Saturday, 20. September 2014
09. 07. 13. - 10:00
Austria's national bank governor (OeNB) Ewald Nowotny has come out in favour of a "Bad Bank" model to solve the problems of the Hypo Alpe Adria (HGAA) bank.
The bank in Carinthia was at the centre of a scandal after it was revealed that it had been involved in a number of questionable activities including making bad loans using asset-backed securities particularly in Eastern Europe. But it had also been closely connected to the then regional governor Jorg Haider who had allegedly encourage the bank to make bad business decisions in order to support him politically.
Bad bank is a term for a financial institution created to hold non-performing assets owned by a state guaranteed bank. Such institutions have been created to address challenges arising during an economic credit crunch where private banks are allowed to take problem assets off their books.
In the case of Hypo Alpe Adria it is alleged that the bank's financial situation had been disguised in order to sell it May 2007 to the German BayernLB bank. But after pumping in hundreds of millions in order to stabilise the bank the Germans were forced to sell it back to the Austrian government to prevent a bank collapse.
The financial crisis of 2007–2010 resulted in bad banks being set up to handle the crisis in a variety of countries. For example, a bad bank was suggested as part of the Emergency Economic Stabilization Act of 2008 to help address the subprime mortgage crisis in the US. In Ireland, a bad bank, the National Asset Management Agency was established in 2009, in response to the financial crisis in that country. In 2010 the UK government established UK Asset Resolution, a state owned limited company to manage the assets of the two bankrupt nationalised mortgage lenders Bradford & Bingley and Northern Rock (Asset Management). This Bad Bank is responsible for managing £77bn of assets.
Since buying back the bank the Austrian government has been looking for a solution to get the problem of their books and according to Nowotny he believes that the bad bank idea would be the best option.
He said: "with the idea of using a bad bank model there are a number of possibilities available, it simply a question of seeing which one suits this situation best. At the end of the day though the government has to decide what the best way forward is."
No amount was given on how much money would be lodged with the bad bank but it was revealed last week that the Hypo Alpe Adria in order to balance its books needed more state money.
This year alone is likely to be €2 billion to cover further losses in bad credits made in the Balkans.
The biggest problem at the moment is that officials in Vienna and in Klagenfurt have fixed up a timetable that would involve selling the Balkans bank in the middle of 2015 – which officials in Brussels already said it is far too long.
Pat On The Back From Manure Explosive
A traffic cop in Austria got more than he bargained for after a booby trap covered him head-to-toe in manure as he was trying to catch people speeding.
Viennese Jihad Girl May Have Been Killed
Austrian police say that one of the two attractive young teenage girls who fled the country to go to Syria to fight on the side of Islamic rebels may have been killed.
Perversion of a Medical Dream
The Decline and Fall of the Otto Wagner Hospital, Vienna.
Fat Can Be Used To Burn Off Weight After New Patent Unveiled
It is being hailed as a sensation after scientists at an Austrian university patented a method that transforms fat storing cells into mini factories capable of actually destroying fat by burning it off.
Three Family Members Dead In Well Tragedy
A mother has lost her husband, her pregnant daughter and her son-in-law after a tragic accident where one of them fell into a well and the other two died while trying to carry out a failed rescue.
Brit Soldier Rescued After Climbing Mountain In T Shirt
A British soldier who tackled the frozen Austrian Alps wearing just shorts and a T-shirt has been rapped by officials after he had to be rescued from the snowy peak.
Mum And Daughter Struck By Lightning In Pool
A mother and her daughter were hospitalised after they were struck by lightning – in a swimming pool.
Police Nab Porn Star Who Filmed In Local Church
A woman accused of making a porn movie in a local church has been caught after an informant tipped off police that he recognised her by her breasts after an appeal for information.
Young Hip Hop Dancer Gets 18 Years For Drug Smuggling
A blonde hip hop dancer and charity worker promised an international career after she was spotted by a talent scout has been jailed for 18 years in Indonesia after her work offer turned out to have been part of an elaborate drugs con.
Teen Dying Of Cancer Killed At Charity Event After Ride In Porsche Goes Wrong
The family of a sick boy who was offered a trip in a high-performance Porsche because he was dying of cancer is suing the charity after the Porsche he was travelling in crashed head-on into oncoming traffic.
The most popular stories –
last 7 days
|Viennese Jihad Girl May Have Been Killed|
|Schoolboys Wear Dresses To Support Transgender Classmate|
|Pat On The Back From Manure Explosive|
|Killer Cheese Stolen In Liechtenstein|
|God Gets An Indian ID Card With Bribe|
Why suffer in silence. Let off steam by letting our readers share your troubles. File your complaints about anything and everything here.
Our ombudsman David Rogers will try and help solve some of the problems from lazy civil servants through to incompetent companies – and at the very least the worst transgressors will end up in our weekly special report.