Bank Austria. Presentation to Fixed Income Investors

Transcription

1 Bank Austria Presentation to Fixed Income Investors Vienna, June 2015

2 Agenda Overview Bank Austria Business Model & Strategy Profit & Loss Balance Sheet & Capital Ratios Liquidity & Funding Funding Strategy & Position Transactions Cover Pool Annex 2

3 Bank Austria at a glance Bank Austria Highlights as of 31 March 2015 Member of UniCredit since 2005 Leading corporate bank and one of the largest retail banks in Austria ~ 7,000 FTE and about 240 branches in Austria Management of the leading banking network in CEE in 13 countries RoE after tax 3/15 12/14 Total Assets Customer Loans Direct Funding Equity In bn Stable liquidity with a perfect balance between customer loans and direct funding Cost / income ratio 54.3% CET1 capital ratio2) 10.2% Total capital ratio2) 13.7% Non-performing exposure ratio 4.4% Coverage ratio ~ 29,000 FTE and about 1,400 branches in full CEE subsidiaries1) Solid capital base (10.2% CET1 Ratio) 5.7% 54.7% Cost of risk 1Q15 1Q14 1,383 1,413 Operating costs LLP Operating income Net profit In mn 3 1) plus a further 19,000 FTE and ~ 1,000 branches in Turkey (the 41%-stake now being consolidated at equity) 2) Capital ratios based on all risks; Basel 3 (transitional) and IFRSs; end of period. 73bp S&P BBB A-2 Moody s Baa2 P-2 Fitch BBB+ F2 Market share loans / deposits Austria 15% / 14% Market share loans / deposits CEE 6% / 6%

4 Business Model and Market Position in Bank Austria s Home Market Bank Austria is one of the strongest banks in Austria: CIB Leading corporate bank in the country (7 of 10 large corporates are clients) Focus on - Multinational corporates - International and institutional Real Estate customers requiring investment banking solutions and capital markets-related products - Financial Institutions Clients have access to the largest banking network in CEE as well as to UniCredit branches in major financial centers worldwide Commercial Banking The division covers - Retail customers - Corporate customers - Real Estate - Public Sector (excluding Republic of Austria) Broad coverage through a network of approx. 240 branches, offering its customers a complete range of high-quality products 12% market share in loans to individual customers Strong market position in all corporate segments Private Banking 26% of Austrian High Net Worth Individuals are customers of BA Clients benefit from the combination of local understanding and international capabilities Tailored financial services to High Net Worth Individuals and foundations Successful client approach through BA s PB Division and Schoellerbank 4 CIB = Corporate & Investment Banking

5 Bank Austria s Market Shares 1) in the Domestic Customer Business (as of March 2015) Loans total 14.6% Deposits total 14.4% Retail Loans 12.5% Retail Deposits 10.4% Corporate Loans 16.3% Corporate Deposits 22.7% Public Sector Loans 16.0% Public Sector Deposits 27.5% Funds 2) 12.4% 5 Very efficient network structure to cover the important size of customer share with only 5% of all bank branches in Austria 1) UniCredit Bank Austria AG 2) Pioneer Investments Austria + Bank Austria real estate funds Source: Monthly Report Austrian National Bank (OeNB); VÖIG

6 Economic Conditions in Austria Austrian economic growth YoY in % Austrian inflation rate YoY in % 4,0 3,5 3,0 2,5 2,0 1,5 1,0 0,5 0,0-0,5-1,0-1,5 2,1 3,4 3,6 1,5 1,9 3,1 0,9 0,2 0,3 forecast 0,9 1,5 4,0 3,5 3,0 2,5 2,0 1,5 2,3 1,5 2,2 3,2 1,9 3,3 2,4 2,0 1,7 forecast 1,2 1,6-2,0 1,0-2,5 0,5-3,0 0,5-3,5-4, , , Hopes of perceptible economic growth in 2014 were dashed by faltering support from growth markets and the Ukraine conflict with Russia. Austria s economy grew by an insignificant 0.3% in 2014 as a whole There are at least five good reasons why 2015 will be better than 2014: The modest increase in global demand, supported by the weaker euro and lower oil prices, and fiscal and monetary impetus in the pipeline The sharp fall in oil prices will significantly curb the inflationary trend in Austria also in 2015, while the economy still lacks the impetus for an improvement on the labor market will probably see a further rise in unemployment in Austria to 5.7 % Employment and unemployment rate Employment excl. persons drawing maternity benefits, military service and training (1000s, SA) - RS Unemployment rate (%, SA) - LS Sources: Statistik Austria, Bank Austria Economics & Market Analysis Austria

7 Economic growth in CESEE to continue on its recovery path, while the whole CEE region is set to pick up from 2016 Real GDP growth, % Cross-country breakdown CEE CESEE F F F -10 RU HR RS UA BG HU RO SI CZ SK BH TR 7 CEE: BG: Bulgaria, BH: Bosnia and Herzegovina, CZ: Czech Republic, HR: Croatia, HU: Hungary, RO: Romania, RS: Serbia, RU: Russia, SI: Slovenia, SK: Slovak Republic, TR: Turkey, UA: Ukraine; CESEE: CEE excluding Russia, Turkey, Ukraine Source: UniCredit Research, UniCredit CEE Strategic Analysis

8 UniCredit: leadership in CEE Data as of FY 2014 Total Assets (1) EUR bn Net Profit (2) EUR mn Number of Branches Countries of presence (3) CEE, % share in Group revenues UniCredit (4) 25 (5) SocGen (6) (6) 353 (7) (7) 15 (7) 14 (8) (7) ISP OTP n.m. 8 Note: (1) 100% of total assets for controlled companies (stake > 50%) and pro rata for non- controlled companies (stake < 50%), except for OTP; (2) After tax and before minorities; (3) Including direct and indirect presence in the 25 CEE countries, excluding representative offices; (4) including branches in Turkey at 100%; (5) Results of RBI exclude group corporate, markets and corporate center segments; (6) BG, HR, MG, MD and MC as of FY2013 since 1H 2014 data not available; (7) As of 1H14; (8) Excluding BG, HR, MG, MD and MC. Rest of the countries as per 1H14. Source: UniCredit CEE Strategic Analysis

