Another one bites the dust

15 December 2009 By Nicholas Paisner

The troubled German lender has surrendered its stake in a struggling Austrian subsidiary to Vienna and written off debts of 825 million euros. The move marks the end of a costly saga for BayernLB. But like Germany’s other regional banks, it is still struggling for direction.

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BayernLB and the Republic of Austria agreed on a stabilisation plan for Hypo Group Alpe Adria on Dec.14.

Austria will acquire BayernLB's 67 percent stake in Hypo for a symbolic price of 1 euro. BayernLB will maintain its existing liquidity lines and waive debts totalling EUR 825 million ($1.2 billion).

The chairman of BayernLB said the Republic of Austria and Hypo's other shareholders "have succeeded in stabilising a bank that is systemically important for Austria and south eastern Europe. BayernLB's contribution was a necessary element of the restructuring".

The Austrian state of Carinthia, which owns a 12 percent stake in Hypo, will provide the bank with 200 million euros of additional capital. The Austrian government will make up to 450 million euros available.

BayernLB reported provisions of 1.3 billion euros in the first nine months of 2009. Wholesale financing accounted for 70 percent of the bank's funding at the end of the period, down from 74 percent at the end of 2008.

Context News

BayernLB and the Republic of Austria agreed on a stabilisation plan for Hypo Group Alpe Adria on Dec.14.

Austria will acquire BayernLB's 67 percent stake in Hypo for a symbolic price of 1 euro. BayernLB will maintain its existing liquidity lines and waive debts totalling EUR 825 million ($1.2 billion).

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