Banks in Czech Republic

BAWAG P.S.K. reaches a global settlement solution in the USA

Following intensive negotiations between BAWAG P.S.K., the United States Department of Justice, the Securities and Exchange Commission, the Refco debtors and Creditors Committee, the securities holder class action representatives and Thomas H. Lee and Partners, BAWAG is pleased to announce a settlement agreement has been reached with respect to various claims and potential claims of each of these parties against BAWAG relating to the Refco bankruptcy. 

The settlements provide that BAWAG P.S.K. makes an initial payment of USD 158 million, USD 150 million of which will be divided equally between the Refco creditors and the Department of Justice; the Department of Justice, in turn, will distribute the money paid to it by BAWAG to the Refco estates, the securities claimants and T.H. Lee.  An additional USD 8 million will also be paid directly to a class action settlement fund.

Either after one year or upon an earlier sale of the bank, another payment of USD 525 million will have to be effected. This money will again be split equally between the U.S. Department of Justice and the Refco creditors.  The Department of Justice will also distribute this money to the Refco estates, the securities class and T.H. Lee, and it is anticipated that these various distributions from the Department of Justice will cover substantially all of the settlement obligations of BAWAG to Refco, the securities plaintiffs (of USD 108 million) and T.H. Lee.  In addition, the settlement provides that 30% of any amount of the sales proceeds in excess of EUR 1.8 billion will be payable to the settlement parties; such variable portion of the settlement amount is limited to a maximum of USD 200 million.

BAWAG P.S.K. also agrees to drop its own claims against Refco and the Refco creditors, but not its claims against Phillip Bennett.

In exchange, the pending and potential actions of Refco and the Creditors Committee, the class action filed by Refco security holders and the action threatened by TH Lee will be dropped. The Department of Justice has promised not to prosecute acts of BAWAG P.S.K. that may be punishable under criminal law (”non-prosecution”); this part of the agreement has also been signed by the Austrian Trade Union Federation and its affiliated enterprises. The SEC matter has also been settled in an injunction action that involves no additional payment of money.  Both BAWAG P.S.K. and the Trade Union Federation will continue to cooperate with the U.S. authorities and the class action plaintiffs with regard to the clarification of the Refco case.

With this settlement, which has been reached very quickly, an extended phase of uncertainty has been successfully prevented for BAWAG P.S.K.

Thus, security has been created for the bank, its customers, and investors. The initiated process of selling BAWAG P.S.K. can be continued smoothly and in a professional manner.

As part of the settlement solution a security for the second installment will be deposited. The assets of BAWAG P.S.K. in the USA, which had still been frozen recently, may now be disposed of freely and without restriction.

On the basis of the Federal Statute regarding the assumption of liability for the bank, it will be possible to finalize the balance sheet of BAWAG P.S.K. for 2005 tomorrow.

BAWAG P.S.K. is and continues to be the sound Austrian bank for 1.3 million private customers and a strong partner of the Austrian economy and its 60,000 commercial customers.

CEO Ewald Nowotny comments: “This settlement is a good deal because it draws a line under the past. The way is now open for a positive future development of BAWAG P.S.K:”