9 The Leading Network in Central & Eastern Europe Broad presence of UniCredit / Bank Austria in CEE Region Ranking Market Share Total Assets ( mn) Customer Loans ( mn) Primary Funds ( mn) Branches Poland 1) 2 11% 40,027 28,798 30,670 1,023 Russia 9 2% 20,870 13,242 13, Czech Republic 4 9% 19,503 12,664 13, Slovakia 2) 5 7% Croatia 1 26% 14,400 9,789 8, Bulgaria 1 17% 8,489 5,160 5, Romania 5 8% 7,091 4,630 3, Hungary 3 8% 7,320 3,269 3, Ukraine ("held for sale") 6 4% Slovenia 5 7% 2,810 1,975 1, Bosnia & Herzegovina 1 22% 2,659 1,726 1, Serbia 3 9% 2,457 1,485 1, at equity consolidated Turkey 3) 5 10% 31,474 21,004 19,774 1,050 o/w Azerbaijan 10 2% Rep. Offices Belarus Macedonia Montenegro 4) 9 The leading player in CEE: # 1 by assets, branches and net profit ~ 80 bn Direct funding (Primary funds = Deposits from customers + Debt securities in issue) ~2,400 branches *) and ~47,000 FTE *) Within top 5 in 11 Countries *) excl. ~1,000 branches and ~19,000 FTE of Turkish Joint Venture CEE Division (excl. Turkey, excl. Ukraine) 91,464 59,081 53,777 2,453 CEE Region (excl. Turkey, excl. Ukraine) 131,491 87,878 84,447 3,476 Note: Data as of 31 March 2015, ranking and market share as of 31 December ) Poland (Bank Pekao) under management of UniCredit 2) Since 1 Dec. 2013, foreign branch of UniCredit Bank Czech Republic and Slovakia 3) Turkey consolidated at equity as from ) Representative Office of UniCredit Russia 5) incl. Turkey, incl. Ukraine 5) 5)

10 CEE Division 1) incl. Details on Turkey and Ukraine (as of 31 March 2015) Turkey and Ukraine shown separately as Yapi Kredi (Turkish Joint-Venture) consolidated at equity since 2014 Ukrsotsbank (Ukraine) reclassified to Held for Sale ( mn) CEE (excl. TR, UA) Turkey (at 40.9%) Ukraine Loans to Customers Primary Funds 2) Market Share CEE Division Customer Loans 11.7% 5.8% Excl. Russia Incl. Russia Market Share CEE Division Customer Deposits 9.3% 5.3% Excl. Russia Incl. Russia 10 1) excl. Poland (under direct management of UniCredit) 2) Primary funds (= Direct Funding) = Deposits from Customers + Debt Securities in Issue

11 To support the strategic ambition of CEE Division, a large-scale program has been launched, targeting transformation and improved profitability in key areas Balanced growth Reinforcing business refocusing through: Country portfolio optimization, targeting leadership position, increasing profitability and volumes market share with attention to risk awareness Discipline and execution Focus on efficiency Leveraging on presence in CEE as added value for the Group Retail Transformation Profound business model transformation, enabled by investments in infrastructure, to quickly boost profit generation through: Simplification of operating model to free-up resources Service model revision to enhance productivity Extensive leverage of digital and multi-channels Further increase customer base Reinforcing Leadership in Corporate Boost value creation of corporate portfolio through: Enhancement of service model (targeting capital light approach) on a value base logic, strengthening cross-selling and pricing capabilities Increase penetration and customer base on most attractive sub-segments thanks to focus on SME and internationalization program 11

12 CEE keeps focus on portfolio optimization, targeting balanced growth and efficiency * completed in 2014 ** ongoing CEE region CAIBs UCIFIN Integration of CAIBs completed* Integration in RO, BG completed Wind-down of bank activities and merger with UC Leasing Latvia* Leasings Transfer in 2014/15** JV with Renault, Nissan and Infiniti Sale of MICEX Merger of UCB CZ and UCB SK Acquisition of AXA retail portfolio (CZ) Acquisition of Transfinance a.s. (CZ)* Merger of UniCredit Bank Ukraine and Ukrsotsbank Sale of Istratourist* Retail portfolio acquisition (RBS) Corporate portfolio acquisition (RBS)* Sale of ATF Bank Sale of Yapi Kredi Sigorta 12 Further achievements 2014: Turkey: Successful branch expansion Hungary: Solid profitability maintained (unlike most competitors)

13 Strategy for Austria: Bank Austria, a modern retail bank and the most innovative player in the Austrian market Strategic repositioning Basic services bank Basic top-quality services around the clock, meeting everyday financial needs Permanent presence for banking transactions to meet everyday needs Advisory bank Specialists offer various customer groups highly-qualified advisory services at branches and via SmartBanking Leading multi-channel bank With the Online-Konto (online account), Bank Austria creates the first online bank with personal advisory services and the product range of a truly universal bank 13

14 SmartBanking the bank of the future is smart & multi-channeloriented 10,000 new customers since start of the project, SmartBanking for all 1.6 mn customers On average, 800 to 1,000 advisory talks via videotelephony per month, furthermore, customers contact the bank via phone, , messages via the communication center in OnlineBanking, via SMS, MobileBanking, etc. significant increase of new business Offer open to all customers of Bank Austria with a minimum age of 14 years Approx. 100 staff in SmartBanking High customer satisfaction The customers appreciate the innovative approach, the comfort to be able to communicate with their personal relationship manager anywhere and anytime, and in general the prolonged service hours, availability of the whole product range and the whole branch network of Bank Austria, i.e. a clear differentiation to pure online banks Trendsetting apps including ATM finder, importing and generating of QR codes and full support for all tablets SmartBanking, together with the new branches, forms the new service model, allowing the customer to choose how, where and when he/she wants to get in contact with Bank Austria 14

15 Rating Overview Moody's S&P Fitch 1) 1) 1) Long-Term Short-Term Subordinated Long-Term Short-Term Subordinated Long-Term Short-Term Subordinated Bank Austria 2) UniCredit S.p.A. Baa2 P-2 Ba2 BBB A-2 BB+ BBB+ F2 - Rating under Review/ uncertain Negative Baa1 P-2 Ba2 BBB- A-3 BB BBB+ F2 BBB Stable Stable Stable Stable Public Sector Covered Bond Aaa - - Mortgage Covered Bond Aa1 (review for upgrade) - - (as of 23 June 2015) 15 1) Subordinated (Lower Tier II) 2) Securities issued before 31 Dec which benefit from a secondary liability by the City of Vienna (grandfathered debt) are also rated as shown above, with the exception of Baa1 by Moody s for the relevant senior debt

