• Germany's news in English
 
app_header_v3

Nationalisation of Austria's HGAA costs Bavaria €3.75 billion

AFP/DDP/The Local · 14 Dec 2009, 13:52

Published: 14 Dec 2009 12:04 GMT+01:00
Updated: 14 Dec 2009 13:52 GMT+01:00

Austrian Finance Minister Josef Pröll said the move was necessary to save the country’s sixth largest bank from bankruptcy.

"The risk situation of this bank has created an enormous threat for the Republic of Austria, Austria as a financial centre and the entire economic area in the past days and weeks," said Pröll.

The announcement came after a deal was reached for HGAA's owners – Bavaria's BayernLB bank, Austrian mutual insurer Grazer Wechselseitige and the province of Carinthia – to contribute over a €1 billion ($1.46 billion) to the troubled bank.

Participants at the Vienna rescue talks had been in a race against the clock as they sought a solution before the bank opened again on Monday morning.

A spokesman for the Bavarian Finance Ministry told public broadcaster Bayerischer Rundfunk the Austrian bank had cost the southern German state, which owns BayernLB, a total of €3.75 billion. Besides BayernLB selling its HGAA stake to the Austrian government for a symbolic €1, the hefty sum includes several injections of capital and writing off some outstanding debts owed the Bavarians.

“BayernLB’s contribution to the restructuring was necessary,” said Bavarian Finance Minister Georg Fahrenschon. “Together with the Republic of Austria and other shareholders we’ve managed to stabilise a strategically important bank for Austria and southeastern Europe.”

Before the nationalisation, HGAA was 67.08-percent owned by BayernLB, Grazer Wechselseitige held a stake of 20.48 percent, Carinthia 12.42 percent and HGAA employees 0.02 percent.

The German bank acquired the majority stake of 50 percent plus one share in

Story continues below…

HGAA for €1.63 billion in 2007 and has subsequently raised its shareholding via capital increases. The decision to part with its stake as a "painful step," said BayernLB boss Michael Kammer.

Last month, the Austrian group announced that massive risk provisions would wipe out the capital injections it received from the Austrian state and shareholders over the past 12 months.

AFP/DDP/The Local (news@thelocal.de)

Your comments about this article

10:12 December 15, 2009 by mixxim
Do the bankers keep their inflated salaries as in the UK?
15:32 December 16, 2009 by iivana
what goes around comes around, this german bank flew away from croatian bank when they thought it will go bankrupt...and then they bought the real thing :)Austrian HYPO AA , i allways thought this geramn bank has bad approach to risks. because too concerned about it
Today's headlines
I’m ashamed of Germany’s refugee failure: Green leader
Cem Özdemir. Photo: DPA

The head of the Green Party has responded angrily to Angela Merkel’s speech on refugees on Friday, saying he feels “ashamed at Germany’s failure".

German satirists mock Erdogan (and his penis)
Photo: DPA

Tempting fate?

Huge pro-Erdogan rally puts strain on Turkish community
Erdogan supporters at a rally in 2014. Photo: DPA

Tens of thousands of supporters of Turkish President Recep Tayyip Erdogan plan to rally in Cologne on Sunday, as tensions over Turkey's failed coup have put German authorities on edge.

Opinion
How the Berlin startup scene is wasting its potential
Photo: DPA

"The truth is, there really isn't a truly successful international Berlin startup."

Five years' jail for German darknet weapons dealer
Photo: DPA

He had sold weapons to known Isis-sympathizers and far-right extremists.

Prickly Bavarian calls out cops on hedgehogs' noisy sex
Photo: DPA

Caught in the act.

International or German state school - which one's best?
Photo: DPA

Deciding between sending your child to a German state school or a private international school isn't easy. Max Bringmann has experienced both.

13 mortifying mistakes German learners always make

Sure-fire ways to get off on the wrong foot in the German language.

Captain Schweinsteiger retires from international football
Bastian Schweinsteiger. Photo: DPA

He has won a World Cup with Die Mannschaft and captained them at Euro 2016. On Friday Bastian Schweinsteiger announced his retirement from the national team.

Woman accused of false rape allegation at Cologne NYE
Cologne on New Year's Eve. Photo: DPA

According to latest reports, the woman was not even in Cologne on New Year's Eve.

Sponsored Article
Why you should attend an international job fair
Travel
Enter if you dare: Berlin's best abandoned haunts
DPA
Gallery
IN PICTURES: How Munich responded to shooting spree
Lifestyle
10 rookie errors all Brits make when they arrive in Germany
Sponsored Article
Why Swiss hospitality graduates are in demand
National
Bavaria train attack: Were police right to shoot to kill?
Sponsored Article
Five things Americans should know about voting abroad
National
How to get German citizenship (or just stay forever)
Technology
Brexit will turn Berlin into 'Europe’s startup capital'
Travel
Six soothing day trips to escape the bustle of Berlin
International
'Germany needs to make UK come to its senses'
Sponsored Article
Why expats choose international health insurance
Features
Six odd things Germans do in the summer
Travel
These 10 little-known German towns are a must see
Sponsored Article
Health insurance for expats in Germany: a quick guide
Features
How two gay dads cut through German red tape to start a family
National
Five things to know about guns in Germany
Culture
10 things you need to know before attending a German wedding
National
Eight weird habits you'll pick up living in Germany
Sponsored Article
Why Swiss hospitality graduates are in demand
Lifestyle
Six reasons 'super-cool' Berlin isn't all it's cracked up to be
Society
Only one country likes getting naked on the beach more than Germany
Sponsored Article
Why you should attend an international job fair
Lifestyle
23 ridiculously fascinating things you never knew about Berlin
Culture
8 German words that perfectly sum up your 20s
Lifestyle
Can't make it past the door at Berlin's most famous club? Help is at hand
Business & Money
Why Frankfurt could steal London's crown as Europe's finance capital
Features
6 surprising things I learned about Germany while editing The Local
10,786
jobs available
Toytown Germany
Germany's English-speaking crowd