VIENNA, Aug 1 (Reuters) - Austria may take another shot at selling Kommunalkredit after last year's failure to reprivatise the public-sector finance specialist which was nationalised in 2008.
Kommunalkredit's sale was due to close by mid-2013 but offers Vienna got last year proved unacceptably low in a tough market for selling bank assets, forcing Vienna to miss a deadline set by EU regulators in Brussels.
That meant the European Commission had the right to appoint a trustee to sell the bank, but Austria asked Brussels not to take that step and in return Kommunalkredit stopped making any new loans.
Now Austria is considering selling a smaller version of the lender, a source close to the matter said.
"We have to see if the process works but the fact that the first one was stopped is no reason not to do it if there may be more value," the person said.
"We see a significant improvement in the market generally but we are at the beginning of this exercise if there is one," he said, adding, "We are grooming the horse to put it on the race track and see how it performs."
Klaus Liebscher, head of the government agency that oversees state stakes in banks, declined to comment on what he called "rumours". Kommunalkredit also had no comment.
A report by Format magazine said two Austrian groups were eyeing the bank, which made a 2013 profit of 5.1 million euros ($6.8 million) and has forecast annual profits of 7-8 million should markets remain stable.
The magazine said a group led by Lower Austrian state bank Hypo NOe and including businessman Hans Peter Haselsteiner and former Chancellor Alfred Gusenbauer was in the hunt. Investors Michael Tojner and Wilhelm Hemetsberger had also teamed up, it said, without citing any sources.
Hypo Noe and Tojner were not immediately available while Hemetsberger declined to commment.
$1 = 0.7463 euros Reporting by Michael Shields; Editing by Greg Mahlich