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Austria: Opposition Criticizes Nationalization

Published: March 20, 2014; 15:11 · (Vindobona)

On Thursday Finance Minister Michael Spindelegger expects a binding statement by ailing bank Hypo Group Alpe Adria about how much state aid will be required. The opposition heavily criticizes the nationalization by the Austrian state in 2009.

From a legal point of view, the country would not have been responsible for Hypo, according to the opposition. / Picture: © Wikipedia / JJ55 (30 March 2008)

On Thursday, ahead of the committee of the audit court, Spindelegger announced wanting to be prepared for all risks. “Of course I expect figures but I do not have them yet,” Spindelegger said and expects the bank’s management to finally present “valid figures”. The Finance Minister did not talk about the consequences in case the management board misses the deadline but only referred to the responsibility of the board of managing directors.

It is still not clear if the financial requirements running into billions of Hypo Group will be addressed during the supervisory board meeting. However, the Finance Ministry assumes that the works for completing the balance sheet 2013 will be over by then. According to a spokesman, the bank was “eager to specify all figures as soon as possible and complete the annual financial statements.”

The banking branch assumes that an additional contribution of around one billion Euros is required for completing the balance sheets of the business year 2013, and as a bridge funding until the downsizing unit will be established. The creation of Hypo Group’s bad bank is expected to take place at the beginning of September. However, there are no offical announcements yet as there were differences with the auditors about the potential devaluation need of the Western Balkan affiliates.

Only last week the supervisory board has underlined that the downsizing of Hypo Group will cost taxpayers up to € 4bn. However, the opposition has raised doubts about these figures. Werner Kogler, budget spokesman for the Austrian Green Party, is convinced that the Hypo disaster will have cost “ten billion Euros upwards” in the end. Ahead of the session, Kogler said that the acute need of one hundred millions more or less was not the major problem but the “overall dimension” was. Currently Kogler assumes that € 800m to 900m for completing the balance sheet will be required. However, according to the deputy leader of the Greens, these figures should be known to both the supervisory board of Hypo and the CEO, and “the Finance Minister should have known them a long time ago.” According to Kogler, the it was up the the owner if the board of Hypo Group did a good job. “The Finance Minister does not talk well about this board of managers,” Kogler said.

The opposition party Neos heavily criticized the nationalization of the ailing bank carried out in 2009. With reference to an interim paper, Rainer Hable, financial spokesman of the party, pointed out that even the Bavarian former parent company did not expect Austria to assume full responsibility for the bank. The nationalization carried out on December 14, 2009, was described as “without alternative”, which, according to Neos, was wrong. From a legal point of view, the country would not have been responsible for anything since Hypo was owned by BayernLB and therefore the Land of Bavaria. Hence, the bank already was nationalized. Hable presented himself convinced that BayernLB would have not sent its Austrian and SEE affiliate into bankruptcy one year after the Lehman-bankruptcy, and in the light of around € 4bn, which the Bavarian bank had already invested.

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