The chief executive officer of Hypo Alpe-Adria-Bank International AG resigned after the nationalized lender warned of losses caused by concessions Austria proposed to win European Union approval for state aid.
The constraints on new business and the accelerated asset sales proposed in the concessions, as well as public debates about the bank, caused losses that could have been avoided, Gottwald Kranebitter, who headed Hypo Alpe since 2010, said in an letter to employees published on Hypo Alpe’s website today. The developments made it impossible for him to go on, he said.
“I’m leaving, but I’m not running away,” Kranebitter, who is 49, wrote. He will continue to work for the lender until the report for the first half year is finished, he said.
Kranebitter’s resignation comes three days after Austria submitted a new restructuring proposal for Hypo Alpe to the European Commission, triggering writedowns and new capital needs at the lender. Chairman Johannes Ditz resigned last month over disagreements on the plan, which foresees selling the bank’s network in the former Yugoslavia until mid-2015.
Austria has set aside 700 million euros ($912 million) in this year’s budget for Hypo Alpe and that will be enough to cover capital needs for the first half-year, Finance Minister Maria Fekter said before a government meeting in Vienna today. How much more it needs depends on the final terms agreed with the European Commission, economic growth in southeastern Europe and the market environment, she said.
Fekter had publicly disagreed with Kranebitter and Ditz last year, when the minister turned down their proposal to create a “bad bank” to warehouse the lender’s non-performing assets. Austria is revisiting those plans now after the EU told it to come up with a better restructuring plan to justify retaining the 2.2 billion euros of aid the lender has received since 2008.
Austria has not yet decided whether it will set up the bad bank, according to former central bank governor Klaus Liebscher, who succeeded Ditz as the lender’s chairman. Several options will be evaluated in the coming weeks, with a bad bank being one of them, he said in an interview with ORF radio today.
The bank may need as much as 2 billion euros in extra capital this year due to Austria’s concessions, according to two people with knowledge of the situation, who asked not to be identified because talks with the EU are confidential.
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