* Cabinet clears ministry to sue BayernLB
* Finance minister sees slim chance of quick settlement
(Adds comments from news conference)
VIENNA, Dec 16 (Reuters) – Austria’s government gave the
finance ministry approval on Tuesday to sue German bank BayernLB
for compensation over the 2009 nationalisation of
lender Hypo Alpe Adria, setting the stage for another legal
battle with Bavaria.
At stake is who pays for an expensive clean-up at Hypo, a
former BayernLB unit that hit the wall after a decade of
unbridled expansion at home and in the Balkans.
Barring legal extensions, Austria will lose the right to sue
over the issue at the end of December.
Austria alleges BayernLB misled it about the true state of
Hypo, which is now being wound down at huge expense to Austrian
taxpayers, pushing up state debt and the 2014 budget deficit at
a time when the economy is flagging.
Finance Minister Hans Joerg Schelling has said he intends to
file the suit by year-end unless negotiations with BayernLB bear
fruit, a prospect he saw as slim.
“At the moment… it does not appear that we will come to a
result in the short term,” he told reporters before a cabinet
meeting that cleared him to pursue legal action.
BayernLB lost a lawsuit in Vienna on Monday against one of
Hypo’s former owners. It had alleged it was duped into buying
the bank in 2007, a deal that has cost German taxpayers more
than 3.7 billion euros ($4.64 billion).
State-controlled BayernLB is trying to recoup 2.4 billion
euros in loans to Hypo that Austria sees as equity. It is also
challenging a law Austria passed this year that forces BayernLB
to contribute 800 million euros to Hypo’s wind-down costs.
Austria has since turned Hypo into a “bad bank” that aims to
wind down its remaining assets over time. It is trying to sell
Hypo’s Balkans network in a deal that it reopened last month.
Schelling gave no details on the Balkans sale, for which
financial sources said binding offers were due on Wednesday.
Hypo had agreed in principle to sell the asset to private
equity group Advent International and the European Bank for
Reconstruction and Development before changing course.
Reopening the sale allowed a group of Bulgarian investors,
backed by Russian financial group VTB, and Russian
investor Igor Kim’s Expobank back into the hunt.
The European Commission has set a deadline of mid-2015 for
signing a sale of the Balkan network, last valued at 89 million
euros.
($1 = 0.7973 euros)
(Additional reporting by Shadia Nasralla and Angelika Gruber;
editing by John Stonestreet)