Financial Regulatory Forum

Austrian watchdog orders Hypo to boost capital

November 19, 2009

hypo   VIENNA, Nov 19 (Reuters) – Austrian financial watchdog FMA has told German state bank BayernLB’s [BAYLB.UL] Hypo Group Alpe Adria unit that it must approve a capital injection at a Dec. 10 emergency shareholder meeting, FMA officials said late on Wednesday.
   Hypo, which owns major banks across the former Yugoslavia, last week said it expected bad debt charges to rise significantly after auditors PwC went through the group’s assets and found significant impairments that would lead to a net loss of “significantly more than 1 billion euros” ($1.50 billion). [ID:nLA640367]
   It said that it would summon an emergency general meeting (EGM) on or about Dec. 10, and would lead talks with shareholders about a capital injection. A first round of talks was held in Munich on Monday.
   The FMA, which is monitoring Hypo’s situation closely, has therefore ordered Hypo’s management to boost its capital to make sure the bank does not drop below legal capital requirements, the officials told journalists in a briefing.
   “We have ordered the management board to report back to us how they plan to replenish their capital,” one official said, speaking on condition of anonymity. “They must approve a capital increase at their EGM.”
   Hypo declined to comment beyond what it said in last week’s statement.
   BayernLB owns 67 percent of Hypo. Austrian insurer Grawe holds 20.5 percent via its Bank Burgenland, while the state of Carinthia, the former majority owner until it sold to BayernLB, still holds 12.4 percent.
   BayernLB has said it is ready and able to inject further capital. Grawe has so far declined to say whether it would participate in a capital injection.
   Carinthia has said it can not afford participating and has asked the Austrian government to inject additional capital. The federal government already injected 900 million euros of non-voting participation capital last year.
 ($1=.6680 Euro) (Reporting by Boris Groendahl; editing by Simon Jessop) ((boris.groendahl@reuters.com; +43 1 53112-258; Reuters Messaging: boris.groendahl.reuters.com@reuters.net))
 Keywords: BAYERNLB/HYPO
  
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 Thursday, 19 November 2009 11:26:37RTRS [nLJ56455] {EN}ENDS

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