March 13, 2012 / 8:25 AM / 5 years ago

UPDATE 2-Hypo Alpe hopes to avoid more state aid

* To skip payments on supplementary and hybrid capital for 2011

* Loses 165 mln euros under Austrian accounting

* Swings to 69.3 mln euros 2011 profit under IFRS (Adds comment from news conference)

By Michael Shields

VIENNA, March 13 (Reuters) - Nationalised Austrian lender Hypo Alpe Adria aims to return to health without needing more state aid, it said while again skipping payouts on capital because it posted a 2011 loss under Austrian accounting rules.

"Our goal is to not burden the taxpayers any more," Chief Executive Gottwald Kranebitter told reporters on Tuesday after the country's sixth-largest bank swung to a profit under international accounting standards.

Austria took control of Hypo in 2009 to avoid a collapse that could have shaken central and eastern Europe. The bank now aims to shrink by revamping itself and selling assets.

It wants to divest banking units in Austria and Italy and is trying to make them as profitable as possible in the hope the market will improve later this year once major banks have hit European capital adequacy targets.

What Kranebitter called its "pearl" is its banking network in southeastern Europe, a region that is set to grow faster than western Europe and which it sees as relatively underbanked. This business will also be sold eventually.

Under IFRS accounting standards the group swung to a 2011 profit of 69.3 million euros ($91 million) before minorities from a loss of 1.08 billion in 2010. The profit included a 126 million euro one-off fair-value gain on its own debt.

Under Austrian standards, which do not allow fair-value gains, it lost 165 million euros in 2011, it said.

"As claims to the payment of interest warrants (coupons) related to the supplementary and hybrid capital instruments conditional to profits are depending on the UGB-based result of Hypo Alpe-Adria-Bank International AG, the bank has to inform that no payments for 2011 can be made," it said.

That means investors missed out on a theoretical payout of around 155 million euros, Kranebitter said.

Non-performing loans on its books fell to 9.3 billion euros at the end of the year but still made up 30.7 percent of its loan portfolio. Its overall capital ratio slipped to 9.8 percent from 10.3 percent of risk-weighted assets a year earlier.

Kranebitter has been resisting regulators' efforts to get that ratio up to 12 percent, saying 10 percent is adequate for a state-owned bank in the process of a sweeping reorganisation.

It would need to reduce risk-weighted assets by around 600 million euros to get its ratio up to 10 percent.

Credit rating agencies are keeping an eye on the support Austria may have to provide its relatively large banking sector.

State-owned KA Finanz - the "bad bank" split off after Austria nationalised Kommunalkredit in 2008 - may need up to 1 billion in fresh aid after taking hits on Greek debt and credit default swaps.

Austria has also agreed to take a stake of up to 49 percent in ailing lender Volksbanken in a second bailout for that bank which will cost the state more than 1 billion euros in writedowns, fresh capital and guarantees.

Prosecutors in Germany, Austria and Croatia are investigating former managers, shareholders and business partners of Hypo and former owner BayernLB on suspicion they lined their pockets at the expense of the banks.

German landesbank BayernLB has sued the staff foundation at Hypo Alpe Adria, alleging the German bank was duped in 2007 into buying the Austrian lender.

The 50 million euro suit could be the first step by BayernLB -- which took a 3.7 billion euro hit on the acquisition -- toward going after Hypo's other former owners, who deny any wrongdoing. ($1 = 0.7610 euro) (Reporting by Michael Shields; Editing by Hans-Juergen Peters and Erica Billingham)

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