Austria Channels Iceland to Impose Hypo Alpe Losses: Euro Credit
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Austria is invoking a law used by Iceland as it tries to bypass a state guarantee and impose losses on investors in a bank that cost taxpayers billions to bail out and now may cost other lenders their credit ratings.
Finance Minister Michael Spindelegger proposed legislation today voiding 890 million euros ($1.2 billion) of subordinated debt to help cover losses at nationalized Hypo Alpe-Adria-Bank International AG, circumventing a guarantee for the bonds by the province of Carinthia. The law, which is citing a 2001 European Union directive, also voids 800 million euros lent to Hypo Alpe by its former parent Bayerische Landesbank.