UPDATE 1-Hypo Alpe Adria revamp plan gains EU approval - sources
VIENNA, Sept 2 (Reuters) - The European Commission has conditionally approved the Austrian government's reorganisation plan for nationalised lender Hypo Alpe Adria, paving the way for the bank to receive more state aid, three Austrian sources close to the matter said.
The approval covers the bank's plan to sell its Balkans banking network by 2015 and wind down an Italian unit while relying on state support. It has already agreed the sale of its Austrian unit in a deal set to close this year.
"There are still some technical questions," one of the sources said on Monday of the Commission's decision.
The Austrian finance ministry declined comment.
Hypo Alpe Adria, which Austria took over in 2009 to avoid a collapse with regional implications, last week reported a first-half group loss of 860 million euros ($1.13 billion), leaving a gap in its capital to be filled with 700 million euros in additional state funds.
That would bring overall state aid to nearly 3 billion euros.
Backed by guarantees from its home province of Carinthia, Hypo pushed itself to the brink of insolvency with a decade of ambitious expansion and a push into the Balkans before the 2008 financial crisis struck.
How much support the bank will ultimately need depends on the successful divestment of its Balkans business and exact terms of the Commission's approval, Finance Minister Maria Fekter said last week.
She said a model on how to hive off Hypo assets into a resolution vehicle designed to spare taxpayers as much of the burden as possible should be presented before the end of the year, perhaps even before national elections on Sept. 29.
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 told Reuters last week that she still expects to hit the government's goal of balancing the state budget by 2016. ($1 = 0.7584 euros) (Editing by Louise Heavens and David Goodman)