Bawag P.S.K.

Management

Byron Haynes

BAWAG P.S.K. (Proper spelling BAWAG PSK Bank of Labor and Economic and Austrian Postal Savings Bank AG ) was founded in 2005 by the merger of the Bank for Labour and Economy ( BAWAG ) with the Austrian Postal Savings Bank ( PSK ) and is majority- owned by the U.S. fund Cerberus Capital management.

It is the fourth largest bank in Austria, as measured by total assets. 2005 became the BAWAG because of a financial scandal ( BAWAG affair), in which the bank lost 3.5 billion euros, in a serious distress and had to be rescued by a billionaire collecting action of the state from bankruptcy. The creditworthiness of the bank was downgraded in the wake of the rating agency Moody's several times. The Bank is the legal successor of the Post Office Savings Bank, the bank of the Republic of Austria (§ 71 Federal Budget Act ).

Current Company headquarters the listed Vienna Postal Savings Bank at the Georg -Coch -Platz 2 also listed building banking and home of the former BAWAG corporate seat in the Seitzergasse 2-4 and the bank building Tuchlauben 5 (formerly Hochholzerhof ) were, among other BAWAG property inter alia, the Tuchlaubenhof in Tuchlauben 7 and 7a, sold to a consortium led by the real estate investor Rene Benko.

History

Austrian Postal Savings Bank

The Austrian Postal Savings Bank ( PSK ) was one of the largest banks in Austria and was founded in 1882 under a law. In 1883, nearly 4,000 post offices took on the postal savings service. Major impetus received the Austrian postal savings sector by Georg Coch. In the First Republic, the state-owned bank came under the 1926 disrupted postal savings bank scandal into the talk, which was about lossy stock market speculation in securities and foreign exchange, often in cooperation with the United speculators Siegmund Bosel. In this context, the short-term Treasury Jacob Ahrer temporarily emigrated to Cuba.

In 1906, according to the plans, built by Otto Wagner new main building at the Georg -Coch-Platz was based in Vienna, which is one of the most important Art Nouveau buildings in Austria.

Bank of Labor and Economic

The bank was the Social Democrat Karl Renner, as "workers Bank " was founded in 1922 by former Chancellor, less with the goal of workers to provide cheap loans, " but to the organizations and institutions of the working class to create an auxiliary institution, offering them the use of capitalist institutions spared "(quote Karl Renner ). So you replaced the existing credit since 1913 Association of Austrian labor unions. At the "Workers Bank AG " had the socialist unions and the Wholesale Society for Austrian Consumvereine ( GÖC ) each have a share of 40 percent. 1934, the Bank was dissolved by the Austro-fascist corporate state.

After the Second World War in 1947, re-established, the renamed Bank of Labor and Economic and abbreviated BAWAG Bank in 1963 reached from the seventies, a large customer base. Here, the branch network has been greatly expanded. Popular Products of the bank were and are the KapitalSparbuch ( Fixzinssparbuch with different predetermined maturities) and the works credit (one of the works of Austrian companies for employees mediated private credit ).

Main shareholder was the foundation of the Austrian Trade Union Federation Austrian Trade Union Federation (70 %) together with the consumer co-operatives (30 %). Following the bankruptcy of consumption in 1995, Bayerische Landesbank took over the shares and increased it to 46%. However, in 2004, BayernLB got out of BAWAG and sold its shares in the Austrian Trade Union Federation, which was now the sole shareholder of BAWAG.

Although the BAWAG in recent years, several acquisitions in Central and Eastern Europe (Czech Republic, Slovakia, Hungary ) and Malta -actuated, is the principal business activity, in contrast to other Austrian banks ( Bank Austria, Erste Bank, Raiffeisen Central Bank), still in Austria. Following the acquisition of BAWAG by the U.S. fund Cerberus, most foreign banks were sold.

On 14 May 2007, BAWAG was P.S.K. finally taken over by the U.S. fund Cerberus. (see BAWAG sale )

At the same time it was announced that the existing cooperation agreement with the Post Office for distribution of financial services over the 1334 post branches is extended by three years to 2015. The distribution of financial services products through the mail is to be reinforced.

Fusion of BAWAG P.S.K.

