Vienna - As Austria's parliament passed bail-out measures
for banks Monday, some of the country's financials institutions said
they would make use of the government's capital injections and
guarantees for inter-bank credits.
All five parties in parliament unanimously approved the package
worth 100 billion euros (134 billion dollars).
As the global financial crisis has led to a lack of trust between
banks, the parliament also set aside 75 billion euros as government
guarantees for inter-bank lending.
Several banks, including Bank Austria and Raiffeisen Zentralbank,
told Austrian news agency APA they would participate in a clearing
point, backed up by government guarantees, that will be set up to
broker liquidity among banks.
Another 10 billion euros will be allocated to provide blanket
guarantees on private savings and to protect accounts held by small
businesses up to 50,000 euros.
If needed, the state will be ready to inject up to 15 billion
euros of capital into faltering banks.
The Sparkasse banking group is considering whether to apply for
such help, said Michael Ikrath, secretary general of the group, which
includes Erste Bank.
As government support in other countries had already 'massively
strengthened' the capital base of banks in other countries, Austrian
banks could suffer a competitive disadvantage if they did not follow
suit, Ikrath said.
Financial institutions would have to pay for the guarantees,
Chancellor Alfred Gusenbauer told the parliament.
'The package in front of you is in no way a gift to banks,' he
said.
If the government had to buy a stake in a failing bank in order to
inject capital, the state would profit when the shares were
privatized at a later stage, he added.
The banking package also includes a ban on short selling of
stocks, a practice in which traders bet on falling share prices.
Although politicians have stressed that the country's financial
sector is in good health, the national bank and five major Austrian
banks had to step in last Thursday to rescue Constantia Privatbank
AG, a private banking institution.
Constantia had to be saved with a bail-out plan worth 450 million
euros because major customers had shifted their funds to bigger
institutions.
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