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Austrian report Austrian report
by Euro Reporter
2012-03-07 09:52:36
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Debt office head says unnecessary to change bonds issuance plans

Austria sees no need to change its debt issuance program and is sticking to its plan to stay below the European Union’s deficit ceiling this year even as it injects cash into Oesterreichische Volksbanken AG (VBPS) and KA Finanz. The Alpine republic, which has been warned that more bank bailouts may put its credit rating at risk, will raise tax revenue this year to offset the new cash injections as well as a write-down on previous bank aid. The country intends to lower the deficit to 3 percent of gross domestic product and won’t need to sell more bonds to raise the cash, according to Austrian officials.

“I don’t see a need to change the range we announced in December,” said Martha Oberndorfer, head of the Austrian Federal Financing Agency, referring to the agency’s plan to issue 27 billion Euros to 30 billion Euros ($35 billion to $39 billion) of debt this year, of which 20 billion Euros to 24 billion Euros will be government bonds.

The austerity plan approved by Austria’s government today was thrown into disarray last week when the state-backed rescue of Volksbanken created an unanticipated budget gap. Austria will write off 70 percent of 1 billion Euros it previously injected into the lender, and provide 250 million Euros of additional funds. Under European budget rules, the write-down weighs on Austria’s budget deficit this year, while the new cash only affects the debt level.

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Record number of cars in Austria


Austrians own more than 4.5 million cars, it was announced. Statistic agency Statistik Austria said the number of registered vehicles surpassed 4.5 million for the first time in history. Around 4.51 million cars are registered for usage in the alpine country at the moment, according to the agency which recorded a 1.6 per cent increase of car ownership from 2011 to 2012. Statistik Austria said that almost a third of all cars Austrians currently own are more than 10 years old. Austrian car dealers look back on a record year of sales. More than 356,000 cars were bought in the country in 2011, up by 8.4 per cent compared to 2010 which was the previous record year for vehicle sales. Volkswagen (VW) has been Austrians’ favourite brand for years. The German company, which has its headquarters in Wolfsburg, sold 65,000 cars in Austria in 2011. The booming car maker’s rival finished in second place in Austria in 2011 thanks to 26,000 sales.

The Austrian Traffic Club (VCÖ) found that there are the most cars per residents in Burgenland. VCÖ studies show that there are 616 vehicles per 1,000 inhabitants in the small province located in the east of the country. Lower Austrians own many cars as well (610). Tyrol (505) and Vienna find themselves on the other side of the ranking. Households owning cars are least common in the capital city where 394 cars per 1,000 residents are registered.

The Viennese government coalition said last week it decided to actively support a company’s car sharing project to help raise the public’s attention on such offers. Several firms are engaged in car sharing initiatives in Vienna at the moment. Demand for such services is reportedly on the rise but still low in international comparison. Now the Social Democrats (SPÖ) and their coalition partner, the Viennese Green Party, said Denzel’s car sharing affiliate was now allowed to use public parking spaces in Josefstadt district for free. Charges will apply again in three years, according to Rüdiger Maresch of the Green Party which cooperates with the SPÖ in city hall since 2010. The VCÖ appealed to the Viennese government to support the current renaissance of walking as well. The organisation claimed that the number of people opting to walk instead of using cars was on the rise. VCÖ experts suggested to broaden sidewalks, increase the number of benches and traffic-free zones in a possible master plan for more walking in urban areas.

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Austria aims to exit rescued Volksbanken by 2017


Austria aims to sell by 2017 the big minority stake in Volksbanken AG it will get by rescuing the ailing lender in a bailout funded by fellow banks, Finance Minister Maria Fekter said. Austria would also have to help nationalised lender Kommunalkredit sort out its Greek debt exposure this year, she told reporters on Tuesday. Austria will take a stake of up to 49 percent in Volksbanken in a rescue that will cost the state more than 1 billion Euros ($1.3 billion) in write downs, fresh capital and guarantees.

Chancellor Helmut Faymann said a second bailout for Volksbanken - it had already got 1 billion in state capital - was cheaper than letting the lender go bust. A failure would have triggered deposit insurance claims and state guarantees. "We were talking about an overall risk of 13 billion Euros," Faymann said after a cabinet meeting. Losses on Greek debt and bad loans in Eastern Europe have hammered Volksbanken, once the country's fourth-biggest bank which failed last year's European stress tests. It forecast in November its 2011 loss would be at least 10 percent greater than the consolidated 500-750 million Euros it had expected only a month before.

The 62 regional banks that own a Volksbank majority are also injecting fresh funds, while minority shareholders DZ Bank Group, insurer Ergo and Raiffeisen Zentralbank will see their stakes diluted sharply. Ratings agencies have cited Austria's relatively large financial sector as a risk to its sovereign debt rating. Standard & Poor's has already stripped Austria of its AAA rating and Moody's has said it might do the same.



      
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