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Vienna Insurance to fight Hypo law in court-Austrian financial paper
July 22, 2014 / 11:27 AM / in 3 years

Vienna Insurance to fight Hypo law in court-Austrian financial paper

VIENNA, July 22 (Reuters) - Vienna Insurance intends to fight a new law bailing-in Hypo Alpe Adria subordinated debt holders in Austria’s constitutional court, its chief executive was quoted saying on Tuesday.

“This action is ultimately a cold-blooded expropriation and we will fight it in the constitutional court because, in my opinion, it is unconstitutional,” Peter Hagen told the WirtschaftsBlatt newspaper in an interview published on Tuesday.

Austria’s lower house of parliament passed legislation this month to wipe out some subordinated creditors of nationalised bank Hypo despite guarantees from its home province, entering uncharted territory for debt markets.

Vienna Insurance faces a 50 million euro ($67 million) hit from the move, which is designed to ensure that investors share with taxpayers the costs of winding down the bank, which has swallowed 5.5 billion euros in state aid so far.

Credit ratings agency Moody’s said earlier the new law, which still has to be passed by the upper house of parliament later this week, was credit-negative for Austrian banks and had mixed credit implications for sovereign debt.

The World Bank is also challenging the law, EU finance ministers have concerns, and the International Monetary Fund has urged a rethink. ($1 = 0.7416 Euros) (Reporting by Georgina Prodhan; Editing by David Holmes)

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