Bank Austria plans to enter the U.S. debt market by launching a $2 billion medium-term-note program before the end of the year.

Stefan Zapotocky, senior general manager and head of the bank's securities operations in Vienna, said that the medium-term-note program is proceeding and that the bank also intends to raise around $70 million in equity by issuing American depositary receipts.

Mr. Zapotocky cautioned that although talks on the two U.S. issues are well advanced, the final size of the debt and equity deals, as well as the launch date, have not been set.

Others in the Market

Bank Austria joins several foreign banks that have either issued or are planning to issue debt and equity in the U.S. markets.

Earlier this month, for example, France's Credit Lyonnais launched a $2 billion senior medium-term-note and subordinated medium-term-note program underwritten by Goldman, Sachs & Co., Bear, Stearns & Co., Lehman Brothers, and Merrill Lynch & Co.

In April, Bank Austria took the first step to issuing equity here. It launched a so-called Level One ADR program for its common stock, sponsored by J.P. Morgan & Co. Level One permits a bank to sell existing equity or raise equity in the United States.

Private Placement

Any issue of common stock in the United States will probably be privately placed, Mr. Zapotocky said.

The bank is Austria's biggest, with $47.3 billion in assets at midyear. The bank is a form of municipal trust and is guaranteed by the city of Vienna. Moody's Investors Service Inc. rates the bank triple-A.

Earlier this year, deputy chairman Gerhard Randa predicted that Bank Austria will earn over four billion Austrian shillings in 1993, or around $350 million, up from around $300 million in 1992.

Much of the increase in earnings will come from cost cuts related to the merger two years ago that formed the bank. Other cuts will come from a reduction in the overhead of U.S. operations.

Staff Reduction Planned

Bank officials added that this year alone, Bank Austria is planning to reduce staff from around 10,000 to 8,500, mainly through attrition.

Bank Austria has had a checkered history of lending in the U.S., which Mr. Randa said won't be repeated. The bank disregarded its U.S. lending limits and made too many highly leveraged loans. Included in those mistakes is a $114 million loan to real estate giant Olympia and York Developments, which is now insolvent.

He added that Bank Austria has cut its U.S. loan size and does not plan to participate in big syndications.

The Austrian banker added that he sees a steady 5% yearly growth in the United States. Officials added the bank will make its first operating profit in U.S. this year.

Bank Austria At a Glance

Headquarters Vienna

Chairman andCEO Rene Alfons HaidenAssets $47 billion

Six-month earnings, as $172 million of June 30U.S. assets $2 billionU.S. Bank Austriasubsidiary America Inc.Planned $2 billion inU.S. issues medium term notes $70 million in American depositary receipts

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