Österreichische Volksbanken-Aktiengesellschaft ... - Volksbank AG

2. RISK FACTORS
Prospective investors should consider carefully the risks set forth below and the other information
contained in the Prospectus, any supplements thereto and the respective Final
Terms prior to making any investment decision with respect to the Notes. The following
description of risk factors is limited to the most essential risk factors which in the Issuer’s
current view could have a material adverse effect on the Issuer’s businesses, operations,
financial condition or prospects which, in turn, could have a material adverse effect on the
amount of principal and interest which investors will receive in respect of the Notes and
which could impair the ability of the Issuer to fulfil its obligations to the investors with respect
to the Notes. In addition, each of the risks highlighted below could adversely affect
the market value and trading price of the Notes or the rights of investors under the Notes
and, as a result, investors could lose some or all of their investments in the Notes. Prospective
investors should therefore consider two main categories of risk: (i) risks relating to the
Issuer, and (ii) risks relating to the Notes.
Prospective investors should note that the risks described below are not the only risks the
Issuer faces and that are associated with the Notes. The Issuer has described only those risks
that it considers to be material and of which it is aware. There may be additional risks that
the Issuer currently considers not to be material or of which it is not currently aware, and
any of these risks could have the effects set forth above. Moreover, prospective investors
should be aware that the events described in the risk factors may occur simultaneously,
which could compound the negative effects. If one or several of the risk factors below were
to materialise, this might have considerable adverse effects on the profit, business and financial
position of the Issuer and the profit potential of the Notes.
Prior to deciding whether to invest in any Notes issued under the Programme, a prospective
investor should conduct its own thorough analysis (including its own accounting, legal and
tax analysis) since any evaluation of the suitability for an investor of an investment in Notes
issued under the Programme depends upon the prospective investor's particular financial
and other circumstances, as well as on specific terms of the relevant Notes. If it does not
have experience in financial, business and investment matters sufficient to permit it to make
such a determination, the investor should consult with its financial adviser prior to make a
decision with respect to the suitability of any investment in the Notes.
2.1 Risk factors relating to the Issuer
Credit risk
Credit risk is the risk of a partial or complete loss of interest and/or redemption payments
expected to be made by a counterparty. The credit risk comprises non-payment risks, country
risks and default risks. Any deterioration in the creditworthiness of a counterparty may
lead to an increase in the credit risk. The worse the credit standing of the counterparty, the
higher the non-payment risk. Furthermore, it is possible that securities issued by the counterparty
to cover the credit risk will not be sufficient to settle the default in payments, for
example due to a dramatic drop in the market price.
The credit risk is the most important risk with respect to an investment in the Notes since it
applies to both standard banking products, such as the credit, discount and guarantee business,
as well as to certain trade products, such as derivative contracts like financial futures,
swaps and options or security pension transactions and security lending.
The credit risk also encompasses the country risk, which is the risk that a foreign counterparty
cannot make scheduled interest and/or redemption payments despite its own solvency
due, for example, to a lack of foreign exchange reserves of the competent central bank
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