Austrian Vice Chancellor Wants to Nationalize Central Bank Completely

Monday, January 11, 2010

Austrian conservative Finance Minister and Vice Chancellor Josef Pröll wants to nationalize Austria's central bank completely. According to reports from Austrian state broadcaster ORF Pröll offers the 30% private shareholders €50 million, a multiple for their €3.6 million in equity. Austria owns 70% of its Oesterreichische Nationalbank (OeNB), with the remainder held by banks, insurances and other privileged institutions under the system of Austria's "social partnership."
Pröll made his comments after a high-level meeting of his party ÖVP (Österreichische Volkspartei.)
The conservative led coalition from 2000 to 2003 looted more than half the gold reserves of the OeNB in order to present a phony zero deficit budget. As Pröll can be viewed as a loyal party soldier this move may be seen as a comfortable buyout for the 30% shareholders. The central bank had to pull a lot of rabbits out of its hat in order to come up with a positive result for 2008, which was only saved by the price appreciation of the gold hoard and the 24/7 shifts at the Austrian Mint, a 100% subsidiary, which has established itself as the world leading seller of gold and silver bullion coins.

Nationalize, Nationalize, Let the Sovereign Pay the Bill
Here we go again with the conservative hypocrisy. After nationalizing Hypo Alpe Adria and considering the same for Oesterreichische Volksbanken AG the conservative finance minister, a nephew of Lower Austria's mighty governor Erwin Pröll, is now keen to bail out his party allies ahead of the coming big Austrian banking crash, leaving the sovereign - that's the citizens - to pick up potential losses in the near future.

€4 Billion Unicredit Equity Issue to Bolster Bank Austria
All Austrian banks are considered very risky investments these days and it will be interesting to see how well the equity issue of Italian Unicredit Group, parent of Bank Austria, will be taken up. According to a report by the Austrian daily Der Standard Unicredit wants to raise €4 billion and transfer half of the proceeds to bolster Bank Austria's equity base. With an issue price of €1.589 per share Unicredit is trying to assure the success of the issue as this price is 29% below the last traded price on last Friday.
So far not a single Austrian politician has acknowledged the undisputable fact that it was a lack of banking oversight that lets Austria tumble down from the once 6th richest country in the world into the poorhouse of Europe. Austrian banks are still pushing €2.33 trillion in OTC derivatives risks ahead of them, roughly 10% more than 2 years ago.

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