Oesterreichische Kontrollbank AG

Transcription

Primary Credit Analyst:
Thomas F Fischinger, Frankfurt (49) 69-33-999-243; [email protected]
Secondary Contact:
Alois Strasser, Frankfurt (49) 69-33-999-240; [email protected]
Table Of Contents
Major Rating Factors
Rationale
Outlook
Government Support And GRE Methodology
Background And Business Description: Agent Entrusted By Law For Export
Guarantees
Ownership, Legal Status, And Organization: Joint-Stock Company Owned
By Private Austrian Banks
Sovereign Support And Supervision: Dedicated Government Agent
Strategy: Clearly Focused On Export And Capital Market Services
Asset Quality: Excellent Because Of Guarantees
Profitability: Low
Asset And Liability Management: Wholesale Issuer In Capital Markets
Capital: Well Capitalized Relative To Risk Assets
WWW.STANDARDANDPOORS.COM/RATINGSDIRECT
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Table Of Contents (cont.)
Related Criteria And Research
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Major Rating Factors
Strengths:
• "Almost certain" likelihood of extraordinary support from the Republic of
Austria, based on critical role for and integral link to Austria.
• Irrevocable, unconditional, and timely guarantees by Austria on practically all
debt obligations.
• Extremely low-risk loan portfolio, almost entirely comprising fully secured
loans.
Counterparty Credit Rating
AA+/Stable/A-1+
Weaknesses:
• Almost exclusive focus on low margin businesses, which additionally exposes the bank to the business cycle in the
Austrian export sector.
• No state ownership.
Rationale
The ratings on Oesterreichische Kontrollbank AG (OKB) are based on our view that OKB as a government-related
entity (GRE) benefits from an "almost certain" likelihood of extraordinary government support. In accordance with our
criteria for GREs, we base this view on OKB's:
• "Integral" link with the government, which plays a major role in defining the bank's strategy and provides
unconditional, irrevocable, and timely guarantees for its bond issues. In addition, the government effectively
guarantees most of OKB's assets and provides continuous support by servicing drawn asset guarantees. Even
without government ownership, the state remains involved through government commissioners who participate in
the bank's shareholder and supervisory board meetings; and
• "Critical" role for Austria as its sole agent for the administration of the Republic's export guarantee program and
provision of export financing. In this respect, OKB serves an important sector of the export-dependent Austrian
economy. The role is further underpinned by OKB's assumption in 2008 of another government mandate through its
subsidiary Oesterreichische Entwicklungsbank AG (OeEB).
The combination of the "integral" link and "critical" role leads us to conclude that the government would provide
timely and sufficient extraordinary support to OKB in the event of financial stress. As a result, we qualify the likelihood
of such extraordinary support as "almost certain".
The Republic of Austria unconditionally and irrevocably guarantees timely payment of the bank's debt obligations
issued under the Export Financing Guarantees Act (Ausfuhrfinanzierungsförderungsgesetz; AFFG). The ratings also
reflect the bank's prudent management and stable financial profile, including an extremely low-risk loan portfolio,
almost entirely made up of loans granted under OKB's export financing scheme. If OKB calls on the Republic to honor
the guarantee on a loan, the underlying bank receivable is transferred to the Republic, leaving the bank with zero
non-performing loans.
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OKB is the Republic of Austria's export credit agency. It supports the government's policy objectives in the Austrian
export industry by administering the Republic's export guarantee program and by providing medium- and long-term
financing to banks and importers of Austrian goods.
In line with our criteria for government related entities, we consider OKB to play a "critical" role for the Austrian
government as sole agent for the administration of the Republic's export guarantees and provider of export financing
for its export-oriented economy. We assess the bank's link with the government to be "integral", although OKB is not
owned by the government. A variety of Austrian financial institutions forms a stable ownership structure for the bank
in our view. However, the minister of finance appoints a government commissioner and deputy commissioner who
participate in the bank's shareholder and supervisory board meetings. Most of OKB's activities are governed by
specific laws, and the government explicitly guarantees practically all of OKB's debt. As most of OKB's lending is
collateralized by export guarantees, most of them from Austria's export guarantee program, the government effectively
guarantees most of OKB's assets, as well. As a result, we consider there to be an "almost certain" likelihood that the
Austrian government would provide timely and sufficient extraordinary support to OKB in the event of financial
distress. In addition, we understand that neither the government nor OKB intends to change the bank's business model
despite a decline in business volume and operating profits. We are convinced that the government will support the
bank even beyond guarantees as long as its policy towards export promotion does not change.
