LONDON, Feb 12 (Reuters) - Support from other Austrian provinces for Carinthia’s offer to buy back debt of “bad bank” Heta will boost acceptances for its proposed deal by around 15 percent, the federal finance ministry said on Friday.
Finance Minister Hans-Joerg Schelling “welcomes the unanimous decision earlier this week by all Austrian provinces and their finance secretaries to support Carinthia’’s offer to buy 10.8 billion euros ($12.2 billion) of Heta Asset Resolution bonds at a discount and expects this decision to translate into additional acceptances of nearly 15 percent”, a statement said.
It did not give a breakdown of the 15 percent figure, but some Austrian provinces still own mortgage lenders that, together with covered-loan issuer Pfandbriefbank, control 1.2 billion euros in Heta bonds.
Carinthia, the southern province home to more than 500,000 people, aims to avert insolvency by buying back state-guaranteed bonds for 75 percent of their nominal value with the help of federal loans.
It guaranteed the debt of local lender Hypo Alpe Adria before the bank collapsed. Heta Asset Resolution was formed to wind it down but regulators froze Heta’s debt repayments after discovering a gaping capital hole at the bad bank.
The offer runs until March 11 but is opposed by many creditors who want full repayment. ($1 = 0.8864 euros) (Reporting by Kirsti Knolle and Michael Shields; editing by Susan Thomas)