Download - Volksbank AG

A euro financial market
is emerging
Corporate bonds are
gaining significance
The future of loan
financing
The bank for
family businesses
Basel II
Investkredit rating
CORPORATE LENDING.
DEVELOPMENT OF THE FINANCIAL MARKET. Europe bears witness to the birth of a euro financial
market, for which capital-market oriented rules are becoming increasingly important. This involves a
re-orientation of the credit-based financing tradition. On the one hand, the classic loan – the
core service of Investkredit Bank AG – plays a prominent role in corporate financing, on the other
hand, financing instruments such as private equity, mezzanine financing and corporate bonds are
gaining significance.
In March 2001, Investkredit was the lead manager in charge of the issuance of corporate bonds of SPAR
Österreichische Warenhandels AG launched with a volume of EUR 200 m. In addition, the bank was also
represented in the issuing group for the corporate bond of BBAG – Österreichische Brau-Beteiligungs-
Aktiengesellschaft. Investkredit received further mandates to prepare the launch of corporate bonds
which will be issued in the current year, such as the Egger bond with a volume of EUR 100 m. These
mandates have made the Bank for Corporates one of the leading banking partners for corporate
bonds in Austria. With respect to this instrument, cross-departmental collaboration – particularly with
the Capital Markets Team of the Treasury Department – is of vital importance. Especially in its capacity as
specialist bank, Investkredit regards the further development of loan financing as a great task and
challenge. According to the customers of Investkredit continuity and predictability are pivotal features
of any external financing transaction which are realised by means of medium- and long-term loan
agreements.
Austrian medium-sized corporates, which in most cases are family businesses, show a stable
demand for long-term bank loans. In view of their preference for independent decision-making structures
– which are not influenced by the stock markets – loans are particularly well suited to meet their
requirements. Another factor is the high level of trust they place in their financing banks and the lack
of disclosure requirements to the wide-spread publicity. However, the ongoing orientation towards a
capital market approach regarding the pricing of loans, is encouraging a more open disclosure
practice of corporates vis-à-vis their banks.
As regards the level of credit margins, an increasing
differentiation according to corporates’
credit ratings and agreed collateralisation is
being observed. Bank-internal and external
ratings are gaining importance. Within the
whole euro area, credit margins will converge
along the risk profiles.
In the run-up to the introduction of the new
capital adequacy requirements for banks
(Basel II), bringing the credit ratings of corporates
in line with the ratings of large international
rating agencies (e.g. Moody’s Investors
Service and Standard & Poor’s) has already become
a standard procedure followed by Investkredit.
The discussion of ratings is a major component
of the talks with our customers. The
departure point for the rating process of Investkredit
is the credit quality of the balance sheet,
which is determined on the basis of balance
sheet ratios. Qualitative factors such as inno-
Corporates
“A bank
lives on the
bad business
it avoids.“
HERMANN JOSEF ABS
THE BANK FOR CORPORATES
23