The debt obligations issued by OKB are generally guaranteed by Austria under the AFFG. However, OKB also issues
unguaranteed debt occasionally, especially short-term debt.
As of year-end 2013, OKB had total assets of nearly €29.0 billion, compared with €41.5 billion in 2008. The decline
reflects a change in the structure of export financing, with lower foreign direct investments by Austrian companies
abroad. Moreover, repayments on loans exceeded new disbursements. However, we regard the reduction in balance
sheet size as unimportant given the continued significance of OKB in export financing, which is highlighted by the
amount of guarantees granted on behalf of the Republic. In 2013, OKB administered €3.5 billion in new export
guarantees for the Republic of Austria. The volume of export guarantees administered by OKB declined for a fifth
consecutive year, to €31.5 billion, from over €40.0 billion in 2009.
OKB also acts on behalf of the Republic in providing guarantees other than export guarantees if entrusted by law, for
example special support laws (Unternehmensliquiditätsstärkungsgesetz - ULSG) passed in 2009 and retired in 2010.
We note that in 2013 the Republic of Austria refused payments to creditors of a company (Alpine) despite a
conditional guarantee provided by OeKB on behalf of the government, claiming covenants were broken. We view the
missed payment under the ULSG guarantee as a bona fide commercial dispute.
Refinancing provided by OKB is fully secured by the Republic's export guarantees for the underlying transaction,
which have to be transferred to OKB as beneficiary of the granted export guarantees. We note that OKB has never
suffered a loan loss on its balance sheet. The bank's profits, which are in line with its mandate, have typically been
modest and declined in 2013, to about €52.4 million from a restated €82.4 million in 2012. The decrease was mainly
driven by a decline in net interest income and a decline in net gains on financial instruments. From a regulatory
perspective, the bank's risk-weighted capital ratio at 204.6% in 2013 (up from 149% in 2012) and Tier 1 capital ratio at
158.7% (up from 114% in 2012) remain very strong.
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Outlook
The stable outlook on OKB reflects that on Austria (see "Supplementary Analysis: Austria (Republic of)," published
April 25, 2014, on RatingsDirect). We do not believe that the federal government will change its attitude toward OKB
or withdraw its support, exceeding the granted guarantees in our view. The outlook also reflects our expectation that,
given OKB's strategic importance for Austria as an export-oriented economy, there will be no significant changes in
government support for the bank or the legal framework governing its operations. We further believe the bank will
maintain its monopoly position as the government's agent for managing the country's export guarantee program.
The ratings on OKB would change in line with any changes to the sovereign rating. Furthermore, the ratings could
change if we were to conclude that OKB's role for or link to the Austrian state had weakened. We currently consider
this a remote possibility, however.
Government Support And GRE Methodology
We view OKB as a GRE and apply our criteria for rating GREs (see "Rating Government-Related Entities: Methodology
And Assumptions," published Dec. 9, 2010). Under our criteria for assessing the likelihood of extraordinary
government support, we view OKB as having an:
• "Integral" link with the government, which plays a major role in defining the bank's strategy and provides
unconditional, irrevocable, and timely guarantees for its bond issues. In addition, the government effectively
guarantees most of OKB's assets and provides continuous support by servicing drawn asset guarantees. Even
without government ownership, the state remains involved through government commissioners who participate in
the bank's shareholder and supervisory board meetings; and
• "Critical" role for Austria as its sole agent for the administration of the Republic's export guarantee program and
provision of export financing. In this respect, OKB serves an important sector of the export-dependent Austrian
economy. The role is further underpinned by OKB's assumption in 2008 of another government mandate through
OeEB. OeEB supports the Austrian government in meeting its international development obligations by financing
private-sector investments in developing and transitional countries, backed by government guarantees.
The combination of the "integral" link and "critical" role leads us to conclude that the government would provide
timely and sufficient extraordinary support to OKB in the event of financial stress. As a result, we qualify the likelihood
of such extraordinary support as "almost certain".
