More than 400 Media reactions

1. The Austrian Court of Audit revealed the Austrian „Speculation Scandal 2009“ in a paradigmatic audit concerning risk management of short term assets

2. Paradigmatic Audit risk management More than 400 Media reactions • DiePresse „State as speculator - 600 mill. EUR of losses possible“ • APA: „ÖBFA held share of 1,8 % of the world marke • of super-risky assets - up to 617 mill. EUR • loss possible“ • - even Bloomberg and Financial Times reacted

3. Paradigmatic Audit risk management What was the problem? • ÖBFA (Austrian Federal Financing Agency) had excess-liquidity and used • it for short-term investments in the money market to „make margin“ • part of these short-term investments were in ABCP‘s of SIV‘s (Asset backed • commercial papers of Structured Investment Vehicles) • SIV‘s are complex investment vehicles that were hit first by the outbreak • of the US-subprime-crisis in July 2007 • ÖBFA bought a share of 1,8% of the world market(!!) in these vehicles with a • very unlucky timing (first SIV‘s already tumbling)

4. Paradigmatic Audit risk management • Short term investments - ÖBFA • 2002: 4,525 bill. EUR • 2006: 15,163 bill. EUR (+ 335% auf 2002) 2007: 15,472 bill. EUR (+ 341% auf 2002)

5. Paradigmatic Audit risk management • Short-term investments - ÖBFA - non-performing assets • 3,961 bill. EUR were invested in ABCP of SIV‘s (August 2007) • Share of the world market sep. 2007 (4,922 bill. EUR) of 1,8% • Non-performing SIV-ABCP: 616,9 mill. EUR; pending loss by • december 2008: approx. 380 mill. EUR

6. Paradigmatic Audit risk management What was the „story“ of ÖBFA during the audit? • „there is no loss - we had only to exchange SIV-ABCP • for zero coupon notes with the same nominal amount“ • „all of this ABCP was AAA“ • „these losses are a singular event and can only be • explained with the worst financial crisis since the 1930s“

7. Paradigmatic Audit risk management Why were we able to proof the contrary? • - because of ongoing surveys in financial media (Bloomberg, • Wall Street Journal) we knew at an early stage about the problems in the US housing market: • Since mid 2006 the US-Subprime-crisis was spreading in the US (housing-index was starting to drop) • SIV‘s were known as one of the possible first victims of a possible subprime crash • simple financial calculation showed clearly a loss (100 mill. today is much more than 100 mill. 10 years later) • because of data from World Bank and IMF die Austrian Court of Audits knew the world market in SIV‘s

8. Paradigmatic Audit risk management Why could this happen to ÖBFA? • ÖBFA had a tradition of an excellent debt management for years • the asset management know how was less of a focus for ÖBFA • SIV‘s were a very special product - only understood by some financial • insiders in London or New York • financial innovations were sold with aggressive marketing

9. Paradigmatic Audit risk management Luckily there was a steep learning curve of ÖBFA • introduction of new limit systems for ÖBFA (maximum liquidity) • purchases of SIV‘s were generally banned • the minister of finance started an expert group to come up with • resolutions for a better risk management • new law (6/2010 in parliamentary discussions) details risk • management for public debt and assets