November 3, 2015 / 11:47 AM / 2 years ago

Austria to close agency overseeing state aid to banks

VIENNA, Nov 3 (Reuters) - Austria will next year close the agency it set up in 2008 during the financial crisis to oversee state aid granted to troubled lenders, the finance ministry said on Tuesday.

The cabinet agreed a proposal by Finance Minister Hans Joerg Schelling to close FIMBAG as of mid-2016, his ministry said. FIMBAG had largely completed its tasks and its leaders agreed to a move that would save money and spare red tape, it added.

“Closing FIMBAG is further evidence of the successful reduction of legacy burdens from the banking crisis,” Schelling said.

FIMBAG owns capital that the state injected into Heta Asset Resolution, the vehicle winding down the remnants of Hypo Alpe Adria, a Carinthian lender nationalised in 2009 when it ran aground after a decade of breakneck expansion.

FIMBAG also holds capital in two other “bad banks”: Volksbanken AG remnant Immigon and KA Finanz, , the rump of Kommunalkredit.

Completed sales of Hypo Alpe Adria’s Balkan network and parts of Kommunalkredit’s business mean that the biggest challenges left are winding down Heta and Hypo’s former Italian unit, the ministry said.

FIMBAG’s role will be divided between the ministry and the ABBAG vehicle set up last year to hold stakes in Heta and the Italian bank. (Reporting by Michael Shields; Editing by Greg Mahlich)

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