Stand-alone credit profile not assessed
We have not assessed OKB's stand-alone credit profile, as the bank's rating is entirely determined by that on Austria.
We currently consider the likelihood that this situation will change as remote.
Background And Business Description: Agent Entrusted By Law For Export
Guarantees
OKB was established in 1946 to provide specialized services, namely administering export guarantees issued by
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Austria and export-loan financing. In addition, the bank engages in capital market activities and information
management. The bank does not accept deposits from the general public or engage in commercial lending or other
commercial banking activities.
As of year-end 2013, OKB had total consolidated assets of nearly €29 billion and a staff of nearly 400. OKB holds a
number of equity investments, most importantly a 51% stake in OeKB EH Beteiligungs- und Management AG, a
holding company for OeKB Versicherung AG and PRISMA Kreditversicherungs-AG, both of which operate as private
credit insurers. OKB announced in mid-2014 that the two companies would merge, but continue to operate as separate
brands. The bank also has a majority stake (70%) in Österreichischer Exportfonds GmbH, Austria's export refinancing
specialist for small and midsize enterprises. In 2008, OKB founded OeEB, at the government's request, to facilitate
private-sector investments in developing and transitional countries, complementing Austria's official development
assistance strategy. The contribution of these equity investments to OKB's consolidated balance sheet remains
marginal. Since 1950, OKB has been involved in financing and promoting Austrian exports. With the adoption of the
Export Promotion Act in 1964 and the Export Guarantees Act (Ausfuhrförderungsgesetz, AusfFG) in 1981, the bank
became the sole agent for administering export guarantees issued by Austria.
A change in legislation in 2003 has meant that the government can in principle transfer the legal monopoly over export
support services and the task of administering export financing and guarantees to another entity. However, this would
require a formal bidding process and OKB could rely on a two-year notice period before its mandate ended. If this
were to happen, the sovereign guarantees on OKB's existing liabilities would remain in place and would be
grandfathered. We believe that the option of transferring the agency role to another entity is currently remote. We
partly base this on our view of the integration between OKB and the government has been strengthened by OeEB's
mandate.
Export Guarantees Act valid until 2017
OKB grants export guarantees according to the underlying law (AusfFG), which is valid until Dec. 31, 2017. The ceiling
for outstanding export guarantees is €50 billion, of which currently only 63% are in use, leaving some room for future
flexibility. We expect the Austrian government will extend the AusfFG well ahead of its scheduled expiry date as it has
done in the past. All granted guarantees would remain valid until their agreed maturity even if the Act were repealed.
Austria's export guarantees comply with the guidelines of the Organization of Economic Cooperation and
Development, the EU, and the International Union of Credit and Investment Insurers. The guarantees cover, in
particular, political and commercial risks. In 2013, OKB processed 811 export guarantees totaling €3.5 billion, slightly
down from the levels of previous years.
The bank processes and performs credit analysis in respect of the guarantees, but the guarantees themselves must be
authorized by the government. Austria has issued guarantees totaling €199.6 billion since 1950. As of 2013, cumulative
claims paid over that period totaled €8.0 billion, with recoveries at €3.5 billion and write-offs at €3.6 billion. Austria's
net claims outstanding in 2013 equaled €0.9 billion. As in the years before 2013, the export guarantee scheme
generates small profits, some of which are accumulated to cover unexpected losses. We observe that claims are
generally low, although there are political and economic risks in some countries for which Austria guarantees exports.
Because Austria is the issuer of the guarantees, OKB's profitability is not affected by write-offs or claims paid.
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Export financing (Export Financing Guarantees Act), valid until 2018
OKB's second major line of business is to provide medium- and long-term refinancing to banks and foreign companies
involved in Austrian export transactions. The AFFG originally dates from 1967 and has been regularly adapted since
then, with expiry now set for end-2018. The latest change was in 2014. Under the Act, OKB's borrowing related to
export financing receives an unconditional and irrevocable guarantee from the Republic of Austria. The current limit
for such guarantees is €45 billion. With utilization of the guarantee exposure limit standing at €28.8 billion at year-end
2013, there remains plenty of headroom for expansion of export financing. Furthermore, the Ministry of Finance is
authorized to reimburse the bank for exchange rate losses related to borrowings in foreign currencies. The bank pays a
fee for these guarantees.
