG for 2011 184 

Management Report of UniCredit Bank Austria AG 185 

Financial Statements of 

UniCredit Bank Austria AG for 2011 210 

Balance sheet of UniCredit Bank Austria AG 

as at 31 December 2011 210 

Items shown below the balance sheet 212 

Profit and loss account 2011 213 

Notes to the Financial Statements 


List of shares in group companies and equity 

interests of UniCredit Bank Austria AG 237 

Supervisory Board and Management 

Board of UniCredit Bank Austria AG 239 

Auditors’ Report 241 


Investor Relations, ratings, financial calendar, imprint 251 


Preliminary remarks on the financial statements of UniCredit Bank Austria AG for 2011 

UniCredit Bank Austria Aktiengesellschaft, the parent 

company of the Bank Austria Group, presents its balance 

sheet as at 31 December 2011 and its profit and loss account 

for the year ended 31 December 2011, 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 2011 and 

ending on 31 December 2011 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 251). 

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 in 2011 

1. Report on business developments and the economic 

situation 

1.1. Business developments 

Economic situation and banking environment in our core 

markets 

The banking environment in 2011 was mainly determined by three 

factors: 

First, the economic slowdown: The global economy entered 2011 

with a strong momentum gathered in the period of recovery after 

the recession seen in 2008/2009. In the first half of 2011, growth 

was stronger than predicted but then weakened in the remaining 

part of the year. Output in the industrial countries stagnated at a 

high level towards year-end without sliding back into recession. 

The economy in the euro area again benefited from the catchingup 

process in the Asian emerging markets. In China, growth again 

reached 9%, despite restrictive measures. Overall, the emerging 

markets recorded economic growth of over 6%. This trend mainly 

benefited the highly competitive European core countries, including 

Austria, and CEE countries whose industrial sector is closely 

integrated. Developments within the euro area were increasingly 

disparate in 2011, with marked differences between the core and 

the periphery. Germany achieved average annual growth of over 

3%, while the economies of Spain and Italy grew by only 0.5%. The 

strong increase in core Europe reflected a strong momentum 

continuing from the previous year and an excellent performance in 

the first quarter of 2011. In the euro area as a whole, economic 

growth weakened from an annualised 3.1% in the first quarter to a 

slight decline in the fourth quarter; the average figure for 2011 was 

1.6%. 

Second, the government debt crisis: Government debt 

accumulated over several decades, compounded by fiscal-policy 

measures taken to handle the crisis in 2008/2009, was suddenly 

seen by investors as unsustainable, especially against the 

demographic background and structurally weak growth in the 

mature industrial countries. The unprecedented loss of confidence 

was triggered by the protracted controversy over the US debt limit 

in the first half of 2011 and by the inclusion, at the end of July 

2011, of a partial debt waiver by private creditors in the second 

support package for Greece. This quickly led to doubts about the 

sustainability of debt in other highly indebted countries. Irrespective 

of the fundamentals, rolling over government debt of these 

countries via the market became a problem, with interest rate 

spreads reaching high and partly prohibitive levels. Despite the 

countermeasures taken by the ECB, sovereign bonds suddenly 

became high-risk bonds, with a strong impact on the overall 

interest rate structure. 

Third, stricter regulation of the banking sector against the 

background of more difficult funding conditions: in view of the 

close interdependence of banks and their home countries, the 

government debt crisis rapidly spread to banks. Liquidity and 

medium-term funding via banks’ own issues became much more 

expensive, and so did the raising of equity capital in view of the 

sharp fall in prices of bank shares (EuroStoxx/Banks down by 38% 

year-on-year). Money markets also saw a decline in banks’ 

confidence in each other; as a result, clearing took place via the 

ECB euro system. These developments were accompanied by 

increasing regulatory pressure on banks: 

Based on stress tests carried out by the European Banking 

Authority in March/June and October/December, rules under the 

Basel 3 package were tightened and their application was brought 

forward, including the equity capital definitions and the target of a 

Core Tier 1 capital ratio of 9% to be met by the middle of 2012. As 

a result, banks had to build substantial risk buffers and increase 

their core capital. However, after reevaluating the medium- to longterm 

outlook in their markets, banks started to adjust their 

business models to the new environment in 2011. In many cases, 

these efforts involved a targeted reduction of assets and a focus on 

core commercial banking, especially the attraction of deposits, as 

well as strengthening the equity capital base. 

The stark contrast between the first and the second half-year 

was reflected in economic trends and in all segments and key 

indicators of financial markets. In the first half of 2011, strong 

economic growth coupled with inflationary pressure resulting from 

trends in commodity prices prompted the European Central Bank 

to raise key interest rates twice – at the beginning of March and as 

late as the beginning of June – to a level of 1.5%. When the 

government debt crisis came to a head in July/August, this 

triggered an abrupt trend reversal in all market segments. The 

credit ratings of the GIIPS countries (Greece, Ireland, Italy, 

Portugal and Spain) were downgraded, with Greece falling to CCC 

(S&P) on 13 June. On 18 July, the US was placed on review for 

possible downgrade, losing its AAA rating on 6 August, for the first 

time since 1941. Following the publication of the stress test 

results by the EBA on 15 July 2011, and subsequent to the 

European Council decisions of 21 July 2011, which for the first time 

provided for a voluntary remission of debt as part of the second 

support package for Greece, market strain escalated. Prices for 

Greek government bonds (mid-prices in per cent, five-year) fell 

from 75.45 (year-end 2010) via 53.42 (end of June 2011) and 

42.67 (end of September 2011) to 23.25 (year-end 2011); yields, 

which are of little informative value, were around 50%. 

Scepticism spread from debtor countries like Greece and Portugal 

to such highly indebted countries as Italy and Belgium, and later 

also France, which were previously seen as being beyond doubt. 

The CDS spreads on long-term government bonds of the GIIPS 

group of countries – in pre-Lehman times around 60 basis points 

(bp) and in the middle of 2009 still below 100 bp – rose from an 

average of about 400 bp in the middle of 2011 to 1,200 bp by the 

end of the year. The creditworthiness of core European countries 

enjoying the top rating also came to be questioned from 

November/December onwards, including that of Austria with a 

reference to the banks’ large exposure to Hungary. 

In summer 2011, stock markets tumbled worldwide and showed 

volatile trends in the remaining part of the year. By the middle of 

August, the world share index MSCI had fallen by 18%; at the end 

of 2011 it was 8.5% lower than a year earlier. The EuroStoxx index 

was down by 26% from the end of July to the lowest point in 2011 

(and down by 18% in a comparison of year-end 2011/2010 levels), 

the ATX index lost even 38% (or 36% based on year-end levels). 

The flight to quality saw benchmark bonds (denominated in US 

dollars and euros) gaining in value. The 10-year euro benchmark 

yield reached its low at 1.64% on 23 September 2011 and was 

only slightly higher at the end of the year (1.86% compared with 

2.97% at the end of 2010). 

At the end of July, spot and forward rates in money markets fell 

far below key interest rates levels, which were reduced to 1% much 

later, at the beginning of November and in early December. The 

ECB intensified its expansionary monetary policy at the beginning 

of August by resuming three-month and six-month long-term 

tenders with full allocation, and increasing purchases of 

government bonds and covered bonds. An essential sign of easing 

was the first of two announced three-year tenders in December 



(allocation: € 489 bn / net of expiring transactions: + € 194 bn on 

that day). From the middle to the end of 2011, the outstanding 

volume of open-market operations rose by 64% or € 233 bn. Use 

of the deposit facility was almost equally intensive. In the euro 

system, divergence between countries taking and placing funds 

became more pronounced. 

Interbank interest rates remained comparatively high. At year-end 

2011, the cost of three-month interbank money was 1.36%. The 

three-month Eonia swap (which limits default risk to compensation 

payments based on the interest rate swap) was almost 1 

percentage point lower, at 0.38%. The secured interest rate was as 

low as 0.14% (repo). Ultimately, three-month Treasury bills 

(German Bubills) even traded at a negative yield of 0.9%. 

Doubts about the power of determination of EU institutions and 

about the expansionary central bank policy pursued worldwide 

fuelled the strong rise in prices for precious metals and in the 

Swiss franc. In the crisis weeks of the third quarter, gold rose to an 

all-time high of US$ 1,920 per ounce; as institutional investors 

subsequently realised profits, the price of gold fell to US$ 1,564 per 

ounce at the end of 2011 (+10% year-on-year, +83% compared 

with year-end 2008). The Swiss central bank succeeded in 

stopping the rise of the Swiss franc (1.0085 CHF/EUR on 9 

August) by announcing unlimited intervention at a level of below 

1.20 CHF/EUR (closing rate at the end of 2011: 1.2133 CHF/EUR, 

+2.9%). The US dollar more or less followed the interest rate 

differential, initially showing a weak trend (1.4939 USD/EUR on 4 

May 2011). On the basis of expansionary central bank measures 

taken by the ECB, the US dollar strengthened to 1.2945 at the end 

of 2011; at that level it was slightly up on a year earlier (+3.3). 

Recurrent media reports on the crisis led to widespread 

uncertainty among investors, which further reinforced the shift 

away from investments in mutual funds and shares. For example, 

the MSCI index of the BRIC stock markets at the end of 2011 was 

20% lower than at year-end 2010, and the MSCI index of CEE 

stock markets was down by 19%. The ATX index, in which banks 

have a strong weight, lost 36%. Jumbo mortgage bonds generated 

a performance of +3.8%, corporate bonds were weaker after two 

good years (+2.5%, non-financial, BBB). Commodities also showed 

a disappointing performance (–6.3%, Rogers, euro). 

In Austria, economic recovery proceeded at a surprisingly quick 

pace in the first half of 2011. Growth picked up from 2.3% in 2010 

as a whole to over 4% in the first half of 2011. It was driven by 

robust export demand, moderate growth of consumption and highly 

dynamic investment activity fuelled by a backlog of demand 

accumulated during the crisis. In summer, however, the loss of 

confidence caused by the European government debt crisis started 

to have an impact on economic expectations. Capacity utilisation in 

the Austrian economy, which almost matched the multi-year 

average in the spring of 2011, declined as the year progressed. 

After a strong recovery in which investment in equipment rose by 

an annual average of 8%, Austrian companies’ propensity to invest 

fell significantly. However, external uncertainty prevented domestic 

growth from becoming self-sustaining. Private consumption, on the 

other hand, increased moderately but steadily throughout the year, 

rising by less than 1 per cent in real terms although the labour 

market situation eased visibly. The number of employed persons in 

Austria was up by 1.8% on the previous year, reaching a new 

record level of over 3.4 million. Thanks to a mild winter in 2011, 

employment trends did not yet reflect the economic slowdown. The 

unemployment rate declined from 4.4% to 4.2% in 2011, though 

the improvement has recently come to a halt. 

Factors dampening consumption were the economic slowdown and 

the rise in inflation, caused by commodity prices, to an average 

level of 3.3% (2010: 1.9%), which did not ease until the end of 

2011. Global demand, and in its wake also Austrian exports, 

weakened in the course of the year. Production in Austria’s exportoriented 

industrial sector therefore lost momentum and even 

entered a mild recessionary phase before the turn of the year. 

Based on the sharp upturn in 2010 and in the first few months of 

2011, however, annual average rates of change were high: both 

exports and industrial output rose by over 7% in 2011, strongly 

supporting the Austrian economy. Real GDP grew by 3.3%, 

making Austria one of the euro area countries which recorded the 

strongest growth in 2011. 

Credit demand in Austria remained weak in 2011. Nevertheless, 

this was the first year after 2009 and 2010 which saw growth 

(adjusted for CHF exchange rate effects) of just under 1.5%. While 

demand for residential construction loans was relatively robust, 

growing by about 4%, the volume of loans to small and mediumsized 

enterprises (SMEs) stagnated. In the area of consumer 

loans, repayments once again exceeded new business, leading to 

a decline of about 3% in total volume. Demand for corporate loans 

was slightly stronger: annual growth rose from 2% to 2.5%, mainly 

driven by developments in the second half of the year. Interest 

rates on deposits and loans in Austria rose in parallel with the 

increase in money market rates in 2011. While margins had 

narrowed towards the end of 2010, this development did not 

continue in 2011; the mark-up on money market rates was 

therefore lower, in annual average terms for 2011, than in the 

previous year, especially for SME and housing loans. The same 

applies to deposit rates although interest rates in customer 

business rose much more strongly than money market rates 

towards the end of 2011. 

With the economic recovery in 2011, and as there were no major 

insolvencies during the year, insolvency liabilities fell sharply, by 

41%, and the number of insolvencies also declined by 8%. While 

the number of insolvencies of private households increased again, 

the related liabilities were lower than in the previous year. 

In 2011, consumption probably continued to rise more strongly 

than incomes. The savings ratio declined significantly, from 8.4% to 

7.6%. This means that monetary capital formation of private 

households was as weak as in 2010. While bank deposits 

accounted for about one half of additions to financial assets, the 

total volume of deposits held by private households stagnated after 

the summer although deposit rates, unlike money market rates, 

increased slightly. Thanks to long-term contracts the life insurance 

sector recorded steady inflows of funds. The strong demand for 

bonds seen in the first six months of 2011 did not continue in the 

second half of the year. The net change in total volume of 

investment certificates was negative in 2011, after two years which 

saw net inflows. 

Central and Eastern Europe (CEE) did not completely escape the 

two major external influences, namely the economic slowdown in 

the second half of 2011 and the impact of the government debt 

crisis. Divergence among the regions and countries was 

pronounced, however. All countries were impacted by the 

slowdown in the European industrial sector in the latter half of 

2011, but this development affected in particular the Central 

European countries, which are highly integrated in the production 

network. While exports of these countries rose strongly in the first 

few months, weaker growth in the second half of 2011 failed to be 

offset by trends in domestic demand in view of the fiscal 

consolidation efforts made in all of these countries. In Hungary, 

special local factors dampened economic growth as in the previous 

year (real GDP 2011: +1.6%). 



Exporters of commodities and basic materials in CEE also 

recorded weaker growth but world market prices for such goods 

remained high compared with the previous year. Expansion in 

Russia (real GDP +4.2), Ukraine (+4.0%) and Kazakhstan (+6.8%), 

and also in Romania (+2.6%), was additionally driven by real 

domestic demand, but this was accompanied by inflation rates of 

about 8%, far above the average level, and by currency 

depreciation. Among the large markets with a high degree of 

economic autonomy, Turkey was one of the countries which 

achieved the highest real growth rates, at close to 8%, despite 

economic-policy measures acting as a brake. Booming domestic 

demand (investment and consumption) in Turkey resulted in a 

large current account deficit (of over 10% of GDP). The turnaround 

in the Baltic countries, with strong GDP growth of between 5% and 

7%, was based on tough restructuring measures of previous years. 

As oil prices remained high, Kazakhstan was able to continue its 

ambitious investment in infrastructure (GDP +7% in real terms). In 

2011 as a whole, economic growth of the CEE region (Bank 

Austria perimeter, without Poland) probably reached about 4.5%, 

two and a half times the rate achieved in Western Europe. 

Collateral damage of the European debt crisis was limited in 

2011. In contrast to 2008, financial markets did not focus their 

attention on the CEE region. The main reasons for this were the 

generally low levels of government debt in CEE, which averages 

41% – calculated without the statistical outliers: Hungary (79%) at 

the upper end, and Russia (8%), Kazakhstan (13%), Bulgaria 

(17%) and Estonia (7%) at the lower end; the fact that measures to 

reduce annual public deficits, which rose during the crisis years, 

were initiated in time; and current account surpluses recorded by 

most CEE countries (with the exception of Turkey). The IMF’s 

presence in five countries was another reason for the region’s 

resilience. Nevertheless, in the third and fourth quarters of 2011, 

the region was affected by the risk aversion of international 

providers of capital. Countries with a wide external funding gap 

were hit hardest by the withdrawal of short-term portfolio 

investments (while direct investment remained more or less stable). 

At the same time, risk premiums – measured, for example, by CDS 

or interest rate spreads – rose. Highly exposed countries like 

Hungary and Croatia as well as Ukraine were faced with a stronger 

increase. Overall, however, spreads were lagging well behind 

those for peripheral countries of the euro area and also behind the 

SovX index for Western Europe (including AAA-rated countries). 

In a challenging environment the CEE banking sector continued to 

expand, driven by nominal economic growth, monetary expansion 

and the growing market penetration with banking products. New 

lending business in the CEE market declined recently. 

Nevertheless, outstanding volume rose by 9% to a total of € 1.5 trn. 

Growth was disproportionately strong in Turkey (over 30%) and 

Russia (over 20%), followed by Ukraine and Kazakhstan with over 

10%. In most Central and South-East European countries, lending 

volume rose by about 5%. The expansion of lending business was 

driven by corporate banking. In the second half of the year, priority 

was given to attracting deposits as liquidity in CEE tightened as a 

result of lower inflows of external financing. Asset quality stabilised 

in most countries in 2011. Impaired loans as a proportion of gross 

lending volume (impaired loans ratio) have not increased in 

average terms for the region since the end of 2010; they reached 

an estimated 14% at the end of 2011. The gradual improvement in 

asset quality (with the exception of Kazakhstan) was even more 

visibly reflected in a decline in the cost of risk. 

The long-term outlook for the CEE region is now, after the 

fundamental reappraisal of banking business in 2011, perceived 

differently. In most CEE countries, especially in the large 

economies, the upturn of the banking sector remains assured, 

even if it may be more moderate than in the past. But there are 

some countries with a promising economic environment where the 

restructuring of the banking sector is not yet complete, or where 

there is strong dependence on external capital inflows. 

In Kazakhstan NPL ratios (non-performing loans as a percentage 

of gross lending volume) will remain disproportionately high for 

some time, which is partly due to local legislation. Ukraine is 

suffering from a large external funding gap, and the domestic 

circular flow of money is only slowly gaining momentum, not least 

on account of political uncertainty. When, in 2011, international 

banks reevaluated risks and were confronted with the new 

regulatory requirements and more difficult funding conditions, they 

also adjusted their plans for exposed countries to the new 

scenarios, a process which involved impairment losses on 

goodwill. 

In Hungary, a number of amendments to the Constitution and to 

the legal framework in 2011 were not entirely acceptable to the EU 

and the IMF, the country’s most important lender. The levy on 

banks introduced in 2010 was compounded by efforts to ease the 

solvency problems of private households through administrative 

procedures, placing a larger burden on banks which acted as 

lenders. The Home Protection Act passed in May 2011 among 

other things gave mortgage debtors the option of rescheduling their 

debt at fixed exchanges rates. In September the government went 

even further with the option of early repayment of loans 

denominated in euro or foreign currency at a fixed mandatory 

conversion rate. The rules imply a loss of at least 25% on CHFdenominated 

loans and 15% on the rescheduling of eurodenominated 

loans – the total volume of foreign currency loans is 

about € 18 bn. In December 2011, the government and the 

Hungarian Banking Association reached agreement on easing the 

burden on banks, permitting the latter to offset 30% of the losses 

thereby incurred against the levy on banks in 2012. The 

unpredictable regulatory intervention in 2011 (and in the early part 

of 2012) nevertheless led to a sell-off by international investors. 

Hungary’s country rating was moreover downgraded to speculative 

investment on 24 November 2011, which made the rollover of its 

debt much more expensive, and the country was faced with a 

downward spiral of currency depreciation. From the end of 2010 to 

the end of 2011, risk premiums doubled to 551 basis points (10year 

CDS spreads) and a benchmark spread of 7.8 percentage 

points for 10-year government bonds (which reflects both a risk 

premium and the generally higher level of interest rates). Based on 

a comparison of year-end data, the Hungarian forint depreciated by 

11.7% against the euro and by 14.2% against the Swiss franc. 

Hungary’s economic policy-makers responded by taking 

countermeasures at the expense of domestic growth. While real 

economic growth in 2011 was an estimated 1.5%, we assume that 

2012 will see stagnation. The deleveraging process in the banking 

sector also contributed to this development. Lending volume 

stagnated in 2011 (+0.4% in euro terms). The proportion of nonperforming 

loans (NPL ratio) rose to 14.5%, and several banks 

reported losses. Given the close links between the real economy 

and the banking sector in Hungary and neighbouring Austria, 

Standard & Poor’s used the Hungarian crisis of confidence as an 

important argument for downgrading the rating assigned to the 

Republic of Austria shortly after the turn of the year. 



