Oesterreichische Volksbanken : ECB drops Volksbanken capital target - Der Standard

VIENNA (Reuters) - The European Central Bank has quietly dropped its draft minimum capital target for Austria's Volksbanken as the group moves to wind down its flagship unit by mid-year, the newspaper Der Standard reported, citing unnamed regulatory sources.

The ECB in December had given the Association of Volksbanks - which groups flagship Volksbanken AG (VBAG) with the regional banks that own a majority - a draft target to maintain a common equity tier 1 (CET1) capital adequacy ratio of 14.63 percent of risk-weighted assets from July 26, 2015.

The Association had a CET1 ratio of 11.5 percent at the end of September.

Der Standard said "the ECB has informally rescinded its informal draft. The 14.6 percent target does not exist in this form any more" because Austrian officials had been able to persuade the ECB that the spin-off could not go any faster.

A Volksbanken spokeswoman said she could not comment on regulatory issues.

Owners of part-nationalised VBAG have approved in principle plans to turn the lead institute into a "bad bank", relieving pressure on the regional lenders that own 52 percent of VBAG.

By relinquishing its banking licence VBAG would be freed from minimum capital requirements for banks, and simply run off its remaining assets over the years to come while paying off its debts.

(Reporting by Michael Shields; Editing by Toby Chopra)