Export financing facilities are subject to a guarantee issued by Austria or a high-quality credit insurer or guarantor, and
the rights from the guarantee and underlying export contract have to be assigned to OKB as collateral. In 2013, the
bank issued new financing commitments worth €5.1 billion, a level similar to the levels seen between 2009 and 2011.
As repayments exceeded loan disbursals, however, disbursements outstanding fell for a fifth consecutive year, to €22.0
billion from €28.4 billion in 2011.
Other activities
OKB engages in non-export-related financial activities, which have only a very modest effect on its balance sheet and
profitability. These include primarily:
• Organizing and administering issues of domestic bonds and money-market instruments, notably Austria's bond
offerings;
• Acting as the clearing house and central counterparty for the Vienna Stock Exchange via a subsidiary;
• Acting as the central depository for securities in Austria, assigning security identification numbers;
• Acting as the official notification office under the Capital Markets Act;
• Settling over-the-counter transactions through an electronic platform;
• Performing financial clearing and risk management functions in the energy market, including carbon dioxide
emission certificate trading; and
• Providing information services.
Ownership, Legal Status, And Organization: Joint-Stock Company Owned By
Private Austrian Banks
OKB is an Austrian bank established as a joint-stock company under the Austrian Corporation Act (Aktiengesetz) and
regulated by the Austrian Banking Act (Bankwesengesetz), which qualifies the bank for access to liquidity from the
European Central Bank (ECB). Its capital stock of €130 million in common shares is owned by leading Austrian banks
and is not quoted on any exchange. The shareholders may transfer OKB shares, but only with the consent of the
supervisory board. Furthermore, all the shareholders have preemption rights. In practice, however, changes to the
shareholder structure are rare (see table 1).
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Table 1
Oesterreichische Kontrollbank AG--Shareholder Structure 2014*
Share (%)
CABET-Holding-GmbH (UniCredit Bank Austria Group)
24.8
UniCredit Bank Austria AG
16.1
Erste Bank der oesterreichischen Sparkassen
12.9
Schoellerbank AG
8.3
AVZ Finanz-Holding GmbH
8.3
Raiffeisen Zentralbank Oesterreich AG
8.1
BAWAG PSK Bank für Arbeit und Wirtschaft und Österreichische Postsparkasse AG
5.1
Raiffeisen OeKB Beteiligungsgesellschaft mbH
5.0
Oberbank AG
3.9
Bank für Tirol und Vorarlberg AG
3.1
BKS Bank AG
3.1
Österreichische Volksbanken-AG
1.5
*As of June 30, 2014.
A substantial part of the bank's export financing business is placed with its shareholders. Nevertheless, other than
regulated dividend payouts, OKB does not offer its shareholders preferential terms on export financing. The bank's
organizational structure is relatively uncomplicated. A two-member board of executive directors manages day-to-day
operations. The executive directors are appointed by a 23-member supervisory board, 15 of which are appointed by
the shareholders and eight by the employees.
Sovereign Support And Supervision: Dedicated Government Agent
Strong government support is evident in the guarantees for OKB's debt and the bank's exclusive and legally defined
role in administering Austria's export guarantees. In particular, we note continuous increases in the guarantee limits
under the AusfFG and the AFFG. The liability limit under the AusfFG has increased to €50 billion from €35 billion in
the past decade, while the limit under the AFFG rose to €45 billion from €25 billion over the same period.
In 2003, amendments to the acts opened the possibility for the government to choose a different agent for its export
financing and guarantee programs, subject to a two-year notice period. If this were to occur, the sovereign guarantees
on existing liabilities for OKB's funding would remain in place. At present, we consider it unlikely that the government
would award the administration of the programs to another entity, in view of OKB's track record and the numerous
mandates it fulfills for the government.
The close relationship between OKB and the government was further strengthened by the creation of OeEB, a bank
that facilitates private-sector investments in developing and transitional countries and complements the government's
development assistance strategy. Although the development bank was created on behalf of the Austrian government, it
is a subsidiary of OKB. All economic and political risks are assumed by the Austrian state, however.
