Hypo Alpe Adria Bank

Heta Asset Resolution A.G. is a "bad bank" that was the residual asset of the original Hypo Alpe-Adria-Bank International A.G., which was dismantled in 2014. It was owned by the Government of Austria.

Heta Asset Resolution
Formerly
Hypo Alpe-Adria-Bank International
state-owned enterprise
IndustryFinancial services
Successor
  • Addiko Bank (Balkan branches)
  • Austrian Anadi Bank (Austrian branches)
Founded1896
2014 (spin off)
Defunct2014 
Headquarters1 Alpen-Adria-Platz,
Klagenfurt
,
Austria
Servicesformer bank under resolution
€06.714 billion (2016)
Total assets €10.788 billion (2016)
Total equity €00997 million (2016)
OwnerAustria (100%)
Number of employees
6,576 (31 December 2012) 
Subsidiaries
  • Alpe Adria Privatbank (in liquidation)
Websiteheta-asset-resolution.com
Footnotes / references
in a consolidated financial statement[1]

The bad bank contained the leasing subsidiary of former Hypo Alpe-Adria-Bank Group in Austria, Italy, Bulgaria, Serbia, Montenegro and North Macedonia[2] but not in Bosnia and Herzegovina, Croatia and Slovenia, which were transferred to the "good bank".[3]

In the past Hypo Alpe-Adria-Bank International was also active in Austria, Germany, Italy, Bulgaria, Hungary and Ukraine.[4] However, due to the European debt crisis, the group was split into HBI-Bundesholding AG (consisting of the subsidiary Hypo Alpe-Adria-Bank S.p.A.; Italy), the Balkan banks (Hypo Group Alpe Adria AG; now Addiko Bank) and a bad bank, Heta Asset Resolution AG (ex-Hypo Alpe-Adria-Bank International AG) in 2014. The leasing subsidiaries of the former Hypo Alpe-Adria-Bank International in Italy, Bulgaria, Serbia, Montenegro and North Macedonia were retained in the bad bank.[5] The Austrian branches were sold in 2013 (now Austrian Anadi Bank).

History

Birth and rise of cross-border banking

The bank was founded in 1896 as a Landes-und Hypothekenbank (state Hypothekenbank). In the 1990s it explosively expanded into the Alps-to-Adriatic region. In 2004 the company was renamed Hypo Alpe-Adria-Bank International A.G., as a holding company for the "Hypo Alpe-Adria-Bank" subsidiaries.[5]

In May 2007 BayernLB, the Bavaria-state-owned bank, bought 50% plus one share (controlling stake) of Hypo Alpe-Adria-Bank International for €1.63 billion.[6]

European debt crisis and the demerger of the group

On 14 December 2009, BayernLB, Kärntner Landesholding (Carinthia state holding) and Grazer Wechselseitige Versicherung sold their stakes in the bank to the Austrian government for €1 each.[7] The bank was nationalised by the Austrian government to avert a bank collapse.[8] It was expected that between €13 billion and €19 billion of outstanding loans will never be paid back; to avoid bankruptcy, the Austrian taxpayers will have to cover this loss.[9]

The headquarters, which accounts for around 500 employees, was located in Klagenfurt, Austria and was responsible for controlling the subsidiary banks in Austria, Italy and South-Eastern Europe as well as those markets from which the bank was withdrawing (wind-down markets).[10]

In 2013 the domestic branches of the bank in Austria were sold to Anadi Financial Holdings, and renamed to Austrian Anadi Bank.[11]

As of February 2014, the Hypo Alpe-Adria-Bank International situation was unsolved,[12] causing Chancellor Werner Faymann to warn that its failure would be comparable to the 1931 Creditanstalt event.[13]

Under Resolution

In March 2014, the Austrian government decided to split Hypo Alpe-Adria-Bank International into a Balkans banking unit (Hypo Group Alpe Adria A.G.; formerly: Hypo SEE Holding A.G.), an Italian business (HBI-Bundesholding A.G.) and a bad bank, Heta Asset Resolution. The Balkans unit was sold in December 2014 to Advent International (80%) and the European Bank for Reconstruction and Development (20%).[14]

The original company Hypo Alpe-Adria-Bank International was renamed as Heta Asset Resolution, becoming a "bad bank" that did not have a banking license. It was intended to wind down the bad bank over a period of years.[15] The European Union had forbidden member states to provide state aid to make the market less compatible, thus the 2013 plan was redesigned in order to comply with EU law.[16] The General Court also ruled that the guarantee granted by Austria to BayernLB in 2009 during the nationalization was a state aid but nevertheless compatible with EU law.[17][18]

In October 2014 Italian Guardia di Finanza started an investigation on the leasing department of the Italian subsidiary. The department was remained in the "bad bank" as Heta Asset Resolution Italia S.r.l..[19]

On 1 March 2015 the Financial Market Authority Austria (German: Finanzmarktaufsicht Österreich) imposed a moratorium on debt and interest payments by Heta Asset Resolution on unguaranteed debt. It was due to Austrian Federal Act on the Recovery and Resolution of Banks (BaSAG German: Bundesgesetz zur Sanierung und Abwicklung von Banken) was came to effect, an Austrian transpose of EU Bank Recovery and Resolution Directive (BRRD). An audit also found that Heta had a capital shortfall of up to €7.6 billion.[20] The Financial Market Authority would draw a new resolution plan for the bad bank in order to be in line with EU law. Financial Market Authority was the "national resolution authority" of this mechanism.