16 Agenda Overview Bank Austria Business Model & Strategy Profit & Loss Balance Sheet & Capital Ratios Liquidity & Funding Funding Strategy & Position Transactions Cover Pool Annex 16

17 P&L of Bank Austria FY14 Stable operating income (decrease mainly due to high one-offs in 2013) Operative improvement mainly due to lower net write-downs of loans ( mn) y/y 4Q14 3Q14 4Q13 q/q Operating Income 5,890 6, % 1,429 1,554 1, % Operating Costs -3,336-3, % % Operating Profit 2,554 3, % % Net Write-Downs of Loans , % % Net Operating Profit 1,860 1, % % Non-Operating Items -82-1, % % Profit Before Tax 1, >100.0% % Income Tax % % Group Net Profit 1,383-1,542 >-100.0% , % Cost / Income Ratio - excl. bank levies (in %) 53.9% 49.9% 400 bp 58.3% 50.1% 50.5% 819 bp 17 Operating income y/y down by 9%, mainly due to lower equity contribution from Turkey (due to sale of Sigorta insurance in 3Q13) and decreased trading income (MICEX-sale 4Q13) Costs slightly lower vs. FY13, driven by strict cost management and despite further increase in Austrian bank levy Net write-downs of loans significantly lower (-47% y/y), decrease both in Austria and in CEE Group Net Profit at 1,383 mn, last year s result was impacted by the total write-off of goodwill and other special factors Note: Non-operating items include provisions for risks and charges, profit from investments and integration costs

18 P&L of Bank Austria 1Q15 Stable operating profits trend confirmed ( mn) 1Q15 4Q14 1Q14 q/q y/y Operating Income ,1% -2,1% Operating Costs ,6% -2,8% Operating Profit ,7% -1,3% Net Write-Downs of Loans ,6% 1,1% Net Operating Profit ,3% -2,5% Non-Operating Items ,8% >100.0% Profit Before Tax ,9% -26,1% Income Tax ,4% -9,2% Group Net Profit ,6% -43,2% Cost / Income Ratio (in %) 54,3% 56,9% 54,7% -263 bp -37 bp 18 Operating income slightly down, mainly due to low interest environment in Austria, currency effects and expiry of profit contribution in UniCredit Markets Division (part of the intra-group sale of CAIB in 2010) at the end of 2014 Costs significantly lower vs. 2014, driven by strict cost management and currency effects Net write-downs of loans stable, low requirements in particular in Austria Non-operating items increase due to higher systemic charges (including first-time contribution to Austrian resolution fund following BRRD implementation in Austria already in 2015 Note: Non-operating items include provisions for risks and charges, systemic charges, profit from investments and integration costs

19 Net Operating Profit Bank Austria confirms profitability, with CEE as main contributor Net Operating Profit Composition ( mn) Share of Divisions *) Net Operating Profit by region (%) Operating income Costs LLP Austria 22% ,413 1,383 1,413 1,442 1,383 78% CEE *) without Corporate Center NOP slightly down y/y (-3%) Reduction of revenues y/y due to low interest environment in Austria, currency effects (mainly Russian Ruble) and expiry of profit contribution in Q Q Q UniCredit Markets Division Y/y and also q/q, decrease in costs due to strict cost control (in particular lower staff costs) and currency / /2015 effects LLP stable, with Austria still at very low levels

20 Loan Loss Provisions and Cost of Risk LLPs and Cost of Risk stable Net Write-Downs of Loans (in mn ) Cost of Risk (in basis points) CEE Austria % 210 BA Group Commercial Banking CIB CEE Q14 4Q14 1Q15 1-3/ /2015 FY14 1-3/ LLPs: stable y/y, with a decrease in Austria (in particular Corporates) and higher in CEE, due to Russia Cost of risk on FY14 level (BA Group at 73 bps vs. FY14 with 68 bps), with Commercial Banking (i.e. the Austrian customer business) and CIB again at low levels (increase vs. FY14 due to larger write-backs/releases in previous year) CEE stable

21 Asset Quality Slight worsening of AQ ratios in 1Q15 Net Impaired Loans 1) (in bn ) % of Net Impaired Loans on Total Net Loans 1) % Coverage Ratio on Impaired Loans 1) 5.0 BA Group +4% ,3% BA Group +4bp 4,3% 4,4% 55.0% BA Group -29bp 55.4% 54.7% Net impaired loans up in 1Q15, driven by an increase in Russia (but with an overall still very good asset quality in 1Q14 4Q14 1Q15 1Q14 4Q14 1Q15 1Q14 4Q14 1Q15 Russia). Austria and Austria Austria Austria most CEE countries stable -6% -12bp +151bp Net impaired loan ratio % 2.2% 2.2% 62.6% 64.5% 64.2% almost stable, impacted by the same developments 1Q14 4Q14 1Q15 1Q14 4Q14 1Q15 1Q14 4Q14 1Q15 Coverage ratio on impaired loans slightly CEE CEE CEE reduced y/y by % bp -81bp 6.6% 6.5% 6.6% 51.2% 51.2% 50.4% 29 bp. Improvement in Austria, CEE somewhat lower (again partly driven by Russia) 21 1Q14 4Q14 1Q15 1Q14 4Q14 1Q15 1Q14 4Q14 1Q15 1) on-balance clients (non-banks) only

22 CEE Division increases profit before tax by 29 per cent at constant exchange rates Profit before tax in EUR mn - change y/y in % (at constant exchange rates) Hungary 1) CEE 390 Russia 79 Turkey 1) 70 SEE 163 Bulgaria 48 Croatia 63 Romania 22 Serbia 16 Bosnia 14 CE 100 CZ/SK 76 Slovenia % 6% 5% n.m. n.m. 29% 28% 35% 39% 40% 58% 72% 93% Profit before tax up by 29% y/y (at constant rates while +19% at current rates) based on substantially higher revenues (+17%), strict cost management and despite higher loan loss provisions Strong improvement in most countries Within a difficult environment, Russia confirmed as important profit contributor Turkey up based on strong revenue performance Excellent results in SEE despite challenging economic environment Significantly higher profits also in all countries in Central Europe 22 1) Turkey consolidated at equity, therefore incl. in CEE total with net profit of 70 mn. The proportionate profit before tax amounts to 88 mn.

