The wheels are coming off the Austrian banking cart. On Monday morning Austria's red-eyed conservative Finance Minister Josef Pröll was happy to present a solution for ailing Carinthian Hypo Alpe Adria Bank AG whose main shareholder has been German Bayerische Landesbank. According to his statements - Austria will take over 100% ownership of the bank that had helped the late right-wing governor of Carinthia, Jörg Haider, to finance his populist measures in Austria's most indebted province.
The complete deal has a volume of €4.5 billion, counting all equity and liquidity injections. While the finance minister was keen to point out that the damage for Austrian taxpayers may be less than the €1,800 per capita figure splashed on tabloid papers this morning, it cannot be yet said how big the damage will actually be. According to Pröll the former owners Bayerische Landesbank, Carinthia and Austrian Insurer Grazer Wechselseitige will inject altogether €1.5 billion in equity together with the Austrian government. Bayern LB took the biggest hit in negotiations that also involved telephone conversations with ECB President Jean-Claude Trichet and promised to prop up the bank with €825 million equity and more than €3 billion in liquidity.
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