From the middle of January 2012, the exaggerated reactions seen 

in financial markets reversed, leading to more normal levels: from 

the end of 2011 to the middle of February 2012, the Hungarian 

forint appreciated significantly (+8.1% against the euro / +7.5% 

against the Swiss franc), CDS spreads and bond spreads 

narrowed (to 493 basis points and 6.73 percentage points, 

respectively, on 10-year bonds). The stock market also recovered 

lost ground. When the government accepted a number of 

regulatory demands by the EU, the fundamentals-based 

assessment of the highly integrated Hungarian economy got the 

upper hand again. 

Hungary has an open economy, external trade (exports + imports) 

totals 165% of GDP, the large stock of direct investment is a 

distinct feature of the country’s competitive industries, 65% of retail 

loans and 47% of business loans are denominated in foreign 

currency and banks with international owners account for 88% of 

the banking sector’s total assets. All this makes it unlikely that the 

country will go it alone. Hungary’s basic balance is highly positive 

(8.8% of GDP), and its currency reserves of € 37 bn are higher 

than the short-term foreign debt of the entire business sector (€ 25 

bn). Overall, although there have been occasional fears of a 

default, we think that this is unlikely. In our base scenario we 

assume that Hungary will reach an agreement with the EU and the 

IMF in March/April 2012 and that the situation will continue to ease 

as the year progresses. 

The Hungarian banking subsidiary of UniCredit Bank Austria AG 

performed strongly in the difficult environment which prevailed in 

2011. Although the provisioning charge rose slightly, and despite 

the bank levy, it generated the largest profit among the four 

Central European countries and achieved the highest return on 

equity. The NPL ratio is below the average for all our banks in 

CEE. The Hungarian banking subsidiary is the seventh-largest 

bank in the country, with a market share of about 5%. Its business 

focuses on the less exposed corporate customer segment. In our 

multi-year plan Hungary, an EU member country where integration 

has reached an advanced stage, is not among the growth markets. 

The strategy of expansion has been suspended, not least on 

account of political uncertainty, but this decision may be revised in 

2013. 

Movements in CEE currencies in 2011 were volatile. Especially 

the shift from long-term capital inflows to short-term portfolio 

investments increased sensitivity to changes in sentiment among 

international investors. Weighted by contributions to operating 

income of CEE operations, CEE currencies (in Bank Austria’s 

perimeter, without Poland) depreciated by about 5.5% in the 

reporting period (based on a comparison of year-end data) 

against both the euro and the US dollar. It should be noted in this 

context that this average figure includes two euro area countries 

and three countries with de facto fixed exchange rates against the 

euro. Overall developments were strongly influenced by the 

Turkish lira, which has a strong weight in the calculation and 

showed autonomous depreciation of 15.3% against the euro and 

18.0% against the US dollar (year-end 2011 compared with yearend 

2010). The Hungarian forint depreciated at double-digit rates 

against the euro and the US dollar (as the situation in the country 

came to a head in the autumn of 2011). 

Development of total assets 

Overview: UniCredit Bank Austria AG’s balance sheet showed 

moderate and balanced trends in 2011, despite the volatile 

environment and pronounced uncertainty among business partners 

and customers. As at 31 December 2011, total assets were 

€ 125.0 bn, up by € 4.3 bn or 3.5% from the level as at 

31 December 2010. As in 2010, the new focal areas of business 

policy, by which the bank responded to changes in the overall 

environment following the financial market crisis, were favourably 

reflected in movements in balance sheet items (and even more 

strongly in income statement items). Customer business being the 

top priority, the bank’s proprietary trading activities were reduced 

already in 2010 and the capital base was significantly 

strengthened. Overall, the assets side of the bank’s balance sheet 

reflected weak credit demand in the 2011 financial year. Loans and 

advances to customers rose by 2.1%. Significant increases were 

seen in medium-term and long-term loans, including mortgage 

loans (+6.1%) and local-authority loans (+5.0%), while loans to 

private individuals and low-volume loans as well as export loans 

declined slightly. 

As the cost of funding via wholesale markets rose strongly, the 

bank made efforts in 2011 to strengthen the funding side on a 

sustainable basis. Overall, primary funds rose by € 2.9 bn or 13% 

as the bank significantly increased the volume of its own issues 

(debts evidenced by certificates) while customer deposits were 

stable; this was the main change on the liabilities side. Especially 

mortgage bonds, which are covered bonds, met investors’ stronger 

preference for security. Loans and advances to customers (which 

amounted to € 68.1 bn, accounting for about 54.5% of total assets) 

were thus funded with primary funds (€ 70.3 bn or 56% of the 

balance sheet total) to the extent of 103.1% (year-end 2010: 

100.4%). Shareholders’ equity (the sum total of items 9 to 12 on 

the liabilities side) remained at the high level of € 14.0 bn reached 

after the capital increase at the beginning of 2010; it accounted for 

a high 11.2% of the balance sheet total. Other significant changes 

in balance sheet items – a strong increase in bonds and other 

fixed-income securities (within which government bonds were 

reduced) on the assets side, and an increase in amounts owed to 

credit institutions on the liabilities side – are related to internal 

financing tasks performed by UniCredit Bank Austria within 

UniCredit Group, not least in its capacity as sub-holding company 

for CEE operations. 

Major balance sheet items – comparison of year-end levels 

2011/2010 

31 Dec. 2011 31 Dec. 2010 

Assets 

Loans and advances to credit institutions (item 3) 

18.3% 19.1% 

Loans and advances to customers (item 4) 54.5% 55.2% 

Securities including shares (items 5 and 6) 9.7% 7.8% 

Shares in group companies (item 8) 9.9% 10.4% 

Liabilities and Equity 

Amounts owed to credit institutions (item 1) 25.5% 25.0% 

Amounts owed to customers (item 2) 37.0% 38.0% 

Debts evidenced by certificates (item 3) 19.2% 17.4% 

Primary funds (items 2 and 3) 56.2% 55.5% 

Capital and reserves (total of items 9, 10, 11 and 

12) 

11.2% 12.0% 



Major balance sheet items – comparison of year-end levels 

2011/2010 

On the assets side, cash in hand and balances with central 

banks and postal giro offices declined by € 185.9 m or 15.2% to 

about € 1 bn. Treasury bills and similar securities eligible for 

repurchase transactions declined by € 250.7 m or 7.3% from the 

level a year earlier; but at € 3.2 bn, they were a significant liquidity 

reserve. 

Loans and advances to credit institutions were € 22.9 bn, down 

by € 209 m or 0.9% from the year-end 2010 level. This reflects a 

reduction of domestic interbank business (–19.2%, mainly 

denominated in foreign currency). Loans and advances to foreign 

credit institutions, on the other hand, rose slightly (by 1.4%, mainly 

denominated in euro) although export credits declined. The 

amounts of the changes are small compared with the large total 

volume. At the end of 2011, 91% of interbank loans were loans and 

advances to foreign credit institutions, reflecting the significance of 

funding for banks within the Group. 

Loans and advances to customers rose by € 1.4 bn or 2.1% to 

€ 68.1 bn after loan loss provisions (the gross amount rose by 

2.3% to € 70.6 bn). Overall (domestic and foreign customers, all 

currencies), mortgage loans recorded the strongest growth 

(+6.1%), followed by local-authority loans (+5.0%). Low-volume 

loans to private individuals were down by 9.3%. The total amount 

of other loans (€ 47.1 bn or 69% of total lending volume) rose by € 

1.5 bn or 3.3%. Export loans remained at a stable level. Domestic 

borrowers accounted for three-quarters of total loans and advances 

(€ 50.8 bn), slightly more (+1.2%) than at the end of 2010. Loans 

and advances to foreign borrowers increased by 7% in 2011. 

Foreign currency loans were no longer actively offered by the bank; 

the volume of such loans rose as the respective currencies 

continued to appreciate (currency translation effects). 

Bonds and other fixed-income securities – almost all of which were 

securities issued by non-public issuers – rose by € 3.1 bn or 34.2% 

to € 12.1 bn. The increase was mainly due to the acquisition of 

foreign euro-denominated securities. 

On the liabilities side, amounts owed to credit institutions were 

up by € 1.7 bn or 5.7% to € 31.9 bn, which mainly reflects the 

increase in repurchase transactions. 

As at 31 December 2011, amounts owed to customers were 

€ 46.3 bn (up by € 381 m or 0.8%). Within the total amount, 

savings deposits rose slightly, to € 16.7 bn. The increase of 0.6% 

to € 29.6 bn in other liabilities within this item reflects a reduction of 

time deposits in favour of deposits repayable on demand. This 

development may be explained by declining opportunity cost in 

view of the low interest rate environment. 

Debts evidenced by certificates rose by € 2.9 bn or 13.8% to 

€ 23.9 bn in 2011, mainly as a result of the increase in new issues 

of mortgage bonds and public-sector mortgage bonds (previously 

local-authority bonds); the total amount of mortgage bonds and 

public-sector mortgage bonds rose by € 3.2 bn or almost two-thirds 

(+63%). At € 14.6 bn, bonds remained the largest sub-item within 

debts evidenced by certificates, but the total amount outstanding 

rose at a lower rate (+5%). Mortgage bonds are covered bonds and 

were therefore easier to place in the market; they were also seen 

as a lower-cost funding alternative by the bank. Money market 

instruments such as commercial paper and CDs, which were of 

significance in commercial international business in previous years, 

continued to decrease substantially (–62%). 

Other liabilities, mainly comprising trading liabilities, were down 

by € 659.5 m or 41.5% to € 931 m. 

Provisions increased by € 472.5 m to € 4.6 bn in the reporting 

year. The major part (68%) related to provisions for severance 

payments and pension provisions. The total amount of other 

provisions (+ € 393.9 m to € 1,467.1 m) included provisions for 

taxes, for pending losses on lending and securities business, for 

risks associated with equity interests, and for litigation risks and 

guarantee obligations. 

Subordinated liabilities declined by € 176 m or 6.3% to € 2.6 bn. 

As a result of the release of reserves, capital and reserves 

(equity) – including subscribed capital, capital reserves and 

revenue reserves as well as the reserve pursuant to Section 23 (6) 

of the Austrian Banking Act – declined to € 14 bn, which represents 

11.2% of the balance sheet total. 

Profit and loss account for 2011 

Overview: The profit and loss account for the reporting period 

reflects various developments: economic trends were positive 

although growth weakened as the year progressed; the interest 

rate environment became increasingly difficult; the government 

debt crisis caused uncertainty among customers; and divergent 

business trends at UniCredit Bank Austria AG’s banking 

subsidiaries in CEE resulted in lower dividend income. Positive 

factors in commercial banking business included the fact that after 

the decline in the provisioning charge in the previous year, net 

expenses for the disposal and valuation of loans and advances 

were again significantly reduced across all customer segments. But 

a number of special factors had a strong impact on the profit and 

loss account. These included the bank levy (– € 75 m), write-downs 

on Greek government bonds (– € 263 m) and adjustments of the 

book values of equity interests as part of a general reassessment 

of the outlook for several banking subsidiaries (– € 419.4 m net of 

income from the valuation and disposal of equity interests). The 

above-mentioned non-operating items had a combined negative 

impact of almost € 757 m, which was not offset by movements in 

the other items. 

On the income side, credit demand in 2011 was low after years of 

strong growth; this development reflected the economic slowdown, 

with low levels of investment activity in the business sector, and the 

favourable liquidity position of corporate customers. Moreover, the 

yield curve flattened during the year, reducing income generated 

from maturity transformation. Against this background, the bank 

achieved a significant increase in net interest income in 2011: 

although interest expenses rose more strongly than interest income 

because of the higher interest rate spreads which banks had to 

pay, net interest income rose by 6.2% to € 1,390 m, accounting for 

53% of operating income (2010: 46%). But revenue trends were 

impacted by uncertainty and risk aversion among institutional and 

private investors. In combination with structural factors, including a 

further decline in derivatives business, this led to a decrease of 

18.0% in net fee and commission income. Dividend income 

was also lower, not least because CEE banking subsidiaries’ 

balance sheets were strengthened. Overall, operating income 

declined by € 226 m or 7.9% to € 2,615 m. After deduction of 

operating expenses, which rose by 6.8% to € 1,802 m, operating 

results amounted to € 812.4 m (down by € 340 m or 29.5%). The 

items between operating results and results from ordinary business 

activities were a net expense of over one billion euros (€ 1,199 m), 

which was composed of net income/expenses from the disposal 

and valuation of loans and advances and securities (– € 566 m), 

essentially the provisioning charge for lending business, and net 



income/expenses from the disposal and valuation of securities 

valued as financial fixed assets, and of shares in group companies 

and equity interests (– € 633 m). The latter item includes the writedown 

on Greek government bonds held as financial fixed assets 

and the results from the disposal and valuation of shares in group 

companies and equity interests, which were mainly determined by 

the adjustment of the book values of shareholdings in our banking 

subsidiaries in Kazakhstan and Ukraine through impairment 

charges. 

Items in the profit and loss account for 2011 compared with 

the previous year 

Net interest income in the reporting year was € 1,390 m, up by 

€ 81.6 m or 6.2%. 

Income from securities and equity interests decreased by 

€ 184.2 m or 26.6% to € 508.4 m in 2011. The decline was partly 

due to the fact that dividend income from credit institutions and 

specialised credit institutions in 2011 was down by € 27.9 m, also 

because profits generated by CEE banks in which UniCredit Bank 

Austria AG holds interests were retained locally (in 2010, our 

Slovak banking subsidiary had paid a large special dividend). But 

the main reason for the decline was the sale of UniCredit CAIB in 

the middle of 2010, which resulted in substantial income from the 

intermediate holding company in that year. 

Net fee and commission income was down by 18% to € 572.7 m. 

Fee and commission income declined by 11.9% to € 802.9 m and 

fee and commission expenses rose by 8.4% to € 230.2 m. In 

lending business, income from guarantees given to CEE banks fell 

significantly while risk-related commission expenses vis-à-vis 

leasing companies increased. In the securities sector, mutual fund 

business declined strongly and commission income from foreign 

exchange dealings was also down by about 13%. Among other 

services, commission income declined in the areas of new building 

society savings agreements and insurance contracts. 

The item net profit/loss on trading activities increased to 

€ 69.5 m, despite the reorganisation of trading activities to focus on 

customer-driven business. The figure cannot be directly compared 

with the previous year (+ € 35 m) because UniCredit CAIB was 

sold within UniCredit Group in 2010. 

Operating income in 2011 totalled € 2,615 m and was thus down 

by € 225.8 m or 7.92% from the 2010 figure. 

In 2011, general administrative expenses (€ 1,564 m) rose by 

€ 102.1 m or 7.0%. Staff costs increased by 8.4% (+ € 73.6 m) to 

€ 953.2 m. Other administrative expenses, including those for 

services provided by Group-internal service companies, rose by 

4.9% (+ € 28.5 m) to € 610.8 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 trading-related 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. 

Total operating expenses – including depreciation and 

amortisation and other operating expenses, which together did not 

change to any significant extent – rose by € 114.6 m or 6.8% to € 

1,802 m. 

Net expenses from the disposal and valuation of loans and 

advances as well as securities were € 565.9 m, down by 

€ 138.8 m from the previous year. Most of the decline resulted from 

a reduction of write-downs on customer loans. The provisioning 

charge (€ 522 m net) for 2011 was down by 23% or € 153 m from 

the 2010 figure. Contributions to this further improvement – which 

was supported by favourable economic trends in the first six 

months of the reporting year – came from retail banking and from 

business with corporate customers, with the latter also benefiting 

from successful restructuring of loans. 

Net expenses arising from the disposal and valuation of 

securities valued as financial fixed assets rose by € 226.5 m or 

55.7% to € 632.9 m. The increase resulted primarily from valuation 

losses on securities investments (Greek government bonds). The 

European Council decisions made on 21 July 2011 to support 

Greece were for the first time accompanied by an offer for the 

participation of private investors, suggesting an impairment of the 

investments in Greek government bonds of about 21%. The 

European Council’s statements of intent of 26 October 2011 made 

a more extensive debt restructuring appear more likely, and 

financial markets discounted this factor. Therefore the investments 

held as financial fixed assets were written down to the mid-market 

prices prevailing as at the end of 2011. This resulted in an expense 

of € 262 m reflected in the valuation results for financial 

investments (including another € 14 m from current assets). 

Together with the partly favourable development of other financial 

investments, the results from the disposal and valuation of 

securities investments were – € 213 m after + € 30 m in the 

previous year. Within the item “net income/expenses from the 

disposal and valuation of securities valued as financial fixed 

assets, and of shares in group companies and equity interests”, the 

results from the valuation and disposal of shares in group 

companies and equity interests were a net expense of € 419 m, 

down by € 17 m from the previous year’s figure (2010: – € 436 m). 

As part of the current multi-year planning process (five-year plan 

covering the period from 2011 to 2015) Bank Austria updated 

medium-term scenarios for its business segments and regions. 

Compared with the original assumptions made for planning 

purposes, the less favourable earnings trend for JSC ATF Bank in 

Kazakhstan and for PJSC Ukrsotsbank and PJSC Ferrotrade 

International in Ukraine required an adjustment of the respective 

book values in the combined amount of € 569 m. This expense 

was offset to the extent of about one half by positive results from 

the valuation and disposal of other equity interests; for example, 

the 50% interest in the Turkish Koç Finansal Hizmetler A.Ş. 

(“KFS”), on which we made a write-down in 2008 following an 

impairment test, has in the meantime developed much more 

favourably than originally assumed. And the outlook is also 

positive, as confirmed in our multi-year plan. This means that the 

reasons for the lower valuation were no longer applicable, and we 

were able to make a write-up, valuing the equity interest at cost. 

The large expense arising from the results of valuation and 

disposals in 2011 led to negative results from ordinary 

business activities in the amount of – € 386.3 m (2010: 

+ € 41.8 m). After deduction of income taxes (€ 21.5 m) and other 

taxes (€ 78 m) and after a release of reserves, the profit for the 

year was € 100 thsd (2010: € 234 thsd). Together with the profit 

brought forward from the previous year, UniCredit Bank Austria 

AG’s accumulated profit was € 2.4 m. 



1.2. Structural changes in the Bank Austria Group 


Number 

124 

11 

Newly established companies 

Companies newly added to the group of 

5 

consolidated companies 5 

Acquired companies 1 

6 

Companies sold or liquidated 4 

Mergers 2 

Other changes 1) 

Opening balance 

Additions 

Disposals 

10 

Closing balance 

139 

1) includes companies which were previously included in a sub-group and are 

now reported separately 

Companies accounted for under the 

proportionate consolidation method 

Number 

17 

0 

1 

Other changes 1) 


Additions 

Disposals 

1 


17 

1) 

includes companies which were previously included in a sub-group and are 

now reported separately 



Number 

25 

Additions 

11 


Newly added companies 10 

Disposals 

4 


32 

Additions 


Name of Company Domicile Addition as at 

UCTAM RK Limited Liability Company 1) Almaty 1 January 2011 

UCTAM Ukraine LLC 1) Kiev 1 January 2011 

UniCredit Turn-Around Management GmbH 1) Vienna 1 January 2011 

VIENNA DC Bauträger GmbH Vienna 1 January 2011 

VIENNA DC Tower 1 Liegenschaftsbesitz GmbH Vienna 1 January 2011 

VIENNA DC Tower 2 Liegenschaftsbesitz GmbH Vienna 1 January 2011 

Center Heinrich-Collin-Straße 1 Vermietungs 

GmbH u. Co KG Vienna 30 June 2011 

DC elektronische Zahlungssysteme GmbH Vienna 30 June 2011 

UCTAM RO S.R.L. 1) Bucharest 30 June 2011 

Europa Investment Fund Management Budapest 1 September 2011 

UCTAM d.o.o. Beograd. 1) Belgrade 31 December 2011 

1) The objectives 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. 


