Austria’s Hypo Alpe Expects Balkan Bank Sale Signing This Month

Hypo Alpe-Adria-Bank International AG, the nationalized Austrian lender being broken up, expects the sale of its Balkan banking business to be signed this month.

Hypo Alpe, based in Klagenfurt, Austria, and one of the nation’s most costly bank failures, is in exclusive talks with one bidder, Chief Executive Officer Alexander Picker said in a statement late yesterday, without elaborating on the interested party. The bank is in exclusive talks with Advent International Corp., two people with knowledge of the matter said last month.

“We took another important step to dispose of our assets in the best possible way,” and the bank aims to agree on a sale “while we are still in October,” Picker said. “We’re aware of our responsibility and are working hard to keep the costs of Hypo Alpe’s wind-down to the taxpayer as low as possible.”

Hypo Alpe’s general meeting yesterday approved the spinoff of Hypo SEE Holding AG, the unit that owns its banks in Slovenia, Croatia, Serbia, Bosnia and Herzegovina and Montenegro, into a separate company owned by Austria ahead of the sale. That company will be renamed Hypo Group Alpe Adria AG and retain Hypo Alpe’s banking license.

The Balkan banks had combined total assets of 8.5 billion euros ($10.9 billion) at the end of June and narrowed their after-tax loss to 4.3 million euros in the first half of the year. The subsidiaries are dependent on about 2.2 billion euros of funding from the parent company, most of which expires in 2017. The extension of the funding was the main area of discussion with Advent, the people familiar with the talks said at the time.

After the spinoff, the remainder of Hypo Alpe will be turned into a “bad bank” and renamed Heta Asset Resolution, with the sole task of winding down its about 18 billion euros of assets. Hypo Alpe has cost Austrian taxpayers 5.5 billion euros since its rescue in 2009, and more is still expected to be needed to fund its wind-down.

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