Just over a year ago, Austria’s Volksbanken stood at the edge of the abyss. The consortium of co-operative banks had failed the European Central Bank’s (ECB's) asset quality review in 2014, a flashback to the group’s bailout during the global financial crisis, which had brought the realisation that radical change was necessary.
The Volksbanken sector, which consists of 50 banks from across Austria, agreed to a voluntary restructuring under the supervision of the ECB and European Commission, first suggested before the results of the stress test in early October. The restructuring, which began in July 2015, includes plans to significantly reduce the group’s number of banks, branches and product offerings. In doing so, the banks hope to cut costs, return to profitability and repay state aid.