Name of Company Domicile Addition as at 

BA GebäudevermietungsgmbH Vienna 30 June 2011 

Cash Service Company AD Sofia 30 June 2011 

Kapital-Beteiligungs Aktiengesellschaft Vienna 30 June 2011 

MARINA CITY Entwicklungs GmbH Vienna 30 June 2011 

MARINA TOWER Holding GmbH Vienna 30 June 2011 

Wiener Kreditbürgschaftsgesellschaft 

m.b.H. Vienna 30 June 2011 

SP Projektentwicklung Schönefeld GmbH & 

Co KG Stuttgart 30 September 2011 

V.A. Holding GmbH Vienna 30 September 2011 

UNI Gebäudemanagement GmbH Linz 30 September 2011 

Österreichische Wertpapierdaten Service 

GmbH Vienna 30 September 2011 

ADF Service GmbH Vienna 31 December 2011 

Disposals 


Name of Company Domicile Disposal as at 

Bank Austria Global Information Service GmbH Vienna 30 June 2011 

ZAO IMB Leasing Moscow 31 August 2011 

UPI poslovni Sistem DOO Sarajevo 3 November 2011 

Limited Liability Company B.A. Real Estate Moscow 1 December 2011 

Companies accounted for under the 

proportionate consolidation method 


Informations Technologie Austria GmbH in Liqu. Vienna 29 December 2011 



RCG Holding LLC (vormals Ramius LLC) New York 31 May 2011 

UniCredit Business Partner SCPA Cologno Monzese 31 May 2011 

Credanti Holdings Limited Nicosia 31 August 2011 

Moll Holding GmbH Munich 31 December 2011 

Mergers 


Name of merged company 

UniCredit Factoring Penzügyi 

Domicile Name of absorbed company Domicile Merger as at 

Szolgoltato Zrt. Budapest UniCredit Bank Hungary Zrt. Budapest 1 January 2011 

Teledata Consulting und 

Systemmanagement GesmbH Vienna 

Treuconsult Beteiligungsgesellschaft 

m.b.H. Vienna 14 July 2011 



All4Quality and Blue IT 

In 2011, the outsourcing project "All4Quality" was implemented 

with a view to combining Global Banking Services (GBS) functions 

in a single company: UniCredit Business Integrated Solution 

Austria GmbH (UBIS). 

For this purpose UGIS Austria GmbH was established on 19 May 

2011 as a subsidiary of UniCredit Bank Austria AG. As part of the 

establishment of this company, UniCredit Bank Austria AG sold its 

interests in UGIS Austria GmbH and UCBP Austria GmbH to the 

respective holding company (UGIS SCpA and UCBP SCpA). 

UniCredit Bank Austria AG sold Bank Austria Global Information 

Services GmbH (BAGIS) to UGIS Austria GmbH with effect from 

1 July 2011. 

Procurement and Security were outsourced to UGIS Austria GmbH 

with effect from 1 December 2011. In respect of both areas, 

strategic control, management of access authorisation for banking 

systems, management of IT security guidelines and the definition 

of requirements for IT security as well as business continuity and 

crisis management remained within Bank Austria. In this context, 

65 employees (57.6 FTEs) were transferred to UniCredit Bank 

Austria AG. 

The name of UGIS Austria GmbH was changed to UBIS Austria 

GmbH with effect from 1 February 2012. At the same time, UCBP 

Austria GmbH merged with UBIS Austria GmbH. 

UBIS Austria GmbH focuses on providing data processing and 

settlement services for Bank Austria. 

At present work is under way to draw up new service level 

agreements (SLAs) / agency agreements and organisation level 

agreements (OLAs) for Procurement and Security. In respect of the 

other areas which have been outsourced, the SLAs and OLAs 

originally agreed with UCBP Austria GmbH and UGIS Austria 

GmbH will remain effective on a legal succession basis. 

Some units of software development and of the computer 

operations centre were outsourced to Blue IT Services GmbH, a 

subsidiary of IBM Austria, with effect from 1 July 2011. While 

reducing costs and enhancing efficiency, this move also helped to 

avoid job reductions. 

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 

2011 2010 2009 2008 2007 

Tier 1 capital ratio (based on banking book) 21.3% 21.0% 19.7% 18.7% 20.1% 

Return on equity before taxes -2.7% 0.3% 0.0% 0.0% 12.3% 

Return on equity after taxes -3.4% 0.0% 0.0% 0.0% 12.2% 

Cost/income ratio 66.5% 57.2% 67.8% 70.1% 48.5% 

Risk/earnings ratio 27.6% 33.7% 38.3% 18.1% 10.0% 

Risk/earnings ratio (without dividends) 37.7% 51.6% 54.9% 33.6% 18.3% 

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 

2011 2010 2009 2008 2007 

Domestic branches 273 281 291 304 313 

Foreign branches (without banking 

business) 1 1 1 1 1 

Outlets at companies 1 1 1 3 7 

Head office 1 1 1 1 1 

Total 276 284 294 309 322 

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. 

31 Dec. 


Annual 

average 

for 2011 

31 Dec. 

2010 

31 Dec. 

2009 

31 Dec. 

2008 

31 Dec. 

2007 

Headcount 1) 

of which; workers other than 

6,935 6,933 6,839 6,613 6,599 7,236 

salaried staff 0 0 0 0 0 0 

Full-time equivalents 1) 

of which: workers other than 

6,540 6,559 6,469 6,097 6,072 6,711 

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. We are seeking to create an 

environment in which employees generate sustainable value for 

our customers. The Global Job Model, a Group-wide personnel 

management system used for defining and classifying all functions 

and activities within UniCredit, and the UniCredit Competency 

Model, which defines standards for employee conduct in key 

situations, serve as guiding principles for our human resources 

activities. 

We offer our employees a working environment with an 

international flavour 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 126 training positions were filled in 2011. A 

new onboarding process is designed to welcome new employees 

and to make it easier for them to find their feet in our company. 

This includes the organisation of a welcome event entitled 

“Welcome Days”, providing employees with all the information they 

need, and a coordinated “Buddy programme”. 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. In addition, we 

support customer sales activities through strategic staff planning 

initiatives, such as the internal “Movement Management” 

programme that will be implemented in 2012. This ensures the 

optimum deployment of employees while increasing customer 

centricity. 

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 managers. 

Realigned in 2011, the national mentoring programme, through 

networking and an exchange of knowledge, is a further measure 

for supporting young employees in developing their potential in 

terms of career and personal development. 

The roll-out of the new SAP-supported Performance Management 

tool for Bank Austria enables the bank for the first time to 

electronically capture and archive goals and performance 

evaluations as well as feedback given by managers to employees 

in their area of responsibility. Priority is given to providing greater 

transparency for both managers and employees while giving both 

the possibility to play a more active role in defining further potential 

for development and career steps. Performance Management thus 

makes a substantial contribution to the bank’s corporate culture 

based on respect. 

In April 2011, the international CRF Institute presented UniCredit 

with the European Top Employer 2011 award for outstanding HR 

services in five countries in which UniCredit operates: Austria, 

Germany, Italy, Poland and the United Kingdom. 

Sustainability management 

Sustainability and responsibility with all their aspects are becoming 

increasingly significant factors in the business sector. 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. 

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 in cooperation with non-governmental organisations 

and educational and research institutions, e.g. under the “Sharing 

knowledge” and “Business meets the environment” programmes. 

Financial education is another important area in which Bank 

Austria launched an initiative. 

Environmental management system certified in accordance 

with ISO 14001 

In May 2011, Bank Austria became the first commercial bank in 

Austria to implement an environmental management system in 

accordance with ISO 14001. The bank also had the system audited 

by Quality Austria, an external organisation; the audit took several 

days to complete. In contrast to many other companies, Bank 

Austria decided to set up an environmental management system 

that covers the head office buildings and all branches. While this 

involves significant challenges in implementing the system, it 

shows that Bank Austria attaches great importance to ecological 

sustainability and the careful use of resources. 

The establishment of the environmental management system 

ensures ongoing monitoring and control of major direct 

environmental impacts. This provides the basis for continuous 

improvement. 

The bank aims to further expand the range of sustainable products 

and services. In 2011, in addition to sustainable mutual funds of 

Pioneer Investments, Bank Austria again offered a savings product 

under the name of “Bau(m)sparen”, which combines a classic 

building society savings agreement with the possibility of actively 

contributing to the protection of rainforests. The bank also 

continued to organise seminars on “Energy-efficient construction 

and renovation”, which remain very popular. 



Key ecological indicators for Bank Austria: 1) 


Electricity consumption in KWh incl. computer 

operations centre 77,000,000 2) 

Heating in KWh (incl. long-distance heating, oil and 

natural gas) 50,000,000 2) 

80,824,248 3) 

55,248,832 3) 

C0 2 emissions from electricity and heating in t *) 8,900 9,366 

Business travel in km 24,985,198 24,018,073 

of which: air travel in km 18,831,252 17,739,435 

of which: by car in km 5,442,757 5,560,294 

of which: by train in km 711,189 718,344 

CO2 emissions due to business travel in t 4) 

3,180 3,125 

Water consumption in m 3 incl. well water 232,000 290,000 

Waste in kg 5) 

1,560,343 1,845,905 

Paper consumption in kg 896,742 1,021,761 

1) 

of which: TCF/ECF paper 763,864 964,114 

of which: recycling 61,467 21,150 

Includes all branches, central office locations and subsidiaries 

located there 

2) 

Projection 

3) 

In contrast to the projections for 2010 included in the 2010 

report, these figures are effective consumption data for 2010. 

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 bank’s capital resources of € 13,546 m are composed of Tier 1 

capital (core capital), Tier 2 capital (supplementary capital 

resources) and Tier 3 capital. 

Tier 3 capital amounts to € 132 m; in addition, unused Tier 2 capital 

of € 535 m is available for reclassification into Tier 3 capital. 

Tier 1 capital is equal to 104.8 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. 2011 31 Dec. 2010 

Paid-in capital 1,681 1,681 

Capital reserves 9,332 9,332 

Other reserves eligible as Tier 1 capital 3,101 3,587 

Fund for general banking risks 0 0 

Less: own shares 0 0 

Less: intangible assets -59 -81 

Tier 1 capital 14,055 14,519 

Net valuation reserve 0 0 

Net supplementary capital 392 445 

Net subordinated capital 1,919 2,059 

Tier 2 capital 2,311 2,504 

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% -1,112 -1,204 

Less: subordinated claims where the holdings exceed 10% -40 -45 

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% -1,390 -1,968 

Less: IRB provision shortfall -328 -587 

Net capital resources 13,414 13,137 

Tier 3 capital 132 96 

13,546 13,233 

Capital requirement 

Amounts in € m 31 Dec. 2011 31 Dec. 2010 

Capital requirement for credit risk pursuant to Sections 22a-22h of the 

Austrian Banking Act 

5,286 5,521 

Capital requirement for settlement risk 0 0 

Capital requirement for position risk in debt instruments, equities, 

foreign currencies and commodities 

132 96 

Capital requirement for operational risk 294 273 

Capital requirement resulting from switch to Basel 2 rules (Section 

103e, no. 6, of the Austrian Banking Act) 

0 0 

Total capital requirement 5,712 5,890 

Net capital resources composed of Tier 1 capital and Tier 2 capital 

(€ 13,414 m) exceed by 153.8% the capital requirement for credit 

risk (€ 5,286 m). 

Tier 1 capital amounts to € 14,055 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 2011 amounted to € 1,681,033,521.40 and consisted 

solely of ordinary shares. 

As at 31 December 2011, 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 Region 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 2011 

financial year 

After movements in reserves in the amount of € 485,833,511.33 

the profit for the financial year beginning on 1 January 2011 and 

ending on 31 December 2011 was € 100,000. The profit brought 

forward from the previous year was € 2,314,164.75. Thus the profit 

available for distribution was € 2,414,164.75. 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 € 2,414,164.75 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 been appointed 

in these proceedings to review the amount of the cash 

compensation paid; the expert report is now available and 

essentially confirms the adequacy of the cash compensation paid 

in connection with the squeeze-out. A decision by the court of first 

instance in this case is not yet available. 

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. 

Cross-divisional control 

The Asset/Liability Committee (ALCO) is responsible for the 

management of balance-sheet structure positions, it 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). Liquidity risk control is performed by a 

separate committee which was set up in 2008 and meets once a 

week to deal with current liquidity-related topics. These include 

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 within the CIB 

Division 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 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. The counterparty 

risk model (NORISK CR), which was approved by the Austrian 

supervisory authority in 2009, was extended in 2011 to include 

further CEE countries for risk management aspects; special 

mention should be made of the subsidiaries in Croatia and Russia 

because of their size. In this context the focus is 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 and Risk 

Integration 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 the 

bank’s overall liquidity and interest rate gap structure is optimised, 

with the results from interest maturity transformation being reflected 

in the Corporate & 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 

Austria and CEE and have remained at a high level on account of 

the persistent government debt crisis. 

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-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 2011 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 UniCredit Bank 

Austria AG’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%. 

Details of the use of financial instruments are given in the notes to 

the financial statements. 

Credit Treasury 

Credit Treasury has two main tasks: preparing and monitoring the 

risk-adequate pricing of loans; and executing risk-transfer 

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 

transactions (via synthetic securitisations, CLNs, etc.) 

and liquidity-generating measures 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 the second quarter of 2011, UniCredit Bank Austria AG was 

granted permission by the Austrian supervisory authorities 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 constituted a 

significant change of model in accordance with Section 21e of the 

Austrian Banking Act. 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. The conditions 

imposed by the college of supervisors (Italy, Germany, Austria) 

when regulatory approval was given to the new model were largely 

met already in 2011. Moreover, an application was filed with the 

regulators (BoI and FMA) in 2011 for permission to use the models 

developed within UniCredit Group to comply with the new CRD III 

rules for the trading book which will have to be applied from 

December 2011 onwards. This applies especially to Stressed VaR 

and IRC (incremental risk charge). CRM (comprehensive risk 

measure) is not applicable to UniCredit Bank Austria AG for lack of 

credit tranche holdings in the trading book. The relevant reviews in 

Bank Austria were completed by the Austrian supervisory 

authorities in 2011 with positive results. Approval for the use of the 

new model was given as at the end of 2011. 

As at 30 December 2011, 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 -1.3 

Equity position risk, trading book 0.0 

Equity position risk, banking book -11.4 

Interest rate position risk, trading and banking 

book -6.4 

Credit spread risk (VaR limit scope) -33.0 

Overall market risk (VaR limit scope) -43.3 

Overall market risk -55.8 

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. 

Since April 2011, the new model has been used for the purposes of 

calculating capital requirements. The relevant parameters are a 10day 

holding period, a confidence level of 99 % and a multiplier of 

3.5. As at 30 December 2011, the risk amount was € 43.9 m. 

The following capital requirements result for UniCredit Bank Austria 

AG in connection with “stressed VaR” (S-VaR) and “incremental 

risk charge” (IRC): € 67.0 m for S-VaR and € 21.4 m for IRC. 

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 2011, 

there was no backtesting excess. The results of backtesting have 

thus confirmed the accuracy and reliability of the new model. 

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 will be implemented by 2013; the 

other relevant banking subsidiaries will undergo the approval 

process for the risk model from 2014 onwards. 

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 was 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 additional capital requirements for trading books 

(“incremental risk charge” and “stressed VaR”) which became 

effective in 2011 are monitored using separate indicators. 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 riskreturn 

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 

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 2011 

was 0.99 for > 1 year and 0.98 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 although the liquidity 

situation in financial markets deteriorated significantly in the 

second half of the year, not least on account of the persistent 

government debt crisis in Europe. 

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. 

The tight liquidity situation in financial markets (especially in the 

interbank market) put a strain on these crisis scenarios, but the 

existing pool of collateral was sufficient to cover liquidity outflows. 

The extreme scenario (combining an extreme market crisis and a 

name-driven crisis) calculated on the basis of the strained liquidity 

situation is below the one-month liquidity horizon. However, 

measures have been taken to strengthen the liquidity buffer for 

unexpected liquidity outflows. 



Funding plan and liquidity costs in pricing 

Financing that part of credit growth which is not covered by 

deposits and funding the CEE subsidiaries is one of the main 

functions of the Group’s liquidity management. Financing 

requirements for the coming year and the short-term and long-term 

funds made available to the subsidiaries for their business are 

defined on the basis of a funding plan, and a strategy for raising 

the required funds is drawn up. As financial markets in Central and 

Eastern Europe were under greater strain, closer attention was 

given in 2011 to the financial independence of the CEE 

subsidiaries. The focus is on a well-balanced financial position, 

which reduces dependence on financial markets. 

Part of the country risks in connection with financing the CEE 

subsidiaries out of Austria 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). 

To ensure the correct settlement of liquidity premiums payable by 

the Bank Austria Group to external market participants, liquidity 

costs are charged. 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, the bank 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. 

The counterparty risk model (NORISK CR), which was approved by 

the Austrian supervisory authority in 2009, was extended in 2011 to 

include further CEE countries for risk management aspects; special 

mention should be made of the subsidiaries in Croatia and Russia 

because of their size. In this context the focus is 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, which is currently in 

conformity with Basel 2 standards, we are now concentrating on 

preparations for adjusting the existing model to the new Basel 3 

rules concerning counterparty credit risk. A project was initiated in 

Market Risk and Risk Integration for this purpose. 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. 

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. 

Sovereign debt 

The assessment of country risk, reflected in country limits and 

counterparty risk, and for the sovereign of a country, reflected in 

counterparty limits, is in both cases performed via a groupwide risk 

process. The sovereign counterparty limits are assessed by the 

FIBS CRO risk team (FIBS: Financial Institutions, Banks and 

Sovereigns) and assigned to UniCredit subsidiaries according to 

business needs. Impairment losses are recognised, if necessary, 

according to accounting standards. In general, countries which are 

presumed less risky – e.g. the US, Japan, core EU – have no 

country limit assigned for cross-border business, but sovereign risk 

(direct state risk, e.g. bonds) is limited via counterparty limits. The 

overall bond exposure is monitored via nominal credit risk limits 

and additionally via market risk limits. The country risk for all other 

countries is limited by the assigned country limit. 

Greek bond exposure has been impaired based on a conservative 

approach and impairment losses will be further recognised using 

applicable accounting standards. Business with Greek banks has 

been reduced to an absolute minimum and is restricted via a watch 

list strategy. 



Due to the challenging political and economic situation in Hungary, 

UniCredit Group has taken prudent risk mitigating measures and is 

actively monitoring the situation and its portfolio. UniCredit Group 

has also limited business via a watch list strategy. Apart from the 

current credit risk evaluation reflected in mark-to-market valuation 

an impairment is – in line with applicable accounting standards – 

currently not foreseen. 

While there is a small exposure to Hungary and Spain, the bank 

does not hold any Irish government bonds. 

The Italian risk is also centrally monitored and has also been 

adjusted via a watch list strategy, mainly focusing on UniCredit, tier 

1 banks and the sovereign within assigned counterparty credit and 

market risk limits. 

Own holdings of government bonds as of 31 December 2011 

Own holdings of government bonds as of 31 December 2011 

Country Classification Nominal amount Book value Market value 

Austria 1,580,000,000.00 1,543,481,597.89 1,684,262,750.00 

Fixed assets 1,189,700,000.00 1,150,441,404.57 1,279,780,805.00 

Current assets 390,300,000.00 393,040,193.32 404,481,945.00 

Italy 1,112,464,078.60 1,101,083,916.37 1,090,228,348.62 

Fixed assets 232,464,078.60 233,466,583.65 222,319,348.62 


Greece 368,137,724.55 93,473,952.51 93,473,952.51 

Fixed assets 338,137,724.55 87,298,452.51 87,298,452.51 


Croatia 92,215,735.70 89,764,280.88 88,915,455.76 

Fixed assets 10,000,000.00 10,056,125.12 9,207,300.00 


Belgium 80,000,000.00 79,989,953.81 83,382,000.00 

Fixed assets 80,000,000.00 79,989,953.81 83,382,000.00 

Current assets 0 0 0 

Portugal 70,000,000.00 69,953,324.73 45,500,000.00 

Fixed assets 70,000,000.00 69,953,324.73 45,500,000.00 


Romania 10,000,000.00 9,968,057.51 9,572,450.00 

Fixed assets 10,000,000.00 9,968,057.51 9,572,450.00 


Other Countries 21,941,022.62 21,777,023.69 21,710,208.40 

Fixed assets 21,941,022.62 21,777,023.69 21,710,208.40 


TOTAL 3,334,758,561.47 3,009,492,107.39 3,117,045,165.29 

Credit risk 

Net write-downs of loans and provisions for guarantees and 

commitments in 2011 continued to improve across all segments 

compared with the previous year. This development reflected 

significantly higher economic stability, especially in the first half of 

the year, and the fact that the economic slowdown which started in 

the second half of 2011 did not yet have a strong impact. 

