UPDATE 2-Hypo Alpe Adria's H1 loss blows hole in balance sheet
* H1 group loss 860 mln euros under IFRS vs 3.4 mln profit year ago
* Has 619 mln euro capital shortfall to be plugged with state aid
* European Commission decision on state aid due in autumn (Adds finance minister comments)
ALPBACH, Austria, Aug 28 (Reuters) - Nationalised Austrian bank Hypo Alpe Adria swung to a first-half group loss of 859.8 million euros ($1.15 billion), leaving a gap in its capital to be filled with more state funds if the European Commission approves, the bank said on Wednesday.
The loss meant parent institution Hypo Alpe-Adria-Bank International AG was 618.8 million euros short of meeting minimum capital requirements, the bank said in a statement.
It added: "The capital measure of 700 million euros necessary to remedy this shortfall was resolved on 23 July 2013 by the general shareholders' meeting and will be implemented immediately following a positive state aid decision by the European Commission" due by the autumn.
The well-flagged loss was primarily due to a five-fold jump in risk provisions to 623 million euros, stemming mostly from economic weakness in its core markets and its need to scale back quickly in return for state aid.
Austria is the bank's sole owner.
Hypo, which Austria nationalised in 2009 to avoid a meltdown with regional implications, will need more state aid on top of almost 3 billion euros it has already received or been pledged, its chairman said last month.
In an interview with Reuters, Finance Minister Maria Fekter declined to speculate just how much extra help the bank would need, saying this depended on how the sale of its Balkan banking network goes and on the conditions the Commission imposes.
She said a model on how to hive off Hypo assets into a resolution vehicle designed to spare taxpayers as much as the burden as possible should be presented before the year was out, and perhaps even before national elections on Sept. 29.
The bank is the subject of a dispute between Austria and the Commission, which is examining the legality of the aid in view of what it considers too-slow progress in restructuring.
Hypo overstretched itself with a decade of robust expansion and an ambitious push into the Balkans before the 2008 financial crisis struck.
Its shrinking cure saw total assets fall to 31.3 billion euros at mid-year from 33.8 billion at the end of 2012.
The bank has managed to agree the sale of its domestic banking business in Austria, which is expected to close this year, but still has the southeastern European unit on the block and is winding down an Italian unit.
The burden on Austrian taxpayers for supporting Hypo Alpe Adria may hit hard only next year, complicating efforts to cut state debt and deficits, the head of Austria's debt watchdog panel said in July.
Fekter said she still expected to hit the government's goal of balancing the state budget by 2016.
($1 = 0.7466 euros) (Reporting by Michael Shields; Editing by Ludwig Burger, Georgina Prodhan and David Evans)