Former US Treasury Secretary to join BAWAG board
Vienna (dpa) - Former US Treasury Secretary John Snow will join the board of troubled Austrian bank BAWAG, it was disclosed Friday, a day after a consortium led by US hedge fund Cerberus won the bidding for BAWAG.
BAWAG chief executive Ewald Nowotny told a press conference that Snow, who heads Cerberus, will join the board together with two Austrian representatives of the consortium.
"I was authorized by Cerberus to tell you that the board will be bolstered after the deal is closed," Nowotny said.
Austria's trade union federation (OGB), the bank's owners, put BAWAG up for sale after dubious credits and failed currency speculations severely damaged both bank and union finances.
Nowotny was content with the new owners, saying the consortium was chosen because of the strong Austrian presence. The new owners provided guarantees for the next five years, assuring BAWAG's continued existence as an independent bank, Nowotny said.
The consortium, consisting of Cerberus and its Austrian partners Wuestenrot, a home loan bank, the insurer Generali, and a group of entrepreneurs around Hannes Androsch, a former Austrian finance minister, was joined by Austrian's privatised postal services shortly before the end of the bidding race.
According to media reports the consortium paid 3.2 billion euros(4.2 billion dollars) for the ailing bank.
Fetching a good price was essential for the survival of the OGB, who were forced to pawn the union's strike funds to cover BAWAG's losses. The total losses from the bank's failed Caribbean investments and the Refco affair were estimated at some 3 billion euros.
BAWAG's troubles began in October 2005, when the bank became embroiled in the bankruptcy of New York commodities brokerage Refco, lending Refco several million dollars just before the brokerage filed for bankruptcy.
In order to avoid prosecution and settle bankruptcy claims the bank agreed in June to pay at least 530 million euro to Refco creditors.
Further losses after failed speculative investments in the Caribbean between 1995 and 2004 led to the near collapse of the bank, Austrian authorities filed charges against nine former BAWAG executives in connection with the affair.
Cerberus beat Lone Star, another US-based fund, and BayernLB, Germany's second largest regional bank, which had been regarded top contender in the race until the last minute. // © 2006 DPA
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