By Christian Gutlederer and Peter Maushagen

VIENNA/MUNICH, Dec 14 (Reuters) – Austria nationalised Hypo Group Alpe Adria on Monday to avoid a collapse that could have undermined trust in banks in eastern Europe and cast doubt over Austria’s and Germany’s backing of state-owned lenders.

Austria is taking full control of the ailing bank after a high-stakes gamble over the weekend that soured German-Austrian relations and required interventions by the presidents of the European Central Bank and the Bundesbank to be resolved.

German state bank BayernLB, Austrian insurer Grawe and the Austrian region of Carinthia are to give away their stakes for a nominal amount, while injecting around 1 billion euros ($1.5 billion) of capital, Finance Minister Josef Proell said.

Austria will inject up to 450 million euros itself and will have to clean up Hypo’s books on its own, facing further losses in the process, but authorities said the damage from an insolvency would have been much bigger.

“The risk situation of this bank has created an enormous threat to Austria in the past days,” Proell said on Monday after a weekend of crisis talks that ended only shortly before Hypo branches were due to open on Monday.