Austria parliament starts investigation into Hypo bank collapse


VIENNA Jan 14 (Reuters) – Austria’s parliament launched an
investigation on Wednesday into defunct lender Hypo Alpe Adria,
seeking to assign blame for the country’s worst postwar
financial scandal that has soured ties with Bavaria.

Making use of new powers for opposition parties to demand
such probes, parliament is due to call several high-profile
figures to testify on Hypo’s spectacular rise, near-collapse and
role in increasing state debt and the budget deficit.

“This shouldn’t be a tribunal, but rather a seamless and
ruthless exposure of political responsibility,” said
Heinz-Christian Strache of the opposition far-right Freedom
Party.

The opposition Neos party has named 200 people it wants to
question, including top current and former government officials
in Austria and the German state of Bavaria, banking supervisors
and central bankers Ewald Nowotny and Jean-Claude Trichet.

Hypo has cost Austrian taxpayers 5.5 billion euros ($6.46
billion), with billions more to come as a rump “bad bank” winds
down assets left after it sold its Balkans and domestic units.

The probe may be especially sensitive for the conservative
People’s Party, whose finance ministers were in charge when Hypo
was nationalised and while Austria let Hypo’s problems fester.

The government, a coalition between the Social Democrats and
the People’s Party, decided only last year to wind Hypo down
rather than let it go bust, an option opposition parties favour.

Hearings could start as early as next month.

Austria nationalised Hypo in 2009, buying it from German
lender BayernLB to avoid a collapse that would have sent shock
waves through the region a year after Lehman Brothers went bust.

An independent panel of experts said last month Austria
bungled its handling of Hypo and let BayernLB off the
hook too easily.

Austrian officials have insisted they had no choice but to
take over Hypo. Otherwise, they say, around 20 billion euros in
state debt guarantees would have suddenly come due if BayernLB
followed through on threats to let Hypo go under.

The panel rejected that argument, which comes amid a welter
of suits and countersuits over the case.
($1 = 0.8516 euros)

(Reporting by Michael Shields; editing by Keith Weir)

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