In the Corporate & Investment Banking segment (CIB), the decline 

in the number of new cases requiring corporate restructuring 

activities had a positive influence on additions to loan loss 

provisions. At € 128.2 m, net write-downs of loans and provisions 

for guarantees and commitments in this business segment were 

further reduced, by more than 20%, from the previous year’s level. 

In the Family & SME Banking segment (F&SME), net write-downs 

of loans and provisions for guarantees and commitments continued 

to decline even after the inclusion of the sub-segment comprising 

small and medium-sized businesses with a turnover of up to € 50 

m. Overall, the provisioning charge in this business segment 

amounted to € 157.5 m, an improvement of 25 % over the previous 

year which was mainly due to significantly lower additions to loan 

loss provisions in the sub-segments of Mass Market and Affluent 

customers. The additional write-down on foreign currency loans in 

these sub-segments was further increased to take adequate 

account of the risk associated with loans with final maturity. Quite 

generally, as in the previous year, a large number of additional 

advisory talks were held with customers in this segment in several 

waves in order to evaluate the new situation and the credit risk 

costs 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. 

In the CEE segment, net additions to loan loss provisions in 

UniCredit Bank Austria AG in 2011 amounted to € 232.6 m. Most of 

this amount related to a provision for the guarantee given for the 

Kazahk loan portfolio to support the local subsidiary. Moreover, as 

in previous years, write-downs were made on CEE exposures 

booked in Vienna, especially in the Real Estate sub-segment. 

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 (probability of 

default), LGD (loss given default) and EAD (exposure at default) – 

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 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. 

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. 

Four CEE banking subsidiaries switched from the standardised 

approach to the Foundation 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. 

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 productrelated 

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 2011 concentrated on further developing OpRisk 

management with a focus on mitigation actions to reduce future 

losses and involving OpRisk in relevant projects to a greater 

extent. A focal area in CEE was the analysis of derivatives sale 

processes by a working group established jointly with Market Risk. 

In this context the CEE banking subsidiaries were reviewed for 

compliance with the rules of the Derivatives Policy CEE rolled out 

in 2010 in order to identify and mitigate potential operational risk. 

The OpRisk soft limits for the Bank Austria Divisions and all major 

banking subsidiaries, introduced in 2010, 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 the 

extensive and complete operational risk data collection. A 

Permanent Working Group (PWG) was established in UniCredit 

Bank Austria AG to identify and implement possible measures to 

address existing and potential operational risk on the basis of an 

analysis of factors including loss events, key risk indicators, 

scenarios, projects and new products. In 2011, implementation of 

the PWG concept started at all AMA-compliant banking 

subsidiaries in CEE. 

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 2012, activities with regard to operational risk will focus on 

• monitoring 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, 

• supporting the holding company in implementing measures 

resulting from the review by Banca d’Italia, 

• working to ensure that the Permanent Working Group 

becomes firmly established in UniCredit Bank Austria AG and 

completing the PWG rollout in major CEE legal entities with a 

view to better analysing loss events, indicators and scenarios 

through cooperation with the relevant functions and defining 

mitigation actions to reduce operational risk, 

• validating the implementation of the Derivatives Policy CEE at 

the CEE banking subsidiaries, 

• developing a process to identify OpRisk-relevant projects, 

• creating, firmly establishing and rolling out the reputational 

risk function in Bank Austria and in major CEE banking 

subsidiaries. 

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, provisions have 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. 

In November 2011 the Court of Cassation granted Bank 

Austria’s appeal, revoked the judgment for the plaintiff issued 

by the Court of Appeal of Zurich and remanded the case back 

to the Court of Appeal (= second instance) for 

reconsideration. 

• The Madoff fraud 

Several customers addressed enquiries and complaints 

against Bank Austria in connection with certain funds related 

to the fraudulent actions by Mr. Bernard L. Madoff. The 

following proceedings are relevant: 

Austrian civil proceedings: In connection with the funds 

linked to the activities of Mr Madoff, many legal actions are 

pending with Austrian courts to date, with the claimed amount 

totalling € 130.5 million. In nine lawsuits Bank Austria 

succeeded at first instance, five at second instance as well 

and two overall are already legally binding. In one of those 

cases the Supreme Court revoked the judgment issued by the 

court of second instance in favour of the plaintiffs and 

remanded the case back to the court of first instance. Two 

interim judgments were handed down in favour of the 

plaintiffs, in one of those cases the claim has since been 

withdrawn and in the other case Bank Austria has appealed 

the interim judgment. 

Criminal proceedings: Bank Austria has been named as a 

defendant in criminal proceedings in Austria which concern 

the Madoff case. These proceedings were initiated by a 

complaint filed by the FMA (the Austrian Financial Market 

Authority) to the Austrian prosecutor. Subsequently 

complaints were filed by purported investors in funds which 

were invested, either directly or indirectly, in Bernard L. 

Madoff Investments Securities LLC and Bernard L. Madoff 

Securities LLC (collectively referred to as “BMIS”). These 

complaints allege, amongst other things, that Bank Austria 

breached provisions of the Austrian Investment Fund Act as 

prospectus controller of the Primeo Fund. These criminal 

proceedings are still at the pre-trial stage. 



U.S. Securities Class Actions in the U.S.: Bank Austria 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 Bank 

Austria has also been named in two putative class action suits 

filed in the United States District Court for the Southern 

District of New York. In each of the suits, the class action 

plaintiffs claim to represent investors whose assets were 

invested in BMIS, directly or indirectly. 

Proposed amended complaints have been filed; one of which 

purports to include allegations that the defendants, including 

Bank Austria, 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 and seeks treble damages under 

RICO, i.e., three times US$ 2 billion. 

On 29 November 2011, the Court dismissed the actions as 

against Bank Austria and its liquidated indirect subsidiary, 

among others, and denied plaintiffs’ motion to amend the 

complaints. The plaintiffs in those actions have filed notices of 

appeal of that decision. 

The United States Bankruptcy Court appointed Irving H. 

Picard as Trustee (the “SIPA Trustee”) for the liquidation of 

BMIS. 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 Bank Austria and a liquidated indirect subsidiary of 

Bank Austria, to recover amounts to be determined at trial. 

One complaint (the “First Trustee Complaint”) seeks to 

recover so-called avoidable transfers to initial transferees of 

funds from BMIS, subsequent transfers of funds originating 

from BMIS (in the form of alleged management, performance, 

advisory, administrative and marketing fees, among other 

such payments, said to exceed US$ 400 million in the 

aggregate for all defendants), and compensatory and punitive 

damages against certain defendants alleged to be in excess 

of US$ 2 billion. 

The other complaint (the “Second Trustee Complaint”) further 

alleges defendants violated RICO by allegedly participating in 

a plan to enrich themselves by feeding investors’ money into 

Madoff’s Ponzi scheme. In this latter complaint, 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. 

On 28 July 2011, the Court granted the motion to dismiss the 

First Trustee Complaint with respect to the claims for aiding 

and abetting Madoff’s fraud, breach of fiduciary duty, unjust 

enrichment and contribution. The Court’s decision did not 

address the claims to recover avoidable transfers. The SIPA 

Trustee has filed a notice of appeal of the decision. 

Bank Austria has moved to dismiss the Second Trustee 

Complaint with respect to the RICO claims and the claims for 

unjust enrichment, conversion and money had and received. 

On 21 February 2012, the Court granted the motion to dismiss 

the Second Trustee Complaint with respect to the RICO 

claims and the claims for unjust enrichment, conversion and 

money had and received. The Court’s decision did not 

address the claims to recover avoidable transfers which are 

now returned to the bankruptcy court. Although the decision 

may be appealed, the timing of that appeal has not been 

determined. 

All pending U. S. actions are in their initial phases. 

Bank Austria intends to defend itself vigorously against the 

Madoff-related claims and charges. 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. In addition to the proceedings outlined 

above, additional actions arising out of Madoff’s activities 

have been threatened and may be filed in the future by private 

investors or local authorities; in this context the question of 

whether these cases fall under the statute of limitations will 

have to be examined. Pending or future actions may have 

negative consequences for Bank Austria. 

In line with the above policy, no provision has been made for the 

following pending legal proceeding. 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. 



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). 

The filing of an application for approval of the advanced IRB 

approach of UniCredit Bank Austria AG for the Group-wide models 

covering Global Project Finance transactions, insurance 

companies and leasing companies is planned for 2012. 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. 

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, UniCredit 

Bank Czech Republic, a. s., and UniCredit Bank Slovenija d. d., the 

application of the F-IRB approach was approved as at 1 January 

2011. The application of the F-IRB approach at UniCredit Bank 

Hungary Zrt. was approved as at 1 July 2011. 

Further approvals for the application of the F-IRB approach at the 

CEE subsidiaries UniCredit Tiriac Bank S.A. and UniCredit Bank 

Slovakia a.s. are expected for 2012. 

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 available for the banking subsidiaries in in 

the Czech Republic, Slovakia, Hungary, Slovenia, Croatia, Bulgaria 

and Romania. In the next few years, AMA preparations will 

concentrate on our banking subsidiaries in Russia, Serbia and 

Turkey. 

Current status of Basel 2.5 / Basel 3 implementation in the 

Bank Austria Group 

Market risk in the trading book 

In the past year Bank Austria, in cooperation with the UniCredit 

holding company, successfully implemented the joint projects in 

connection with significantly stricter capital requirements for the 

trading book. “Stressed VaR” was implemented under IMOD, the 

new market risk model, and approved by the Austrian supervisory 

authority pursuant to the Austrian Banking Act as part of the joint 

decision of the college of regulators. The extension to include the 

incremental risk charge (IRC) – to cover default risk and rating 

migration risk – was also completed in 2011, with reviews 

performed by the supervisory authorities at Bank Austria and at 

holding company level. Bank Austria integrated capital 

requirements for both areas in its regulatory reporting for the first 

time as at the end of 2011. As part of the approval processes for 

IRC and S-VaR, the college of regulators imposed several 

requirements which need to be addressed at holding company 

level or at Bank Austria level. Bank Austria and UniCredit Group 

will have to meet these requirements by the end of 2012. 

Counterparty risk 

Details of the changes in the area of counterparty credit risk which 

result from the publications of the Basel Committee (Basel 3) and 

the capital adequacy directive (CRD IV) are now available. On this 

basis Bank Austria has developed a plan to implement the 

changes. Originally focusing on UniCredit Bank Austria AG, the 

local project in Austria is now included in a broader context at 

UniCredit Group level under joint control. Key changes in the area 

of counterparty credit risk 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, stricter standards for 



collateral management and margining. There are also stricter 

requirements in respect of stress testing and backtesting. The 

approval process for the adapted model is planned to start in the 

middle of 2012. 

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 made the necessary extensions to the liquidity 

monitoring system in the course of 2011 and integrated 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 2012 

The economic environment 

The moderate upturn of the global economy, underway since 

2010, has lost momentum since autumn 2011. According to the 

most recent sentiment indicators and leading indicators, the 

lacklustre performance is likely to be only temporary. But the worse 

than expected economic developments in the second half of 2011, 

and probably also in the first quarter of 2012, have reduced the 

prospects for the economy to get off to a reasonable start in 2012. 

Annual growth rates for 2012 have consequently been revised 

downwards. Global trade slowed towards the end of 2011, but still 

recorded growth in a year-on-year comparison; we expect global 

trade to pick up again as from spring 2012. We think that from 

3.3% in 2012, global economic growth will return to a level of 4% in 

2013. 

With an anticipated growth rate of between 9% and 10% in 2012, 

China will provide the main impetus for global economic growth. 

The performance of the US economy in 2012 will fall somewhat 

short of its potential growth (2 % after 1.7 %). In the euro area, the 

economy contracted by 0.3 % in the fourth quarter of 2011 

compared with Q3 2011, and will remain weak in the first quarter of 

2012. In addition to a technical recession (two quarters of 

seasonally-adjusted negative growth) the less favourable starting 

position (negative carry-over effect) will lower the growth rate 

expected for 2012 to 0% to ½%. All forecasts are made on the 

premise that confidence in the debt-bearing capacity of industrial 

countries will slowly be restored, that it will at least not be shaken 

again, and that a renewed sharp rise in commodity prices 

(triggered, for example, by a culmination of events at the Persian 

Gulf) can be prevented. 

Since the beginning of the current year, favourable leading 

indicators and sentiment surveys in Austria have suggested that 

the intermediate low may be coming to an end. The Austrian 

economy will return to a growth path in the first half of 2012, though 

expansion will be very moderate. Weak foreign demand, consumer 

restraint and a cautious approach to business investment will limit 

economic growth for the time being. From the middle of the year, 

impetus provided by the Asian emerging economies should have 

an indirect effect on Austrian industry via Germany, Austria’s main 

trading partner, and this should reinvigorate the economy. 

Investment projects which were postponed should then be carried 

out and consumption should pick up, supported by weakening 

inflation (expected to average 2.2 % in 2012) and a slightly positive 

trend in real incomes. Despite the economic revival in the course of 

the year, growth will be moderate, reaching only 0.8 % for 2012 as 

a whole. This also reflects the low base before and after the turn of 

the year. The unemployment rate will rise slightly in 2012, to 4.3 

per cent, though remaining very low by international comparison. 

GDP is expected to grow by 2 % in 2013, when budget 

consolidation measures will become fully effective, but dampening 

growth only slightly. According to preliminary calculations, the 

direct dampening effect for 2013 will be about ¼ percentage point 

of GDP and will be more than offset by stronger global economic 

trends. In view of the moderate economic outlook, credit expansion 

is expected to show hardly any change in the course of 2012, with 

growth again reaching between 2% and 3%. The major challenges 

facing the banks (buildup of additional risk buffers, difficult funding 

conditions, management of liquidity ratios) led to high and rising 

interest rates on bank deposits in the second half of 2011, which 

rose by over 3%. Deposits from private customers increased by 

close to 2 % and accounted for about one-half of additions to 

financial assets held by private households. In 2012, monetary 

capital formation could be somewhat more pronounced. At the 

current low valuation levels in some areas, capital markets offer 

attractive investment opportunities. But deposit interest rates will 

probably remain attractive also in 2012. 

Countries in Central and Eastern Europe (CEE) were also 

affected by the deterioration in the global economic environment in 

the second half of 2011 and around the turn of the year. Overall, 

however, the region continued to pursue sound expansion. As the 

European debt crisis escalated, risk aversion again became more 

pronounced. But given the relatively low levels of government debt 

in the region, CEE coped well with this situation. Developments in 

the euro area will continue to be among the factors determining 

trends in the CEE region later in 2012. The difference between a 

weak first six months and more lively business in the second halfyear 

will be particularly apparent in the Central European countries, 

which are closely integrated in the production network. The impact 

on major exporters of raw materials and commodities will be 

weaker, these countries will benefit from high oil prices. Turkey, 

which enjoys a high degree of economic autonomy, continues to 

achieve strong growth even if the boom of past years is over. 

Overall, we expect that economic growth in CEE (in Bank Austria’s 

perimeter) will be 3.0 % (2012) and 3.8 % (2013), double or triple 

the figure for Western Europe. Despite significant regional 

divergence, we expect that the CEE region as a whole will see 

currency appreciation rather than depreciation. This will require 

stable inflows of long-term capital. 



In our base scenario we assume that the impact of the debt crisis, 

at least the volatility and the unpredictable elements, will ease: the 

external financing needs of the CEE countries – and thus 

vulnerability to external shocks – are today lower than they were 

many years ago. Moreover, vulnerable countries can count on IMF 

and EU support. And we do not expect that foreign banks will 

withdraw capital in response to pressure to adjust to the new rules 

concerning capital requirements. In the medium to long term, the 

CEE banking sector still has the potential to achieve growth in 

terms of turnover and income at a level above the EU average in 

view of the market penetration gap which still exists in the area of 

financial services. For example, lending volume as a percentage of 

GDP is estimated at 49% in CEE, compared with 120% in the euro 

area. 

One of the major risk factors in the banking environment in 2011 

was the European government debt crisis, with Greece at the 

centre of the crisis and the credit ratings of other highly indebted 

countries deteriorating. Significant progress was made in 

overcoming the debt crisis towards the end of the previous year 

and in 2012 to date; as a result, apart from Greece itself, the 

situation has eased. On 21 February 2012, representatives of the 

Eurogroup, the EU and the European Central Bank reached 

agreement with Greece on a second support package with private 

sector involvement (PSI). Under the agreement, the Eurogroup is 

prepared to provide additional funds of up to € 130 bn (by the end 

of 2014). The bulk of the immediate financing requirements is 

accounted for by a recapitalisation of the Greek banking sector (€ 

50 bn) and an EFSF guarantee facility (€ 30 bn) for the remaining 

claims of the private sector after PSI. Private investors, primarily 

international banks, have agreed to a debt restructuring package 

under which the present value loss arising from the debt 

restructuring amounts to about 75%. Implementation of the overall 

package still involves risks; for example, one cannot rule out the 

possibility that the Greek government will apply Collective Action 

Clauses, triggering a “credit event”. But even if the implementation 

of the package for Greece suffers a further setback, the European 

Union, the Eurogroup and the European Central Bank are 

determined not to let the situation repeat itself, and their 

determination enjoys credibility. All European decision-making 

bodies see the case of Greece, and private sector involvement in 

particular, as a singular event. 

This has also reduced the risk of contagion. Spain (and Portugal) is 

negotiating with EU authorities with the objective of deferring the 

agreed consolidation targets in order not to deepen recession. 

Interest rates on recent bond issues of Spain were significantly 

lower. Portugal will not be able to access capital markets for some 

time to come, but the country can count on support from the IMF 

and the EU. Italy is a large and competitive economy playing in a 

different league. Italy’s main problem is the legacy burden of public 

debt amounting to 119% of GDP, which has been rolled over at this 

level without any problems for over fifteen years. In 2011, Italy 

achieved a primary surplus of over 1% and its government intends 

to strongly increase the primary surplus by achieving a balanced 

budget in nominal terms by 2013. Interest rate spreads on Italian 

bonds declined significantly in the current year. Risk premiums on 

bonds issued by Hungary (see introductory section) also declined 

recently, though the downward trend was not as pronounced as in 

the case of Italy. Although pressure is easing, we expect that 

Hungary will resume negotiations with the IMF and the EU. 

The policy pursued by the European Central Bank (ECB) has 

provided strong impetus to crisis management in the past few 

months. In addition to a more relaxed monetary policy via standard 

instruments, the two large-volume three-year tenders made a 

significant contribution toward easing the general situation. The 

ECB’s outstanding open market operations thus reached a record 

level of € 1.2 trn, with the surplus liquidity probably resulting in 

additional pressure on interest rates. 

Outlook for UniCredit Bank Austria AG’s performance 

The outlook for banking business in Bank Austria’s perimeter of 

operations is determined by expectations of low growth in Western 

Europe, at a rate which will be just above zero, and of more 

moderate growth in Central and Eastern Europe, and by the 

probability of a deflationary rather than inflationary monetary 

environment. The foreseeable stricter regulatory requirements are 

likely to reduce the credit multiplier. Given the confidence crisis, 

and despite ample supplies of liquidity by the ECB, the interbank 

market is still not operating effectively; this has an impact on 

liquidity management and also indirectly affects a number of capital 

market-related financing instruments. The operating environment 

for the banking industry means that volume trends and margins in 

the coming year will not enable Bank Austria to generate a level of 

annual revenue growth which was quite normal in the years before 

2009; growth will be moderate, in line with the overall market. 

However, after the substantial one-off charges absorbed in 2011, 

we expect that the bank’s strong operating performance will again 

feed through to bottom-line profits to a larger extent. 

� The objective of our multi-year plan is to make the bank’s 

performance sustainable in this scenario of what is widely 

referred to as “the new normal”. These are the basic pillars of 

the plan: targeted employment of capital, pursuing a focused 

growth strategy in CEE, simplifying our organisational set-up and 

processes, and maintaining strict cost management. Bank 

Austria’s strong equity capital base enables the bank to pursue 

further growth and will exclusively support commercial banking 

business with customers. We will give close attention in Austria 

to risk-adjusted capital efficiency down to the level of individual 

transactions. Capital allocation provides CEE, one of the few 

growth regions, with a sound base for further expansion. In 

pursuing expansion, we will focus on countries which are ahead 

in terms of revenue/risk considerations as well as market size 

and growth, and where we hold strong market positions: these 

countries are Turkey, Russia and the Czech Republic. In the 

other countries we will pragmatically focus our business portfolio 

on a case-by-case basis. We seek to achieve a sound balance 

of local credit expansion and local deposit growth in all 

countries. 

