Heta Props Up Hypo Alpe Italy to Avoid Ex-Unit’s Collapse

Heta Asset Resolution AG and Austria agreed to inject capital and liquidity into Hypo Alpe-Adria-Bank SpA to avoid Italian authorities winding down the Italian operations of failed Hypo Alpe-Adria-Bank International AG.

Heta agreed to supply aid for the business, whose main activity is leasing in northern Italy, because it may otherwise lose a larger sum of money it’s owed by the former subsidiary, it said in a statement late Tuesday. The Italian unit’s parent, Austrian state-owned HBI-Bundesholding AG, will also provide aid, it said. The terms weren’t disclosed.

“The goal of the agreement is to avoid a regulatory procedure in Italy and to achieve a bigger repayment of the outstanding funds,” Heta said in the statement. “The economic and financial consequences of the agreement will be reflected in Heta’s first-half results.”

Heta, Hypo Alpe’s “bad bank,” sold the Italian business to HBI when it was set up in October. It has 1.6 billion euros in outstanding loans to the Italian business, and set aside 1.2 billion euros for potential losses last year, according to its annual report published last week. An additional 300 million-euro “emergency liquidity facility” to replace deposits withdrawn from the bank was frozen when Austrian regulators imposed a debt moratorium on Heta in March.

Heta warned in the annual report that this led to a continuous deterioration of the liquidity situation of HBI, whereby it can’t compensate the continuous deposit outflow without external support.

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