ALPBACH, Austria, Aug 29 (Reuters) - Partially state-owned Austrian lender Volksbanken AG swung to an 87 million euro ($116 million) first-half loss as it carried out a drastic European Union-mandated restructuring process, it said on Thursday.
But its tier 1 capital ratio rose to 11.4 percent at the end of the first half from 10.9 percent at the end of 2012 and its capital buffer improved slightly as a result of the downsizing process, it said.
"The massive deleveraging process will continue to affect results, it is therefore to be expected that VBAG Groups results for the full year 2013 will be negative," it added.
Austria took a 43 percent stake in the bank last year as part of a rescue that cost taxpayers more than 1 billion euros in writedowns on previous aid, fresh capital and guarantees.
$1 = 0.7496 euros Reporting by Michael Shields; editing by Georgina Prodhan