Key Events during the Financial Year
Changes in the Managing Board
Sanjay Sharma was appointed Chief Operating Officer effective 1 January 2010. He can draw on many years of experience at Barclays Bank plc and has been Managing Director for Operations at BAWAG P.S.K. since August 2008.
Christoph Raninger joined the Managing Board on 17 May 2010 as Head of Financial Markets. He succeeded Carsten Samusch, who announced in January 2010 that he would not be seeking an extension of his fixed term contract. Christoph Raninger is now responsible for Corporate and Financial Markets and took over the Austrian Corporates division from Regina Prehofer, who left the Managing Board at the end of August 2010. Before taking on these duties, Christoph Raninger was managing director and member of the managing board of UniCredit CAIB AG, where he was responsible for the Markets and Investment Banking division.
Andreas Arndt became Chief Financial Officer on 1 October 2010. Prior to this, he spent many years in managerial positions in the Deutsche Bank group, including a tenure on the board of Deutsche Bank Privat- und Geschäftskunden AG.
The business areas Retail Banking and Small Business have been directed by Wolfgang Klein since 1 November 2010. Wolfgang Klein worked at Deutsche Postbank for the last ten years. During this time, he was a member of the board and was responsible for the various aspects of retail banking. He was CEO for his last two years at the bank prior to joining BAWAG P.S.K.
Changes in the Supervisory Board
Scott Parker left the Bank's Supervisory Board on 30 June 2010.
The Supervisory Board was expanded with the appointment of Ronald E. Kolka on 6 August 2010 and Keith Tietjen on 5 October 2010.
Capital and Guarantee Contributions by the Republic of Austria and Shareholders
A framework agreement was signed in 2009 between BAWAG P.S.K., its shareholders and the Republic of Austria in which the Republic of Austria undertook to subscribe participation capital in BAWAG P.S.K. in the amount of EUR 550 million and to issue a guarantee for certain assets in the maximum amount of EUR 400 million. In addition, the Bank's shareholders granted a capital contribution totalling EUR 205 million in August 2009. The Bank cancelled its entitlement to the guarantee from the Republic of Austria in full as of 22 June 2010.
On 30 June 2010, the European Commission approved the participation capital package. This approval included certain conditions and compensatory measures that the Bank must fulfill in the upcoming years.
These compensatory measures include the sale of certain non-core participations, a temporary prohibition on the payment of shareholder dividends, limits on investments in business activities outside of Austria and the early redemption of certain securities.
Moody’s Rating for BAWAG P.S.K.
The rating agency Moody's completed a review of its rating for BAWAG P.S.K. in October, based on the figures for the first half of 2010.
Despite the challenging business conditions, the agency confirmed its rating for BAWAG P.S.K. on 14 January 2011 and assigned the Bank a stable outlook, as it did last year. This result is satisfactory.
Long-term bonds from BAWAG P.S.K. are rated at Baa1, short-term liabilities at P2 and the Bank's financial strength rating is D. The rating for hybrid capital instruments remained unchanged at B2.
In its rating illustration, Moody's specifically recognised the extensive improvements already made by the Bank; it also included special praise for the improvements made in the area of risk and the intensive collaboration with Österreichische Post AG, which will have a positive effect on the retail network.
The rating classification is "stable outlook".
Legal Aspects
SPhinX
SPhinX companies filed a lawsuit with the Supreme Court of the State of New York in March 2008 against over fifty parties, one of them being BAWAG P.S.K. No specific amount has been named for the alleged damages.Various motions for the dismissal of this suit are still pending. In addition, documents are being collected and reviewed to gather evidence for the case, and witnesses have already been questioned in hearings lasting several days. BAWAG P.S.K. has filed claims with the liquidators of SPhinX for investments in SPhinX funds that have not been redeemed in the amount of approximately USD 29.4 million.
The proceedings are proving to be arduous, and it cannot be foreseen when they will be completed.
The Bank's claims still have not been recognised, and the liquidator's proposals for the distribution of the available assets have been subject to debate.
Changes in the Group’s Holdings
BAWAG P.S.K. Versicherung
The Bank sold a 24.99 per cent share in BAWAG P.S.K. Versicherung AG to Generali Holding Vienna AG in January 2010, reducing its stake from 49.99 per cent to 25 per cent plus one share.To account for the requirements of the market and the significant growth of the company, a shareholders' contribution was agreed in 2010 to strengthen the equity base of BAWAG P.S.K. Versicherung. BAWAG P.S.K. participated in the contribution in accordance with its stake in the company.
MKB Bank Zrt.
The Hungarian MKB Bank Zrt. completed a capital increase equal to EUR 172 million on 1 December 2010. BAWAG P.S.K. Group participated in this capital increase through P.S.K. Beteiligungsverwaltung GmbH in accordance with its stake in the bank, and still holds a share of 9.77 per cent. The capital contribution totalled approximately EUR 17 million. Antoinette Holding Ltd., which is affiliated with the shareholders, did not participate in the capital increase. Together, P.S.K. Beteiligungsverwaltung and Antoinette Holding Ltd. now hold a 10.11 per cent stake.Restructuring of Foreign Companies
As part of the comprehensive reorganisation of our subsidiaries in Liechtenstein and Ireland, a number of steps were taken to streamline our structure. After the completion of the liquidation proceedings of our subsidiaries in Ireland that were initiated in 2010 and that are nearing their conclusion, the Bank will exit the Irish market entirely. Due to mergers, the number of companies that are active in Liechtenstein was reduced to one.Other Material Changes in the Group's Holdings
Further Companies in Liquidation
The liquidation of BAWAG International Finance Ltd. (Ireland), BAWAG P.S.K. Jersey Auto Finance Ltd., Auto Finance Jersey I Ltd. and Auto Finance Jersey II Ltd. was completed in 2010.Real Estate
We continued to consistently apply our real estate strategy in the 2010 financial year. Properties worth approximately EUR 41.4 million in total were sold, in part through asset and share deals.The Leasing and Real Estate Project "Simple"
The comprehensive restructuring and streamlining of the leasing structure was decided during the current financial year. The project consists of the following steps:- Liquidation or merger of companies that are no longer needed
- Structuring according to business segments
- Liquidation of the dormant companies
In the real estate segment, BPI Holding GmbH and IDG Immobilien Development Gesellschaft m.b.H. were merged with BAWAG P.S.K. IMMOBILIEN GmbH.