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Hypo courts Bank Austria?
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March 14, 2000: 6:24 a.m. ET
Report: No. 2 German bank in talks with Austrian rival on cross-stake deal
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LONDON (CNNfn) - Germany's HypoVereinsbank and Bank Austria are discussing a cooperation and share exchange that could lead to the creation of a consumer banking network in Poland, Austria, the Czech Republic and Hungary, according to a published report.
The banks may end up taking stakes of up to 20 percent in one another, the Wall Street Journal reported Tuesday . That could be a precursor to a full merger, the newspaper said, though the banks are only contemplating a partnership at present.
The newspaper said the banks are discussing an exchange of between 5 and 20 percent of the other's shares. A 20 percent stake in HypoVereinsbank would be worth just under 5 billion euros ($4.8 billion) at current market prices, while an equivalent stake in Bank Austria is valued at slightly less than 900 million euros.
The Journal, which reported that an announcement is expected in coming days, said an alliance would fuse HypoVereinsbank's focus on mortgage banking and the consumer market with Bank Austria's more traditional strengths as a universal bank that also has investment and corporate banking divisions.
The Journal cited people close to the matter as saying HypoVereinsbank, Germany's number-two bank, had also been talking to Dresdner Bank about a merger. However, Dresdner Bank and Deutsche Bank last week announced plans to merge, forming one of the world's leading financial institutions. Analysts valued that deal at $31.6 billion.
European banks are feeling increasing pressure to grow to help them compete as banking services can increasingly be market across borders and on line, revolutionizing traditional ways of doing business.
In January, Banco Santander Central Hispano, Spain's largest bank, and France's No. 3, Société Générale, agreed to swap stakes and unveiled plans for joint ventures and coordinated efforts in a range of pan-European activities from asset management to online banking.
HypoVereinsbank, created by the 1998 merger of Bayerische Hypotheken-und Wechsel-Bank and Bayerische Vereinsbank, is Germany's second-biggest bank after Deutsche Bank, and already has a strong presence in Poland and Hungary.
Bank Austria is Austria's dominant bank, with about 25 percent of the domestic market in both corporate and retail banking, according to the Journal. 
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