Austrian Banks Are Undercapitalized, Central Bank’s Ittner Says

 2011-04-20 10:00:00.19 GMT

By Boris Groendahl

     April 20 (Bloomberg) -- Austria’s six biggest banks have less capital and rely more on wholesale funding than their peers also active in eastern Europe and need to build up their buffers, the central bank’s chief bank supervisor said.

     The banks, which include Erste Group Bank AG and Raiffeisen Bank International AG, have on average a Tier 1 capital ratio of

9.4 percent, compared to a 10.2 percent average for 15 international banks active in eastern Europe, Andreas Ittner, the central bank’s director responsible for bank supervision, told journalists in Vienna today. The Austrian banks have lent

147 percent of their deposits, compared to 127 percent for their peers, Ittner said.

     “In our view it is necessary to beef up the risk buffers and improve the capital ratios,” Ittner said. “We appeal to them to put as much as possible into the strengthening of capital. We are in permanent talks to the banks about this.”

     Erste, Raiffeisen and UniCredit SpA’s Bank Austria are the biggest lenders in the former Communist part of Europe.

     Ittner repeated a central bank estimate saying that the Alpine nation’s banks need to raise 10 billion euros ($14.5

billion) by 2019 to reach the minimum requirement for new Basel

3 banking rules and to repay state aid, adding that lenders are aware that the minimum capital level defined under the Basel rules is not sufficient.