23 Agenda Overview Bank Austria Business Model & Strategy Profit & Loss Balance Sheet & Capital Ratios Liquidity & Funding Funding Strategy & Position Transactions Cover Pool Annex 23

24 Balance Sheet structure (as at 31 March 2015) Loans and receivables with banks Balance Sheet ( mn) Change vs. 31 December ,009 (100%) 30,096 (15%) 195,009 (100%) 23,739 (12%) Deposits from banks Balance sheet % 195 ( bn) Loans to customers % 118 Loans and receivables with customers 117,511 (60%) 106,150 (54%) Deposits from customers 12/14 03/15 12/14 03/15 Other Financial Assets Other Assets 35,265 (18%) 12,137 (6%) 30,100 (15%) 19,279 (10%) 15,740 (8%) Debt securities in issue Other Liabilities Equity Deposits from customers % 106 Securities in issue % 30 Assets Liabilities 12/14 03/15 12/14 03/15 24 Balance sheet development (+3.1%% vs. YE14) partly driven by strong deposit growth and currency effects (appreciation of Ruble, USD, CHF) Classical commercial bank - loans and primary funds (customer deposits + debt securities in issue) well balanced and representing a high share in the balance sheet Debt securities in issue stable q/q, following a successful covered bond issue ( 0.5 bn) and two Tier 2 issues ( 0.75 bn) compensating for maturing bonds Solid capital base of 16 bn, 5% up vs. YE14 As from 2014, Turkey (Yapi Kredi) is consolidated at equity and therefore only included as participation. Ukraine classified as held for sale (included in other assets/other liabilities) Shareholders equity 15 12/ % 16 03/15 Leverage ratio 5.6% 5.6% 12/14 03/15

25 Loan and Deposit Volumes Loans more than covered by deposits and debt securities in issue Loans to Customers 1) ( mn) Deposits from Customers 1) ( mn) CEE CEE Austria 113, ,680 +3% 115, ,732 +3% 117,511 Austria 95,605 95,725 11% 99, ,256 +4% 106,150 55,166 57,127 57,748 56,378 58,472 44,564 45,414 46,932 48,796 51,026 51,041 50,312 52,841 53,460 55,124 58,394 58,553 57,800 57,353 59,039 1Q14 2Q14 3Q14 4Q14 1Q15 1Q14 2Q14 3Q14 4Q14 1Q15 Loans/Direct Funding Ratio 92% 93% 89% 86% 86% 25 Loans to customers +3% q/q largely due to currency effects: Austrian business driven by CHF appreciation, CEE business by USD and Ruble appreciation in 1Q15 Deposits from customers with a +4% q/q, with strong growth in all Austrian business divisions while the increase in CEE is partly due to business growth (increases mainly in Croatia, Bulgaria and Slovenia) and also due to FX appreciation Loans more than covered by deposits and debt securities in issue, Loans/Direct Funding Ratio on an excellent level of 86% 1) All figures recast and excl. Turkey and Ukraine

26 Volumes in CEE Good business development, impact from currency movements Customers loans / Direct Funding ( bn) 1) Regional Breakdown Customer loans Direct Funding Customer loans ( bn) March 15 CEE o/w Russia 13 CZ/SK 13 Hungary 3 Bulgaria 5 Croatia 9 Romania 5 1Q14 4Q14 1Q15 Primary funds ( bn) March 15 1) 26 Loans/Direct Funding Ratio CEE 117% 109% 109% Loans/Direct Funding: Also within CEE, ratio further improved y/y to 109% Regional Breakdown: well-balanced distribution of volumes, with Russia and Czech Rep./Slovakia as largest banks. In a proportionate view, equity-consolidated Turkey would be the largest CEE bank (loans 21 bn, direct funding 19 bn) 1) Direct Funding = Deposits from customers + Debt securities in issue CEE 54 o/w Russia 13 CZ/SK 14 Hungary 4 Bulgaria 6 Croatia 9 Romania 3

27 Capital position and RWA Sound capital ratios Capital Ratios 13.5% Total CAR 13.4% 13.7% 1) Common Equity Tier 1 (CET1) ratio stands at solid 10.2% and Total Capital ratio at 13.7% (both according to Basel 3 phase-in and IFRS) Tier % 10.3% 10.2% Safe capital base as Bank Austria unlike its main competitors did not take up state capital CET1 11.3% % % 1Q15 B3 phase-in RWA development in FY14 influenced by implementation of the CRR (leading to higher market risk RWA in 2014), volume growth in CEE and switch to IFRS. Increase in 1Q15 includes CEE business growth and appreciation of some currencies (CHF, USD, Ruble) Regulatory Capital ( bn) Risk-Weighted Assets ( bn) Total Capital Additional Tier 1 CET ) Total RWA Market risk CVA charge Operational risk ) Credit risk Q15 B3 phase-in 1) Starting with 2014, figures in accordance with Basel 3/CRR and since 3Q14 based on IFRS; transitional adjustments (phase-in) only relevant for capital, not for RWA Q15 B3

28 Agenda Overview Bank Austria Business Model & Strategy Profit & Loss Balance Sheet & Capital Ratios Liquidity & Funding Funding Strategy & Position Transactions Cover Pool Annex 28

29 Bank Austria Acts as Regional Liquidity Center for Austria / CEE and is a Strategic Issuing Platform for UniCredit Group UniCredit S.p.A. Holding RLC Italy RLC Germany RLC Austria/CEE RLC Poland UniCredit S.p.A (Baa1/BBB-/BBB+) UniCredit Bank AG (A3/BBB/A-) UniCredit Bank Austria AG (Baa2/BBB/BBB+) Bank Pekao SA (A2/BBB+/A-) Bank capital OBG (covered bonds) Registered sec./ Schuldscheindarlehen (SSD) Senior benchmark Private placement Retail issues Mortgage- and Public Sector Pfandbriefe Senior benchmark Registered sec. (SSD, NSV *) ) covered / senior Private placements Retail Issues Certificates Mortgage- and Public Sector Pfandbriefe Senior benchmark Housing-bank-bonds (Wohnbaubankanleihen) Registered sec. (SSD, NSV *) ) covered/senior Private placements Retail issues Retail issues Bearer bonds Own Issue Programs Presence on the local and global markets During the liquidity crisis no state aid needed 29 Coordination of the global market presence through UniCredit Holding Long-Term Ratings by (Moody s/s&p/fitch) as of 23 June 2015 *) Namensschuldverschreibungen

