VIENNA, March 9 (Reuters) - Austria faces a hit of up to 1 billion euros ($1.31 billion) for the hole Greece’s debt restructuring punches in state-owned “bad bank” KA Finanz, the lender said on Friday.
KA Finanz (KF), split off after Austria nationalised Kommunalkredit in 2008, said its risk provisions for Greece could amount to 1 billion euros should the portfolio of credit default swaps - Greek debt insurance it has written - be triggered as a result of the country’s debt revamp.
“The owner knows the support that would be needed. It has been committed and is around 1 billion,” Chief Executive Alois Steinbichler said.
Austrian Finance Minister had also cited this sum last weekend, saying 600 million euros in provisions had already been built up and 400 million more was at risk.
KF said it was still open whether its Greek CDS portfolio would be triggered by collective action clauses Athens plans to invoke for investors who did not tender bonds.
“For KF, activation of the CDS with an assumed loss ratio of about 80 percent would mean an additional provisioning charge of 423.6 million,” it said in a statement. That is included in the 1 billion euro figure.
KF contributed a nominal 305 million euros in Greek bonds toward the country’s debt swap this week. It owned as of the end of 2011 another 160 million worth of bonds of Greek corporate debt covered by state guarantees.
KF will publish its 2011 results in April.
Hits on Greek debt will tip state-owned Austrian lender Kommunalkredit Austria (KA) - the healthy part of Kommunalkredit - to a 2011 loss of around 140 million euros ($184 million) but it will not require more state aid, KA said separately.
“Due to the one-off charge (for Greece) ... KA expects to close 2011 with a negative result for the year of around 120 million euros according to Austrian GAAP and approximately 140 million according to IFRS,” it said.
“KA continues to have a sound capital position and will not require government support,” it said. It exchanged a nominal 150 million euros of Greek bonds this week.
Based on preliminary figures, it still expected a Tier 1 capital ratio of “well above 11 percent” as of the end of 2011.
Austria has also agreed to take a stake of up to 49 percent in ailing lender Volksbanken in a second bailout for that bank that will cost the state more than 1 billion euros in writedowns, fresh capital and guarantees.
Hypo Alpe Adria, which the state took over in 2009, might also need more help if it is unable to get rid of risky assets in its portfolio. ($1 = 0.7622 euros) (Reporting by Michael Shields; Editing by Will Waterman)