All this does not change our determination to operate as a 

European bank throughout Central and Eastern Europe. Despite 

regional divergence and structural differences, the growth 

potential of the banking sector in CEE countries remains intact. 

This is based on the economic catching-up process and the 

accelerated monetary cycle, and also on convergence in terms 

of wages, standard of living and consumer habits. The latter 

factors hold out the prospect of gradually closing the gap in the 

supply of modern banking products and services. Various cost 

reduction programmes are under way to enhance cost efficiency 

by redimensioning head offices after the numerous integration 

tasks performed in the past years; this process involves the 

pooling of real estate used by the banks themselves in several 

countries. The establishment of cross-regional infrastructure for 

transaction settlement, IT and internal services is also of great 

significance in the long term. A major step forward in this context 

was the creation of UBIS, with UBIS Austria as one of its 



components, in 2011 and 2012, which will enable us to unlock 

synergies in the coming years. This is particularly important as 

demands on IT and back-office operations are rising (taxation of 

capital gains on the sale of securities, reporting and regulatory 

requirements etc.). 

� We expect that the moderate revenue growth planned for 2012 

will be reflected in operating profit to a larger extent. We believe 

that the reduction of net write-downs of loans and provisions for 

guarantees and commitments in the past few years will be 

sustainable, even though fluctuations over time cannot be 

excluded. While the provisioning charge in Austria has declined 

to a very low level, there is further potential for restructuring in 

CEE, especially in those countries which originally caused the 

strong increase in the provisioning charge. This points to a 

continued upward trend in net operating profit. On this 

favourable basis we assume that the substantial goodwill 

impairment charges which Bank Austria had to absorb in 2011 

will not be repeated in 2012 and 2013. As far as sovereign risks 

are concerned, we expect that there will be no further debt 

restructuring outside Greece. After the lessons learned in the 

past year, the determination of the Eurogroup, the EU and the 

European institutions to avoid contagion enjoys credibility, as 

does the path towards stricter fiscal discipline in Europe. We 

have adjusted the valuations of our subsidiaries and equity 

interests in other companies in CEE to the new business outlook 

on several occasions since 2008, most recently in 2011. These 

adjustments have been substantial, so that similar charges 

should not recur. Apart from any unexpected risks which may 

arise from geopolitical developments, for example, we think that 

a larger proportion of the anticipated stable or slightly stronger 

operating performance is likely to feed through to Bank Austria’s 

net profit. 

� Bank Austria coped well, without state aid, in the crisis years. 

Its strong operating performance enabled the bank to absorb 

substantial burdens arising from adjustments. Over the past few 

years we have aligned our business model with sustainability 

criteria. The main features are the top priority given to customer 

business and the renewed attention to our core economic 

functions – and this includes a permanent commitment to CEE. 

We are also determined to play an active role and share 

responsibility as a corporate citizen in all countries and local 

communities in which we operate. We want to contribute to 

restoring the reputation of banking operations within a short 

time. 

Developments in the banking sector and at Bank Austria will not 

only reflect economic trends and our response to them. A decisive 

factor will be the regulatory framework in which we operate. We 

have prepared for the regulatory changes arising from Basel 3, 

including capital ratios, SIFI requirements, changes in the definition 

of equity capital etc. While other new rules such as liquidity ratios 

and funding rules (LCR and NSFR) are in the process of being 

tested or calibrated, Bank Austria has also made preparations for 

them. These rules support the stability of the financial sector, which 

is in our own interests. 

We are an international bank and it is therefore particularly 

important for us that supervisory authorities take a coordinated 

approach and create rules which are consistent across national 

borders. Banking business – more than other sectors of the 

economy – needs a reliable environment and a level playing field, 

in the home country and in the target country. Changes in the 

general framework should be made in a reasonable manner to 

avoid a situation in which the cumulative effect of regulatory 

restrictions and fiscal burdens impacts the banks’ ability to operate 

effectively. Direct intervention such as stress tests with 

requirements set at short notice, bank levies which are seen as adhoc 

fiscal charges, taxes on business volume and transactions, or 

trading restrictions may quickly prove to be counterproductive. For 

us as a European bank, it is of great importance that the use of 

protectionist measures, including efforts to restrict the free 

movement of capital or influence it by bringing moral pressure to 

bear, be prevented from the very start. 

Research and development 

Bank Austria’s business objective 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 refined. 

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. The go-live is planned for the 

week-end of 21/22 July 2012, with preparations taking the form of 

trial runs and the final test in the preceding months. The 

standardisation of the many systems adopted through previous 

business combinations has cut costs while increasing IT efficiency 

and reducing IT complexity. 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, a web-based system 

harmonised across the different regions. EuroSIG moreover 

facilitates the development and settlement of products which are 

distributed on a cross-border basis. Austria will be the fourth 

country – after Italy, the Czech Republic and Germany – to adopt 

EuroSIG. In 2011, components of software development, of the 

computer operations centre and of support services were 

outsourced to the IBM Banking Solution Center. The relevant 

activities will in future be performed in cooperation with IBM. A 

similar service agreement was concluded for the next ten years 

with IBM in Ukraine in February 2012. 



A personnel-intensive service company seeking to increase 

efficiency needs to make investments in the buildings it uses. With 

the realisation of the Bank Austria Campus project, the head office 

functions currently performed in various locations will be 

concentrated within a single headquarters complex. Bank Austria 

will develop, build and utilise a new business location with 

workplaces for about 4,000 employees of the bank by 2016. 

Planning permission will probably be granted by the authorities in 

2012. Since 2011, UniCredit Bank Austria AG has been building an 

innovative basic and ongoing training centre at Kaiserwasser in 

Vienna. The training centre – with Turin, UniCredit Group’s second 

international centre for management development – will include 

sports and leisure facilities, and facilities for events. After 

completion, scheduled for the end of 2012, it is envisaged that 

about 4,000 employees from all the regions covered by the Group’s 

operations will participate in training courses at the centre each 

year. 

3. Events after the balance sheet date 

The guarantee assumed in April 2010 for a second loss position of 

a synthetic securitisation issued by the Ukrainian banking 

subsidiary ("Ukrsotsbank") expired and was renewed by UniCredit 

Bank Austria AG at the end of December 2011. The Ukrainian 

central bank gave its approval as at 31 January 2012. At the end of 

2011 the transaction amounted to USD 1,125.3 m (guarantee 

amount). 

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 in addition to the existing internal control 

system. 

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 maintain effective 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. 

The implementation of the internal control system in relation to the 

financial reporting process is also 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. IT access authorisation is handled on a very restrictive 

basis. 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 

Willbald Cernko Gianni Franco Papa 

(Chairman) (Deputy Chairman) 

Massimiliano Fossati Francesco Giordano Rainer Hauser 

Dieter Hengl Doris Tomanek Robert Zadrazil 

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. 

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 2011 

Assets 31 Dec. 2011 31 Dec. 2010 

Change 

in € 1,000 in € 1,000 in € 1,000 in % 

1. Cash in hand, balances with central banks and postal giro offices 1,035,215 1,221,130 -185,915 -15.2 

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 

3,167,337 3,418,027 -250,690 -7.3 

3,167,337 3,418,027 -250,690 -7.3 

--- --- --- --- 

3. Loans and advances to credit institutions 22,883,174 23,092,322 -209,148 -0.9 

a) repayable on demand 907,280 3,068,524 -2,161,244 -70.4 

b) other loans and advances 

21,975,894 20,023,798 1,952,096 9.7 

4. Loans and advances 68,124,085to customers 66,704,530 1,419,555 2.1 

5. Bonds and other 

fixed-income securities 12,090,602 9,009,293 3,081,309 34.2 

a) issued by public borrowers 630,173 772,250 -142,077 -18.4 

b) issued by other borrowers 11,460,429 8,237,043 3,223,386 39.1 

of which: own bonds 

1,602,573 527,111 1,075,462 >100 

6. Shares and other 328,622 variable-yield securities 425,883 -97,261 -22.8 

7. Equity interests 3,198,263 2,808,729 389,534 13.9 

of which: in credit institutions 

161,352 194,727 -33,375 -17.1 

8. Shares in group companies 12,342,813 12,555,297 -212,484 -1.7 

of which: in credit institutions 

9,267,370 9,121,297 146,073 1.6 

9. Intangible fixed59,152 assets 

80,683 -21,531 -26.7 

10. Tangible fixed assets 

of which: land and buildings used by the credit institution 

261,169 256,696 4,473 1.7 

for its own business operations 

136,806 137,133 -327 -0.2 

11. Own shares and 

shares in a controlling company --- --- --- --of 

which: par value 

--- --- --- --- 

--- --- --- --- 

--- --- --- --- 

12. Other assets1,096,329 

1,097,108 -779 -0.1 

13. Prepaid expenses 419,663 62,596 357,067 >100 

125,006,424 120,732,294 4,274,130 3.5 



Liabilities and Shareholders' Equity 31 Dec. 2011 31 Dec. 2010 

Change 

in € 1,000 in € 1,000 in € 1,000 in % 

1. Amounts owed to credit institutions 31,873,073 30,152,398 1,720,675 5.7 

a) repayable on demand 3,441,559 4,648,678 -1,207,119 -26.0 

b) w ith agreed maturity dates or periods of notice 28,431,514 25,503,720 2,927,794 11.5 

2. Amounts owed to customers 46,301,693 45,921,168 380,525 0.8 

a) savings deposits 16,653,853 16,437,147 216,706 1.3 

aa) repayable on demand 5,030,262 4,662,385 367,877 7.9 

bb) w ith agreed maturity dates or periods of notice 11,623,591 11,774,762 -151,171 -1.3 

b) other liabilities 29,647,840 29,484,021 163,819 0.6 

aa) repayable on demand 19,528,034 16,680,934 2,847,100 17.1 

bb) w ith agreed maturity dates or periods of notice 10,119,806 12,803,087 -2,683,281 -21.0 

3. Debts evidenced by certificates 23,954,383 21,053,024 2,901,359 13.8 

a) bonds issued 17,546,236 12,723,037 4,823,199 37.9 

b) other debts evidenced by certificates 6,408,147 8,329,987 -1,921,840 -23.1 

4. Other liabilities 930,572 1,590,027 -659,455 -41.5 

5. Deferred income 172,439 46,612 125,827 >100,0 

6. Provisions 4,591,307 4,118,829 472,478 11.5 

a) provisions for severance payments 267,798 251,510 16,288 6.5 

b) pension provisions 2,856,359 2,794,149 62,210 2.2 

c) provisions for taxes 86,091 65,300 20,791 31.8 

d) other 1,381,059 1,007,870 373,189 37.0 

6.A Special fund for general banking risks --- --- --- --- 

7. Subordinated liabilities 2,619,018 2,794,736 -175,718 -6.3 

8. Supplementary capital 446,983 452,810 -5,827 -1.3 

9. Subscribed capital 1,681,034 1,681,034 --- --- 

10. Capital reserves 9,332,128 9,332,128 --- --a) 

subject to legal restrictions 7,913,947 7,913,947 --- --b) 

other 1,418,181 1,418,181 --- --- 

11. Revenue reserves 893,898 1,379,715 -485,817 -35.2 

a) for ow n shares and 

shares in a controlling company --- --- --- --b) 

statutory reserve 14,535 14,535 --- --c) 

reserves provided for by the bye-law s 

--- --- --- --d) 

other reserves 879,363 1,365,180 -485,817 -35.6 

12. Reserve pursuant to Section 23 (6) 

of the Austrian Banking Act (BWG) 2,129,748 2,129,748 --- --- 

13. Accumulated profit/loss 2,414 2,314 100 4.3 

14. Untaxed reserves 77,734 77,751 -17 0.0 

a) valuation reserve resulting from special depreciation 77,734 77,751 -17 0.0 

b) other untaxed reserves --- --- --- --aa) 

investment reserve pursuant to Section 9 

of the Austrian Income Tax Act (EStG) 1988 --- --- --- --bb) 

investment allow ance 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 --- --- --- --- 

125,006,424 120,732,294 4,274,130 3.5 



Items shown below the Balance Sheet 

Assets 31 Dec. 2011 31 Dec. 2010 

Change 

in € 1,000 in € 1,000 in € 1,000 in % 

1. Foreign assets 60,864,595 57,659,214 3,205,381 5.6 

Liabilities and Shareholders' Equity 31 Dec. 2011 31 Dec. 2010 

Change 

in € 1,000 in € 1,000 in € 1,000 in % 

1. Contingent liabilities 14,203,715 14,171,106 32,609 0.2 

of w hich: 

a) acceptances and 

endorsements --- --- --- --- 

b) guarantees and assets pledged as 

collateral security 

14,203,715 14,171,106 32,609 0.2 

2. Commitments 2,990,962 2,757,487 233,475 8.5 

of w hich: commitments arising from repurchase agreements 

1,817 3,634 -1,817 -50.0 

3. Liabilities arising 1,127 from transactions 1,127on a trust basis --- --- 

4. Eligible capital pursuant to Article 23 para. 14 13,545,882 13,233,417 312,465 2.4 

of w hich: Ow n funds pursuant to Article 23 para. 14 no. 7 

132,305 96,360 35,945 37.3 

5. Capital requirement pursuant to Article 22 para. 1 5,712,051 5,890,458 -178,407 -3.0 

of w hich: Capital requirement pursuant to Article 22 para. 1 nos. 1 and 

4 

5,579,746 5,794,098 -214,352 -3.7 

6. Foreign liabilities 30,043,386 30,278,238 -234,852 -0.8 



Profit and Loss Account for the year ended 31 Dec. 2011 

Profit and Loss Account for the year ended 31 December 2011 2011 2010 

in € 1,000 in € 1,000 in € 1,000 in % 

1. Interest and similar income 3,463,459 3,171,681 291,778 9.2 

of w hich: from fixed-income securities 

435,292 317,238 118,054 37.2 

2. Interest and similar expenses -2,073,269 -1,863,123 210,146 11.3 

I. NET INTEREST INCOME 1,390,190 1,308,558 81,632 6.2 

3. Income from securities and equity interests 508,422 692,582 -184,160 -26.6 

a) income from shares, other ow nership interests and 

variable-yield securities 8,047 7,341 706 9.6 

b) income from equity interests 11,322 16,033 -4,711 -29.4 

c) income from shares in group companies 

489,053 669,208 -180,155 -26.9 

Net fee and commission income 

(sub-total of items 4 and 5) 

572,702 698,755 -126,053 -18.0 

4. Fee and commission income 802,887 911,200 -108,313 -11.9 

5. Fee and commission expenses -230,185 -212,445 17,740 8.4 

6. Net profit/loss on trading activities 69,563 34,524 35,039 >100,0 

7. Other operating income 73,996 106,273 -32,277 -30.4 

II. OPERATINGINCOME 2,614,873 2,840,692 -225,819 -7.9 

8. General administrative expenses -1,563,983 -1,461,874 102,109 7.0 

a) staff costs -953,177 -879,566 73,611 8.4 

w ages and salaries -525,767 -474,755 51,012 10.7 

expenses for statutory social-security contributions 

and compulsory contributions related to 

w ages and salaries -106,258 -105,344 914 0.9 

other employee benefits -13,859 -11,001 2,858 26.0 

expenses for retirement 

benefits -229,793 -239,693 -9,900 -4.1 

allocation to the pension provision -47,557 -19,856 27,701 >100,0 

expenses for severance payments 

and payments to severance-payment funds 

Change 

-29,943 -28,917 1,026 3.5 

b) other administrative expenses -610,806 -582,308 28,498 4.9 

9. Depreciation and amortisation 

of asset items 9 and 10 -47,686 -80,037 -32,351 -40.4 

10. Other operating expenses -190,756 -145,870 44,886 30.8 

III. OPERATINGEXPENSES -1,802,425 -1,687,781 114,644 6.8 

IV. OPERATINGRESULTS 812,448 1,152,911 -340,463 -29.5 




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 -565,878 -704,699 -138,821 -19.7 

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 -632,883 -406,420 226,463 55.7 

V. RESULTS FROM ORDINARY BUSINESS ACTIVITIES -386,313 41,792 -428,105 >-100,0 

15. Extraordinary income --- --- --- --of 

w hich: releases from the special fund for general banking risks 

--- --- --- --- 

16. Extraordinary expenses 

--of 

w hich: allocations to the special fund for general banking risks --- 

--- --- --- 

--- --- --- 

17. Extraordinary results --- --- --- --- 

(sub-total of items 15 and 16) 

18. Taxes on income -21,473 -20,930 543 2.6 

19. Other taxes not included under item 18 -77,948 -20,628 57,320 >100 

VI. ANNUAL SURPLUS/ANNUAL DEFICIT -485,734 234 -485,968 >-100 

20. Movements in reserves 485,834 --- 485,834 --- 

VII. PROFIT/LOSS FOR THE YEAR 100 234 -134 -57.3 

21. Profit/loss brought forward from previous year 2,314 2,080 234 11.3 

VIII. ACCUMULATED PROFIT/LOSS 2,414 2,314 100 4.3 


Notes to the Financial Statements of UniCredit Bank Austria AG 

Notes to the Financial Statements of 

UniCredit Bank Austria AG 

1. General information 

The financial statements of UniCredit Bank Austria AG 

for the 2011 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 26a (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 (Offenlegungsverordnung – OffV) 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, 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 

2011. Expenses and income in foreign currencies were 

translated at the ECB’s end-of-month reference rates. 

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 a permanent decline in 

value, write-downs were made in respect of listed and 

unlisted companies. 

Impairment test 

For the impairment test the Standard UniCredit Group 

Discounted Cash Flow Valuation Model (3-phase 

model) was employed throughout the Group using the 

following assumptions: 

� Phase 1 (2011): the figures are based on year-end 

projections for net profit and risk-weighted assets 

of the respective cash-generating units. 

� Phase 2 (2012–2021): 

Phase 2a – planning period (2012–2015): the 

2012 budget figures for net profit and riskweighted 

assets were used for 2012, and multiyear 

planning figures were used for subsequent 

years. 

Phase 2b (2016–2021): in this phase the growth 

rates of net income and risk-weighted assets 

converge towards 2%. 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%). 

Phase 2a is the result 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: The terminal value 

cost of equity of CGUs in the euro area was set at 

10%. For CGUs which will join the euro area by 

2018, the rate is 10.35%. The terminal value cost 

of equity for all other CGUs was set at 11.85%. 

Exceptions are Kazakhstan and Ukraine, where 

the terminal value cost of equity was set at 12%. 

It should also be noted 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 2011 financial statements. 

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 

For derivatives in the banking book, use was made of 

the grandfathering rule defined by the Austrian 

Financial Market Authority (FMA) with regard to 

interest rate risk management. As in previous years, 

such derivatives are therefore valued using the accrual 

method as long as, on balance, they do not result in 

pending losses. To the extent that derivatives were 

interest-rate hedging transactions, related income was 

included in net interest income. 

Based on the position paper of the Austrian Financial 

Reporting and Auditing Committee (AFRAC), valuation 

units were formed for hedging derivatives relating to 

structured own issues. Derivatives assigned to the 

trading book were marked to market. 

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: 5.25% p.a. (2010: 5.00% p.a.) 

� Increases under collective bargaining agreements: 

2.45% p.a. (2010: 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. (2010: 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 

service regulation 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 

The AFRAC position paper of September 2010 on 

accounting for derivative financial instruments and 

hedging transactions was applied for the first time in 

the 2011 financial year. With regard to interest rate risk 

management in the banking book, however, use was 

made of the FMA’s grandfathering rule: derivatives 

used for interest rate risk management were not 

valued on an individual basis but the bank continued 

not to recognise negative market values of derivatives 

as long as a portfolio view shows that undisclosed 

reserves arising from interest rate management 

instruments predominate in the banking book. 

For hedging relationships of derivatives and structured 

issues (micro hedges), valuation units within the 

meaning of the AFRAC position paper of September 

2010 were formed for the first time as these 

instruments were reclassified from the trading book to 

the banking book (see item 4.22). 



