Volksbank issues profit warning

Volksbank is warning that profits are going to be hard to come by for the next year, so shareholders shouldn’t hold their breath for dividends.

The management board of Österreichische Volksbanken AG (VBAG) announces that due to the increasingly difficult economic environment a payment on profit-related instruments (shares, participation capital, hybrid capital and supplementary capital) in 2012 for the 2011 business year is unlikely from today´s viewpoint. According to a current forecast the main reasons for the profit warning are an increasingly difficult economic environment which negatively affected the valuation of participations (VB Romania), the sale of participations as well as an earnings forecast impacted by potential additional financial burdens (e.g. measures by the Hungarian government with respect to foreign currency loans).

We won’t really go into those rumors swirling about about the state getting in the mood for some nationalization. But things do appear to happening quite rapidly now. Take the press release earlier this month? “Owners of VBI and Sberbank Signed Acquisition Agreement in Vienna”

The owners of Volksbank International AG (VBI) and the representatives of the Sberbank of Russia (Sberbank) signed an agreement relating to the acquisition of the VBI Group today in Vienna. Until now, Österreichische Volksbanken-AG (VBAG) has held a 51% shareholding in VBI, whereas the German banking groups DZ BANK AG / WGZ BANK AG and the French BPCE S.A. have each held a 24.5% stake in VBI. With the signing of the agreement, Sberbank agreed to acquire a 100% stake in Volksbank International AG. VB Romania is not included in the transaction. The deal price will be 1.0x VBI equity (excluding VB Romania) ranging from EUR 585 million to EUR 645 million depending on business performance of VBI in 2011. In addition to the sales price, Sberbank will assume financings provided by the current owners in an amount of almost EUR 2.5 billion. Also at closing, VBAG or a group of banks led by VBAG will provide Sberbank with five-year funding in an amount of EUR 500 million. Closing of the transaction is expected by the end of the year – after certain conditions precedent are fulfilled.

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