30 Self-funding of Business Growth of Bank Austria Group Business Growth of BA Group to be self-funded by a well-balanced mix of customer deposits and market issuances Well-diversified funding base due to BA s commercial banking model. Priority is on growth of local funding sources out of customer business with a variety of products (sight, savings, term deposits) as well as medium- and long-term placements of own issues The self-funding strategy of Bank Austria was demonstrated by returning to the capital markets: from 2010 focus was given to issuance of benchmark-sized Pfandbriefe and since 2013 also on Senior Unsecured Benchmarks The strict principle of self-sufficient funding of Bank Austria ensures that the proceeds are used primarily for business development of entities of Bank Austria Group enables Bank Austria to calculate its own funding costs according to its own risk profile Same Principles apply for the CEE banks of BA Group Also in CEE the business model as commercial bank with its priority on growth of local funding sources from customer business leads to a well-diversified funding base Self-sufficiency target is applied in CEE as a business principle of UniCredit Group and is also strongly favored by regulators, e.g. introduction of Loans to Local Stable Funding Ratio - LLSFR by Austrian National Bank (OeNB) 30 Through its know-how and international business relationships BA actively supports the development of local capital markets, especially in local currency, e.g. local Covered Bond issuance in Czech Republic, first SME Covered Bond in Turkey and Senior Unsecured issues in Russia, Turkey and Romania

31 Liquidity and Funding Management within BA Group based on clear and strict Risk Management Principles Clear Rules and Principles in Bank Austria for the Management of Liquidity and Funding Liquidity strategy Bank Austria acting as an independent Regional Liquidity Center (RLC) within UniCredit Group - in line with the self-funding principle of the new Group Strategy Bank Austria manages the liquidity development in Austria and CEE Clear operative rules Active liquidity and funding management by defining short-term and structural liquidity and funding limits for all banking subsidiaries of BA Group In addition to the Austrian regulator s principles, BA strictly monitors the balanced intra-group funding flows within BA Group All international and national legal / regulatory constraints have to be followed on single bank level Bank Austria establishes a separate Funding and Liquidity Plan for Austria and its CEE subsidiaries as part of the Funding and Liquidity Plan of UniCredit Group 31

32 BA Group-wide Liquidity Position (steered centrally by ALM BA) BA RLC 3 month available liquidity position (1) (2) Constant prudent net liquidity reserve inflows from market and captive customer base positive effect of cash pooling Cash horizon constantly above 3M Sound counterbalancing capacity (approx. 28bn on 1Y average) Structural liquidity ratio (1Y) 1,10 1,09 1,08 1,07 1,06 1,05 1,04 1,03 1,02 1,01 1,00 0,99 0,98 0,97 0,96 0,95 0,94 0,93 0,92 0,91 0,90 0,89 0,88 1Y Liquidity Ratio 1Y Limit Structural liquidity ratio 3) well above limits Internal rule of 0.90 for maturities above 1y Level as of May 2015: 1.06, decreased vs the previous month (1.09) thanks to Stable Loan/Deposit ratio 2015 M/L Term Funding Plan positively kicked off Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May (1) Sum of net liquidity inflow + counterbalancing capacity (2) Assuming no roll-over of current outstanding wholesale debt (3) Calculated as ratio between liabilities (cumulative sum above one year) and assets (cumulative sum above one year)

33 Medium- & Long-Term Funding Development and Target 2015 Medium- & Long-Term Funding (in bn) Benchmark Issuances in 2014 and 2015: Mortgage Pfandbrief 4,63 Benchmarks in January, April, 3,18 Pfandbriefe 2.3 bn Pfandbriefe 3.0 bn 2,10 3,79 3,85 o/w 0.5 Pre-Funding 2014 Pfandbriefe 1.4 bn o/w 0.5 Pre-Funding 2015 Pfandbriefe 2.0 bn 4,08 Pfandbriefe 1.75 bn September 2014 and February 2015 successfully placed Public Sector Pfandbrief Benchmark in May 2014 successfully placed Plan for 2015: Benchmark Issues, Private Pfandbriefe 0.8 bn Placements and Issuance via own Network of Covered Bonds and Senior Bonds Plan 33

34 Maturity Profile of Bank Austria s Own Issues (as of 30 April 2015) Maturity Profile (in mn) 9,902 Split of Instruments (in mn) Total 25,845 3,783 Subordinated Bonds 5, ,514 4,685 8,332 Covered Bonds 3, , , , , , , , ,010 1, ,604 after 2019 Senior Bonds 12,828 Above percentage distribution of these instruments targeted to be maintained at similar levels also in the future 34 Subordinated Bonds Senior Bonds Covered Bonds Approx. 15% of total own issues were placed as retail issues Note: Data including issues sold through Group network

35 Agenda Overview Bank Austria Business Model & Strategy Profit & Loss Balance Sheet & Capital Ratios Liquidity & Funding Funding Strategy & Position Transactions Cover Pool Annex 35

36 Overview of Pfandbrief Benchmark Issues 2015 In February, successful issue of a 10-year Mortgage Pfandbrief Benchmark Bank Austria Mortgage Pfandbrief 0.75% 25/02/ mn Feb MS + 3bps Others Switzerland France 3% UK 3% 6% 5% Asia 6% 52% Germany Central Banks/ Official Institutions Insurance companies 4% 18% 48% Banks Austria 25% Funds 30% 36

37 Overview of Pfandbrief Benchmark Issues /2 In January, successful issue of a 10-year Mortgage Pfandbrief Benchmark Bank Austria Mortgage Pfandbrief 2.375% 22/01/ mn Jan MS + 35bps Switzerland Others Italy UK 3% 6% France 2% 9% 2% Central Banks Insurance companies 12% 5% Asia 10% 47% Germany Funds 31% 52% Banks 21% Austria In April, successful issue of a long 5-year Mortgage Pfandbrief Benchmark Bank Austria Mortgage Pfandbrief 1.25% 14/10/ mn April 2014 MS + 23bps Switzerland Asia Spain Italy 2% 3% 6% 2% Nordics 10% Insurance companies Central Banks 9% 6% Benelux 11% 54% Germany Funds 30% 55% Banks 37 Austria 12%

