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Hypo Group: Insolvency Still an Option?

Published: March 12, 2014; 14:54 · (Vindobona)

The group of international advisors appointed by the Austrian government seems to have come to a different conclusion than the task force of Hypo Group Alpe Adria.

The Council of Ministers has already given green light to a new capital injection for Hypo Group. / Picture: © Vindobona.org

The report by international advisors, which will be published today, took a surprising turn as it does not completely dismiss the idea of sending the ailing bank into insolvency but point out advantages. Now, Finance Minister Michael Spindelegger could find the idea of insolvency to his liking, according to rumors.

By this, creditors will have to participate in the downsizing costs. However, both Chancellor Werner Faymann and the bank’s task force, which consists only of members from Austria, have so far strictly rejected the idea of sending the nationlized bank into insolvency but forwarding all the costs to the taxpayers. Ewald Nowotny, Governor of the Austrian National Bank (OeNB) and head of Hypo Group’s task force, is expected to tear apart the report. However, according to some experts, the paper could only serve as a threat scenario in order to bring former parent company BayernLB, which still has a right to veto, to its knees.

The economic councils appointed by the government have also delivered a warning as they regard the assets endangered. In case the undercapitalized bank will not be granted further financial injections bankruptcy is menacing as soon as this week. “We are really annoyed and want to know where the money went,” circles of the government announced. On Friday, at the meeting of the ailing bank’s supervisory board, a preliminary decision will have to be made. The Council of Ministers has already given green light to a new capital injection.

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