Hypo Alpe-Adria Bank International AG, the Austrian lender nationalized in 2009, said a European Union ruling on whether it gets more time to sell assets is the key milestone it is facing this year.
The bank’s management board, including Chief Executive Officer Gottwald Kranebitter and Chief Risk Officer Wolfgang Edelmueller, today received three-year contract extensions to show a “sign of stability,” the Klagenfurt, Austria-based lender said in an e-mail.
“The Austrian goal to do an orderly wind-down is reasonable,” Wolfgang Nolz, an Austrian Finance Ministry official, said today at a press conference in Vienna. The job of the European Commission, the EU’s executive body, is to speed up that process, he said, adding that the commission’s “message is understood” by Austrian authorities.
Austrian taxpayers have so far subsidized Hypo Alpe with 1.76 billion euros ($2.29 billion) in capital. Public guarantees of about 16.7 billion euros, mostly given by its erstwhile owner, the Austrian province of Carinthia, still loom over the bank. The European Commission has yet to approve the support.
EU Competition Commissioner Joaquin Almunia warned March 8 that an Austrian bank faced possible liquidation. Hypo Alpe-Adria is the only Austrian bank negotiating a restructuring plan with the EU, according to a spokesman for the European Commission.
Since 2008, the bank has made several restructuring proposals to the EU, with the most recent submitted in February, Hypo Alpe Adria spokesman Nikola Donig said today via telephone.
The bank wants to sell subsidiaries in eastern Europe, Italy and Austria before liquidating its remaining assets. The economic downturn in the former Yugoslavia and Italy means the bank may need until 2016 or 2017 to fetch an adequate price for the assets, which are valued at 1.5 billion euros on the bank’s books, Donig said.
A “positive decision by the EU Commission on state aid procedures is the next key milestone this year,” Kranebitter said. “The journey on the path to reorganization isn’t over.”
The bank expects to reach an agreement with the European Commission in the first half of 2013, Donig said.
“We’re in intensive negotiations with the EU,” Austrian Finance Minister Maria Fekter said today at a press conference, adding that she “hopes” additional government support won’t be needed.