On 8 May 2015 The Munich I Regional Court obligated HETA to pay BayernLB €1.03 billion and CHF 1.29 billion plus interest. On 7 July 2015 Austria and Bavaria signed a memorandum of understanding which confirmed BayernLB was the one of the non-subordinated, unsecured creditors for €2.4 billion. Austria would pay Bavaria €1.23 billion in advance for HETA. Despite it may be reimbursed due to ongoing court proceeding.[21] Previously Austria, BayernLB and Bavaria sued each other for the responsibility of the debt, which BayernLB was a shareholder of the bank.[22][23]

Dexia announced in February 2016 they would suffer another loss due to the moratorium.[24]

In 2016 the state government of Carinthia, the provider of the state guarantee, offered a debt hair-cut to buy the senior bonds for 75% face value and 30% face value for subordinated bonds.[24] On 4 August 2016, a private equity fund advised by Bain Capital purchased Heta Asset Resolution Italia S.r.l. (former Hypo Alpe-Adria Leasing S.r.l.) from Heta.[25] During the year, Financial Market Authority also made a debt hair cut using the power as a resolution authority of EU Bank Recovery and Resolution Directive, making the bad bank had a positive equity for the first time.

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References
  1. "2016 Annual Report" (PDF). Heta Asset Resolution. 20 April 2017. Retrieved 8 May 2017.
  2. "2015 Annual Financial Report" (PDF). Heta Asset Resolution. 29 April 2016. Retrieved 1 May 2016.
  3. "2014 Konzern-Geschäftsbericht" [2014 Annual Report] (PDF) (in German). Hypo Group Alpe Adria. 28 May 2015. Archived from the original (PDF) on 2 March 2016. Retrieved 21 February 2016.
  4. "Group Structure: Material Subsidiaries as of 31.12.2012". Hypo-alpe-adria.com. May 5, 2013. Archived from the original on May 2, 2013.
  5. "2014 Annual Financial Report" (PDF). Heta Asset Resolution. 26 June 2015. Retrieved 21 February 2016.
  6. "BayernLB übernimmt Hypo Alpe Adria". Handelsblatt (in German). May 22, 2007.
  7. (in German) "BayernLB kauft sich von Hypo Group Alpe Adria frei", Handelsblatt (in German), December 14, 2009
  8. "Austria nationalises ailing Hypo". Reuters.
  9. "Die Hypo und die Rechenkünstler". Die Presse (in German). 2014-02-14.
  10. "Austria nationalises ailing Hypo -FinMin". Reuters. 2009-12-14. Retrieved 2014-01-04.
  11. "Kanoria buys Hypo's domestic banking arm". Financial Times. 31 May 2013. Retrieved 21 February 2016.
  12. "Hypo Alpe Debt Cut Four Steps as a kind of Insolvency Not Ruled Out". Bloomberg. 15 February 2014.
  13. "Faymann Evokes 1931 Austria Creditanstalt Crash on Hypo Alpe". Bloomberg. 17 February 2014.
  14. "Advent International and EBRD enter agreement to acquire Hypo Group Alpe Adria AG (Southeast Europe banking network)" (Press release). Advent International. 23 December 2014. Retrieved 21 February 2016.
  15. Michael Shields (2014-12-23). "Austria sells Hypo Balkans network to private equity firm Advent". Reuters.
  16. "State aid: Commission approves plan to orderly wind down Hypo Group Alpe Adria". European Commission. 3 September 2013. Retrieved 24 April 2016.
  17. case number: SA.28487
  18. "The General Court confirms that the guarantee granted by Austria to BayernLB in the context of its restructuring concerning BayernLB's credit lines in favour of Hypo Group Alpe Adria constitutes State aid which is nevertheless compatible with EU law" (PDF). General Court of the European Union. 28 January 2016. Retrieved 24 April 2016.
  19. "Hypo-Alpe-Adria Bank, software truccati per lucrare sull'Euribor: la Finanza scopre truffa da 88 milioni" (in Italian). Il sole 24 ore. 25 October 2014. Retrieved 22 February 2016.
  20. "Austria imposes debt moratorium on Heta "bad bank"". Reuters. 2015-03-01.
  21. "Information for Creditors and Investors" (PDF). Heta Asset Resolution. 6 November 2015.
  22. Weber, Webb & Comfort, "A" (7 July 2015). "Austria to Pay Bavaria 1.2 Billion Euros in Heta Deal". Bloomberg Business. Retrieved 10 July 2015.CS1 maint: multiple names: authors list (link)
  23. "Implementation of the Memorandum of Understanding of 7 July 2015" (PDF). Heta Asset Resolution. 21 September 2015. Retrieved 8 March 2016.
  24. "Dexia Group Consolidated Results 2015" (PDF). Dexia. 19 February 2016. Retrieved 22 February 2016.
  25. "Sale of affiliate Heta Asset Resolution Italia S.r.l. and publication of new investor information" (PDF). Heta Asset Resolution. 4 August 2016. Retrieved 19 August 2016.
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