EANS-Adhoc: Kommunalkredit Austria AG / Kommunalkredit withdraws Moody's Ratings for unsecured funding instruments

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other/rating 20.06.2014

(Vienna, 20 June 2014) - Kommunalkredit Austria AG (KA) decided today to withdraw all ratings for unsecured funding instruments (bank deposit, bank financial strength rating, senior unsecured, subordinate, other short term) by Moody's Investors Service (Moody's) with immediate effect, except for its current covered bond rating of Aa2.

The decision is due to differences in opinion between the bank and Moody's regarding the - according to Moody's - reduced support propensity by the Republic of Austria (Moody's rating Aa1) for KA, which is holding a 99.78% share in KA.

Moody's argues that the draft legislation regarding Hypo Alpe Adria, which was approved by the Council of Ministers on 11 June 2014, implies a reduced support propensity by the Republic of Austria for the Austrian banking sector in general, which is now to be applied to KA in particular.

Prior to the withdrawal, the bank had the following Moody's ratings for unsecured instruments: bank deposit "Baa3", bank financial strength rating "E", senior unsecured "Baa3", subordinate "Ca", other short term "P-3". The bank deposit, senior unsecured and other short term ratings carried a negative outlook.

In the view of KA and the Republic of Austria the above mentioned draft legislation, which is still subject to the parliamentary legislative process of the Republic of Austria, does not indicate a change in the support propensity of the Republic of Austria. This was also communicated to the rating agency. Since its restructuring in 2009, KA has received neither capital nor liquidity support and at the current time no support requirement is foreseeable. Nevertheless, in accordance with the amending decision by the European Commission (EC) of 19 July 2013, the Republic of Austria has the possibility to provide respective support measures to KA.

In 2013, KA reported an annual IFRS result of EUR 20.4mn before taxes (EUR 5.1mn after taxes). For the first half 2014, KA expects a positive result. KA has a sound credit portfolio of which 93.1% is rated investment grade and which shows no overdue credit claims (non-performing-loan ratio of 0.0%). The capitalization under Basel III is solid with a total capital ratio of 22.9 % and a common equity tier 1 ratio of 16.1% as of 30 April 2014.

ISIN:

XS0285503248 XS0340901908 XS0271821513 CH0025662831 CH0024015452 XS0218834843 XS0214564972 XS0210167218 XS0100920353 XS0252707624 XS0270872640 XS0253410236 XS0236776877 XS0218474533 XS0213230047 XS0205974701 XS0180539420 XS0495988072 AT0000329859 XS0302365134 XS0267998481 XS0252786669 XS0235597068 XS0215839019 CH0020669583 XS0197387953 XS0299062389 XS0261832942 XS0252593198 CH0022280058 XS0215865287 XS0212122534 XS0187975262 XS0163624504 XS0592235187 XS0373257590 XS0255439803 XS0241451581 XS0219327524 XS0214981812 XS0211496590 XS0186736228 XS0104786263 XS0687890441 XS0973424152 XS0981809584 XS1003074306 XS1003354252 XS1005197477 XS1008699933 XS1013581274 XS1015492595 XS1016032457 XS1017111029 XS1017193167 XS1018909454 XS1020014608 XS1033673440 XS1040273267 XS1045121784 XS1045221063 XS1046170699 XS1048251091 XS1055031139 XS1072804484 XS1073920255

Stock exchange: Vienna, Luxembourg, Zurich

original announcement: =------------------------------------------------------------------------------- EANS-Adhoc: Kommunalkredit Austria AG / Kommunalkredit withdraws Moody's Ratings for unsecured funding instruments

other/rating 20.06.2014

(Vienna, 20 June 2014) - Kommunalkredit Austria AG (KA) decided today to withdraw all ratings for unsecured funding instruments (bank deposit, bank financial strength rating, senior unsecured, subordinate, other short term) by Moody's Investors Service (Moody's) with immediate effect, except for its current covered bond rating of Aa2.

The decision is due to differences in opinion between the bank and Moody's regarding the - according to Moody's - reduced support propensity by the Republic of Austria (Moody's rating Aa1) for KA, which is holding a 99.78% share in KA.

Moody's argues that the draft legislation regarding Hypo Alpe Adria, which was approved by the Council of Ministers on 11 June 2014, implies a reduced support propensity by the Republic of Austria for the Austrian banking sector in general, which is now to be applied to KA in particular.

Prior to the withdrawal, the bank had the following Moody's ratings for unsecured instruments: bank deposit "Baa3", bank financial strength rating "E", senior unsecured "Baa3", subordinate "Ca", other short term "P-3". The bank deposit, senior unsecured and other short term ratings carried a negative outlook.

In the view of KA and the Republic of Austria the above mentioned draft legislation, which is still subject to the parliamentary legislative process of the Republic of Austria, does not indicate a change in the support propensity of the Republic of Austria. This was also communicated to the rating agency. Since its restructuring in 2009, KA has received neither capital nor liquidity support and at the current time no support requirement is foreseeable. Nevertheless, in accordance with the amending decision by the European Commission (EC) of 19 July 2013, the Republic of Austria has the possibility to provide respective support measures to KA.

In 2013, KA reported an annual IFRS result of EUR 20.4mn before taxes (EUR 5.1mn after taxes). For the first half 2014, KA expects a positive result. KA has a sound credit portfolio of which 93.1% is rated investment grade and which shows no overdue credit claims (non-performing-loan ratio of 0.0%). The capitalization under Basel III is solid with a total capital ratio of 22.9 % and a common equity tier 1 ratio of 16.1% as of 30 April 2014.

ISIN:

XS0285503248 XS0340901908 XS0271821513 CH0025662831 CH0024015452 XS0218834843 XS0214564972 XS0210167218 XS0100920353 XS0252707624 XS0270872640 XS0253410236 XS0236776877 XS0218474533 XS0213230047 XS0205974701 XS0180539420 XS0495988072 AT0000329859 XS0302365134 XS0267998481 XS0252786669 XS0235597068 XS0215839019 CH0020669583 XS0197387953 XS0299062389 XS0261832942 XS0252593198 CH0022280058 XS0215865287 XS0212122534 XS0187975262 XS0163624504 XS0592235187 XS0373257590 XS0255439803 XS0241451581 XS0219327524 XS0214981812 XS0211496590 XS0186736228 XS0104786263 XS0687890441 XS0973424152 XS0981809584 XS1003074306 XS1003354252 XS1005197477 XS1008699933 XS1013581274 XS1015492595 XS1016032457 XS1017111029 XS1017193167 XS1018909454 XS1020014608 XS1033673440 XS1040273267 XS1045121784 XS1045221063 XS1046170699 XS1048251091 XS1055031139 XS1072804484 XS1073920255

Stock exchange: Vienna, Luxembourg, Zurich

Further inquiry note: Kommunalkredit Austria AG Treasury - Investor Relations Dinah Reiss 1092 Wien/Vienna, Türkenstraße/Tuerkenstrasse 9 Tel./Phone: +43/1/31 6 31-678 Fax: +43/1/31 6 31-505 oder/or 99678 Mail: d.reiss@kommunalkredit.at

end of original announcement euro adhoc =-------------------------------------------------------------------------------

sector publicity of original announcement: 2014-06-20 17:46:14 - Bloomberg- sent

2014-06-20 17:46:14 - Bloomberg- sent

end of announcement euro adhoc =-------------------------------------------------------------------------------

(END) Dow Jones Newswires

   June 20, 2014 12:55 ET (16:55 GMT)- - 12 55 PM EDT 06-20-14