VIENNA Feb 9 Austria's finance minister no
longer rules out letting nationalised lender Hypo Alpe Adria
go bust, he told a newspaper, softening his earlier
Michael Spindelegger said he would still prefer to get
commercial banks to support a "bad bank" that would absorb toxic
assets from Hypo, which Austria had to nationalise in 2009, but
said he would now consider other options.
"If no solution is found with the banks, nothing is ruled
out. For me, it's about finding the most favourable solution for
taxpayers. There are no taboos here," he told Oesterreich
newspaper in an interview published on Sunday.
The government wants to keep the bad bank's liabilities off
Austria's public debt calculation by roping Austria's healthy
commercial banks into a scheme to support it.
But Erste Group, Raiffeisen Bank International
and Bank Austria are sceptical about taking
part in such a venture.
Austria nationalised Hypo after the bank's breakneck
expansion pushed it to the brink of bankruptcy. Taxpayers have
provided 4.8 billion euros ($6.54 billion) in aid for Hypo so
A Hypo insolvency could entail government support for Hypo's
home province of Carinthia, which cannot afford to make good on
over 12 billion euros in outstanding guarantees on Hypo's debt.
On the other hand, it could save billions if Hypo creditors,
including bondholders and former owner BayernLB, had
to take haircuts on their claims on Hypo.
The Austrian central bank is reported to have warned the
government a disorderly insolvency of Hypo could cost nearly 25
The central bank has said in public that such a move could
trigger a chain reaction dragging in other banks and ruining
Austria's reputation in the capital markets.
($1 = 0.7343 euros)
(Reporting by Georgina Prodhan; Editing by Louise Heavens)