38 Overview of Pfandbrief Benchmark Issues /2 In May, successful issue of a 7-year Public Sector Pfandbrief Benchmark Bank Austria Public Sector Pfandbrief 1.375% 26/05/ mn May 2014 MS + 25bps Others Italy France Nordics/Benelux 3% Switzerland 3% 3% 2% Asia 4% 3% 1% UK Corporates Insurance companies 4% Central Banks 10% 3% Austria 10% 46% Funds 71% 37% Banks Germany In September, successful issue of long 5-year Mortgage Pfandbrief Benchmark Bank Austria Mortgage Pfandbrief 0.5% 16/01/ mn Sept MS + 7bps 38 Switzerland France Others Nordics 2% Middle East 4% 4% 4% 3% Italy 6% Benelux 7% 56% 7% UK/Ireland 7% Austria Germany Central Banks Insurance companies 4% 6% Funds 28% 62% Banks

39 Overview of Pfandbrief Benchmark Issues prior to 2014 Bank Austria Mortgage Pfandbrief 1.25% 30/07/ mn July 2013 Mid-Swap +26 Bank Austria Mortgage Pfandbrief / First Tap 1.25% 30/07/ mn Sept Mid-Swap +10 Bank Austria Public Sector Pfandbrief 2.375% 15/06/ mn June 2010 Mid-Swap +45 Bank Austria Public Sector Pfandbrief 4.125% 24/02/ bn Feb Mid-Swap +69 Bank Austria Public Sector Pfandbrief 2.875% 04/11/ mn Nov 2011 Mid-Swap +85 Bank Austria Public Sector Pfandbrief 2.625% 25/04/ mn Apr 2012 Mid-Swap +88 Bank Austria Public Sector Pfandbrief 1.875% 29/10/ mn Oct 2013 Mid-Swap

40 Bank Austria Covered Bond Spread Comparison Strong performance of all BA Covered Benchmark Bonds issued so far Source: Bloomberg Mid ASW-Spread 40

41 Overview of Senior Unsecured Benchmark Issues 2013 Senior Unsecured Benchmarks (January 2013 and its first tap in May and an additional one in November 2013) were successfully issued Bank Austria Senior Unsecured Bond 2.625% 30/01/ mn Jan Mid-Swap +163 Bank Austria Senior Unsecured Bond 2.625% 30/01/ mn May 2013 Mid-Swap +105 Bank Austria Senior Unsecured Bond 2.5% 27/05/ mn Nov Mid-Swap +135 Overview of Investors Other Insurances 8% 6% Other Italy 10% Nordics 6% 3% Switzerland 5% 23% Germany 41 Banks 31% 54% Funds Netherlands 11% France 12% 13% UK 17% Austria

42 CEE Local issuance activities strengthen the liquidity profile of our banking subsidiaries and open up new funding sources RU Senior Public Market 1 y 250 mln equivalent RUB Aug % MS + 65bps TR Senior Public Market 5 y 362 mln equivalent USD Oct % MS + 357bps TR Club Term Loan 1 y 1 bn equivalent (USD 340 mln / 761mln) Oct floating MS + 80bps TR Diversified Payment of Rights (DPR) 17 y WAL * 362 mln equivalent USD Oct floating MS + 211bps RU Senior Public Market 1 y 96 mln equivalent RUB Nov % MS + 145bps CZ Mortgage Covered Bond 4 y 196 mln Dec % MS + 80bps CZ Mortgage Covered Bond 8.5 y mln March 2015 floating MS + 48bps CZ Mortgage Covered Bond 6 y 234 mln March 2015 floating MS + 35bps CZ Mortgage Covered Bond 5 y 250 mln April 2015 floating MS + 45bps 42 TR Club Term Loan 1 y Notice: TR = Turkey, RU = Russia, CZ = Czech Republic 1,26 bn equivalent (USD 428 mln / 835 mln) *) WAL = weighted average life May 2015 floating MS + 70bps

43 Agenda Overview Bank Austria Business Model & Strategy Profit & Loss Balance Sheet & Capital Ratios Liquidity & Funding Funding Strategy & Position Transactions Cover Pool Annex 43

44 Executive Summary Bank Austria Public Sector Cover Pool Aaa Rating by Moody s ECBC Covered Bond Label has been granted to the Public Sector Cover Pool of Bank Austria Cover Pool Volume as of 31 March 2015 amounts to EUR 7,329 mn Average volume of loans is approx mn Average seasoning is 5.5 years 44

45 Public Sector Parameters of Cover Pool and Issues Total Value of the Cover Pool as of 31 March 2015 in EUR equivalent: 7,329 mn thereof in EUR: 3,543 mn thereof in CHF: 1,850 mn thereof public sector bonds in EUR equivalent: 1,936 mn Parameters of Cover Pool Weighted Average Life (in years incl. Amortization) 6.7 Contracted Weighted Average Life (in years) 9.1 Average Seasoning (in years) 5.5 Total Number of Loans 3,909 Total Number of Debtors 1,431 Total Number of Guarantors 285 Average Volume of Loans (in EUR) 1,874,815 Stake of 10 Biggest Loans 30.2% Stake of 10 Biggest Guarantors 33.0% Stake of Bullet Loans 61.4% Stake of Fixed Interest Loans 35.6% Amount of Loans 90 Days Overdue 0 Average Interest Rate 1.6% Moody s Rating: Aaa Nominal / Present Value Over-Collateralization *) : 69.3% / 53.3% Total Value of Sold Covered Bonds as of 31 March 2015 in EUR: 4,330 mn Parameters of Issues: Total Number 36 Average Maturity (in years) 4.9 Average Volume (in EUR) 120,268, *) Austrian Mortgage Banking Act requires a nominal over-collateralisation of 2%. The basis for its calculation is a cover pool value reduced by legally defined haircuts. Taking these haircuts into consideration, the cover pool value amounts to EUR 6,835 mn, thus the overcollateralization is 57.9%. Additionally, in its Articles of Association, UniCredit Bank Austria commits itself to an over-collateralisation on a present value basis.

