Austria: Hypo Group Becomes Fiasco for Taxpayers

Caput Lupinum · Feb 11, 2014

The most expensive solution for the winding up of troubled Hypo Group becomes imminent.

Yesterday, after months of the government's reassurance to search for the least straining solution for the Austrian budget it became evident that the total costs for the Hypo Group desaster will have to be paid by the taxpayers. The major Austrian banks have refused to take part in a joint financing of a bad bank for the nationalized problem bank.

After a summit with bankers and statisticians on Monday it became clear that the bank participation model was rejected and the hope of both Finance Minister Michael Spindelegger and Hypo Group's taskforce to cushion state debts was shattered. Now, the most expensive solution will become imment which leads to taxpayers being burdened with at least 19bn, which is the the estimated amount of outstanding assets. Expert forecast state debts to surge to 80 percent once all liabilities and risks are forwarded to the national bad bank.

The tax package targeted for the coming four years is supposed to generate 5.5bn. However,the income had to be three times as much in the same period to outweigh the costs for Hypo Group.

After a summit in the Federal Chancellery, Finance Minister Spindelegger gave an update: "One has to face the truth," he said. The consequences for the taxpayers can not be estimated yet. According to him, the institutional model was worked on swiftly. However a new time frame could not be announced for the time being.

The reason why the bank participation model was rejected was technical concerns by Eurostat, the statistical office of the European Union, and the banks, which, in return have demanded the abandoning of the bank levy. According to announcements, a due diligence review by bankers would have taken too long.
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https://www.friedlnews.com/article/austria-hypo-group-becomes-fiasco-for-taxpayers

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Austria: Hypo Group Becomes Fiasco for Taxpayers

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