Austria won't rule out Hypo insolvency -finmin

VIENNA Mon Feb 17, 2014 3:28am EST

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VIENNA Feb 17 (Reuters) - Austria has not ruled out letting nationalised lender Hypo Alpe Adria go bust even though this option poses many risks, Finance Minister Michael Spindelegger told parliament on Monday.

"I do not exclude any option but I warn against shooting from the hip," he told a debate about the government's handling of the bank it had to nationalise in 2009. "An insolvency is associated with all kinds of dangers which have to be exhaustively and thoroughly analysed."

Chancellor Werner Faymann cited the contagion risk that Hypo posed for other Austrian banks given 12.5 billion euros ($17.1 billion) in debt guarantees still held by its home province of Carinthia.

"There is still a risk that investors could lose trust in Austrian banks so it is our task to achieve the opposite: to increase trust and do a wind-down that shows we have drawn the proper consequences," he told the televised debate.

($1 = 0.7307 euros) (Reporting by Michael Shields)

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