Because of the sovereign support extended to OKB's debt, the bank has a 0% risk weighting (the amount of capital a
bank should have in relation to its total risk-adjusted assets). The bank also benefits from certain regulatory
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exemptions from the Austrian Banking Act and the Capital Requirements Regulation. In addition, OKB holds a
minimum liquidity reserve with the ECB. Large exposures from the bank's export financing business are not subject to
risk capital limits because of the sovereign guarantees. Exemptions also exist for certain minimum liquidity ratios and
requirements limiting the open foreign currency positions of OKB's liabilities, for which Austria has issued
exchange-rate guarantees.
The government has no direct representation on OKB's supervisory board, but the minister of finance appoints a
government commissioner and deputy commissioner who participate in the bank's shareholder and supervisory board
meetings. The AFFG authorizes these appointees to examine the bank's books and participate in, but not vote on, all
internal debates relating to borrowings subject to sovereign guarantees under the Act.
Strategy: Clearly Focused On Export And Capital Market Services
OKB's strategy remains clearly focused on providing export and capital market services, in our view. There are no
plans to change the bank's business model or strategy, which we regard as positive. We understand that both the
government and the bank are content with OKB's role as an export and capital markets specialist. As such, we do not
expect OKB's status as the government's exclusive agent in administering export guarantees and providing export
financing to change. The bank has no intention of taking on higher risk or competing with commercial banks, which
would dilute its policy mandate and weaken its balance sheet.
Overall, we view OKB as having a stable and profitable franchise. Nevertheless, its focus on export-related businesses
exposes it to conditions in the Austrian export sector. This was particularly apparent during the 2009 global financial
crisis and the subsequent years of low economic growth in Europe, when fluctuations in foreign direct investment
flows somewhat limited the bank's discretionary activities.
Asset Quality: Excellent Because Of Guarantees
OKB's exceptional asset quality results from its clearly defined business model and conservative lending policies, in
our view. The bank restricts its lending to mainly medium- and long-term loans to banks. These financing activities
enable the borrower banks to refinance their own loans to Austrian exporters, foreign buyers of Austrian products, or
Austrian enterprises for equity investments abroad.
The loans OKB grants require a guarantee for the underlying transactions, which has to be issued by the Austrian
government or, less frequently, credit insurers. The rights from the guarantees (except guarantees by aval) and the
underlying export contracts are assigned to OKB as collateral. As a result, we expect the bank's asset quality to remain
very strong as long as the business model is unchanged.
OKB's three major shareholders account for about two-thirds of its receivables. We are convinced that established
checks and balances, the presence of a government commissioner at bank meetings, and the present guarantee
approval mechanisms will prevent governance issues resulting from the fact that the government is not a shareholder
in the bank.
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OKB itself remains well protected against failures of commercial banks because its claims would be legally insulated
from any bankruptcy proceedings, taking seniority over other claims.
As of year-end 2013, loans and advances to banks and customers, plus financial assets, accounted for 84.5% of OKB's
consolidated balance sheet, or 193% including guarantees. OKB's export promotion activities (as measured by loans
and advances, financial assets, and guarantees) have declined by an average 7.4% annually over the past five years
(see table 4), in stark contrast to an average increase of 13% annually over 2005-2008. Given continued uncertainty
about the global economy, we believe that the decline in loans and advances could continue over the next few years,
depending on the development of export markets eligible for state guarantees and export financing.
