November 22, 2013 11:17 pm

Austria’s Hypo to ask for €1bn in further state aid

Hypo Alpe-Adria-Bank International, one of three midsized Austrian banks which had to be nationalised during the financial crisis, said that it needed a further €1.05bn in state aid this year to avoid breaching minimum capital requirements.

In a brief statement on Friday evening, the Klagenfurt-based lender said that a shareholder meeting would be organised before the end of the year to authorise the issuing of non-voting participation capital to offset the shortfall. The bank added that its short-term needs would be covered by the state.

Although Hypo had already said it would need more aid, the latest call for help is an unwelcome headache for Austria’s two biggest parties, the Social Democrats and the People’s Party, as they attempt to thrash out a coalition agreement following September’s election.

The two parties are trying to balance Austria’s budget by 2016, but could be thwarted if Hypo continues to make demands on the public purse.

In September, the EU said that Austria could provide up to another €5.7bn in state aid for Hypo, which as already received €2.9bn, as part of a plan which would see the struggling lender’s viable parts in Austria and the Balkans sold, and the rump of the bank wound down.

However, there has been speculation that the final cost of dealing with the stricken lender could be much higher. In September, the Austrian central bank (ÖNB) was forced to deny a report that it had carried out a study suggesting the bill could reach €17bn in the worst case scenario.

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