Commission approves temporary rescue of BayernLB’s subsidiary Hypo Group Alpe Adria
04 January 2010
The Commission is implementing an in-depth investigation of Hypo Group Alpe Adria. HGAA will have to provide a detailed restructuring plan by end-March 2010 while BayernLB has to revise the restructuring plan already submitted.
The European Commission hasapproved the rescue of BayernLB's subsidiary Hypo Group Alpe Adria (HGAA) by Austria and Land Carinthia for reasons of financial stability. At the same time, the Commission is extending its in-depth investigation, opened on 12 May 2009, into the total aid received so far by both banks. HGAA will have to provide an in-depth restructuring plan by end-March 2010. BayernLB has to revise the restructuring plan it has already submitted to take due account of the new rescue aid to HGAA. The Commission has therefore decided to extend the scope of its in-depth investigation to cover the new aid. In the meantime, the Commission has approved the measures temporarily for a maximum period of up to six months as urgent rescue aid to remedy a serious disturbance in the Austrian economy.
Competition Commissioner Neelie Kroes said: “I expect both BayernLB and Hypo Group Alpe Adria to submit credible and substantiated restructuring plans to address the challenges emerging from this rescue operation and to bring the aid measures fully in line with EU state aid rules."
In the autumn of 2009 an expert assessment established that HGAA would require significant write-downs reducing its capital ratio to less than the regulatory required minimum. After intense discussions between the owners and Austria, an agreement was reached on 14 December 2009 that Austria would acquire all shares of HGAA for a symbolic price of 1 euro from each of its three owners, BayernLB, the Austrian insurance group GRAWE and Land Carinthia. In addition, Austria and the owners decided to provide capital (Austria up to €450 million, Carinthia €200 million, GRAWE €30 million and BayernLB €825 million) and liquidity. BayernLB has to write down the full book value of HGAA and has furthermore agreed to provide additional capital and funding.
As HGAA is a systemic bank in Austria and a number of countries in South-Eastern Europe, the Commission has approved the new aid measures for a maximum period of up to six months. During this period, the Commission will evaluate in detail whether the new state support is fully in line with EU state aid rules and, in particular, whether the restructuring plan is likely to restore the viability of HGAA. The Commission will also investigate whether the bank's owners sufficiently participate in the cost of restructuring.
Press release
© European Commission
