Austria On Track to Bail in Heta Creditors After Aid Stop
Source: Bloomberg
Austria won’t give fresh capital to Heta Asset Resolution AG, making the “bad bank” of failed Hypo Alpe-Adria-Bank International AG the first case under new European Union rules imposing losses on bank bondholders.
Austria cut off support for Heta, which has already cost Austrian taxpayers about 5.5 billion euros ($6.2 billion) in aid, after Heta notified the government it may need as much as 7.6 billion euros on top of that, the Finance Ministry said in a statement on Sunday. The Finanzmarktaufsicht regulator put Heta into resolution and ordered an immediate debt moratorium.
“The decision was triggered by information from Heta’s management about the first results of an asset review,” the ministry said. “Because of that dramatic change of the asset evaluation, the ministry together with the entire government decided not to invest any more tax money into Heta.”
The immediate debt moratorium means 950 million euros of bonds due March 6 and March 20 won’t be repaid. It affects 9.8 billion euros in outstanding bonds, supplementary capital and Schuldschein loans, 1.24 billion euros debt to Pfandbriefbank (Oesterreich) AG, a bank that handles bond issues for Austrian provincial banks, as well as loans from BayernLB, according to the FMA’s decree published on its website.
Read more: http://www.bloomberg.com/news/articles/2015-03-01/austria-on-track-to-bail-in-heta-creditors-after-aid-stop
There is apparently an $8.5 billion USD hole in an Austrian bank. Comparisons are already being made to Creditanstalt in 1931. While I don't know enough high finance to make my own call on this news, it doesn't look good.