In 2000, the BAWAG by the Republic of Austria bought 74.82 % of the shares of the Austrian Postal Savings Bank ( PSK ), which offers financial services through its branch network of Austrian Post. By November 2003, the BAWAG acquired the remaining 25.18 %, which had held a subsidiary of Bayerische Landesbank and the Austrian Trade Union Federation since 2000. In 2005, the BAWAG finally merged with PSK and there was BAWAG P.S.K. as the fourth- largest banking group. As part of the final fusion of BAWAG PSK with the was established in 2005 the "old" BAWAG to share management BAWAG PSK AG renamed (AVB ) and became the financial holding company through which the OGB its stake in BAWAG PSK holds. It was decided by the then BAWAG management to transfer as much of their own funds as possible from the mother holding AVB in the operationally active bank. So finally the 1.531 billion euro debt of OGB in the AVB came about that were known to the public until June 2006. Austrian Trade Union Federation President Hundstorfer, who had approved in September 2005, the merger agreements on behalf of the then Austrian Trade Union Federation President had in his own words at that time no knowledge of this transaction resulted from the ultimately profound implications for the OGB.

BAWAG affair

Main article: BAWAG affair

In March 2006, the Financial Market Authority announced that in addition to the loans to the company Refco also the high-risk " Caribbean transactions" BAWAG, which became known as the investigation of Refco's credit debacle, a test would undergo. According to newspaper reports from 1995 to 2000 approximately one billion euro loss to these " Caribbean - shops " in the years have arisen.

In these " Caribbean - shops " it was risky investments, especially in the form of interest rate and currency swaps at a considerable volume level. In the course of that business, and especially in disguising the incurred huge losses is established shell companies that had to tax- friendly Caribbean islands, especially in Anguilla, their seat - hence the name of the debacle. For the balance of 2000, the auditors of the BAWAG demanded a guarantee for the impairment of loans to the many foundations and societies in which the "Caribbean - losses " were hidden. This problem could only be bridged by a guarantee of the Austrian Trade Union Federation. The former Austrian Trade Union Federation President Fritz Verzetnitsch issued the guarantee without notification, let alone consent of this competent bodies ( Board of BAWAG or the Bureau of the Austrian Trade Union Federation ) and used for this purpose as collateral the so-called strike fund of the Austrian Trade Union Federation, which is continuously increased by payments of membership fees.

At a press conference on 24 March 2006, the BAWAG- chairman Günter Weninger confirmed the allegations and announced his resignation from the functions in the BAWAG and the OGB. On 27 March 2006, the affair led to the resignation of the Austrian Trade Union Federation President Fritz Verzetnitsch.

After one, lasting about a year, lawsuits all nine defendants were found guilty and sentenced to unconditional imprisonment partly on 4 July 2008.

The main defendant Helmut Elsner was sentenced to nine and a half years in prison for embezzlement and fraud. The penalty for the former chief executive of the bank which was only slightly below the maximum possible punishment for infidelity. Elsner's successor in office, John Zwettlerstrasse, received a five -year prison sentence. Living in the U.S. speculator Wolfgang Flöttl who had gambled within a few years in speculative transactions several billion euros of the bank, was sentenced to two and a half years, in part due to probation.

The Supreme Court announced on 23 December 2010 that he has upheld the plea of ​​nullity of the former BAWAG Director General Helmut Elsner against his conviction of first part. However, Elsner was sentenced at the same time to a total of ten years' imprisonment, which is the statutory maximum penalty. The at first instance imposed on Elsner's successor, John Zwettlerstrasse imprisonment was upheld by the Supreme Court. The judgments against the co-defendants were and remanded in part, to inform the court.

BAWAG sale

On 30 March 2006, the BAWAG- owner OGB decided to separate from the bank completely. There were heated discussions whether the OGB should not but at least remain minority owners. Triggered by the BAWAG debacle poor financial situation of the Austrian Trade Union Federation had a solution other than the total sale but not too. On 20 April 2006, the U.S. investment bank Morgan Stanley was commissioned to make potential buyers locate. The application deadline for the purchase of BAWAG PSK ended on 8 September 2006. There were a number of offers at Morgan Stanley arrived. On 20 November 2006, decided by Morgan Stanley and OGB that four bidders are in the final round was negotiated further with them. Among them were Bayerische Landesbank, the Alliance (but who wished to remain anonymous), the U.S. fund Cerberus with partners and the U.S. Lone Star. On 14 December 2006, the result of the bidding process was announced. The contract was awarded to the consortium of U.S. fund Cerberus. Cerberus is a financial investor. He intends to BAWAG P.S.K. to rehabilitate and after a few years its share on the stock market to sell.