Table 2
Oesterreichische Kontrollbank AG--Key Balance Sheet Data (Consolidated)
--Year-ended Dec. 31-(Mil. €)
2013
2012
2011
2010
2009
2008
2007
520.6
124.3
586.2
83.1
189.3
989.8
711.1
21,364.3
24,549.0
28,736.8
28,192.3
30,294.0
35,555.8
28,746.9
1,489.2
1,526.6
1,409.7
1,406.2
1,558.7
2,037.8
2,131.3
(0.5)
(0.4)
(0.3)
(0.2)
(0.1)
(0.1)
(0.1)
1,612.0
1,490.2
1,468.1
1,356.2
645.9
635.7
793.7
Assets
Cash and cash equivalents
Loans and advances to banks
Loans and advances to customers
Allowance for impairment losses on loans
and advances
Other financial instruments
Interests in equity-acounted investees
67.8
64.0
57.9
52.9
49.0
54.4
16.4
102.8
101.1
90.6
83.0
79.2
82.9
91.5
Other assets
3,808.1
4,913.2
5,629.2
4,628.8
1,435.9
2,189.8
528.5
Total assets
28,964.3
32,767.9
37,978.2
35,802.3
34,251.7
41,546.0
33,019.4
381.1
1,692.7
957.8
1,411.2
980.6
1,276.1
835.9
Tangible and intangible assets, tax assets
Liabilities
Deposits from banks
Deposits from customers
Debt securities issued
Provisions
674.7
674.3
601.0
608.1
516.8
421.1
343.6
24,590.0
27,281.6
33,350.4
30,396.8
29,876.1
36,538.3
28,140.2
964.3
859.9
668.9
645.8
507.4
635.9
1,006.9
Other liabilities
1,669.7
1,597.5
1,800.7
2,171.3
1,843.5
2,218.4
2,253.0
Total liabilities
28,279.8
32,106.0
37,378.8
35,233.1
33,724.3
41,089.9
32,579.6
Paid-in capital
130.0
130.0
130.0
130.0
130.0
130.0
130.0
Other capital
554.5
532.0
469.4
439.2
397.4
326.1
309.7
Total shareholders' equity
684.5
662.0
599.4
569.2
527.4
456.1
439.8
31,501
34,836
37,058
38,508
40,650
44,446
37,460
Operating income
62.4
81.7
78.4
79.3
85.2
90.6
83.5
Net income
52.7
84.9
50.4
72.2
91.7
22.6
58.8
Capital
Other items
Guarantees*
*Guarantees under mandate of Republic of Austria and not at risk of Oesterreichische Kontrollbank AG. Reporting according to Austrian GAAP
until 2011, IFRS since 2012.
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Profitability: Low
In keeping with its public policy mandate, OKB's profitability is highly regulated and fairly low. In 2013, profits
declined to €52.4 million from €82.4 million in 2012, down from a peak of €92 million in 2009 (see table 3). The main
reason for the changes in OKB's profitability in recent years is net gains and losses on financial instruments and
decreasing net interest income, while operating profits have declined to a lesser extent due to decreasing
administrative expenses. The decline in outstanding guarantees and loans over the past five years is likely to put
further pressure on net interest, net fee, and commission income, although so far this has had no notable effect on
operating profit. Although OKB's stated strategy is not to maximize profits, the bank is nevertheless committed to
generating sufficient profits to support its interest stabilization fund and maintain a stable dividend payout ratio.
Table 3
Oesterreichische Kontrollbank AG--Profit And Loss Account (Consolidated)
--Year ended Dec. 31-(Mil. €)
Interest and similar income
Interest and similar expense
Net interest income
Net fee and commission income
2013
2012
2011
2010
2009
2008
2007
461.1
623.8
774.2
790.5
1,119.6
1,318.9
1,095.4
(380.1)
(527.7)
(679.7)
(696.5)
(1,011.9)
(1,210.0)
(998.4)
81.0
96.2
94.5
94.0
107.3
109.0
96.9
47.9
49.6
50.1
51.2
46.0
46.4
43.1
(80.2)
(82.4)
(79.9)
(80.1)
(76.9)
(71.7)
(68.8)
Balance of other income and expenditure
11.3
15.4
13.7
14.2
8.8
7.0
12.3
Operating profit
60.1
78.8
78.4
79.3
85.2
90.7
83.5
8.2
27.8
(13.4)
13.6
33.8
(62.6)
(9.1)
Administrative expenses
Net gain or loss on financial instruments
Pretax profit
68.3
106.6
65.1
92.9
118.9
28.1
74.3
(15.6)
(23.9)
(14.7)
(20.7)
(27.2)
(5.6)
(15.6)
Minority interest
(0.2)
(0.3)
(0.2)
(0.2)
(0.2)
(0.2)
(0.2)
Profit for the year attributable to shareholders
of the parent
52.4
82.4
50.2
72.0
91.5
22.4
58.5
Income tax and other taxes
Reporting according to Austrian GAAP until 2011, IFRS since 2012.
Net interest income remains the bank's main source of income. Nevertheless, given OKB's low risk business, margins
on export loans are very low but stable, as underlined by the bank's ratio of operating profits to earning generating
assets, which has hovered between 24 and 29 basis points since 2007.
