VIENNA Nov 23 Austrian state bank Hypo Alpe
Adria wants to place a 1 billion euro ($1.3 billion)
bond by the end of the year to help shore up its balance sheet,
it said on Friday.
The Tier 2 bond will be guaranteed by the Republic of
Austria and its interest rate will be linked to the 1.83 percent
currently paid by government bonds, likely somewhat over 2
percent, Chief Financial Officer Johannes Proksch said.
Sources had told Reuters the bank was readying a
billion-euro state-backed bond, and last week Hypo said the
government would also pump another 500 million into the troubled
bank through a capital increase.
Hypo, nationalised in 2009 to avoid a collapse whose effects
would have been felt across central Europe, had been told by
regulators to find an extra 1.5 billion euros by the end of the
year to raise its capital ratio to 12.04 percent.
Reuters IFR reported this week that Hypo had mandated
Citigroup, Commerzbank, Deutsche Bank
and Morgan Stanley to arrange a series of investor
meetings in Europe starting next week.
Proksch said he was confident of getting the sale done by
the end of December and that there was considerable interest
from institutional investors in Germany.
"We assume that we will get a rating oriented towards the
Republic of Austria," he added. Austrian sovereign debt has
triple-A ratings from Moody's and Fitch and AA+ from S&P.
Proksch said he was also confident Austria would get
European Union approval for guaranteeing the bond.
Repeated injections of taxpayer money into Hypo and other
nationalised banks is making it harder for Austria to bring its
state budget deficit below the EU target ceiling of 3 percent of
GDP. It is set to be at least 3.1 percent this year.
Hypo has also been told by Austria's markets regulator it
has to raise its capital ratio further to 12.67 percent by March
2013, which would imply an extra 700 million euros. Proksch said
the bank was considering a range of options for how to do this.
Hypo is trying to shrink itself back to health by running
down some units and selling operations in southeastern Europe,
Austria and Italy, but the sales processes have been slowed by
Proksch said the processes were "on track" but declined to
predict how long they might take.
Hypo is also facing a lawsuit from its former owner, German
bank BayernLB, which is trying to claim back 2.64
billion euros it invested in Hypo before nationalisation.
Proksch said Hypo had engaged a team of experts to evaluate
the claim, who may complete their work by the end of the year,
and that the 2.64 billion was currently a liability on the
bank's balance sheet.
Hypo has 4.5 billion euros in debt repayments coming due in
2013. Proksch said the bank had sufficient liquidity for these
payments before the bond sale.