VIENNA, March 21 (Reuters) - Austria’s state-owned Hypo NOE Group Bank will post a 2014 loss after writing down debt owed by “bad bank” Heta, making it the latest lender hit by regulators’ decision to suspend repayments on Heta debt.
Austria’s Financial Market Authority (FMA) took control of Heta Asset Resolution this month and imposed a debt moratorium until May 2016 after an outside audit exposed a capital hole of up to 7.6 billion euros ($8.2 billion) that the government was not prepared to fill.
The moratorium gives the FMA time to come up with a plan — which may include losses for debtholders or other measures up to insolvency — for equal treatment of creditors at Heta, set up last year to wind down assets of defunct lender Hypo Alpe Adria.
The move has triggered cross-border fallout, especially in Germany, where Duesseldorfer Hypothekenbank AG had to be rescued. Germany has said it expects the problems at DuesselHyp to remain an isolated case.
Hypo NOE, a mortgage lender owned by the province of Lower Austria, said it would write down its 225 million euros of Heta debt holdings by a quarter, or nearly 60 million. It will give more details when it reports results next month.
The bank earned 53.7 million euros in 2013.
“This step is not pleasant for the bank, but can well be managed,” finance chief Nikolai de Arnoldi said in a statement late on Friday, stressing its capital ratios would remain well above regulatory minimums and its liquidity was strong.
Regional mortgage lenders — most but not all owned by Austria’s provinces — also face a hit from a mutual liability pact for 1.2 billion euros in Heta debt it will not repay for now to the Pfandbriefstelle, a joint borrowing vehicle.
The regional mortgage lenders have said they will respect the pact.
$1 = 0.9242 euros Reporting by Michael Shields; Editing by Mark Potter