Given that OKB has never been affected by write-offs on loans and advances, and there is no requirement for loan-loss
provisioning, we believe the bank can continue to operate with a low profit base. Nevertheless, write-offs or losses on
its financial assets would still affect the bottom line.
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Table 4
Oesterreichische Kontrollbank AG--Key Ratios
--Year ended Dec. 31-(%)
2013
2012
2011
2010
2009
2008
2007
84.5
84.1
83.2
86.5
94.9
92.0
95.9
193.2
190.4
180.8
194.0
213.6
199.0
209.4
Risk provisions loans and advances plus shareholders' equity/total
assets
2.4
2.0
1.6
1.6
1.5
1.1
1.3
Risk provisions for loans and advances plus shareholders'
equity/Loans and advances to banks and customers and financial
assets
2.8
2.4
1.9
1.8
1.6
1.2
1.4
Shareholders' equity/total assets
2.4
2.0
1.6
1.6
1.5
1.1
1.3
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Consolidated core capital ratio**
158.7
113.8*
122.8
107.6
78.5
72.7
66.9
Consolidated capital ratio§
204.6
149.3*
163.8
144.4
104.7
94.1
86.4
Cash and equivalents plus financial assets/total assets
7.4
4.9
5.4
4.0
2.4
3.9
4.6
Cash and equivalents plus financial assets/total liabilities
7.5
5.0
5.5
4.1
2.4
4.0
4.6
Operating profit/earnings generating assets*** (in bps)
25.5
28.6
24.8
25.6
26.2
23.7
26.4
Operating profit/earnings generating assets*** and guarantees (in
bps)****
11.2
13.1
11.4
11.4
11.6
11.0
12.1
9.1
12.3
13.1
13.9
16.2
19.9
19.0
Growth in earnings generating assets***
(11.2)
(12.8)
2.1
(4.8)
(15.0)
20.7
17.6
Growth in earnings generating assets and guarantees***
(10.3)
(9.1)
(1.1)
(5.0)
(11.5)
19.6
17.1
Debt
Loans and advances to banks and to customers, financial
assets/total assets
Loans and advances to banks and to customers, financial assets and
guarantees/total assets
Asset quality
Nonperforming loans/gross outstanding loans
Funding and Liquidity
Profitability
Operating profit/ shareholders' equity
Other credit indicators
*In 2013: Risk-weighted assets at €269.6 million. Austrian Banking Act exempts OKB in respect of transactions related to export promotion
activities from the requirements on solvency. **Consolidated Tier 1 capital ratio. §Regulatory capital resources as percentage of total
risk-weighted assets. ***Earnings generating assets: Loans to banks, loans to customers and financial assets. ****Guarantees: Under mandate of
Republic of Austria and not at risk of Oesterreichische Kontrollbank AG. Reporting according to Austrian GAAP until 2011, IFRS since 2012.
Asset And Liability Management: Wholesale Issuer In Capital Markets
OKB has ample access to liquidity. Typically for a specialist wholesale bank, OKB's main sources of funds are bond
issues, particularly in international capital markets. OKB is the largest 'AA+' rated Austrian borrower, after the Austrian
state, in international capital markets, with an average annual long-term funding volume of €3 billion-€4 billion.
Furthermore, OKB has access to ECB refinancing facilities, particularly through repurchase agreements.
Under the AFFG, Austria accords explicit, unconditional, and irrevocable guarantees for the majority of debt issued by
OKB in connection with its export financing business. About 14% of OKB's outstanding debt consists of long-term
liabilities of more than five years, 44% have terms of one to five years, and 42% are short-term liabilities of up to one
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year.
From time to time, OKB issues unguaranteed debt, especially short-term debt. We equalize our ratings on OKB's
unguaranteed debt with those on its guaranteed debt, based on our view that there exists an almost certain likelihood
of extraordinary support by the government for OKB.
OKB has an unguaranteed French certificate of deposit program up to a maximum €5 billion, but actual issuances are
usually small, and accounted for only 0.8% of total debt outstanding as of year-end 2013.