4. Notes to the balance sheet 

4.1. Breakdown by maturity 

Breakdown by maturity 


(in EUR) (in EUR '000) 

Loans and advances to credit institutions 

up to three months 6,577,750,478.16 3,131,264 

over three months and up to one year 3,246,298,226.99 5,277,758 

over one year and up to five years 6,820,798,003.46 6,130,480 

over five years 5,331,046,954.51 5,484,296 

Loans and advances to customers 





Amounts owed to credit institutions 





Amounts owed to customers 

a) Savings deposits *) 





b) Other amounts owed to customers 





Other debts evidenced by certificates 

up to three months 604,008,305.22 1,632,691 

over three months and up to one year 203,016,455.25 419,808 



*) 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 2011, foreign currency assets 

amounted to EUR 26,349,032,111.31 or 21.08 % of 

total assets (31 December 2010: EUR 28,106,914 thsd 

or 23.23 % of total assets). Foreign currency liabilities 

amounted to EUR 28,074,506,252.35 or 22.46 % of 

the balance sheet total (31 December 2010: 

EUR 28,186,104 thsd or 23.29 % 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. 2011 31 Dec. 2010 31 Dec. 2011 31 Dec. 2010 31 Dec. 2011 31 Dec. 2010 

(in EUR) (in EUR '000) (in EUR) (in EUR '000) (in EUR) (in EUR '000) 

Loans and advances 

Loans and advances to credit 

institutions 

Loans and advances to 

19,360,316,248.00 19,081,130 864,520,154.00 749,019 0.00 0 

customers 

Bonds and other fixed-income 

7,289,870,484.00 7,290,421 851,703,997.00 520,289 1,716,374.00 1,568 

securities 7,288,058,615.98 4,495,446 67,630,450.45 0 0.00 0 

Amounts owed 

Amounts owed to credit 

institutions 14,905,770,758.00 18,329,513 11,364,150,662.00 11,611,853 0.00 0 

Amounts owed to customers 943,063,798.00 6,944,858 217,522,040.00 228,128 7,598,440.00 6,226 

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 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 

� FactorBank AG 

� Human Resources Service and Development 

GmbH 

� MC Marketing GmbH 

� MY Beteiligungs GmbH 

� RE St.Marx Holding GmbH 

� UniCredit Turn-Around Management GmbH 

� ZETA Fünf Handels GmbH 



4.5. Related party transactions 

UniCredit Bank Austria AG has issued a guarantee in 

the amount of USD 1,125.3 m for loans to customers 

of Public Joint Stock Company “Ukrsotsbank”, Kiev. 

The guarantee was renewed until 10 January 2013 in 

the amount of USD 719.9 m. In this context UniCredit 

Bank Austria AG 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 2011, financial fixed 

assets accounted for EUR 10,713,479,558.98 

(31 December 2010: EUR 5,829,037 thsd) and current 

assets including the trading portfolio accounted for 

EUR 6,202,145,687.77 (31 December 2010: EUR 

8,401,188 thsd). 

The Management Board decided to hold to maturity 

bonds issued by UniCredit S.p.A., Rome, and tranches 

retained from the bank’s own securitisation 

transactions. Therefore we transferred, from other 

current assets to fixed assets, bonds of 

UniCredit S.p.A in the nominal amount of 

EUR 4,980,000,000.00 at the market value of 

EUR 4,884,553,287.80 as at 31 July 2011 and 

retained tranches from the bank’s own securitisation 

transactions in the nominal amount of 

EUR 57,800,000.00 at the market value of 

EUR 39,159,871.52 as at 28 August 2011. 

4.6.1. The following breakdown shows securities 

admitted to trading on an exchange: 

Listed Not listed 

31 Dec. 2011 31 Dec. 2010 31 Dec. 2011 31 Dec. 2010 

(in EUR) (in EUR '000) (in EUR) (in EUR '000) 

Bonds and other fixed-income securities 3,426,706,152.06 2,894,892 8,663,895,973.44 6,114,401 

Shares and other variable-yield securities 45,645,368.86 56,853 451,390.04 3,383 

Equity interests 349,283,328.84 280,858 0.00 0 

Shares in group companies 2,928,662,298.31 3,155,878 0.00 0 

Total 6,750,297,148.07 6,388,481 8,664,347,363.48 6,117,784 

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. 2011 31 Dec. 2010 31 Dec. 2011 31 Dec. 2010 

(in EUR) (in EUR '000) (in EUR) (in EUR '000) 

Bonds and other fixed-income 

securities 

Shares and other variable-yield 

8,560,315,738.43 3,219,178 3,530,286,387.07 5,790,115 

securities 0.00 0 46,096,758.90 60,236 

Total 8,560,315,738.43 3,219,178 3,576,383,145.97 5,850,351 

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): 

Book value 

Unrecognised 

losses 

Book value 

Unrecognised 

losses 

31 Dec. 2011 31 Dec. 2011 31 Dec. 2010 31 Dec. 2010 

(in EUR) (in EUR) (in EUR thsd) (in EUR thsd) 

Treasury bills and 

similar securities 

Bonds and other 

fixed-income 

307,542,617.88 -53,258,944.92 447,129 -103,843 

securities 

Shares and other 

variable-yield 

7,407,554,786.15 -843,208,268.91 1,810,908 -193,724 

securities 94,340,000.00 -206,776.86 0 0 

Equity interests 

Shares in group 

25,337,083.70 -3,588,237.70 212,118 -66,687 

companies 0.00 0.00 0 0 

A regular impairment test was performed for these 

financial instruments. Within the item “Bonds and other 

fixed-income securities”, a direct write-down of 

EUR 2,849,917.08 on holdings of 4 % Bündelanleihe 

05/12 was made in the reporting year. Analyses 

performed in respect of the other holdings did not 

provide any indication of impairment and therefore no 

further write-downs were required for 2011. 



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 8,114,058.75 

(31 December 2010: EUR 19,058 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 60,461,215.84 

(31 December 2010: EUR 43,416 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 2011, the market value of 

securities held in the trading portfolio was 

EUR 9,489.50 (31 December 2010: EUR 19 thsd) 

higher than cost. 

At the balance sheet date, the market value of listed 

securities held to comply with liquidity requirements 

was EUR 48,941,290.04 (31 December 2010: 

EUR 52,031 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 4,481,922,144.86 (31 December 2010: 

EUR 530,764 thsd) will become due in 2012. Of the 

bonds issued, securities in the amount of 

EUR 4,744,145,375.91 (31 December 2010: 

EUR 3,630,706 thsd) will become due in 2012. 

4.10. Trading book 

In the 2011 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 84,895,707,696.75 (31 December 2010: 

EUR 107,251,491 thsd). 

Of this total, securities carried in the balance sheet 

account for EUR 538,500.07 (31 December 2010: 

EUR 87,405 thsd), money market instruments were 

EUR 808,341,525.98 (31 December 2010: 

EUR 11,214,320 thsd) and other financial instruments 

accounted for EUR 84,086,827,670.70 (31 December 

2010: EUR 95,949,767 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 34,195,275,700.13. 

4.11. Own shares 

There were no sales or purchases of UniCredit Bank 

Austria AG ordinary shares in 2011 (2010: no sales or 

purchases). 

As at 31 December 2011, UniCredit Bank Austria AG 

did not hold any of its own shares (31 December 2010: 

0). 

4.12. Shares in a controlling company 

In the reporting year, sales or purchases of UniCredit 

S.p.A. ordinary shares as part of customer business 

involved 28,320,406 shares (2010: 5,088 thsd shares). 

At the balance sheet date, Bank Austria did not hold 

any UniCredit S.p.A. shares (31 December 2010: 0). 



4.13. Repurchased own subordinated bonds and 

supplementary capital 

As at 31 December 2011, UniCredit Bank Austria AG’s 

own portfolio included subordinated bonds issued by 

the bank itself with a total carrying amount of 

EUR 26,677,943.70 (31 December 2010: EUR 20,816 

thsd) and no supplementary capital (31 December 

2010: EUR 0 thsd). 

4.14. Trust transactions 



Loans and advances to customers 383,015,789.88 446,637 

Total loans and advances 383,015,789.88 446,637 

Amounts owed to credit institutions 102,581,700.17 123,090 

Amounts owed to customers 280,434,089.71 323,547 

Total amounts owed 383,015,789.88 446,637 

4.15. Assets sold under repurchase agreements 

As at the balance sheet date, the book value of assets 

transferred under repurchase agreements was 

EUR 1,511,169,264.83 (31 December 2010: 

EUR 321,150 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 

Loans and advances to customers 


of which: group companies 

Bonds and other fixed-income securities 



(in EUR) (in EUR thsd) 

1,441,503,956.47 1,403,963 

0.00 17,417 

1,426,503,956.47 1,386,546 

712,620,104.13 468,035 

299,999.99 582 

634,630,333.13 276,338 

35,112,546.35 30,263 

0.00 0 

27,414,978.40 of which: group companies 21,324 

4.17. Intangible fixed assets and tangible fixed 

assets 

The item “Intangible fixed assets” does not include any 

software (2010: EUR 0) that was acquired from a 

group company. 

At the balance sheet date, the land value of property 

was EUR 62,294,574.80 (31 December 2010: 

EUR 62,431 thsd). 

4.18. Movements in fixed assets 

Equity interests as shown in the table “Movements in 

fixed assets of UniCredit Bank Austria AG” below 

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”. 

Movements in fixed assets of UniCredit Bank Austria AG 

Cost (in EUR) 

31 Dec. 2010 Additions Disposals Transfers 31 Dec. 2011 

Securities 5,634,726,388.76 2,914,362,663.61 2,716,206,859.87 4,940,674,653.25 10,773,556,845.75 

Equity interests 3,306,044,695.52 69,505,098.23 47,231,788.39 0.00 3,328,318,005.36 

Shares in 

group companies 21,877,493,453.34 659,251,825.88 325,920,464.10 0.00 22,210,824,815.12 

Intangible 

fixed assets 487,136,378.95 0.00 3,232.64 0.00 487,133,146.31 

Tangible fixed assets 

a) Land and buildings 215,249,350.59 5,417,182.15 1,882,796.91 647,946.41 219,431,682.24 

b) Other tangible fixed assets 419,799,573.57 26,406,923.00 9,040,327.83 -647,946.41 436,518,222.33 

Totals 31,940,449,840.73 3,674,943,692.87 3,100,285,469.74 4,940,674,653.25 37,455,782,717.11 

Carrying value (in EUR) 

Accumulated Write-downs/ 

write-downs/ Carrying value Carrying value depreciation 

Write-ups depreciation 31 Dec. 2011 31 Dec. 2010 in 2011 

Securities 36,866,903.97 1) 274,350,549.04 10,536,073,200.68 5,634,368,165.62 252,045,601.39 

Equity interests 374,025,960.69 504,081,542.89 3,198,262,423.16 2,808,728,394.93 6,944,353.56 

Shares in 

group companies 47,999.00 9,868,060,012.47 12,342,812,801.65 12,555,296,914.90 813,084,170.84 

Intangible 

fixed assets 0.00 427,980,767.79 59,152,378.52 80,683,458.88 21,531,080.36 

Tangible fixed assets 

a) Land and buildings 0.00 70,702,778.42 148,728,903.82 147,653,540.64 3,233,269.81 

b) Other tangible fixed assets 592.94 324,078,471.71 112,440,343.56 109,042,434.83 22,921,964.00 

Totals 410,941,456.60 11,469,254,122.32 26,397,470,051.39 21,335,772,909.80 1,119,760,439.96 

1) Premiums/discounts are spread over the period to maturity 



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 58,878,733.17 59,728 

for the subsequent five business years 304,902,113.68 307,025 

4.21. Other assets 

4.21.1. Other assets 

This item includes valuation components, both 

reflected and not reflected in income, of 

EUR 681,667,288.77 (31 December 2010: 

EUR 689,247 thsd) from derivative products. 

Dividends receivable from group companies with which 

there are profit pooling arrangements totalled 


thsd). 

Claims against the Austrian tax office for companies 

(Finanzamt für Körperschaften) totalled 

EUR 247,311,339.68 (31 December 2010: 

EUR 212,652 thsd). 

Other assets also include accrued interest and fee 

and commission income in the amount of 


thsd). 

4.21.2. Prepaid expenses 

This item includes an advance rent payment of 


thsd) for the property in Lassallestrasse 5, 1020 

Vienna, and advance rent payments of 


thsd) for various properties. 

As a result of the transfer of structured own issues to 

the banking book (see item 4.22.) this balance sheet 

item includes discounts of EUR 364,667,875.30. 

4.22. Debts evidenced by certificates 

As at 30 November 2011, structured own issues with a 

nominal value of EUR 1,266,676,567.55 were 

transferred at market values from the trading book to 

the banking book to comply with regulatory 

requirements. In the banking book they are stated at 

the amount repayable, with the differences between 

market value and amount repayable being included in 

the item “prepaid expenses” in the case of discounts, 

and in the item “deferred income” in the case of 

premiums. The related hedging derivatives were also 

transferred at the market values from the trading book 

to the banking book; in the banking book they form 

valuation units together with the related own issues. 

Derivatives with positive market values now form an 

additional part of the discounts in prepaid expenses, 

while derivatives with negative market values now form 

an additional part of the premiums in deferred income. 

As a result of the transfers of own issues, the amounts 

stated in the balance sheet as at 30 November 2011 

increased by EUR 253,255,508.59 in item 3a, by EUR 

35,883,524.50 in item 3b, by EUR 374,099,555.91 in 

prepaid expenses and by EUR 116,048,778.62 in 

deferred income. 

The transfer of the hedging derivatives from the trading 

book to the banking book reduced other assets by 

EUR 81,502,917.12 and other liabilities by EUR 

112,591,172.92. Credit default swaps entered into for 

hedging purposes were also transferred to the banking 

book at market values and continue to be covered by 

provisions in full. 



4.23. Other liabilities 

This item includes valuation components, both 

reflected and not reflected in income, in the amount 

of EUR 802,695,138.20 (31 December 2010: 

EUR 1,469,595 thsd) from derivative products. 

Liabilities resulting from the settlement of Austrian 

capital yields tax (Kapitalertragsteuer – KESt) totalled 


thsd). 

Liabilities arising from short positions amounted to 

EUR 47.12 (31 December 2010: EUR 92 thsd). 

Other liabilities also include accrued expenses in the 

amount of EUR 2,787,476.00 (31 December 2010: 

EUR 2,664 thsd). 

The item also comprises liabilities of EUR 

3,426,635.39 (31 December 2010: EUR 1,670 thsd) 

from the assumption of losses. 

4.24. Deferred income 

As a result of the transfer of structured own issues to 

the banking book (see item 4.22.) this balance sheet 

item includes premiums of EUR 112,588,380.02. 

4.25. Provisions 

4.25.1. Provisions for pensions and severance 

payments 

The discount rate applied in 2011 was 5.25 %. 

The valuation of provisions results in a deficit of 

EUR 442,699,000.00 (31 December 2010: 

EUR 630,057 thsd) compared with the amount of 

pension provisions stated in the balance sheet, and a 

deficit of EUR 29,105,000.00 (31 December 2010: 

EUR 42,920 thsd) compared with the amount of 

provisions for severance payments stated in the 

balance sheet. 

The excess amount of EUR 117,760,000.00 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 [2012: 

EUR 23,552,000.00 (pensions) and EUR 0.00 

(severance payments)]. The amounts recognised as 

expenses in 2011 were EUR 58,669,000.00 (pensions) 

and EUR 2,695,000.00 (severance payments). 

In the financial year, pension provisions increased by 

EUR 62,211,000.00. The regular allocation to pension 

provisions was EUR 3,542,000.00 (2010: 

EUR 6,586 thsd). In the balance sheet at 31 December 

2011, pension provisions were stated at 

EUR 2,856,359,607.19 (31 December 2010: 

EUR 2,794,149 thsd). 

In the financial year, provisions for severance 

payments rose by EUR 16,287,950.07 (2010: 

EUR 6,329 thsd). In the balance sheet at 31 December 

2011, provisions for severance payments were stated 

at EUR 267,797,693.63 (31 December 2010: 

EUR 251,510 thsd). 

4.25.2. Other provisions 

Other provisions 



Provisions for receivables 623,428,844.43 411,926 

Provisions for pending losses 472,100,231.84 306,267 

Provisions for equity interests 9,021,360.00 38,136 

Provisions for indeterminate liabilities 263,508,318.17 248,541 

Restructuring provisions 13,000,000.00 3,000 

Total 1,381,058,754.44 1,007,870 

Provisions for indeterminate liabilities include 

provisions related to payroll accounting and provisions 

for legal costs and experts’ fees. 

4.26. 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 2011, subordinated liabilities 

included 38 bonds and 4 time deposits, most of which 

have maturities exceeding ten years. The bonds and 

time deposits are denominated in USD, JPY and EUR. 

The total amount of subordinated capital stated in the 

balance sheet at 31 December 2011 was 

EUR 2,619,018,451.84 (31 December 2010: 

EUR 2,794,736 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. 



4.27. Equity 

4.27.1. Subscribed share capital 

The share capital of UniCredit Bank Austria AG as at 

31 December 2011 was EUR 1,681,033,521.40, 

unchanged compared with the previous year. The 

share capital is 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. 

4.27.2. Capital reserves 

As at 31 December 2011, capital reserves were stated 

at EUR 9,332,128,625.78, unchanged compared with 

the previous year. 

4.27.3. Revenue reserves 

As at 31 December 2011, the statutory reserve was 

shown at EUR 14,534,566.84, unchanged compared 

with the previous year. Other reserves were stated 

at EUR 879,363,292.82 (31 December 2010: 

EUR 1,365,180 thsd). 

4.27.4. Reserve pursuant to Section 23 (6) of the 

Austrian Banking Act (BWG) 

As at 31 December 2011, the reserve pursuant to 

Section 23 (6) of the Austrian Banking Act (BWG) was 

EUR 2,129,748,409.45, unchanged compared with the 

previous year. 

4.27.5. Untaxed reserves 

The valuation reserve resulting from special 

depreciation was reduced by EUR 16,597.00 to 


thsd). The composition of and changes in untaxed 

reserves are shown in the table below. 

4.28. Supplementary capital pursuant to Section 

23 (7) of the Austrian Banking Act (BWG) 

As at 31 December 2011, supplementary capital 

amounted to EUR 446,982,499.40 (31 December 

2010: EUR 452,810 thsd). 

4.29. Cross-holdings 

There are no cross-holdings within the meaning of 

Section 240, item 9, of the Austrian Business Code. 

4.30. 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) 125,264,085.88 125,010 

Cover fund for mortgage bonds and public sector mortgage 

bonds included in liabilities item 3a) 10,285,491,202.32 7,874,463 

for own bonds and medium-term notes 

included in liabilities item 3a) 56,370,888.94 104,144 

Total 10,467,126,177.14 8,103,617 

Security provided in favour of Oesterreichische Kontrollbank AG 

(OeKB) for the settlement of securities transactions 35,120,689.95 50,356 

Margin requirement in favour of various business partners 101,157,549.42 1,275,982 

Claims etc. assigned in favour of OeKB, security deposit with 

Oesterreichische Nationalbank 5,095,356,057.41 3,192,923 

Claims assigned in favour of European Investment Bank, KfW , 

Oesterreichische Nationalbank; securities pledged 6,752,926,913.04 6,844,441 

Security provided in favour of clearing systems (Cedel, 

Euroclear, Xetra) 114,548,361.21 128,373 

Off-balance sheet transactions 4,317,969,063.30 4,706,898 

Security provided for securities lending 0.00 253,952 

Assets pledged in favour of foreign credit institutions and 

financial institutions which are group companies 257,990,117.70 197,350 

Total 16,675,068,752.03 16,650,275 

Aggregate total 27,142,194,929.17 24,753,892 

The balance sheet item “Savings deposits“ includes 

deposits held in trust for wards in the amount of 

EUR 116,170,566.56 (31 December 2010: EUR 

111,990 thsd). 

Movement in valuation reserve and other untaxed reserves as at 31 December 2011 (in EUR) 

31 Dec. 2010 Transfers Allocations Releases 31 Dec. 2011 

1. 

Valuation reserve resulting from 

special 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 -10,951.80 0.00 0.00 7,114.67 

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 -10,951.80 0.00 0.00 77,377,409.75 

Land and buildings 362,474.20 10,951.80 0.00 -16,597.00 356,829.00 

Other tangible fixed assets 0.00 0.00 0.00 0.00 0.00 

362,474.20 10,951.80 0.00 -16,597.00 356,829.00 

Total 1 77,750,835.75 0.00 0.00 -16,597.00 77,734,238.75 

2. Other untaxed reserves 

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 77,750,835.75 0.00 0.00 -16,597.00 77,734,238.75 



4.31. 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, commodityrelated 

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. 

