Article Tools

Hypo Disaster: Who Are the Beneficiaries?

Published: February 19, 2014; 19:07 · (Vindobona)

International investment companies, funds and domestic banks are the major recipients of the billions of Euros in the Hypo Group disaster.

Hypo Disaster: Who Are the Beneficiaries? / Picture: © Wikimedia Commons / SKopp [Public domain]

With reference to data of the financial information system of news agency Bloomberg, both Austrian daily “Presse” and news program “ZiB” of national TV station ORF have named the investors of Hypo Group’s parts which were placed in bond funds by banks and investment companies. According to the daily, the data collection is very extensive and top financial institutes both in the national and international banking and investment industry can be found.

The major part of bonds in the volume of around € 12bn, which the province of Carinthia is liable for, will mature in 2017 and will therefore have to be refinanced. However, because in all likelihood the ailing bank will not be able to do this on its own government-guaranteed bonds will have to cover the assets, according to experts. Consequently, the liabilities will be forwarded to the Austrian taxpayers.

One of the bonds with the largest investment volume is "A0G0JA" which was issued in January 2007 and will mature on January 24, 2017 in case Hypo Group has not been sent into bankruptcy until then. The repayments of this bond amount to € 5bn which is held not only by international financial institutes like Blackrock and Allianz or foreign major banks like Deutsche Bank and UniCredit, but also by Austrian investment companies like Bawag PSK Invest, Raiffeisen KAG, Sparkasse Upper Austria or even Erste Sparinvest and smaller private banks.

As long as the Austrian taxpayers will fill in for Carinthia, Hypo Group’s bonds are considered quite lucrative. The major bond "A0G0JA" has an interest rate of 4.375 percent and the yields are paid annually. However, because of the current negotiations in parliament the bond comes at 90 percent of its book value which is why investors can count on a yield of 6.2 percent, according to the report

In Switzerland, where a bond of € 400m was issued, Swiss major bank UBS is the biggest single holder (14 percent). The bond, which has a yield of 5.4 percent, will mature in October this year.

Among the domestic investors, partially-nationalized VBAG holds Hypo bonds in the volume of € 20m while Bawag PSK can count on a payment of € 31m in March, according to “ZiB”. Experts assumed that the bonds were traded in a vast amount by international hedge funds until recently.

The opinion that bonds had to be served by 100 percent under any circumstances because the investors had bought the papers “in good faith” in the effectiveness of the Carinthian liability does not have to be sustained, according to Presse. The statutory offering documents list the risks for investors, including the case of insolvency. Moreover, the procedure of how the handle a provincial liability in case of insolvency of the bank. The province will only pay the amount left after the creditors have claimed all legal remedies from the primary debtor.

One of the main reasons why the government presses for the taxpayers to take over all costs in the form of a privatized bad bank is because Hypo Group has still around € 5bn in liabilities to banks, as pointed out by “Presse”.

Fast News Search