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Hypo Group Needs up to € 17bn

Published: September 12, 2013; 08:06 · (Vindobona)

The scenarios for the nationalized Austrian banking group become even more pessimistic.

Hypo Group Needs up to € 17bn / Picture: © Hypo Alpe-Adria-Bank International AG

The Austrian National Bank (OeNB) has made a new risk assessment for Hypo Group. The new worst case scenario would be even more expensive for the Austrian taxpayers than the previous ones. According to OeNB, the capital requirement of the fully nationalized bank may reach up to € 17bn. In July, the most pessimistic scenario indicated a cash requirement of € 14bn.

The probability of the worst case scenario is 40%. In this case, the Austrian Ministry of Finance would have to inject up to € 8.5bn this year. In the best case, by contrast, the capital requirement would come at € 6.2bn. In a first reaction, Hypo Group´s management stressed that these figures are not comprehensible.

In the next weeks, a task force for Hypo Group will prepare the basis of decision making. Hypo Group may separate the risky assets from the good assets. Klaus Liebscher, head of Hypo Group´s supervisory board, thinks that the “bad bank” for Hypo will manage a loan portfolio of € 18bn.

Due to the dismal situation of Hypo Group and the other nationalized banks Kommunalkredit/KA Finanz and VBAG, the economist Christian Keuschnigg anticipates another austerity package after the election at the end of September. Without new austerity measures, the zero deficit would be hardly reached until 2016. However, according to Finance Minister Maria Fekter, there was no reason to leave the path of budget consolidation.