OKB uses best-practice asset-liability management techniques to manage interest rate risk and the sensitivity of the net
interest income on the balance sheet. Overall, we view the bank's asset-liability management as tightly monitored, with
an emphasis on long-term lending and funding, although market developments led to an increase in liquidity holdings
in 2011, peaking in 2013 with a ratio of cash and equivalents plus financial assets to total assets of 7.4%. OKB uses
swaps and other derivative instruments purely as hedging instruments to achieve attractive funding. Internal
requirements on the credit quality of counterparties, the use of credit enhancement, and the monitoring of current
exposures are in line with industry best practices.
Table 5
Oesterreichische Kontrollbank AG--Debt Programs
Issue rating Established Guarantor
Size (bil.) Euro equivalent (bil. €)
Euroshelf debt issuance program AA+
1992
Republic of Austria N/A
N/A
Global issuance facility (SEC)
AA+
1998
N/A
Japanese shelf
AA+
1988
Republic of Austria ¥400.0
3.1
A$ Debt issuance program
AA+/A-1+
2010
N/A
Euro CP program
A-1+
1985
Republic of Austria € 10
10
U.S. CP program
A-1+
1986
Republic of Austria $5
3.8
French CD program
A-1+
2002
N/A
5
€5
CP--Commercial paper. CD--Certificates of deposit. N/A--Not applicable. A$--Australian dollar.
Capital: Well Capitalized Relative To Risk Assets
Due to the decline in the size of OKB's balance sheet, the proportion of equity has increased to 2.4% of total assets, or
€684.5 million as of year-end 2013. We view comparisons between OKB's capital adequacy and that of commercial
banks as fundamentally flawed, however, because OKB has very few nongovernment guaranteed loans in its loan
portfolio. From a regulatory perspective, OKB is well capitalized relative to its true risk assets, and its risk-weighted
capital adequacy ratio (205%) and Tier 1 capital ratio (159%) far exceed the regulator's requirements.
The bank is in full compliance with the reserve standards required by law. Given OKB's exemption from holding risk
capital for assets in connection with export financing, and its otherwise very robust risk-weighted capital ratios and
reserve levels, we think there is no need for OKB to raise additional equity in the near future.
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Related Criteria And Research
• Credit FAQ: What's Behind Standard & Poor's Placement Of Four Austrian States On CreditWatch Negative?, June
10, 2014
• Supplementary Analysis: Austria (Republic of), April 25, 2014
• Research Update: Austria Ratings Affirmed At AA+/A-1+ On Continuing Fiscal Consolidation And Resilient
Economy; Outlook Stable, March 28, 2014
• Sovereigns And Equalized GREs Commercial Paper Rating Methodology, March 29, 2012
• Rating Government-Related Entities: Methodology And Assumptions, Dec. 9, 2010
Ratings Detail (As Of August 8, 2014)
Counterparty Credit Rating
AA+/Stable/A-1+
Certificate Of Deposit
Local Currency
A-1+
Counterparty Credit Ratings History
30-Jan-2013
AA+/Stable/A-1+
17-Jan-2012
AA+/Negative/A-1+
07-Dec-2011
AAA/Watch Neg/A-1+
Sovereign Rating
Austria (Republic of)
AA+/Stable/A-1+
Related Entities
Austria (Republic of)
Issuer Credit Rating
AA+/Stable/A-1+
Transfer & Convertibility Assessment
AAA
Autobahnen-und Schnellstrassen-Finanzierungs-AG
AA+/Stable/A-1+
Senior Unsecured
AA+
Erdoel-Lagergesellschaft m.b.H.
AA+/Stable/A-1+
Senior Unsecured
AA+
KA Finanz AG
A/Watch Neg/A-1
Certificate Of Deposit
A/A-1
Senior Unsecured
A/Watch Neg
OeBB-Infrastruktur AG
AA+/Stable/A-1+
Oesterreichische Entwicklungsbank AG
AA+/Stable/A-1+
*Unless otherwise noted, all ratings in this report are global scale ratings. Standard & Poor's credit ratings on the global scale are comparable
across countries. Standard & Poor's credit ratings on a national scale are relative to obligors or obligations within that specific country.
Additional Contact:
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1352086 | 300149949
SovereignEurope; [email protected]
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1352086 | 300149949
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Oesterreichische Kontrollbank AG

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