On 14 May 2007, BAWAG -PSK was adopted definitively by the U.S. fund Cerberus. Cerberus now holds a 90 percent stake in the bank, while the remaining ten percent are owned by Austrian companies. In addition to the Austrian Post which will hold 5 percent of BAWAG, the Generali insurance company will be involved in the extent of between 2 to 3 percent, Wüstenrot to be involved with about one percent and the industrial group around Androsch with 1.5 to 2 percent. The Post, Generali and Wüstenrot are interested primarily in a sales cooperation with BAWAG PSK.

The buyers paid 3.2 billion euros for the banker, with 2.6 billion euros as sales proceeds went to the Austrian Trade Union Federation, which thus reduce its debt and was able to avoid the use of the liability of the Republic of Austria. A further 600 million euros were invested as capital injection in the BAWAG PSK

Discrimination Affair 2007

On 13 April 2007, the BAWAG became P.S.K. because of discrimination affair into the headlines, because the accounts of about 200 " Cuban-born " Private Customers were terminated ( according to press reports regardless of Austrian nationality ) with reference to their origin. This was justified by the fact that the new U.S. owner had no business with " Cuban-born " wish (specifically, reference was made to the Helms- Burton Act ). In this respect lawsuits have already been announced. The affair drew a debate by itself in the already the withdrawal of the Austrian government accounts from BAWAG is required as serious consequence. On April 26, an administrative penalty procedure was Foreign Minister Ursula Plassnik initiated pursuant against BAWAG, which based on the EC Regulation No 2271/ 96 " for protection against the effects of the extra -territorial application of a third country legislation adopted by it, or the fact necessary measures " based. According to the Law Professor Heinz Mayer each branch manager and each member can be punished (as instigator ) for each termination, the punishment up to 72 673 EUR (one million shillings ) market share, and the punishment - similar to parking tickets - can be often imposed.

According to a press release of BAWAG since May 4, 2007 Cuban customers yet again welcome. Cerberus received a relevant exemption from the U.S. Treasury.

Restructuring in 2007

In the restructuring of BAWAG P.S.K. by the new owner Cerberus was decided to initially for a two-brand market presence of BAWAG PSK Bank and. The bank sales line in the Austrian post offices took place under the name " PSK Bank". Simultaneously, a new logo was designed for both brands. Already in the course of 2010, this strategy was abandoned in favor of a single-brand strategy. By 2012, all branches will operate with a uniform logo under BAWAG PSK.

The 43% stake in the Austrian TV channel ATV was sold. Also sold the Slovak banking subsidiary Istrobanka to the Belgian financial company KBC Group and BAWAG Bank CZ (Czech Republic ) to the Landesbank Baden- Württemberg ( Germany ) in 2008. The piano manufacturer Bösendorfer was sold at the end of 2007 Yamaha.

Government Support

In the wake of the banking crisis in 2009, the BAWG of the Republic of Austria received participation capital amounting to 550 million euros. Having begun in 2013 with the repayment, in March 2014, the greater amount of 350 million euros will be paid back plus interest.

Investments

Domestic:

• Easybank (100 %)
• Sparda Bank Vienna (100 %) to 31 December 2008
• Austrian Road Bank (100 %)
• Wüstenrot (see Wüstenrot Group ( Austria ) )
• Control Bank ( 5.09% )
• Wiener Börse AG ( 2.44% )
• Paylife ( 20.7 %)
• Austria Rail Engineering (50%)

Foreign:

• BAWAG banka, Slovenia
• BAWAG International Finance, Ireland ( in liquidation)
• MKB, Hungary ( The 10% interest in MKB is due to conditions imposed by the EU for sale )

Previous shareholdings:

• Austrian National Bank ( 11.9%; May 2, 2006 it was announced that BAWAG, as well as the OGB transfer their shares in the Austrian National Bank of the Republic of Austria )
• Austrian Lotteries ( around one-third, in 2007 sold to the Casinos Austria )
• Bösendorfer piano manufacturer (100 %), sold to Yamaha (December 2007)
• Istrobanka, Slovakia ( sold in March 2008 KBC)
• BAWAG Bank, Czech Republic ( sold in April 2008 at Landesbank Baden -Wuerttemberg)
• Stiefelkönig, shoe chain