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. 

Information pursuant to Section 64 (1) 3 of the Austrian 

Banking Act may also be derived from the statistical 

data for derivatives. 



Trading book (in EUR) 

Notional amount 

Positive fair 

value 

Negative fair 

value 


Positive fair 

value 

Negative fair 

value 

Trading book 50,422,008,535 1,342,824,971 1,534,369,673 61,127,732,816 1,416,793,096 1,419,247,092 

Financial derivative contracts on debt 

securities and interest rates 38,805,335,309 869,760,765 888,417,876 40,466,559,610 805,537,814 805,756,151 

Options 16,113,894,419 137,445,678 137,560,985 17,652,478,534 217,605,834 138,518,168 

Swaps 22,691,440,890 732,315,087 750,856,892 22,814,081,076 587,931,980 667,237,983 

Forwards 0 0 0 0 0 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 24,520,084 37,950,012 37,950,012 584,944,052 112,683,784 34,551,316 

Options 24,520,084 37,950,012 37,950,012 535,644,052 36,228,099 17,009,868 

Swaps 0 0 0 0 0 0 

Forwards 0 0 0 49,300,000 76,455,684 17,541,448 

Futures 0 0 0 0 0 0 


Financial derivative contracts on exchange 

rates and gold 10,188,635,334 404,387,123 398,467,025 17,712,321,287 482,354,305 472,356,284 

Options 2,942,922,034 97,808,304 97,681,983 2,856,119,724 139,797,247 139,797,248 

Swaps 1,820,786,445 188,987,796 189,866,536 1,331,608,916 183,886,487 175,049,297 

Forwards 5,424,926,855 117,591,024 110,918,505 13,524,592,646 158,670,572 157,509,740 

Futures 0 0 0 0 0 0 


Financial derivative contracts on other 

underlying assets 240,317,810 30,472,505 30,472,505 344,933,867 13,817,282 10,071,281 

Options 79,186,954 15,797,988 15,797,988 279,222,408 9,921,097 6,175,096 

Forwards 161,130,855 14,674,517 14,674,517 65,711,459 3,896,186 3,896,186 

Futures 0 0 0 0 0 0 


Credit derivative contracts 1,163,200,000 254,566 179,062,255 2,018,974,000 2,399,912 96,512,060 

Credit Default Swaps 1,163,200,000 254,566 179,062,255 2,018,974,000 2,399,912 96,512,060 


Banking book - hedging derivatives (in EUR) 


31 December 2011 31 December 2010 

31 December 2011 31 December 2010 

Positive fair 

value 

Negative fair 

value 


Positive fair 

value 

Negative fair 

value 

Banking book - hedging derivatives 133,999,165,473 3,218,666,760 2,209,006,031 159,099,915,850 2,288,077,286 2,585,153,553 

Financial derivative contracts on debt 

securities and interest rates 103,404,485,146 2,828,231,911 1,756,602,022 131,769,445,459 2,070,529,361 1,464,644,649 

Options 4,641,549,983 87,376,068 84,190,247 2,948,266,679 18,732,104 95,921,318 

Swaps 98,762,935,163 2,740,855,844 1,672,411,775 128,821,178,780 2,051,797,257 1,368,723,331 

Forwards 0 0 0 0 0 0 

Futures 0 0 0 0 0 0 


Financial derivative contracts on equity 

securities and share indices 421,365,174 21,405,121 11,709,738 0 0 0 

Options 372,560,000 3,244,947 0 0 0 0 

Swaps 48,805,174 18,160,174 11,709,738 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 29,822,630,232 366,041,359 401,331,345 27,330,470,391 217,547,926 1,120,508,904 

Options 0 0 0 0 0 0 

Swaps 26,799,485,087 333,916,873 383,660,575 27,330,470,391 217,547,926 1,120,508,904 

Forwards 3,023,145,145 32,124,486 17,670,770 0 0 0 

Futures 0 0 0 0 0 0 


Financial derivative contracts on other 

underlying assets 196,684,921 2,765,458 58,662 0 0 0 

Options 196,684,921 2,765,458 58,662 0 0 0 

Forwards 0 0 0 0 0 0 

Futures 0 0 0 0 0 0 


Credit derivative contracts 154,000,000 222,912 39,304,265 0 0 0 

Credit Default Swaps 154,000,000 222,912 39,304,265 0 0 0 


TOTAL of trading book and 

banking book - hedging derivatives 184,421,174,009 4,561,491,731 3,743,375,704 220,227,648,666 3,704,870,383 4,004,400,645 



4.32. 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. 

31 Dec. 2011 

Derivatives by residual life (EUR) Up to 1 year From 1 to 5 years Over 5 years Total 

Trading book 12,651,277,454 20,830,420,993 16,940,310,088 50,422,008,535 

Financial derivative contracts on debt securities and interest rates 4,752,914,006 19,034,607,923 15,017,813,380 38,805,335,309 

Financial derivative contracts on equity securities and share indices 0 0 24,520,084 24,520,084 

Financial derivative contracts on exchange rates and gold 7,664,654,811 982,803,897 1,541,176,625 10,188,635,334 

Financial derivative contracts on other underlying assets 233,708,637 6,609,172 0 240,317,810 

Credit derivative contracts 0 806,400,000 356,800,000 1,163,200,000 

Banking book 36,435,794,698 59,611,008,129 37,952,362,646 133,999,165,473 


Financial derivative contracts on equity securities and share indices 0 384,805,174 36,560,000 421,365,174 

Financial derivative contracts on exchange rates and gold 5,677,995,482 15,482,018,354 8,662,616,396 29,822,630,232 

Financial derivative contracts on other underlying assets 0 196,684,921 0 196,684,921 

Credit derivative contracts 5,000,000 139,000,000 10,000,000 154,000,000 

Total 49,087,072,152 80,441,429,122 54,892,672,735 184,421,174,009 

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 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 

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 sensitivityspecific 

and option-specific limits used for trading and 

positioning in non-linear products. 



In the second quarter of 2011, UniCredit Bank Austria 

AG was granted permission by 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 

constituted a significant change of model in 

accordance with Section 21e of the Austrian Banking 

Act. 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. The conditions 

imposed by the college of supervisors (Italy, Germany, 

Austria) in the course of the approval process for the 

new model were largely fulfilled in 2011. Moreover, in 

2011 an application was filed with the regulators (BoI 

and FMA) for permission to use the models developed 

in UniCredit Group to comply with the new CRD 3 rules 

for the trading book which have been applicable since 

December 2011. 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. The relevant reviews in 

Bank Austria were completed by the Austrian 

supervisory authority with a positive outcome in 2011. 

Approval for use of the new models was given as at 

year-end 2011. 

As at 30 December 2011, VaR at UniCredit Bank 

Austria AG for the respective risk categories was as 

follows (calculated on the basis of the new model): 

(in EUR) 

Exchange rate risk, overall -1,321,717.24 

Equity position risk, trading book 0.00 

Equity position risk, banking book -11,408,788.71 

Interest rate position risk, trading and banking books -6,372,392.61 

Credit spread risk (VaR limit scope) -32,968,618.29 

Overall market risk (VaR limit scope) -43,300,668.00 

Overall market risk arising from the above components -55,831,924.84 

The above figures are based on the new internal 

Group-wide model. 

For the purpose of determining capital requirements, 

the new model has been used since April 2011. The 

parameters used in this context are a 10-day holding 

period, a confidence level of 99% and a multiplier of 

3.5. As at 30 December 2011, the capital requirement 

was EUR 43.9 m. 

The following capital requirements result for UniCredit 

Bank Austria AG in connection with S-VaR and IRC: 

EUR 67.0 m for S-VaR and EUR 21.4 m for IRC. 

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 2011, 

there was no negative backtesting excess. The results 

of backtesting have thus confirmed the accuracy and 

reliability of the model. The multiplier of of 3.5 therefore 

remains unchanged. 

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 market movements 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. 



4.33. Contingent liabilities 

Contingent liabilities of UniCredit Bank Austria AG 

shown below the line in item 1 on the liabilities side 

amounted to EUR 14,203,715,391.63, an increase of 

EUR 32,609,336.23 or 0.23 % compared with the 

previous year. 



Acceptances and endorsements 

Guarantees and assets pledged as 

0.00 0 

collateral security 14,203,715,391.63 14,171,106 

of which Kappa (Kazakhstan) *) 

938,215,044.44 1,277,499 

of which Uranus (Ukraine) **) 

869,666,289.40 903,691 

*) Guarantee for a second loss position of a synthetic 

securitisation issued by the Kazakh subsidiary (ATF Bank). The 

guarantee covers USD 1.2 bn. 

**) Guarantee for a second loss position of a synthetic 

securitisation issued by the Ukrainian subsidiary (Ukrsotsbank). 

The guarantee covers USD 1.1 bn. 

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 2011, amounts paid in for 

retirement planning products benefiting from a state 

premium totalled EUR 117,794,297.06 (including state 

premiums credited for the years 2003 to 2010 in the 

amount of EUR 7,955,601.43, but excluding premiums 

for 2011); this compares with the fund’s net asset 

value of EUR 121,077,435.39. This means that the 

guarantee obligation, which amounted to EUR 

117,794,297.06, 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. 

4.34. 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 eight 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 

1,224,394,385.67 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. 

We issued a letter of comfort to the Republic of Austria 

(Federal Ministry of Finance) in connection with the 

renting of business premises in the area of the Wien- 

Mitte railway station. 

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. 



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. 

4.35. Commitments 

Commitments 



Liabilities arising from sales with an option to repurchase 

pursuant to Section 50 (3) and (5) of the Austrian Banking Act 

(BWG) 1,816,820.89 3,634 

Underwriting commitments in respect of securities 

Call/put options sold (pursuant to Annex 1 to Section 22, 

63,616,513.46 55,852 

item 1 j) 

Irrevocable loan commitments not yet utilised (credit facilities, 

commitments to lend, obligations to purchase securities, 

obligations to provide guarantees 

564,691,362.79 568,328 

or acceptance facilities) 2,291,908,478.67 1,797,049 

Securities borrowed – own account 10,049,800.00 25,394 

Obligations under rent and lease agreements 

Any other irrevocable transactions that may give rise to credit 

58,878,733.17 59,728 

risk and have not been mentioned above 0.00 18,956 

TOTAL COMMITMENTS 2,990,961,708.98 2,757,487 



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 2011, net interest income amounted to 

EUR 1,280,373.82 (2010: EUR 392 thsd) and other 

operating income was EUR 507,391.26 (2010: 

EUR 47 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 50,216,170.59 (2010: 

EUR 181,602 thsd). 

Within income and expenses arising from the valuation 

and disposal of equity interests, group companies 

accounted for a balance of minus 

EUR 791,856,978.49 (2010: minus EUR 435,882 

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 2011, income from safe-custody services and from 

intermediary services relating to insurance, buildingsociety 

savings agreements and real estate totalled 

EUR 70,549,662.13 (2010: EUR 82,032 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. The total amount of this item in 

2011 was EUR 73,995,949.43 (2010: EUR 106,272 

thsd). 

5.5. Expenses for subordinated liabilities 

In the reporting year, the total amount of expenses for 

subordinated liabilities and supplementary capital was 

EUR 139,285,055.44 (2010: EUR 173,515 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 28,645,166.14 (2010: EUR 27,806 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. In the reporting year, other operating 

expenses amounted to EUR 190,756,098.47 (2010: 

EUR 145,870 thsd). 

5.8. Extraordinary income 

No extraordinary income was recorded in the reporting 

year (2010: EUR 0 thsd). 

5.9. Write-ups omitted 

In 2011, no write-ups (2010: EUR 0 thsd) were omitted 

to avoid tax consequences. 

5.10. Effects of the change in untaxed reserves 

The release of valuation reserves did not result in an 

income tax expense in the 2011 financial year (2010: 

EUR 1 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 2011 which 

consisted of UniCredit Bank Austria AG as group 

holding company and 43 companies as group 

members (24 companies with profit and loss transfer 

agreements and 19 companies with tax compensation 

agreements) as well as three group members included 

via joint control arrangements. The tax compensation 

agreements provide for the application of the standalone 

method. Under these agreements, the amount of 

EUR 5,277,892.00 (2010: EUR 5,322 thsd) was 

charged to individual companies in 2011. 

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 21,472,645.17 for the 2011 financial year (2010: 

EUR 20,930 thsd). 

5.12. Deferred tax 

No use was made of the option to carry deferred taxes 

as an asset. 

In 2011, 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 293,824,750.00 (2010: EUR 214,262 thsd). 

5.13. Allocation to reserves 

In the 2011 financial year, the amount of 

EUR 16,597.00 (2010: EUR 21 thsd) was allocated 

from the valuation reserve to the free reserve. 

The amount of EUR 485,833,511.33 (2010: 0) was 

released from the free reserve to cover the deficit for 

the year. 

6. Information on staff, Management 

Board and Supervisory Board 

6.1. Staff 

The average number of salaried staff (full-time 

equivalent) employed in 2011 was 6,655 (2010: 6,381) 

and the average number of other employees was 0 

(2010: 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 2011 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 

9,428,142.65 (2010: EUR 10,608 thsd); allocations 

and payments for other employees 

and their surviving dependants totalled 

EUR 297,864,780.65 (2010: EUR 277,859 thsd). The 

amounts include payments to pension funds 

amounting to EUR 168,194.02 (2010: EUR 110 thsd) 

for active members of the Management Board and 

EUR 18,760.00 (2010: EUR 1,300 thsd) for former 

members of the Management Board. 

6.3. Emoluments of Management Board members 

and Supervisory Board members 

The emoluments paid in the 2011 financial year by 

UniCredit Bank Austria AG to Management Board 

members (excluding payments into pension funds) 

totalled EUR 1,901,324.91 (comparable emoluments in 

2010 totalled EUR 1,705 thsd). Of this total, 

EUR 1,238,880.39 (2010: EUR 1,274 thsd) related to 

fixed salary components and EUR 662,444.52 (2010: 

EUR 431 thsd) related to variable salary components. 

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 2011 financial year, amounted to 

EUR 2,984,659.47 (2010: EUR 2,818 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 8,459,928.63 (of this total, EUR 5,032,052.57 

was paid to former Management Board members of 

Creditanstalt AG, which merged with Bank Austria in 

2002, and their surviving dependants; 

EUR 1,604,062.70 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 8,609 thsd. Emoluments for 

activities in group companies paid to this group of 

persons amounted to 

EUR 334,980.49 (2010: EUR 423 thsd). 

The emoluments of the Supervisory Board members 

active in the 2011 financial year totalled 

EUR 345,475.04 (2010: EUR 316 thsd) for UniCredit 

Bank Austria AG and EUR 1,880.00 (2010: 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 1,689,335.02 (2010: EUR 1,045 thsd). Account 

overdrafts granted to members of the Management 

Board amounted to EUR 2,865.75 (2010: EUR 28 

thsd). Repayments during the business year totalled 

EUR 71,467.88 (2010: EUR 37 thsd). 

Loans to Supervisory Board members amounted to 

EUR 360,414.62 (2010: EUR 552 thsd). Account 

overdrafts granted to members of the Supervisory 

Board totalled EUR 45,225.68 (2010: EUR 274 thsd). 

Repayments during the business year totalled 

EUR 21,657.32 (2010: EUR 44 thsd). 

1.a) Stock options - Members of the Management Board 

Management Board 

Year in which stock 

options were granted 

Number of shares that may be Exercise price or basis 

Number of options granted 

purchased 

or formula 

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 twenty-five 

years. The rate of interest payable on these loans and 

advances is the rate charged to employees of 

UniCredit Bank Austria AG. 

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 sharebased 

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 2011 was EUR 3,274,114.94 (2010: 

EUR 396 thsd). 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 2011 can be seen from the following table: 

Maturity 

Period during which stock 

options may be exercised 

2004 55,500 55,500 4.018 03.09.2008 9 years 

2005 305,500 305,500 4.817 25.11.2009 9 years 

2006 248,400 248,400 5.951 28.06.2010 9 years 

2007 221,304 221,304 7.094 13.07.2011 6 years 

2008 503,867 503,867 4.185 25.06.2012 6 years 

2009 0 0 - - - 

2010 0 0 - - - 

2011 857,286 857,286 1.807 31.07.2014 6 years 

Total Management Board 2004-2011 2,191,857 2,191,857 - - - 

Of which 

Cernko 0 498,421 498,421 1.807 31.07.2014 6 years 

Tomanek 0 132,912 132,912 1.807 31.07.2014 6 years 

Hauser 0 79,747 79,747 1.807 31.07.2014 6 years 

Fossati 0 

12) 12) 

- - - 

Zadrazil 0 99,684 99,684 1.807 31.07.2014 6 years 

Giordano 0 

12) 12) 

- - - 

Hengl 0 46,519 46,519 1.807 31.07.2014 6 years 

Total Management Board 0 857,286 857,286 1.807 31.07.2014 6 years 

Transferability Blocking period 

1) 

1) 

1) 

1) 

1) 

- 

- 

1) 

- 

1) 

1) 

1) 

- 

1) 

- 

1) 

1) 

Fair value as at 

31 Dec. 2011 in EUR 9) 

No 55,389.00 

No 322,241.40 

No 315,219.60 

No 294,157.28 

No 330,133.66 

- 0.00 

- 0.00 

No 516,000.44 

- 1,833,141.38 

No 299,999.60 

No 79,999.73 

No 47,999.72 

- 0.00 

No 59,999.80 

- 0.00 

No 27,999.79 

No 516,000.44 



1.b) Stock options - Executives and Other Employees 

Executives 2007 639,648 639,648 7.094 13.07.2011 6 years 

Executives 2008 1,504,195 1,504,195 4.185 25.06.2012 6 years 

Executives 2011 2,090,024 2,090,024 1.807 31.07.2014 6 years 

Total Executives 2007-2011 4,233,867 4,233,867 - - - 

Other Employees 2007 231,495 231,495 7.094 13.07.2011 6 years 

Other Employees 2008 451,947 451,947 4.185 25.06.2012 6 years 

Other Employees 2011 1,216,780 1,216,780 1.807 31.07.2014 6 years 

Total Other Employees 2007-2011 1,900,222 1,900,222 - - - 

1) 

1) 

1) 

- 

1) 

1) 

1) 

- 

No 850,220.12 

No 985,548.56 

No 1,257,985.45 

- 3,093,754.13 

No 307,703.15 

No 296,115.67 

No 732,379.88 

- 1,336,198.71 

Total Stock Options 2004-2011 8,325,946 8,325,946 - - - - - 6,263,094.22 

In 2011, no stock options were exercised by members of the Management Board. In 2009 and 2010, no stock option plans were issued. 

2. Performance Shares 

Year in which 

performance shares 

were granted 

Number of performance 

shares granted 

Management Board 2005 16,341 

2006 10,269 

2007 11,227 

2008 41,926 

2009 0 

2010 0 

2011 134,888 

Conditions Maturity 

In 2011, 11,227 Performance Shares of the LTI Plan 2007 were allocated to members of the Management Board. 

3. Cash plan 

3) 

4) 

5) 

7) 

- 

- 

5) 

Period for which 

performance shares are 

allocated 



31 Dec.2011 

in EUR 9) 

31.12.2008 unlimited No No 146,663.00 

31.12.2009 unlimited 

2) 

No 49,065 

31.12.2010 unlimited 

6) 

No 60,558 

31.12.2011 unlimited 

8) 

No 129,467 

- - 

- 

- 0 

- - 

- 

- 0 

31.12.2013 unlimited No No 230,928 

Year in which cash plan 

was granted 

EUR Conditions Maturity 

Period for which cash plan 

was allocated 



31 Dec. 2011 in EUR 

Management Board 2009 1,250,000 

11) 

31.12.2012 unlimited No No 1,250,000 

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) 

12) 

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 2011. 

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 

LTIP 2011-2013 0.6019 1.712 

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. 

Stock options for M. Fossati and F. Giordano, Members of the Management Board, are shown in the Annual Financial Statements of the parent company 

UniCredit S.p.A. 



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 239 and 240. 


