Hypo Alpe-Adria-Bank International AG, the nationalized Austrian lender burdened with bad debt, chose Sachsen Asset Management GmbH and Bankhaus Lampe KG to draft a plan for spinning off its bad-assets unit, said two people with knowledge of the decision.
Hypo Alpe, based in Klagenfurt, Austria, told the two German advisers to come up with a plan for the unit with at least 12 billion euros ($16 billion) in assets that minimizes the burden for the Austrian government’s budget, said the people, who asked not to be identified because the plan isn’t public. A decision won’t be made before Austria’s national elections on Sept. 29, they said.
Klaus Liebscher, the former central bank governor who leads the government agency dealing with bank aid, known as Fimbag, declined to comment when contacted by Bloomberg News. Hypo Alpe, SachsenAM and Bankhaus Lampe officials declined to comment.
Austria is accelerating Hypo Alpe’s breakup to gain European Union approval for the 2.2 billion euros in state aid the lender received in the last five years. Once its operating units are sold, it will end up with the non-performing and unsellable assets, which include Croatian hotel project loans, leasing contracts across eastern Europe and seized loan collateral ranging from shopping malls to yachts and tractors.
Finance Minister Maria Fekter opposed Hypo Alpe’s plans to spin off a “bad bank” on concern its liabilities may add to Austria’s government debt and drive it beyond 80 percent of gross domestic product. Chancellor Werner Faymann and Vice Chancellor Michael Spindelegger told her to revisit the plans after the non-performing assets caused losses and capital needs at Hypo Alpe that have burdened Austria’s budget.
A bad bank set up as a company without a banking license would require it to hold less capital, lowering the need for additional state injections. Austrian banks have softened their opposition to taking a role in a bad bank, opening the opportunity to involve private investors in a similar way as in Spain or Ireland. That would avoid the need for the state to recognize the liabilities on its balance sheet.
UniCredit SpA’s Bank Austria unit may drop its opposition to the plan if a bank levy is cut in return, Chief Executive Officer Willibald Cernko said last month. Raiffeisen Bank International AG’s new CEO, Karl Sevelda, said last week that he would look at the proposal according to the principle “do ut des,” citing a Latin phrase meaning “I give in order that you may give.”