UniCredit Takes Aim at Austrian Banks Group With Audit Request

(Bloomberg) -- UniCredit SpA’s Austrian unit is requesting special audits of at least one of the lenders comprising the 3 Banks Group, saying it broke corporate law and governance rules for years.

UniCredit Bank Austria AG is demanding the audit of six share issues at BKS Bank AG, one of the three banks, according to a motion for the May 8 general meeting published on BKS’s website. The motion said BKS effectively injected funds into itself over the past 25 years rather than increased its share capital.

Similar audit requests may be made at the other two banks, Oberbank AG and Bank fuer Tirol und Vorarlberg AG. Oberbank CEO Franz Gasselsberger said he expects a similar motion at his firm’s annual general meeting, telling Oberoesterreichische Nachrichten newspaper that UniCredit’s arguments “aren’t tenable.”

The 3 Banks Group members hold shares in each other as part of a decades-old pact to protect against takeovers. While Bank Austria is the biggest investor in each of the three banks, it can’t outvote the companies under the terms of these pacts, a fact that has frustrated UniCredit’s efforts to sell the stakes. Voiding the past capital injections by the 3 Banks Group’s members, even only partially, would tilt voting rights in UniCredit’s favor.

“The special audit has to clarify whether, and to what extent, the cross-shareholdings are even allowed, and whether capital was effectively raised in those capital increases,” UniCredit’s Bank Austria says in the letter, which is dated April 16 and was posted on BKS’s website late Friday.

BKS said in a statement that the audits are an “attack on an Austrian regional bank” and that UniCredit “apparently aims to assume control” of the group. The cross shareholdings with Oberbank and BTUV have been regularly audited in the past, according to BKS’s statement. Bank Austria denied an intention to gain control of the group, saying this “wouldn’t be consistent with our current strategic plan.”

The three banks are small regional players but the biggest, Oberbank, is punching above its weight by seeking business in Germany and building stakes in large industrials in its region, including Voestalpine AG.


Total assets
(bln euros)
CET1 ratioUniCredit
stake
Other banks’
stake
Oberbank22.217.5%26%BTUV 17%
BKS 15.2%
3-Banken 1.8%
BKS Bank8.412.2%30.3%BTUV 19.5%
Oberbank 19.3%
3-Banken 7.8%
BTUV11.613.3%42.7%3-Banken 14.8%
BKS 13.6%
Oberbank 13.2%

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