Bank Austria sets aside $336m

Bank Austria sets aside $336m

VIENNA (Bloomberg): Bank Austria AG, the country's largest bank, said yesterday it set aside 4.2 billion schillings (US$336 million) as of June 30 to cover possible bad loans in Russia and Indonesia.

The statement came as emerging market stocks and bonds tumbled as concern increased that Russia will have to devalue the ruble and as currencies weakened in Asia, where economic recessions are deepening.

"Bank Austria feels comfortable with the provisioning level in general and in particular that of emerging market exposures," the bank said.

"An aggravation of the situation in the emerging markets would not substantially impact the Bank Austria Group."

At the end of June, the bank's Russian loans amounted to 13.3 billion schillings, of which only a small portion was ruble denominated, the bank said. It made provisions of 2.9 billion schillings for its loans to Russia.

In Indonesia, the bank's exposure amounted to 5.3 billion schillings at the end of June, and it made provisions of 1.3 billion.