Hypo's Balkans network sale moving ahead - Deutsche Bank

Wed Feb 12, 2014 5:16am EST

Related Topics

* Potential buyers eyeing whole network and individual banks

* Deutsche executive praises Austrian approach to Hypo

* Sees potential for 3-4 big IPOs in Vienna this year

By Angelika Gruber and Michael Shields

VIENNA, Feb 12 (Reuters) - The sale of Hypo Alpe Adria's Balkans banking network is moving ahead, unaffected by a row over how to handle the group's chronic need for state aid, according to a senior executive from Deutsche Bank, which is handling the deal.

The nationalised Austrian lender sees its network in southeastern Europe (SEE) as its prime asset as it winds down other businesses.

Austria plans to create a state-owned "bad bank" to absorb Hypo's bad loans, leases and property after failing to get other commercial banks to take part in the scheme, triggering a major political debate.

Former central banker Klaus Liebscher has said foreign investors were being put off by a discussion in Austria about whether the state should let Hypo go bust if all else fails.

"The current sale process for the southeastern Europe network is not affected by the discussion," Rainer Polster, Deutsche's top official in Austria, told Reuters.

"We have expressions of interest for the entire network as well as for individual banks. We are well on the way. There is a whole range of interested parties. The important thing is that the sale moves ahead quickly," he said.

The European Commission last year ordered Austria to find a buyer for the Balkans network by mid-2015 in return for approving state aid for the lender Austria took over in 2009.

The SEE network comprises six banks and three leasing operations in Slovenia, Croatia, Serbia, Bosnia and Montenegro. It had total assets of 9.6 billion euros ($13 billion), a 7.5 billion loan book and a non-performing loan ratio of 16.7 percent as of mid-2013.

The network lost 97 million euros in the first half of last year after booking risk provisions of nearly 129 million.

Polster praised Austria's decision to opt for a state vehicle to wind down as much as 19 billion euros in Hypo assets, saying this approach "is the solution that from the financial centre's perspective would be most suited to taking uncertainty out of the market".

"The important thing is that this solution is now implemented in a sustainable way," he said.

Polster, whose bank helped steer Raiffeisen Bank International's successful exercise last month to raise nearly 3 billion euros from investors, saw an overall positive trend on Austrian capital markets.

"We see potential for further equity steps, also for IPOs on the Vienna Stock Exchange," he said on Tuesday.

"There could be three to four IPOs with a volume of at least 300 million euros this year. There are enough companies in the starting blocks," he said.

"International investors ... are increasingly interested." (Editing by Louise Ireland)

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