FRANKFURT--A spat between the Austrian government and BayernLB
escalated Thursday after the German lender said the Alpine country
should repay 2.4 billion euros ($2.99 billion) in outstanding loans
to its former Austrian unit.
A spokesman for BayernLB said the EUR2.4 billion is owed because
the Austrian government had promised to repay the credit line after
it nationalized Hypo Alpe Adria. "Austria guaranteed it would pay
back [EUR2.4 billion] in credit lines," the spokesman for BayernLB
said.
He added that the bank has set a two-week deadline for
repayment.
The Austrian Finance Ministry and Hypo Alpe Adria, now renamed
Heta Asset Resolution, weren't immediately available for
comment.
Hypo Alpe Adria ran into deep financial difficulty in 2006 after
overextending itself in the Balkans, and it was nationalized by the
Austrian government in 2009. To help stabilize Hypo Alpe Adria,
BayernLB maintained several billion euros in credit lines to the
unit, which were guaranteed by Austria.
Earlier this year, BayernLB filed a lawsuit in Austria's
constitutional court against the Austrian government for
implementing a law that forced Hypo Alpe Adria's creditors to take
losses on more than EUR1.5 billion in loans. The law also allowed
Hypo Alpe Adria to defer repayment by five more years of another
EUR1.5 billion in loans to BayernLB that were due in 2012.
Friction between Austria and BayernLB came to a head in late
October, when Austria said it aimed to sell Hypo Alpe Adria's
southeastern European network, SEE, to private-equity firm Advent
International and the European Bank for Reconstruction and
Development.
The Austrian government had expected BayernLB to sign off on the
sale by the end of this month. Instead, BayernLB, which is still
trying to recoup its loans, has insisted on reviewing the details.
BayernLB still has a say in significant restructuring measures at
its former unit, and its veto could derail the deal.
On Thursday, BayernLB said it couldn't comment on the sale of
SEE.
Write to Eyk Henning at eyk.henning@wsj.com
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