Austrian lender Volksbank is to pull out of Romania, as part of a series of measures demanded by the EU in return for a bailout. Under the restructuring plan laid out by the EU, Volksbank must sell off its subsidiaries and concentrate on its core businesses, in return the lender will get a funding lifeline worth over EUR 4 billion.

According to reports in the local media, Volksbank has until 2017 to divest its Romanian subsidiary. The Austrian bank must also give up a stake in VB Leasing International Division, which controls VB Leasing Romania. VB Leasing International owns 80 percent of VB Leasing Romania IFN, the remaining 20 percent is owned by Volksbank Romania.

The European Commission (EC) approved the bailout yesterday (September 19 ). “ÖVAG's [Volksbank] restructuring plan addresses the problems which led to the bank's difficulties in the past. In particular, I welcome the bank's objective to focus on its core business of providing services to the local and regional Volksbanken,” said Commission Vice President in charge of competition policy Joaquín Almunia. The bailout includes capital injection worth EUR 1.25 billion, liquidity guarantees totaling EUR 3 billion and an asset guarantee worth EUR 100 million.

Volksbank Romania entered the local market in 2000 and currently has assets of about EUR 4 billion, according to Ziarul Financiar. The bank has struggled in recent years and the Austrian state now owns a 43 percent stake in the lender following a EUR 1 billion rescue package given earlier this year.

It is the latest in a long series of banking bailouts in the EU, during which both national governments and the EU have saved banks from ruin with huge injections cash. In return, banks have signed up to restructuring programs and introduced measures to help return them to profitability. “Making sure that banks that received state aid throughout the EU change their business model will help build a healthier financial sector, made of viable banks that do not need taxpayers' money,” said Joaquín Almunia.

Liam Lever, liam@romania-insider.com

photo source: agerpres