VIENNA, July 6 Austrian President Heinz Fischer
will conduct a thorough legal review before deciding whether to
approve legislation that would impose losses on some creditors
of nationalised lender Hypo Alpe Adria, he said on
The law aims to wipe out holders of 890 million euros ($1.21
billion) worth of subordinated Hypo debt despite guarantees from
its home province of Carinthia - an unprecedented step in Europe
that has drawn international scrutiny.
The International Monetary Fund last week advised Austria to
reconsider the plan, saying it could undermine other
"I will certainly not just simply sign this," Fischer told
Austrian television in an interview, adding he would he have to
discuss the legislation in depth first with legal experts.
But Fischer also made clear that Austria had to draw a line
under the country's worst post-war financial debacle and that he
saw the Hypo law as a "middle path" between the unacceptable
option of letting the bank go bust and the other extreme of
having taxpayers alone keep shouldering the entire burden.
The government has said the Hypo legislation - which also
mandates an 800 million euro contribution to Hypo wind-down
costs from former owner BayernLB of Germany - aims to
ensure taxpayers alone are not left footing the Hypo bill.
Austrians are furious that they have had to provide 5.5
billion euros in aid to Hypo since 2008.
The government considered bankruptcy for the lender it had
to nationalise in 2009 after a decade of breakneck expansion,
but decided instead in March to set up a "bad bank" for around
18 billion euros of assets to be wound down over time.
The plan will boost Austrian state debt to near 80 percent
of gross domestic product and nearly double the budget deficit
to 2.7 percent of GDP this year.
The lower house of parliament is due to address the
legislation on Tuesday. It also needs to pass the upper house
and get Fischer's signature. The government has said it could
take effect by August if all went to plan.
($1 = 0.7331 Euros)
(Reporting by Michael Shields, editing by William Hardy)