46 Public Sector Maturity Structure of Cover Pool and Issues Maturity of Assets in the Cover Pool in mn EUR in % Maturity up to 12 months 1, % Maturity months 1, % thereof Maturity months % thereof Maturity months 1, % Maturity months 1, % Maturity longer than 120 months 3, % Total 7, % Maturity of Issued Covered Bonds in mn EUR in % Maturity up to 12 months % Maturity months 1, % thereof Maturity months % thereof Maturity months % Maturity months 2, % Maturity longer than 120 months % Total 4, % 46

47 Public Sector Regional Breakdown of Assets *) in Austria 47 *) Considering Guarantors

48 Public Sector Assets Volume Breakdown by Type of Debtor / Guarantor Assets: Type of Debtor / Guarantor in mn EUR Number State Federal States 2, Municipalities 1,292 2,853 Guaranteed by State Guaranteed by Federal States 1, Guaranteed by Municipalities Other Total 7,329 3,909 48

49 Public Sector Volume Breakdown by Size of Assets Volume Breakdown by Size of Assets in mn EUR Number below 300, ,359 thereof under 100, ,244 thereof 100, , , ,000-5,000,000 1,449 1,406 thereof 300, , thereof 500,000-1,000, thereof 1,000,000-5,000, above 5,000,000 5, Total 7,329 3,909 49

50 Executive Summary Bank Austria Public Sector Cover Pool Aa1 Rating by Moody s - under review for upgrade Bank Austria decided to streamline its Mortgage Cover Pool targeting a simple and transparent pool composition: focus on Austrian mortgages only change to whole loan reporting instead of collateral volume Benefit: pure Austrian risk offer to our investor base no blending of risk, diversification to be decided by investor simple pricing logic ECBC Covered Bond Label has been granted to the BA Mortgage Cover Pool 50

51 Mortgage Cover Pool Parameters of the Cover Pool and Issues Total Value of the Cover Pool as of 31 March 2015 in EUR equivalent: 9,120 mn thereof in EUR: 7,200 mn thereof in CHF: 1,801 mn thereof substitute cover in EUR: 119 mn Parameters of Cover Pool Weighted Average Life (in years incl. Amortization) 9.5 Contracted Weighted Average Life (in years) 13.8 Average Seasoning (in years) 6.3 Total Number of Loans 26,587 Total Number of Debtors 24,829 Total Number of Mortgages 26,587 Average Volume of Loans (in EUR) 338,551 Stake of 10 Biggest Loans 13.6% Stake of 10 Biggest Debtors 17.9% Stake of Bullet Loans 36.9% Stake of Fixed Interest Loans 13.1% Amount of Loans 90 Days Overdue 0 Average Interest Rate 1.4% Moody s Rating: Aa1 under review for upgrade Nominal / Present Value Over-Collateralisation *) : 73.6% / 78.6% Total Value of Issued Mortgage Pfandbriefe as of 31 March 2015 in EUR: 5,252 mn Total Value of Sold Mortgage Pfandbriefe as of 31 March 2015 in EUR: 4,052 mn Parameters of Issues: Total Number 109 Average Maturity (in years) 5.4 Average Volume (in EUR) 48,183, *) Austrian Mortgage Banking Act requires a nominal over-collateralization of 2%. The basis for its calculation is a cover pool value reduced by legally defined haircuts. Taking these haircuts into consideration, the cover pool value amounts to EUR 6,063 mn, thus the overcollateralization is 15.4%. Additionally, in its Articles of Association, UniCredit Bank Austria commits itself to an over-collateralization on a present value basis.

52 Mortgage Cover Pool Maturity Structure of Cover Pool and Issues Maturity of Assets in the Cover Pool in mn EUR in % Maturity up to 12 months % Maturity months 1, % thereof Maturity months % thereof Maturity months % Maturity months 1, % Maturity longer than 120 months 5, % Total 9, % Maturity of Issued Covered Bonds in mn EUR in % Maturity up to 12 months % Maturity months 2, % thereof Maturity months % thereof Maturity months 2, % Maturity months 1, % Maturity longer than 120 months % Total 5, % 52

53 Mortgage Cover Pool Assets Volume Breakdown Volume Breakdown by Size of Loans in mn EUR Number below 300,000 2,866 23,024 thereof under 100, ,815 thereof 100, ,000 2,325 13, ,000-5,000,000 2,652 3,385 thereof 300, , ,980 thereof 500,000-1,000, thereof 1,000,000-5,000,000 1, above 5,000,000 3, Total 9,120 26,587 53

54 Mortgage Cover Pool Regional Breakdown *) of Mortgages in Austria 54 *) Without substitute cover (consists of bonds)

55 Mortgage Cover Pool Breakdown *) by Type of Use Mortgages Breakdown by Type of Use in mn EUR Number Residential 3,689 22,912 Residential subsidized 1,739 2,002 Residential used for business purposes 497 1,036 Commercial 3, thereof Office 1, thereof Trade thereof Tourism thereof Agriculture thereof mixed Use / Others Total 9,001 26, *) Without substitute cover (consists of bonds)

56 Mortgage Cover Pool Breakdown *) by Type of Use Bank Austria s Mortgage Cover Pool Value accounts for 9,001 mn as of 31 March 2015 (without substitute cover) All mortgages in cover pool are located in Austria The main concentration is in the City of Vienna 41.1% and the state of Lower Austria 25.5% Breakdown of cover pool by type of use: 65.8% residential real estate (thereof 19.3% subsidized) 34.2% commercial real estate, divides as follows: Office 16.5% Trade 8.1% Tourism 2.4% Other / Mixed use 7.2% 56 *) all percent Values are respective cover pool value without substitute cover

57 CHF Loans in mortgage Cover Pool are 100% private residential financing The over-collateralization is approx. EUR 3.5 bn or 74% (as of 31 th Dec.2014) Overview Changes due to Issue volume EUR 4.8 bn CHF revaluation Over-collateralization EUR 3.5 bn (74%) Total Asset Value EUR 8.3 bn o/w CHF EUR 1.6 bn EUR 1.8 bn (22% of total asset value) Total Cover Value EUR 5.6 bn o/w CHF EUR 670 mln EUR 670 mln (12% of collateral value / HypBG) Covering of CHF risk in Cover Pool FX-risks are explicitly considered in the rating process of Moody s and are reflected as part of their over-collateralization requirement Moody s currently requires an OC of 26.5% Bank Austria contractually committed itself to a higher OC of 32% 57 Internal Risk Management of Bank Austria According to the Cover Pool Regulation of Bank Austria NPLs are removed regularly (monthly). Less than 1% of the loans (175 of 26,000) were taken out in 2014 for this reason Special safety buffers are designated for CHF Loans The credit rating of FX-Loans is subject to additional and stricter standards and will - as always - be evaluated regularly For CHF Loans an additional FX-buffer of 20% on the credit volume is considered, which must be covered by the credit rating of the client No new CHF mortgage loans, therefore no inflows into Cover Pool since 2010

58 Bank Austria s Whole Loan Approach Whole Loan Approach and its Benefits for Investors According to the Austrian Mortgage Banking Act (HypBG), the maximum coverage volume of Beleihungswert is 60% (maximum current outstanding of the loan) Scenario I: Split Loan Approach = Minimum Approach Value of Mortgage Loan Volume split Value to cover issued Pfandbriefe = Not in Cover Pool & Loan in Cover Pool 60 = Maximum Pfandbrief volume issued according to HypBG For optimization of its collateral value loans are split into 2 parts: 1) included in cover pool and 2) not included in cover pool Scenario II = Approach of Bank Austria = Whole Loan Approach 58 Value of Mortgage & Loan Volume Value to cover issued Pfandbriefe Loan in Cover Pool 40 = Additional Pool volume 60 = Maximum Pfandbrief volume issued according to HypBG The whole loan and not only its legally assigned value is included in the cover pool to collateralize BA s issued Mortgage Pfandbriefe. Thus, investors benefit from collateralization above legal requirement in BA s cover pool.

