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Hypo Group: “Worst Thing If Government Does Not Make Decision”

Published: February 28, 2014; 11:21 · (Vindobona)

According to Felderer, President of the Fiscal Council, a downgrade in the country rating must not be taken “too seriously”.

Hypo Group: “Worst Thing If Government Does Not Make Decision” / Picture: © IHS Vienna

On Friday evening, the country rating by US rating agency Moody’s is expected which is expected to deteriorate because of the ongoing discussion about the downsizing and restructuring of ailing nationalized bank Hypo Group. Bernhard Felderer, President of the Fiscal Council, told Austrian daily “Kurier” (Friday issue) that a possible downgrade in the country’s rating was not to be taken “too seriously”.

“A rating is something that passes,” Felderer said in the interview. According to him, the downgrade in the rating by Standard&Poor’s proved this. Still, Austrian federal bonds have top conditions. Moreover, even if the state debt rate went up to 80 percent, Austria was still among the best countries of the European Union. Instead of focusing on ratings, he said that clarity about further proceedings in the downsizing of Hypo was much more important.

“The worst thing for the financial markets is if the Austrian government is not able to make a decision about Hypo,” Felderer said and stressed that sending the ailing bank to insolvency was not exactly what he wished for but it would not be a catastrophe. One would have to send the province of Carinthia into bankruptcy; however, he pointed out that even in Germany cities like Saarbrücken or Bremen were sent into insolvency several times without affecting the country’s ratings.