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New stepped-coupon mortgage bond of Bank Austria: annually rising interest rates guaranteed

Bank Austria is offering security-conscious investors a new six-year mortgage bond for private investors as from 9 December 2010. The Stufenzins-Pfandbrief Reihe 115/2010–2016 stepped-coupon mortgage bond offers guaranteed interest rates for the entire term, interest is paid on a specified date each year. The interest rate will be adjusted annually, the first coupon with an interest rate of 1.625 per cent p.a. will be due on 9 December 2011. The interest rate will rise steadily from year to year. The final coupon on 9 December 2016 will offer an interest rate of 3.75 per cent p.a. If the investment is held to maturity, the average interest rate is 2.5 per cent p.a.

At the end of the term, 100 per cent of the nominal value of the stepped-coupon mortgage bond will be paid. Investors who need their capital before maturity can sell the stepped-coupon mortgage bond at the prevailing market price. Investors should note that the stepped-coupon mortgage bond is subject to price fluctuations during its term. If the investment is not held to maturity, there is a risk that investors may not get back the full amount invested.

Stepped-coupon mortgage bonds are trustee securities which are secured by Bank Austria mortgage loans. UniCredit Bank Austria AG is moreover liable with its entire assets.

Enquiries: Bank Austria Media Relations Austria
Matthias Raftl, tel. +43 (0) 50505 52809
e-mail: matthias.raftl@unicreditgroup.at

Details of the issue:

Stufenzins-Pfandbrief Reihe 115/2010-2016 (stepped-coupon mortgage bond)
of UniCredit Bank Austria AG

ISIN:    AT000B048905
Offered:   from 9 December 2010, continuous issue
Volume:   EUR 30 million
Denomination:   EUR 100 (minimum investment: EUR 3,000)
Term:   6 years, 9 December 2010 to 8 December 2016
Coupon:    First year:  1.625 % p.a.
Second year:  1.750 % p.a.
Third year:  2.125 % p.a.
Fourth year:  2.625 % p.a.
Fifth year:  3.125 % p.a.
Sixth year:  3.750 % p.a.
Each year on a calendar basis, first coupon due 9 December 2011. If the investment is held to maturity, the average interest rate is 2.5 % p.a. based on the nominal value of 100 %. Taxation: 25 % Austrian capital yields tax (Kapitalertragsteuer – KESt) will be deducted from interest income (final taxation) of individual investors with unlimited tax liability in Austria and from interest income of specific corporate  investors with limited tax liability in Austria, and 25 % corporation tax (Körperschaftsteuer – KÖSt) will be deducted from interest income of corporate investors with unlimited tax liability in Austria. It should be noted that the tax treatment depends on an investor’s personal circumstances and that information is provided on the basis of the current legal situation, which may be subject to change. We in particular draw attention to a draft of the Austrian Ancillary Budget Act 2011 – 2014. Besides other important changes, this Act will overhaul and systematise the taxation of capital and will extend taxation to include capital gains (information as of December 2010). It is recommended that investors consult a tax adviser with regard to any future changes resulting from this new taxation procedure, and to obtain clarification of the impact of these changes on the investment.
Interest payments:   on 9 December of each year, with the first payment due on 9 December 2011
Redemption:   on 9 December 2016 at 100 %
Callable:   no
Listing:   Official Market of the Vienna Stock Exchange (Wiener Börse)

This information does not constitute investment advice or a recommendation. Nor does it in particular constitute an offer or solicitation to buy or sell stepped-coupon mortgage bonds. It is provided only as initial information and cannot replace advice tailored to the investor’s knowledge and specific circumstances. Every investment of capital involves a degree of risk. The value of the stepped-coupon mortgage bond may fluctuate during the term of the bond. In accordance with the terms and conditions, redemption of the stepped-coupon mortgage bond is at the nominal value (= 100 %) on the repayment date. Investors may sell the stepped-coupon mortgage bond prior to maturity at the prevailing price. As the prevailing price may be below the issue price, the investor may not get back the entire amount invested.


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