BayernLB will have to increase its provisions against losses from HAA.īut BayernLB is not going to give up this money without a fight. Since HAA is claiming that the entire amount can be converted to equity, there is no guarantee that any of it could be recovered even at the end of the deferral period.
#Hipo alpe adria full#
In short, it is not 800m Euros that BayernLB stands to lose – it is the full 2.35bn.
BayernLB’s contractual approval rights relating to the establishment of an HAA run-off unit can no longer be exercised. Under the FMA ordinance, this amount would be compulsorily deferred until 30 June 2019.
The real deal is the deferral of repayment of the rest until 2019: Since BayernLB has already made provisions of 1.1bn Euros against the non-recovery of these loans, expropriation of 800m Euros isn't going to cause it a serious problem. Together, these amounts make up the 2.35bn Euros BayernLB was seeking to recover in the earlier lawsuit. So we now have two BayernLB-HAA lawsuits, not one: a petition to the Austrian Constitutional Court regarding the expropriation of 800m Euros of Carinthian-guaranteed loans, and a case in the Munich District Court regarding the non-payment of about 1.5bn Euros. In a case currently pending before Munich District Court, BayernLB has filed suit for payment of the remainder of its receivables in the amount of about EUR 1.5 billion. But this lawsuit has now been overtaken by events: After obtaining a legal opinion the court issued a preliminary ruling in oral hearings on 30 June 2014.īayernLB has been trying to get its money back for the last two years. In its countersuit HAA has now demanded repayment of the interest and principal paid to BayernLB. In December 2012 BayernLB therefore petitioned Munich District Court for repayment of these receivables. Hypo Alpe Adria Bank International AG (HAA) has not repaid several outstanding loans from BayernLB totalling around EUR 2.35 billion, citing the Austrian Equity Capital Substitution Act. From the 2014 interim report & accounts, again: Whatever interest rate BayernLB charged on those loans, it wasn't enough.īut 800m Euros is not the full amount that BayernLB stands to lose. Loans provided to a bailed-out bank are effectively junk even if guaranteed by a sub-sovereign. Kärntner Landesholding’s legal liability to cover this debt is also cancelled. In respect of BayernLB’s loan receivables and contractual approval rights, the special law stipulates essentially that BayernLB’s claims against HAA in the amount of about EUR 800 million are void when the ordinance issued by the Austrian Financial Market Authority (FMA) in accordance with section 6, para. In addition to 890m Euros of guaranteed subordinated debt, the new law bails in 800m Euros of loans granted to HAA by BayernLB after its bailout. According to BayernLB's 2014 interim report & accounts, these loans were also guaranteed by the State of Carinthia (my emphasis): The scheme also envisages the inclusion of EUR 800 million in loans from Bayern LB, which were provided to Hypo Alpe Adria after the grant of state owned participation capital to Hypo Alpe Adria on 29 December 2008. According to the Austrian Ministry of Finance (quoted by Stephen Schmalzl, my emphasis): (Photo credit: Wikipedia)īut BayernLB's problem isn't subordinated debt. The World Bank & Inspection Panel's headquarters in Washington, D.C.
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