Austrian "Good" Banks Balk At Bad-Bank Bailout

Tyler Durden's picture

Since 2009, when Hypo Alpe Adria was 'nationalized', the Austrian government has dumped more than EUR2 billion into the troubled bank. It remains on life-support but this time the government-proposed 'aid' being offered is running into a wall. The rest of Austria's banks (as creditors as well as forced levy-payers from other bailouts) dismiss the government's plan for a "bad-bank" model a la Ireland adding that they "will not allow themselves to be put under pressure by politicians." Reuters notes that the 'bad-bank' plan is up against a deadline at the end of May from the European Commission, and among others Unicredit Austria is clear on its role, "decidedly rule out a commitment on our part." The increasing tension between Vienna and Brussels is evident as a quick sale of the bank will lead to a EUR5-6 billion loss for taxpayers (hurting the government's budget plans) but it seems the rest of Austria's banks are unwilling to throw more good money after bad, "if we go this way, some persuasion will be needed".

Via Reuters,

Austria's banks are giving a thumbs down to supporting the creation of a "bad bank" for Hypo Alpe Adria to relieve pressure on state finances from the nationalised lender.




But such a plan would need backing from private investors, most likely the country's banking sector, which is already paying a levy that was increased last year to help finance the rescue of another troubled bank, Volksbanken AG.


"I decidedly rule out a commitment on our part," Unicredit Bank Austria Chief Executive Willibald Cernko said



"We will not let ourselves be put under pressure by politicians," he said.




Brussels and Vienna are at loggerheads over the pace of overhauling Hypo, with the Commission keen for its operating assets to be sold by the end of the year while Austria is fearful rushed sales could hurt state finances ahead of elections due by late September.


Hypo Alpe Adria has said a quick sale of its businesses in Austria, Italy and the Balkans could saddle taxpayers with losses of between 5 billion and 6 billion euros.


The attraction of Ireland's approach is that its bad bank - the National Asset Management Agency - has a special investment vehicle in which three private investors held the majority, thus allowing Ireland not to count NAMA debts as state debt.


Former Austrian central bank chief Klaus Liebscher, ... "I cannot expect that the initial reaction from banks that are approached will be glowingly positive," he said. "If we go this way, some persuasion will be needed."


Finance Minister Maria Fekter has in the past opposed creating a bad bank for nationalised lenders, partly because it could undermine plans to generate a budget surplus by 2017 and get state debt under 60 percent of GDP by the end of the decade.



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W T F II's picture

Bad Bank = Dumb Depositors

monad's picture

Bad bank = cronies. Silverado, Lloyd Bensen etc

SoundMoney45's picture

Declare the insolvent banks bankrupt, and force the bondholders and stockholders to absorb their losses.  Oh wait, the banker's lackeys are running the EU and want to pass their masters losses onto the serfs.  That means the only solution for Austria is to abandon the failed Euro currency and failed EU bureaucracy.

czarangelus's picture

There's a saying - you know who owns you when you know who you're not allowed to criticize.

I've just noticed the new racial/religious discrimination policy.

buzzsaw99's picture

guaranteeing the big banks to never fail makes them fascist anti-trust anti-competitive monopoly gangsters

Chief_Illiniwek's picture

I don't recall Austrians "balking" at suggestions from - ahem,  Deutschland - working out that well "last time"...

gkumar's picture


Data from India. Bullish for gold?!!!!!!!!!

lolmao500's picture

And from what I read, they will do a haircut for accounts above 30 000 euros.

The Thunder Child's picture

Why anyone keeps more then a chequing account for monthly bills after Cyprus is beyond me...

Weisbrot's picture

wouldn't it be better to let the bad banks fail, transfer the deposits & loans to a good bank, and fire all those that ran the bad bank in to oblivion?

Sofa King Confused's picture

" and fire all those that ran the bad bank in to oblivion"

and hang all those that ran the bad bank until death

fixed it for ya

dizzyfingers's picture

"wouldn't it be better to let the bad banks fail, transfer the deposits & loans to a good bank, and fire all those that ran the bad bank in to oblivion?"

Yes, but that's way too intelligent. And maybe it's illegal by now.

MaxThrust's picture

"I've just noticed the new racial/religious discrimination policy."


Yes I have noticed it too and are disapointed. Stating facts about who owns what is free speach not racism. I had higher hopes of ZH.



shovelhead's picture

I think Reptoid Communist Masonic Illuminati Templar Osiris Worshipping Satanists are still fair game...

But not if they're gay.

WezTheJuic's picture

Drawing of lines, or more constructed drama?


To ask such a question, would also mean some other questions would now come into that light.


Busy World.


"Thank-you Tyler.  I do like the Hippo."