FRANKFURT, June 11 (Reuters) - Austria aims to wipe out 890 million euros ($1.21 billion) of subordinated Hypo Alpe Adria debt guaranteed by the bank's home province of Carinthia to ensure that investors - not just taxpayers - share wind-down costs for the lender, government officials said.
The officials said draft legislation set to be approved by the cabinet on Wednesday also targets an 800 million euro contribution from BayernLB, the German landesbank which co-owned Hypo when Austria had to nationalise it in 2009 to save it from collapse.
However, a 1 billion euro federal guarantee on Hypo subordinated debt will be honoured, they said.
Finance Minister Michael Spindelegger told reporters the step was a special case given Hypo's unusual circumstances and that imposing debt haircuts would not be a common practice. (Reporting by Michael Shields; Editing by Kirsti Knolle)