Austria's Hypo bank to stop repayments to BayernLB

13th December 2012, Comments 0 comments

Scandal-plagued Austrian bank Hypo Alpe Adria (HGAA) announced Thursday it will stop paying back any credits received from its former parent company, Germany's BayernLB bank, prompting the latter to take the matter to court.

Some 2.3 billion euros ($3.0 billion) were injected into Hypo between 2008 and its nationalisation in late 2009 after its near-collapse.

On Thursday however, the bank ruled that the money received from BayernLB amounted to so-called shareholder loans, which should be considered as bank capital and need not be paid back.

Any money already paid to BayernLB -- including repayments on the loans and interest -- should be returned, it added.

The German bank immediately filed a complaint with a court in Munich, slamming Hypo's decision in a statement as "incomprehensible" and questioning the move three years after the Austrian bank changed ownership.

"To defend its legal position, Bayern LB has filed a claim with the regional court in Munich so that Hypo's obligation to provide interest and repayment under the existing financial agreements can be established without delay," BayernLB said in a statement.

Hypo, which has a strong presence in the Balkans, said last month it might need more than two billion euros ($2.5 billion) in state aid this year and next.

The troubled bank, which has been implicated in bribery cases involving former Croatian premier Ivo Sanader and former Austrian far-right leader Joerg Haider, is also being probed by Austrian authorities for alleged conspiracy, fraud, embezzlement, money laundering and false accounting.

© 2012 AFP

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