State aid: Commission approves emergency rescue aid for Austrian bank Hypo Group Alpe Adria

Brussels, 6-12-2012 — /europawire.eu/ — The European Commission has temporarily approved, under EU state aid rules, an emergency recapitalisation totalling €1.5 billion that Austria intends to grant to Hypo Group Alpe Adria (HGAA). The bank needs the aid to comply with regulatory equity ratios. The Commission temporarily approved the aid for reasons of financial stability.

Commission Vice President in charge of competition policy Joaquín Almunia said: “The capital measures allow HGAA to comply with the regulatory capital ratios. Austria now urgently needs to present a comprehensive plan for divesting the operative parts of the bank and winding down the non-viable rest.”

Following a decision by the financial supervisor, HGAA has to meet higher capital ratios by 31 December 2012. This requires additional capital of €1.5 billion. In order to comply with these requirements, Austria intends to (i) proceed with a capital increase of €500 million in the form of shares and (ii) grant a state guarantee on subordinated Tier-2 capital instruments with a nominal value of €1 billion.

In order to comply with EU state aid rules, Austria has committed to certain safeguards for HGAA’s risk policies and new lending business. The aim of these commitments is to contain risks incurred from new lending activities and thereby support the restoration of the operative banking entities.

The authorisation of the aid is linked to the submission of an updated restructuring plan within the next two months.

Background on HGAA

HGAA is currently active in Austria, Italy, Slovenia, Croatia, Bosnia & Herzegovina, Serbia and Montenegro, with a significant market share in some of those countries. The bank has already started to wind-down some of its business lines, in particular its leasing business in Austria, Croatia, Germany, Montenegro, Hungary, Bulgaria, FYROM and Ukraine.

HGAA has already received several aid measures in the past. In December 2008, HGAA received a €900 million Tier-1 instrument capital injection without voting rights (Partizipationskapital) from Austria on the basis of the Austrian bank support scheme. In addition, HGAA received guarantees of €1.35 billion for bond issues under a debt issuance programme on the basis of the same scheme. At the end of 2009, Austria acquired in an emergency rescue operation all HGAA shares for the symbolic price of €1. In addition, the bank received at that time State capital amounting to €550 million and an asset guarantee of €100 million. Moreover, Austria granted an asset guarantee amounting to €200 million at the end of 2010.

The non-confidential version of the decision will be made available under the case number SA.32554 in the State Aid Register on the DG Competitionwebsite once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News