AUSTRIA’S Volksbanken AG officially closed its doors as a bank Friday after getting restructuring approval from European authorities as part of a wind-down plan that began with a 1.35 billion euro (US$1.5 billion) rescue three years ago.

    Volksbanken, crushed in the financial crisis following a break-neck expansion into eastern Europe, surrendered its licence at noon and became a “bad bank” called Immigon Portfolioabbau, whose sole goal is to sell 7 billion euros in assets left from the VBAG empire.

    Under Stephan Koren, brought in by the government to stabilize the crisis-stricken bank, Austria’s Association of Volksbanks has compressed some 51 banks into 10, with Volksbank Wien-Baden now leading the constellation of lenders with some 31 billion euros in combined assets.

    The Austrian state owns a 43 percent stake in VBAG, the former flagship bank in the association, which was left waiting until Friday for official approval from several European authorities before it could hand in its licence.

    Before winding down, the association required approval from the European Central Bank (ECB), the European Commission, European competition authorities, and Austria’s FMA market watchdog. The final confirmations arrived Friday, Volksbanken said.

    On Thursday, the commission was the first to publicly give the green light, saying the association’s restructuring made the group viable in the long-term without further state support.

    Winding down VBAG will relieve pressure on the other regional lenders in the association, which owns 52 percent of VBAG.

    It also cures one headache for the Austrian Government, which is struggling separately to wind down Heta, the state vehicle for failed lender Hypo Alpe Adria.(SD-Agencies)