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) 

List of shares in group companies and equity interests pursuant to Section 238 of the Austrian 

Commercial Code 

Total interest 

in % 

Equity (in EUR) Net income/loss (in EUR) Total assets (in EUR) 

Balance sheet 

date 

Shares in group companies (consolidated) 

Name and domicile of company 


in % 

Equity (in EUR) 

Net income/loss 

(in EUR) 

Total assets 

(in EUR) 

Balance sheet 

date 

"Diners Club CEE Holding AG", Vienna, AT 99.80 9,944,689.81 582,277.46 40,055,260.69 31.12.2011²) 

AI Beteiligungs GmbH, Vienna, AT 100.00 8,597,704.00 -84,886,167.00 21,573,728.00 31.12.2011²) 

Alpine Cayman Islands Ltd., Grand Cayman, KY 100.00 109,138,240.49 768,827.80 508,871,116.20 31.12.2011²) 

AS UniCredit Bank, Latvia, Riga, LV 100.00 83,288,750.54 -1,684,859.19 837,940,271.62 31.12.2011²) 

AWT International Trade GmbH, Vienna, AT 100.00 165,467,268.00 2,324,090.00 167,981,721.00 31.12.2011²) 

BA Alpine Holdings, Inc., Wilmington County, New Castle, USA 100.00 -1,771,248.16 -52,096,744.73 50,739,354.66 31.12.2011²) 

BA Betriebsobjekte GmbH, Vienna, AT 100.00 16,231,798.00 171,575.00 26,562,007.00 31.12.2011²) 

BA GVG-Holding GmbH, Vienna, AT 100.00 636,399.00 357,728.00 1,250,116.00 31.12.2011²) 

BA Private Equity GmbH, Vienna, AT 100.00 1,359,356.00 -74,424.00 1,444,550.00 31.12.2011²) 

BA-CA Markets & Investment Beteiligung Ges.m.b.H., Vienna, AT 1) 100.00 214,196,549.00 11,081,366.00 214,208,661.00 31.12.2011²) 

BA-CA Vienna Mitte Holding GmbH, Vienna, AT 100.00 62,844,302.00 4,127.00 62,855,751.00 31.12.2011²) 

Bank Austria Finanzservice GmbH, Vienna, AT 1) 100.00 3,052,304.00 20,681.00 4,762,102.00 31.12.2011²) 

Bank Austria Real Invest GmbH, Vienna, AT 1) 94.95 111,929,687.00 8,450,995.00 136,589,830.00 31.12.2011²) 

Bank Austria Wohnbaubank AG, Vienna, AT 1) 100.00 46,368,473.00 1,962,804.00 4,176,002,570.00 31.12.2011²) 

CABET-Holding-Aktiengesellschaft, Vienna, AT 1) 100.00 670,848,032.00 15,803,513.00 670,861,177.00 31.12.2011²) 

card complete Service Bank AG, Vienna, AT 1) 50.10 46,000,282.78 13,927,938.63 573,717,780.64 31.12.2011²) 

Cards & Systems EDV-Dienstleistungs GmbH, Vienna, AT 58.00 7,059,157.00 3,477,826.00 15,067,929.00 31.12.2011²) 

Domus Clean Reinigungs GmbH, Vienna, AT 100.00 304,611.03 287,112.79 1,627,500.12 31.12.2011²) 

DOMUS FACILITY MANAGEMENT GmbH, Vienna, AT 1) 100.00 2,486,665.48 1,616,602.08 10,070,139.41 31.12.2011²) 

EK Mittelstandsfinanzierungs AG, Vienna, AT 98.00 21,751,650.00 -7,768,834.00 22,118,358.00 31.12.2011²) 

FactorBank Aktiengesellschaft, Vienna, AT 1) 100.00 8,657,080.06 520,812.89 212,116,300.66 31.12.2011²) 

GUS Consulting GmbH, Vienna, AT 100.00 33,156.00 -1,702,610.00 11,645,535.00 31.12.2011²) 

Human Resources Service and Development GmbH, Vienna, AT 1) 100.00 87,419.60 -9,864,618.45 2,101,302.37 31.12.2011²) 

Immobilien Rating GmbH, Vienna, AT 85.89 706,611.00 128,062.00 1,619,243.00 31.12.2011²) 

JSC ATF BANK, Almaty, KZ 99.67 341,232,348.29 -43,466,875.75 5,149,603,315.41 31.12.2011²) 

Kaiserwasser Bau- und Errichtungs GmbH und Co OG, Vienna, AT 99.80 -1,187,482.00 -162,665.00 8,811,944.00 31.12.2011²) 

KLEA ZS-Immobilienvermietung G.m.b.H., Vienna, AT 99.80 2,647,958.60 97,889.60 4,462,669.72 31.12.2011²) 

KLEA ZS-Liegenschaftsvermietung G.m.b.H., Vienna, AT 99.80 1,575,594.42 284,813.42 6,668,029.55 31.12.2011²) 

Lassallestraße Bau-, Planungs-, Errichtungs- und Verwertungsgesellschaft m.b.H., Vienna, AT 99.00 -2,459,278.93 -471,831.80 138,929,060.68 31.12.2011²) 

MC Marketing GmbH, Vienna, AT 1) 100.00 145,217,265.00 3,649,776.00 145,295,871.00 31.12.2011²) 

Mezzanin Finanzierungs AG, Vienna, AT 56.67 24,663,476.00 -1,298.00 28,356,677.00 31.12.2011²) 

MY Beteiligungs GmbH, Vienna, AT 1) 100.00 60,007,411.00 612,958.00 60,016,429.00 31.12.2011²) 

POLLUX Immobilien GmbH, Vienna, AT 99.80 3,547,659.05 -168,788.95 5,853,308.66 31.12.2011²) 

Private Joint Stock Company "Ferrotrade International", Kiev, UA 100.00 85,418,783.65 595,393.75 85,420,376.63 31.12.2011²) 

Public Joint Stock Company "Ukrsotsbank", Kiev, UA 95.34 587,959,026.54 77,848,942.31 3,807,273,262.50 31.12.2011²) 

RAMSES Immobilien Gesellschaft m.b.H. & Co OG, Vienna, AT 99.50 15,480,012.00 1,514,819.00 53,320,354.00 31.12.2011²) 

RIGEL Immobilien GmbH, Vienna, AT 99.80 3,236,947.07 107,508.07 12,727,220.23 31.12.2011²) 

Schoellerbank Aktiengesellschaft, Vienna, AT 100.00 84,161,083.07 14,646,784.60 2,387,737,278.62 31.12.2011²) 

SIRIUS Immobilien GmbH, Vienna, AT 99.80 -166,953.30 -141,613.30 7,551,036.48 31.12.2011²) 

UniCredit Bank a.d. Banja Luka, Banja Luka, BA 92.92 50,583,334.19 3,513,292.77 359,771,915.33 31.12.2011²) 

UniCredit Bank Czech Republic, a.s., Prague, CZ 100.00 1,283,430,405.36 38,063,908.40 11,197,314,327.84 31.12.2011²) 

UniCredit Bank d.d., Mostar, BA 89.98 239,322,467.02 26,094,449.84 1,805,270,433.58 31.12.2011²) 

UniCredit Bank Hungary Zrt., Budapest, HU 100.00 544,724,054.10 -1,545,989.98 5,518,401,093.59 31.12.2011²) 

UniCredit Bank Serbia JSC, Belgrade, RS 100.00 398,846,278.59 41,909,033.41 1,873,112,796.05 31.12.2011²) 

UniCredit Bank Slovakia a.s., Bratislava, SK 99.03 428,472,987.00 34,300,776.00 3,850,967,443.00 31.12.2011²) 

UniCredit Banka Slovenija d.d., Ljubljana, SI 99.99 240,887,701.67 12,214,728.00 2,945,635,933.67 31.12.2011²) 

UniCredit Bulbank AD, Sofia, BG 96.46 993,992,157.68 115,149,902.85 6,052,082,602.52 31.12.2011²) 

UniCredit CAIB Czech Republic a.s., Prague, CZ 100.00 3,784,959.40 -214,743.51 4,037,297.90 31.12.2011²) 

UniCredit CAIB Hungary Ltd., Budapest, HU 100.00 1,827,858.23 1,055,304.64 2,064,319.46 31.12.2011²) 

UniCredit CAIB Poland S.A., Warsaw, PL 100.00 98,006,744.28 3,734,543.29 316,668,746.97 31.12.2011²) 

UniCredit CAIB Romania SRL, Bucharest, RO 100.00 913,864.64 94,948.07 1,885,845.53 31.12.2011²) 

UniCredit CAIB Serbia Ltd. Belgrade, Belgrad, RS 100.00 241,805.59 -121,758.11 249,575.69 31.12.2011²) 

UniCredit CAIB Slovakia a.s., Bratislava 2, SK 100.00 670,733.00 -303,000.00 682,000.00 31.12.2011²) 

UniCredit CAIB Slovenija, d.o.o., Ljubljana, SI 100.00 479,217.00 -305,156.00 814,399.00 31.12.2011²) 

UniCredit Tiriac Bank S.A., Bucharest, RO 50.57 575,762,805.21 36,061,353.60 5,288,204,117.76 31.12.2011²) 

UniCredit Turn-Around Management GmbH, Vienna, AT 1) 100.00 15,308,183.00 -3,484,390.00 18,783,797.00 31.12.2011²) 

UNIVERSALE International Realitäten GmbH, Vienna, AT 100.00 183,906,393.00 -1,257,206.00 236,987,074.00 31.12.2011²) 

WED Holding Gesellschaft m.b.H., Vienna, AT 48.06 9,269,078.59 -214.41 9,470,111.95 31.12.2011²) 

WED Viennaer Entwicklungsgesellschaft für den Donauraum Aktiengesellschaft, Vienna, AT 100.00 17,383,669.85 1,337,905.85 18,366,223.68 31.12.2011²) 

Zagrebacka Banka d.d., Zagreb, HR 84.47 2,113,956,538.81 167,329,292.16 13,782,207,530.05 31.12.2011²) 

ZAO UniCredit Bank, Moscow, RU 100.00 2,103,954,944.85 367,990,806.05 18,484,671,876.08 31.12.2011²) 

ZETA Fünf Handels GmbH, Vienna, AT 1)100.00 405,712,415.00 5,641,414.00 407,885,682.00 31.12.2011²) 


Shares in group companies and equity interests of UniCredit Bank Austria AG 

Interests in companies accounted for under the proportionate consolidation method 



in % 


Koc Finansal Hizmetler AS, Istanbul, TR 50.00 1,774,615,108.87 -444,499.02 1,774,912,347.33 31.12.2011²) 


(in EUR) 

Total assets 

(in EUR) 

Balance sheet 

date 

Interests in associated companies accounted for under the equity method 



in % 



(in EUR) 

Total assets 

(in EUR) 

Balance sheet 

date 

Bank für Tirol und Vorarlberg Aktiengesellschaft, Innsbruck, AT 47.38 728,302,000.00 53,373,000.00 9,230,952,000.00 31.12.2011²) 

BKS Bank AG, Klagenfurt, AT 36.03 650,334,000.00 41,479,000.00 6,420,878,000.00 31.12.2011²) 

Kapital-Beteiligungs Aktiengesellschaft, Vienna, AT 20.00 6,867,089.00 59,735.00 7,967,247.02 31.12.2011²) 

NOTARTREUHANDBANK AG, Vienna, AT 25.00 21,603,992.00 8,191,000.00 1,093,158,000.00 31.12.2011²) 

Oberbank AG, Linz, AT 33.33 1,248,488,000.00 120,510,000.00 17,105,000,000.00 31.12.2011²) 

Oesterreichische Kontrollbank Aktiengesellschaft, Vienna, AT 49.15 603,320,000.00 64,883,000.00 37,165,361,000.00 31.12.2011²) 

Österreichische Hotel- und Tourismusbank Gesellschaft m.b.H., Vienna, AT 50.00 25,486,000.00 116,000.00 1,038,724,000.00 31.12.2011²) 

Österreichische Wertpapierdaten Service GmbH, Vienna, AT 29.30 75,065.86 33,318.00 1,267,789.81 31.12.2011²) 

SP Projektentwicklung Schönefeld GmbH & Co.KG, Stuttgart, DE 50.00 15,405,295.00 -100,305.00 16,394,440.92 31.12.2011²) 

UniCredit Leasing SPA, Bologna, IT 31.01 1,641,610,396.00 49,732,397.00 20,777,407,811.00 31.12 2010²) 

Viennaer Kreditbürgschaftsgesellschaft m.b.H., Vienna, AT 24.49 5,996,116.00 106,491.00 7,536,657.67 31.12.2011²) 

Unconsolidated companies 



in % 



(in EUR) 

Total assets 

(in EUR) 

Balance sheet 

date 

A) Group companies 

Alfa Holding Ingatlanszolgaltato Kft., Györ, HU 95.00 -6,557.95 -1,325.58 826.50 31.12 2010 

Baltic Business Center Sp.z.o.o. w likwidacji, Gdynia, PL 62.00 78,082.07 21,102,446.40 101,429.79 31.12 2010 

Bank Austria Immobilien Entwicklungs- und VerwertungsgmbH, Vienna, AT 1) 100.00 17,500.00 -17,711.26 454,238.64 31.12 2010 

Bank Austria-CEE BeteiligungsgmbH, Vienna, AT 100.00 45,399.65 -3,293.13 46,659.65 31.12 2010 

Bank Rozwoju Energetyki i Ochrony Swodowiska S.A. MEGABANK in Liquidation, Warsaw, PL 100.00 -4,443,072.21 114,310.64 0.22 31.12 2010 

BFAG - Holding Gesellschaft m.b.H., Vienna, AT 100.00 20,340.99 -1,213.60 21,360.99 31.12 2010 

Buchstein Immobilienverwaltung Gesellschaft m.b.H., Vienna, AT 100.00 44,484.82 4,329.72 52,984.82 31.12 2010 

Erzet-Vermögensverwaltungsgesellschaft m.b.H., Vienna, AT 100.00 211,007.45 -1,638.33 212,267.45 30.11 2010 

Financial Risk Management GmbH, Vienna, AT 100.00 422,835.27 8,039.94 663,105.66 31.12 2010 

MY Drei Handels GmbH, Vienna, AT 100.00 35,422.66 4,126.81 36,347.98 31.12 2010 

Paytria Unternehmensbeteiligungen GmbH, Vienna, AT 100.00 279,535.59 -8,308.78 287,888.39 31.12 2010 

RAMSES-Immobilienholding GmbH, Vienna, AT 99.80 28,772.22 1,451.11 30,058.22 31.12 2010 

RE-St.Marx Holding GmbH, Vienna, AT 1)100.00 20,955.18 43,496.29 67,451.47 31.12 2010 

Sigma Holding Ingatlanszolgaltato Kft., Budapest, HU 95.00 -366,975.01 6,437.15 379,347.07 31.12 2009 

Sinera AG, Zug, CH 100.00 60,800.37 -15,299.52 62,366.84 31.12 2010 

THETA Fünf Handels GmbH, Vienna, AT 100.00 -19,951.90 -3,991.10 1,000,000.00 31.12 2010 

Wirtschaftsverein der MitarbeiterInnen der UniCredit Bank Austria e.Gen., Vienna, AT 54.66 262,348.56 -1,253,836.50 3,556,211.31 31.12 2010 

B) Associated companies 

"Gesfö" Gemeinnützige Bau- und Siedlungsgesellschaft m.b.H., Vienna, AT 25.00 7,228,430.24 402,364.05 14,850,532.52 31.12 2010 

"Sparkassen-Haftungs Aktiengesellschaft", Vienna, AT 28.26 213,531.01 -4,337.95 216,182.01 31.12 2010 

bareal Immobilientreuhand GmbH, Vienna, AT 50.00 49,958.02 12,927.75 386,898.03 31.12 2010 

Mizuho Corporate Bank - BA Investment - ConsultingGmbH, Vienna, AT 50.00 1,006,316.81 661.03 1,129,048.11 31.12 2010 

MY Fünf Handels GmbH, Vienna, AT 50.00 24,453.54 -3,836.85 62,392.07 31.12 2010 

Projektentwicklung Schönefeld Verwaltungsgesellschaft mbH, Stuttgart, DE 50.00 28,070.24 191.60 28,980.29 31.12 2010 

C) Other companies 

Banco Interfinanzas S.A., Buenos Aires, AR 50.00 5,401,308.93 243,266.57 73,358,445.11 31.12 2010 

2020 Medici AG, Vienna, AT 25.00 1,692,440.25 -1,078,021.07 2,435,522.22 31.12 2010 

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 2011 – 31 December 2011 

Chairman: Erich HAMPEL (from 2 November 2011) 

Paolo FIORENTINO (from 21 January 2011 

until 2 November 2011) 

Deputy Chairman: Paolo FIORENTINO (from 2 November 2011) 

Erich HAMPEL (until 2 November 2011) 

Members: Sergio ERMOTTI (until 23 February 2011) 

Candido FOIS 

Karl GUHA (from 19 January 2011) 

Jean Pierre MUSTIER (from 20 April 2011) 

Roberto NICASTRO 

Vittorio OGLIENGO 

Franz RAUCH 

Karl SAMSTAG 

Wolfgang SPRISSLER 

Ernst THEIMER 

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 Chairman 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 2011 

Chairman/ 

Chief Executive Officer: Willibald CERNKO 

Deputy Chairman: Gianni Franco PAPA (from 22 January 2011) 

Federico GHIZZONI (until 21 January 2011) 

Members: Helmut BERNKOPF (until 31 July 2011) 

Jürgen DANZMAYR (until 30 June 2011) 

Massimiliano FOSSATI 

Francesco GIORDANO, MSc (from 1 February 2011) 

Rainer HAUSER 

Dieter HENGL (from 1 August 2011) 

Doris TOMANEK 

Carlo VIVALDI (until 31 January 2011) 

Robert ZADRAZIL (from 1 October 2011) 


Financial Statements for 2011 



Translation of the facsimile on pages 246 to 248 / Auditors’ Report on the Financial Statements for 2011 



Report on the Financial Statements 

The Austrian Savings Bank Auditing Association and KPMG Austria GmbH Wirtschaftsprüfungs- und 

Steuerberatungsgesellschaft, Vienna, have audited the accompanying financial statements of UniCredit Bank Austria AG for 

the financial year from 1 January 2011 to 31 December 2011 including the accounting records. These financial statements 

comprise the balance sheet as at 31 December 2011, the profit and loss account for the financial year ended 31 December 

2011, 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. 

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. 



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. 

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 2011, and the financial performance of UniCredit Bank Austria AG for the financial year from 1 January 2011 to 

31 December 2011 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 Business 

Code) are appropriate. In our opinion, the management report is consistent with the financial statements. The disclosures 

pursuant to Section 243a UGB (Austrian Business Code) are appropriate. 

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. 



Gerhard Margetich 

Certified Accountant 

Walter Reiffenstuhl 



Austrian Savings Bank Auditing Association 

Auditing Board 

(Bank Auditor) 

KPMG Austria GmbH 

Wirtschaftsprüfungs- und Steuerberatungsgesellschaft 

Reinhard Gregorich 

Auditor 

Klaus-Peter Schmidt 


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 2011 


Sparkassen-Prüfungsverband KPMG Austria GmbH 

Grimmelshausengasse 1 Wirtschaftsprüfungs- und 

1030 Wien Steuerberatungsgesellschaft 

AUSTRIA Porzellangasse 51 

1090 Wien 

AUSTRIA 










Translation of the facsimile on page 250 




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: 

Willibald Cernko Gianni Franco Papa 

CEO Support Services CEE Banking Division 

(Chairman) (Deputy Chairman) 

Massimiliano Fossati Francesco Giordano Rainer Hauser 

CRO Risk Management CFO Finance Family & SME Banking Division 

Dieter Hengl Doris Tomanek Robert Zadrazil 

Corporate & Investment Human Resources Austria & CEE Private Banking Division 

Banking Division 





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 

Erich Kodon 

Tel: (+43) (0)5 05 05-549 99 

Andreas Petzl 

Tel: (+43) (0)5 05 05-595 22 

Ratings 

Moody's 1) 

Standard & Poor`s 2) 

Public-sector mortgage 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 

Long-Term Subordinated Liabilities Short term 

A2 A3 P-1 

A A- A-1 

10 May 2012 Publication of the results as of 31 March 2012 

4 August 2012 Publication of the half-year results as of 30 June 2012 

13 November 2012 Publication of the results as of 30 September 2012 

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 

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 2011 of Bank Austria

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