EU ruling on Hypo Alpe aid decision due next week-sources
ALPBACH, Austria Aug 30 (Reuters) - The European Commission is expected to decide next week whether nationalised Austrian lender Hypo Alpe Adria can accept the state aid that is keeping it afloat, sources close to the matter told Reuters.
The Commission will decide on a revised reorganisation plan for the lender, which has received nearly 3 billion euros ($4 billion) in actual or pledged state funds including 700 million to cover first-half losses.
The government has expressed optimism that the revamp plan, adjusted to reflect the Commission's concerns, will go through.
One Austrian source said on Friday the Commission would not require major changes to the plan, which envisions selling off Hypo's Balkans banking network by mid-2015 and winding down an Italian unit. It already agreed the sale of its Austrian unit.
European Competition Commissioner Joaquin Almunia in March said Hypo faced possible closure for failing to adequately reorganise since Austria took it over in 2009 to prevent a collapse with regional implications.
Austrian National Bank Director Andreas Ittner told reporters at an economic conference in the Alpine village of Alpbach that supervisors were in close contact with Hypo officials in charge of liquidity and capital management.
"We monitor especially intensively banks that come close to capital borderlines," he said late on Thursday in remarks for release on Friday, adding that such close supervision "was and is appropriate" in Hypo's case.
The bank was pushed to the brink of insolvency by a decade of overly ambitious lending and expansion into the Balkans.
Ittner gave no estimates on how much more aid Hypo might need, but said revamping such banks required "significant sums".
Ittner said work continued on a plan to hive off toxic assets from Hypo into a wind-down vehicle that would slash its banking portfolio. He gave no details on the vehicle, which Finance Minister Maria Fekter has said aims to protect taxpayers as much as possible from more hits.
Sources close to the matter have told Reuters Austria would like to have private-sector investors hold a majority of the wind-down unit, thus keeping its debts off state books and sheltering public finances from a potentially expensive blow-up.
Fekter, a conservative in the coalition government led by Social Democrats, has come under fire from opposition parties ahead of Sept. 29 national elections over her handling of Hypo. ($1 = 0.7562 euros) (Editing by David Cowell)
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