59 Agenda Overview Bank Austria Business Model & Strategy Profit & Loss Balance Sheet & Capital Ratios Liquidity & Funding Funding Strategy & Position Transactions Cover Pool Annex 59

60 Agenda Annex Bank Austria within UniCredit Group Real Estate Market Austria Legal Situation Austrian Covered Bonds 60

61 UniCredit at a glance A clear international profile based on a strong European identity UniCredit Highlights Shareholder Structure 1) Strong local roots in almost 20 countries ~ 130,000 employees ~ 7,500 branches ~ 31 mn customers in Europe Retail, miscellaneous and unidentified Investors 24.3% 48.3% Institutional Shareholders One of the most important banks in Europe with total assets of ~ 840 bn One of the 30 Global Systemically Important Banks ( G-SIBs ) worldwide Stable Shareholders 27.4% Market capitalization of ~ 36 bn 2) Common Equity Tier 1 (CET1) Ratio at 10.02% under Basel 3 fully loaded Main shareholders: Stable shareholders, e.g. Foundations Institutional investors Retail investors 61 1) Source: UniCredit analysis on Sodali Shareholders' ID. All data based on ordinary shares as at 31 March ) As at 9 March 2015

62 Role of Bank Austria within UniCredit Within UniCredit, Bank Austria is the Central hub for the CEE Region (except Poland) and the Responsible unit for the Austrian market Bank Austria as UniCredit s central hub for the CEE Region: Holding for banks in 13 CEE countries with a population of approx. 300 mn Managing a network of about 1,400 branches and 30,000 FTE*) in CEE**) Development of retail and corporate business in the region Bank Austria benefits from being part of UniCredit: Strong market presence in 17 European countries Access to a worldwide network Leveraging on the know-how of the Group s product factories 62 *) **) FTE = Full-time equivalent excl. a further 1,000 branches and ~19,000 FTE of the Turkish Joint Venture Liquidity management for the CEE subsidiaries Management of credit and market risk Responsibility for HR development

63 Agenda Annex Bank Austria within UniCredit Group Real Estate Market Austria Legal Situation Austrian Covered Bonds 63

64 Austrian Real Estate Market Overview The Austrian Real Estate Market is a small, relatively stable market. In the first quarter of 2014, appr. 650 mn were invested in commercial real estate (according to CBRE) Top yields in the office market are slightly below 5%. Currently, there is stable demand and a very limited offer in the office market The Austrian retail market is saturated. Throughout Austria there is very limited new construction or extension of shopping centers. The top return regarding shopping centers is approx. 5.25%. Prices for residential real estate increased significantly within the last years (see next page). Austrian National Bank (OeNB) mentions an overvaluation of approx. 22% in the first quarter 2014 According to OeNB, the low increase in real estate loans and a still low indebtedness of households in an international comparison (and decreasing in relation to the GDP) indicates a high share of own funds in private real estate purchases 64

65 Austrian Real Estate Market Prices for residential real estate Strong increase in residential real estate prices in Vienna Austria excl. Vienna shows a much more stable development Residential Wohnimmobilienpreisindex Real Estate Price Index (2000 (2000 = 100) = 100) Q1 00 Q3 00 Q1 01 Q3 01 Q1 02 Q3 02 Q1 03 Q3 03 Q1 04 Q3 04 Q1 05 Q3 05 Q1 06 Wien Vienna Q3 06 Q1 07 Q3 07 Österreich Austria ohne excl. Wien Vienna Q1 08 Q3 08 Q1 09 Q3 09 Q1 10 Q3 10 Q1 11 Q3 11 Q1 12 Q3 12 Q1 13 Q3 13 Q1 14 Source: OeNB, TU Wien, Institut für Stadt- und Regionalforschung

66 Austrian Real Estate Market Office Market The Viennese office market remains one of the most stable ones in Europe Neuproduktion Office Space undin Vermietungsleistung Vienna Büroflächen Wien f f Neuflächenproduktion New space in m 2 in m² Vermietungsleistung Rentable space in min 2 m² Source: CBRE, IRG, EHL

67 Agenda Annex Bank Austria within UniCredit Group Real Estate Market Austria Legal Situation Austrian Covered Bonds 67

68 Austrian Legal Framework Mortgage and Public Sector Pfandbriefe Austrian Covered Bonds Pfandbriefe Fundierte Schuldverschreibungen Hypothekenbankgesetz (Mortgage Banking Act 1899) Pfandbriefgesetz (Pfandbrief Law 1938) Law of 1905 Bank Austria 68 Remark: Austrian Mortgage Pfandbriefe also follow the same legal regulation as Public Sector Pfandbriefe

69 Comparison Austria vs. Germany Criteria of Pfandbrief law / Hypothekenbankgesetz Austria Germany Pfandbrief law in place YES YES Mortgage and public sector collateral assets in separate pools YES YES Cover register YES YES Collateral assets limited to Europe YES X Legally required minimum overcollateralization YES YES Cover pool monitoring (Trustee) YES YES Special proceedings in case of insolvency Pfandbriefe remain outstanding in case of issuer s bankruptcy YES YES YES YES NPV matching YES* YES Austrian Hypothekenbankgesetz was initially based on the German legislation Important changes to the German "Pfandbrief" - legislation were followed by the Austrian "Hypothekenbankgesetz", which continues to reflect the principal features of the German "Pfandbriefgesetz Main differences in the current version are: German law also allows collateral assets from non-european countries German law includes compulsory NPVmatching, whereas in Austria a voluntary commitment is foreseen to be stipulated in the articles of association. Bank Austria, accordingly, included such clause in its articles of association 69 * if included in the Articles of Association of the respective credit institution