BAWAG (Abbreviation of German: Bank für Arbeit und Wirtschaft, pronounced [baŋk fyːɐ̯ ˈʔaʁbaɪt ʊnt ˈvɪʁtʃaft], lit.

Socialist trade unions and the Großeinkaufsgesellschaft für österreichische Consumvereine (Austrian consumer associations procurement company) each hold a 40% stake in the bank.

The Austrian Trade Union Federation (ÖGB) retained 70% of the shares, the other 30% were held by the Konsum retail cooperative chain.

The merger, which was not finalized until 2005, created the country's third-largest bank group with a balance sheet total of nearly 45 billion euros, 5000 employees, some 2000 outlets (including branches where P.S.K.

Since the fall of the Iron Curtain and the prospect of an accession of Central- and East European countries to the EU, new market opportunities open up.

Since the Refco scandal in October 2005, which involved bad loans in the amount of 425 million euros, the bank almost defaulted on its obligations and had to be bailed out by the conservative government of Wolfgang Schüssel.

Also, Bawag lent Phillip Bennett, the former chief executive of Refco, hundreds of millions of dollars just before the brokerage filed for bankruptcy protection in October 2005.

Helmut Elsner, former chief executive of Bawag, was found guilty of breach of trust, fraud and false accounting and was sentenced to nine and a half years in prison.

The defendants also included the Bawag executive Johann Zwettler and the investment banker Wolfgang Flöttl, who was based in the United States.

As BAWAG's shareholders were also facing financial trouble, ÖGB decided to sell its entire stake in March 2006.

Cerberus was finally chosen in December 2006, beating competitors Bayerische Landesbank, Allianz and Lone Star Funds, and who bought 90% of BAWAG for €3.2 billion.

In order to transform the bank, the new management sold non-strategic assets, like a 43% stake in Austrian TV operator ATV, foreign subsidiaries Istrobanka,[5] to KBC Group in July 2008, BAWAG Bank CZ[6] to Landesbank Baden-Württemberg in September 2008, piano producer Bösendorfer to Yamaha in January 2008[7] and Stiefelkönig (shoe retailer) in 2011.

After pressure from the government threatening to close its own accounts and initiation of a legal procedure, Ceberus obtained an exemption from the US.