Austria\u2019s largest bank by assets, and the third biggest bank in Eastern Europe after UniCredit and Raiffeisen, announced that its earlier forecast about the amount of bad loans on its books is wrong, and will have to rise by a massive 40%, leading to what will be a record $2.2 billion loss, and triggering writedowns.<\/p>\n
Analysts, whose job it is to predict these things, were shocked:\u201dThis is a clearly bad surprise as it comes in addition to the already \u2018badly surprising\u2019 warning issued by the group at the beginning of this year,\u201d Natixis Securities SAS analyst Steven Gould said in a note to clients. \u201cThese announcements hurt the management\u2019s credibility going forward.\u201d<\/p>\n
What was the catalyst for the early recognition of the massive writedown? Bloomberg explains:<\/p>\n
The provisions are caused by new rules due to be approved by Parliament in Hungary today, forcing banks to refund unfair loan fees, and by the Romanian central bank\u2019s push for faster bad-debt reduction amid the European Central Bank\u2019s bank health check, Erste said. Writedowns on goodwill and deferred tax assets, triggered by the loan-loss provisions, may reach as much as 1 billion euros.<\/p>\n
\u201cBy taking these measures, we have done everything in our power to avoid one-off effects from 2015 onward,\u201d Chief Executive Officer Andreas Treichl said in the statement. \u201cWe are convinced that these measures will also help us pass the asset-quality review and stress test comfortably.\u201d<\/p>\n
Hungary contributed to Erste\u2019s loss with a new law forcing it to repay some loan costs to customers. New rules due to be approved by Parliament in Budapest today will require banks to refund certain expenses on as much as 6.5 trillion forint ($28 billion) of loans going back as far as 10 years, according to the draft bill.<\/p>\n
Higher bad-debt provisions in Romania, the Black Sea country of 20 million where Erste bought Banca Comerciala Romana SA for 3.75 billion euros in 2005, were caused by the central bank\u2019s pressure on banks to clean up their balance sheets as part of the ECB\u2019s bank health check, Erste said.<\/p><\/blockquote>\n
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Austria\u2019s largest bank by assets, and the third biggest bank in Eastern Europe after UniCredit and Raiffeisen, announced that its earlier forecast about the amount of bad loans on its books is wrong, and will have to rise by a massive 40%, leading to what will be a record $2.2 billion loss, and triggering writedowns. … Continue reading “Austrian bank Erste suffers record loss”<\/span><\/a><\/p>\n","protected":false},"author":2961,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49,3],"tags":[9402,9404,9403,191],"class_list":["post-14595","post","type-post","status-publish","format-standard","hentry","category-europe","category-news","tag-austrian-bank","tag-bad-loans","tag-erste","tag-hungary"],"cc_featured_image_caption":{"caption_text":false,"source_text":false,"source_url":false},"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/praag.org\/index.php?rest_route=\/wp\/v2\/posts\/14595","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/praag.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/praag.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/praag.org\/index.php?rest_route=\/wp\/v2\/users\/2961"}],"replies":[{"embeddable":true,"href":"https:\/\/praag.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=14595"}],"version-history":[{"count":2,"href":"https:\/\/praag.org\/index.php?rest_route=\/wp\/v2\/posts\/14595\/revisions"}],"predecessor-version":[{"id":14597,"href":"https:\/\/praag.org\/index.php?rest_route=\/wp\/v2\/posts\/14595\/revisions\/14597"}],"wp:attachment":[{"href":"https:\/\/praag.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=14595"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/praag.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=14595"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/praag.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=14595"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}