VIENNA, June 12 Two of Austria's top bankers
urged the government to reconsider its plan to wipe out some
subordinated debt investors in loss-making state bank Hypo Alpe
Adria despite guarantees from the bank's home
province of Carinthia.
Austria unveiled draft legislation on Wednesday that for the
first time in Europe would mean investors ostensibly protected
by state guarantees must help shoulder the costs of winding down
a nationalised bank.
Ratings agency Standard & Poor's put seven Austrian banks
and four Austrian provinces on CreditWatch negative this week
given concerns about the impact of the law, which calls into
question the commitment of Austria's federal government to stand
behind its states and banks.
"The price that the taxpayer will pay for the law will be
very high," Raiffeisen Bank International Chief
Executive Karl Sevelda told newspaper Der Standard in comments
published on Thursday.
"Insolvency (for Hypo) was rejected because one didn't want
to shake investors' confidence. But failing to honour provincial
guarantees has the same effect," he said.
Sevelda and his boss, Chairman Walter Rothensteiner, wrote
to Finance Minister Michael Spindelegger on Wednesday asking him
to rethink the government's approach given the "loss of
confidence by investors" and the "fundamental intervention in
contractual rights" that could arise, the paper reported.
A Raiffeisen spokeswoman confirmed his comments.
Austrian insurer and Hypo debt investor Uniqa and
former Hypo owner BayernLB have already threatened
legal action over the law, which could take effect by August
should parliament approve it as planned in July.
In an interview broadcast on Thursday, S&P analyst Thomas
Fischinger told broadcaster ORF that Austria's reputation was at
stake in the matter.
(Reporting by Michael Shields; editing by Tom Pfeiffer)