BayernLB mulls approval for Hypo Alpe divestments
FRANKFURT/VIENNA Aug 26 (Reuters) - Germany's BayernLB said on Monday it would not let a financial dispute with former unit Hypo Alpe Adria interfere with any approval it must give for the Austrian bank's divestments.
BayernLB, owned by the state of Bavaria, was given the right of veto over major asset sales when Austria bought Hypo Alpe Adria in 2009 for a symbolic 1 euro sum, the German landesbank's finance chief Stephan Winkelmeier told reporters.
This includes the planned 65.5 million euro ($88 million) sale of Hypo's Austrian banking unit to investor Sanjeev Kanoria, the lender's first step to divest operating units under pressure from the European Commission.
BayernLB will review that deal and discuss it with Hypo, he said, adding that a legal row over Hypo's delay in repaying a loan from the former parent was a separate issue.
"We will not hold anything back just to be mean," he said.
A Hypo Alpe Adria spokesman also expressed confidence that BayernLB would back the deal. "Talks are going on and we expect that our former parent will support its former unit's restructuring efforts," he said.
Hypo last year halted repayment of most of the 2.3 billion euros in funds it still had from BayernLB, arguing the money had to be treated temporarily as a substitute for equity rather than debt while it tries to get back on its feet.
Hypo also demanded back much of the 2.3 billion it had already repaid. In all 4 billion euros was in dispute.
Winkelmeier said BayernLB would have to build provisions for the case only if it thought there was an overwhelming probability that it would never get the money back. "Neither we nor our auditors nor the supervisors see it this way," he said.
BayernLB's veto right may also come into play should Austria decide to set up a "bad bank" for Hypo that would hive off toxic assets to make the remaining parts easier to sell. ($1 = 0.7461 euros) (Reporting by Andreas Kroener in Frankfurt and Angelika Gruber in Vienna; Writing by Michael Shields; editing by David Evans)
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