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Taking advantage of tax benefits with the new WohnbauAnleihe bond of Bank Austria Wohnbaubank AG

With its new 3.75 % Wandelschuldverschreibung 2011–2021/3 convertible bond Bank Austria Wohnbaubank AG is offering a new WohnbauAnleihe (residential construction bond) for investors with larger amounts at their disposal who are looking for quarterly payments and security for their capital at maturity. With this WohnbauAnleihe bond private investors with a minimum investment of EUR 50,000 receive fixed interest of 3.75 % per annum for the entire ten-year period to maturity (based on a par value of 100 %).1

Investments in residential construction bonds are eligible for tax benefits. For private investors, 4 per cent of interest income from residential construction bonds is exempt from Austrian capital yields tax. They can buy as many bonds as they wish and no supplementary taxation is payable when the bonds are sold. These benefits result in higher net income compared with bonds which are subject to the full tax rates. Residential construction bonds are subject to final taxation, which means that they are exempted from income tax. 1

Security for capital and interest
The interest payable on WohnbauAnleihe bonds will be paid on specified dates on a quarterly basis. The capital will be repaid at 100 per cent of the par value at maturity unless the owner of the bond has opted for conversion.

The 3.75 % Wandelschuldverschreibung 2011–2021/3 convertible bond can be sold at the prevailing market price if the investor needs the funds before maturity. It should be noted that the WohnbauAnleihe bond is subject to price fluctuations during the period to maturity. If the investment is not held to maturity it is possible that the investor may get back less than the par value.

Details of the bond issue:

3.75 % Wandelschuldverschreibung 2011–2021/3 convertible bond of Bank Austria Wohnbaubank AG

ISIN:   AT000B074349
Offered: from 2 May 2011 as a continuous issue
Denomination: EUR 50,000 (EUR 50,000 minimum investment)
Term:  10 years (2 May 2011 until 1 May 2021)
Coupon: 3.75 % p.a., exempt from Austrian capital yields tax 1
Interest payments: quarterly, on 2 August, 2 November, 2 February and 2 May of every year, beginning on 2 August 2011
Redemption:  on 2 May 2021 at 100 % unless the owner of the bond has opted for conversion
Fees and charges: Safe-custody fees: 0.22 % p.a. plus 20 % turnover tax,
 sales fee 0.7 %
Conversion privilege:  Convertible bonds of a nominal amount of EUR 400 can be converted into five no-par value participation certificates of the issuer. This corresponds to a nominal conversion price of EUR 80 per participation certificate. The minimum nominal amount that can be converted is EUR 50,000 and a multiple thereof.
Conversion dates:  2 May of each year, beginning on 2 May 2012
Tax treatment: – the interest income of Austrian private investors is exempt from Austrian capital yields tax 1
 – if the investor sells the bond before 1 October 2011, any gains from such sale are subject to the income tax tariff rate.
 – if the WohnbauAnleihe bond is bought on or after 1 October 2011, 25 % Austrian capital yields tax is payable on price gains realised through the subsequent sale of the bond, and through repayment/redemption.
Callable: Not callable by ordinary resolution

This WohnbauAnleihe bond is exempted from the prospectus requirement pursuant to Section 3 (1) 9 of the Austrian Capital Markets Act (Kapitalmarktgesetz – KMG).

Enquiries: Bank Austria Media Relations Austria
 Matthias Raftl, tel. +43 (0)5 05 05 52809;
 e-mail: matthias.raftl@unicreditgroup.at

1) If current income from convertible bonds and from participation certificates constitutes income from assets pursuant to Section 27 of the 1988 Austrian Income Tax Act (Einkommensteuergesetz – EStG 1988) for the investor, Austrian capital yields tax (Kapitalertragsteuer – KESt) of up to 4 % of the par value need not be deducted for the period when these securities are deposited with an Austrian bank. Income tax is deemed to have been paid for the entire investment income including the amount exempted from capital yields tax pursuant to Section 97 of the 1988 Austrian Income Tax Act.
In the case of securities purchased on or after 1 October 2011, income from realised capital gains (gains from sale, redemption or repayment) of private individuals with unlimited tax liability in Austria, is subject to a 25% capital yields tax deducted from such income.
Private individuals resident in a member state of the European Union outside Austria are required to pay EU withholding tax (currently 20 %, rising to 35 % on 1 July 2011) on all interest income from these securities pursuant to the EU Directive 2003/48/EC of 3 June 2003.
It should be noted that the tax treatment depends on an investor’s personal circumstances, and that the tax benefits referred to above may be abolished in whole or in part in the event of future changes in legislation. We in particular draw attention to the Austrian Budget Supplementary Act 2011 ("Budgetbegleitgesetz 2011"); part Austrian Tax Amendment Act ("Abgabenänderungsgesetz").

This information does not constitute investment advice or a recommendation. Nor does it in particular constitute an offer or solicitation to buy or sell this WohnbauAnleihe bond. 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.

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