Commission threatens to close Hypo if operations are not sold?

The preliminary decision on the eventual establishment of a ‘bad’ bank for the troubled Hypo Alpe Adria Bank does not necessarily have to be made by the end of May, stated today the governor of the Austrian central bank, and the media reported that the Indian group Srei is interested in acquiring the Austrian branch.

By the end of the month, Austria must make a decision on the deadlines but not on the method of restructuring, Ewald Nowotny said today on the sidelines of a press conference. -We have little time left for that- he added.

The European Commission is primarily interested in whether state aid to the bank affects fair market competition. Therefore, they fundamentally insist that the bank no longer enters into new deals; they are not interested in solutions for old obligations, explains the Austrian governor.

-I hope that we will still find a solution that will respect the demands of the European Commission- he added.

Austria has one more week to provide Brussels with an acceptable restructuring plan for the Carinthian bank. The Commission has threatened to close Hypo if its operational parts are not sold by the end of this year. According to Vienna’s plans, the ‘toxic’ assets and parts that do not find a buyer should be taken over by the ‘bad’ bank.

The Vienna daily Die Presse reported yesterday, without citing the source of the information, that the Indian group Srei is interested in purchasing the parent Austrian branch of Hypo, which allegedly offers 65.5 million euros for its acquisition, ‘even after the poor quarterly results of the bank were internally published’.

Specific figures have not been published, but potential buyers have been given access to them, writes Die Presse, noting only that the ‘bank is miles away from a pre-tax profit of 16 million euros in the corresponding period last year’.

A member of the Srei Infrastructure Finance Ltd. group is engaged in financing infrastructure projects, and its leader Hemant Kanoria on May 7, in response to a Reuters inquiry to comment on the relevant media reports, denied interest in Hypo’s Austrian subsidiary.

Die Presse also wrote yesterday in an article published before today’s edition of the entire paper that Kanoria personally traveled to Austria to negotiate the acquisition of the Austrian branch and plans a new visit for ‘the end of May, beginning of June’.

-As soon as the Srei group officially informs the Financial Market Authority (FMA) about the planned purchase and submits a business plan, nothing will stand in the way of signing the agreement- writes Die Presse.

The Indians allegedly want to obtain a European concession for conducting banking operations through Hypo and thus expand their business in Europe.

The management and supervisory board of Hypo have not yet made a decision on the sale, said the bank’s spokesman in response to a query from the Austrian news agency APA.