UPDATE 2-Austrian central bank denies report on Hypo capital
* Der Standard: central bank sees Hypo needing 17 bln eur
* Says 6.2 bln eur is best-case scenario
* Austrian Central Bank denies such internal report exists (Adds comment from central bank official, background)
By Georgina Prodhan and Michael Shields
VIENNA, Sept 12 (Reuters) - Austria's central bank denied a report on Thursday that it believed nationalised bank Hypo Alpe Adria could need as much as 17 billion euros ($23 billion) in fresh state aid.
Der Standard newspaper had reported the figure as a worst-case scenario, saying this came from an internal central bank (OeNB) report on the troubled lender, which has already received more than 3 billion euros from the government.
The Austrian central bank issued a statement denying the report. "The OeNB asserts that no such evaluation from the OeNB exists, nor could one seriously be carried out in light of the current level of knowledge," it said.
Philip Reading, the central bank's director of financial stability and bank inspections, told reporters the report did not exist "in this form".
Speaking on the sidelines of a conference, he said that while the central bank had always been aware of the risks posed by Hypo it had not assigned probabilities to possible scenarios for more state aid.
Hypo Alpe Adria, which was nationalised in 2009 after rapid expansion in the Balkans, is trying to sell off assets and wind down its other activities under a plan approved by the European Commission this month.
Austria, which has already provided more than 3 billion euros in state aid to the bank, said earlier this month the sell-off could cost its taxpayers up to 5.4 billion euros in fresh capital by 2017.
But Der Standard said the bill could be as high as 17 billion euros in a worst-case scenario, according to the central bank, and would be at least 6.2 billion euros even if the sell-off was completed next year.
The Austrian government, seeking re-election in a Sept. 29 parliamentary vote, aims to balance its budget by 2016 and has said the Hypo disaster will not throw it off course or force it to adopt austerity measures.
The gross domestic product of Austria, a country of 8.5 million people, was 307 billion euros last year.
Finance Minister Maria Fekter has resisted calls for Hypo's toxic assets to be put into a state-owned "bad bank", hoping instead to set up a privately-owned vehicle for its non-core assets so its debts do not count as state debt.
Austria has also nationalised one other bank and part-nationalised another, partly because of the heavy exposure of the country's banking system to neighbouring emerging European markets.
According to Der Standard, the central bank considered there was a 50 percent chance of Hypo needing between 10 and 11.5 billion euros in fresh capital - 7.5 to 9 billion between now and 2014 and 2.5 billion afterwards.
It rated the worst-case scenario as 40 percent likely. In this case, all of the 14 billion euros in guarantees provided by the provincial government of Carinthia, the bank's former owner, would fall due and the bank would sell its assets at a loss.
The most optimistic case had just a 10 percent likelihood in the opinion of the central bank, Der Standard said.
Hypo has so far agreed to sell its Austrian operating unit and has halted business at its Italian subsidiary. Its prime asset, its Balkans network, must be sold by 2015.
The lender reported a loss of 860 million euros for the first half of 2013. ($1 = 0.7518 euros) (Reporting by Georgina Prodhan; Editing by David Holmes and Ruth Pitchford)
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