Erste Group Bank to report big loss on govt debt

AP News
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Posted: Oct 10, 2011 7:34 AM
Erste Group Bank to report big loss on govt debt

Austria-based Erste Group Bank AG says it will make a net loss of euro700 to euro800 million ($950 million to $1.1 billion) for 2011 because of the government debt crisis and troubles in Hungary.

The bank said in a statement Monday that the writeoffs will erase what would have been an euro850 million to euro900 million profit.

Hungary has passed a law letting people with foreign currency mortgages pay them off at less than market exchange rates. Hungary writedowns amount to euro760 million, and the bank will put an additional euro600 million more capital into its subsidiary there.

Erste Group Bank also marked down holdings of bonds issued by troubled governments such as Greece, Portugal, Spain, Ireland and Italy.

The bank has 3,200 branches across Central and Eastern Europe.