Austrian prosecutors drop investigation of BAWAG-Linz swap deal

VIENNA Wed May 7, 2014 7:02am EDT

VIENNA May 7 (Reuters) - Prosecutors in the Austrian city of Linz said on Wednesday they had dropped a criminal investigation into whether staff at lender BAWAG PSK duped the municipal government into a 2007 swap deal, after finding no evidence of wrongdoing.

BAWAG has long defended its handling of the deal, which the Linz government is trying to unwind in a separate civil legal challenge.

"Investigations that were conducted showed no evidence that people linked to BAWAG deliberately misled the city of Linz or contributed to any potential breach of trust," the prosecutors said in a statement.

BAWAG, which is owned by Cerberus Capital Management , hailed the decision. "The attempt by Linz's lawyers to criminalise BAWAG PSK staff has failed," it said in a statement.

($1 = 0.7177 Euros) (Reporting by Michael Shields; Editing by Andrew Heavens)

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