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Austria: Spindelegger Demands Valid Figures by Hypo Group

Published: March 15, 2014; 15:53 · (Vindobona)

Finance Minister Michael Spindelegger demands valid figures from Hypo Group Alpe Adria before any further capital injections will be made by the Austrian state.

The ailing bank has until the end of April to present "valid figures." / Picture: © Wikipedia / JJ55 (30 March 2008)

Otherwise, the Finance Minister threatened not to grant any further payments. The ailing bank has until the end of April. However, Spindelegger assumes that the figures for the business years 2013 and 2014 will be determined in the coming weeks. The deputy Chancellor announced not wanting to spend further money into Hypo Group every other month.

Since the beginning of the week, Spindelegger has continued to express his “shock” over the new capital requirement for completing the balance sheets of the business year 2013 which derives from the high write-offs of the SEE affiliates of the ailing bank. “I do not feel adequately informed, and this annoyes me enormously,” Spindelegger announced.

On Friday, CEO of Hypo Alexander Picker reiterated his estimates that the downsizing of Hypo Group will cost € 4bn at the maximum. Spindelegger presented himself confident that the figures will be correct. “If the board (of Hypo Group) presents these figures and if the Governor of the National Bank (Ewald Nowotny) confirms them I assume that this is the maximum damage,” Spindelegger said.

From today’s point of view, the most likely scenario will be that the supervisory baord will only approve the balances for last year on April 4, according to insiders. The amount of the new write-offs will then reveal the new budget gap which the Austrian state has to fill with further tax money. Last year, the Austrian federation already granted € 1.75bn in accounting aid capital. The last tranche in aid capital was given to Hypo only in December. The new downsizing company must be capitalized from the beginning. Together with the required bridge financing for the first half year of 2014 until the bank was turned into a downsizing company without a bank license. The aim is for Hypo to undergo changes until September.

According to rumors, the ailing bank will have to sell its Balkan affiliates by around half a billion Euros less than planned. Currently, Hypo Group’s SEE network has a value of around one billion Euros. However, the auditors are expected to demand a value adjustment, and consequently write-offs by around one half of the amount. Together with at least € 400m in assets, the bank hopes to be able to endure until the establishing of the bad bank. Moreover, on Monday a bond in the amount of € 750m will become due. If the taxpayers in Austria had not already spent € 5bn into the problem bank, Hypo Group Alpe Adria would go bankrupt next Monday at the latest. The bank itself estimates the value of its Western Balkan affiliates to come at € 3bn.

Experts are concerned that the Austrian state will have to provide further guarantees for the downsizing companies for refinancing measures in the years after. By this, the financial requirements will stil grow. Moreover, losses are expected to arise with the sale of the Balkan affiliates. The selling procedure is expected to be completed still this year. According to reports, there are five interested parties.

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