Coppola Comment

At Forbes, I have posted the latest episode in the long-running saga of the failure of Hypo Alpe Adria: The story of the  failed Austrian bank  Hypo Alpe Adria (HAA), and its transformation into the world’s worst “bad bank” – the  insolvent HETA  – resembles a Hollywood blockbuster. Complete with a cast of thousands, colorful principal characters, an extraordinary range of special (legal) effects and a reach far beyond its national borders, the HETA saga is long, staggeringly expensive, mind-numbingly complex and at times unintentionally hilarious. HETA’s liabilities are mostly guaranteed by the government of the province of Carinthia. Under its flamboyant far-right governor Joerg Haider, Carinthia provided deficiency guarantees for over 11bn EUR of bonds and subordinated debt issued by HAA. These would be triggered when HETA is wound up, forcing HETA’s losses on to Carinthia and – by extension – on to the Austrian sovereign. But Carinthia’s current government – ...

Two posts that centre on the troubled Austrian bank Hypo Alpe Adria. For a small bank in a small country, it is causing an AWFUL lot of trouble. Firstly, the ongoing saga of HAA's Balkan network, which the Austrian government is attempting to sell. As the bidding enters its final stages, it becomes apparent that the eventual owner will be determined more by politics than money: The present tension between the EU and Russia creates a difficult dilemma for the Austrian authorities. On the one hand, they should get the best deal for Austrian taxpayers, which would imply that they should accept the higher bid even though it involves a sanctioned Russian bank. On the other hand, allowing a sanctioned Russian bank to buy financial companies in the Balkans would seem contrary to the spirit if not the letter of EU sanctions.... Despite my earlier warning , a consortium backed by a sanctioned Russian bank is still in the running to buy HAA's Balkan network. Read about it h...

Austrian banks have developed extensive lending networks in Central and Eastern Europe since the fall of the Iron Curtain. Most of them face deteriorating loan books and falling profits due to difficult economic conditions in Central and Eastern Europe, exacerbated by the Ukraine crisis. But none is more exposed than Raffeisenbank.... Read about Raffeisenbank's Eastern European woes here . There's an update on Erste Bank's Hungarian problem, too.

My latest at Forbes looks at the implications of Moody's downgrade of Oesterreichische Volksbanken AG: The Austrian government’s  recent decision  to overturn the guarantee provided by the State of Carinthia to holders of Hype Alpe Adria’s subordinated debt has come back to haunt it. Citing reduced government support, inadequate capital and poor performance, the ratings agency Moody's  has downgraded  Oesterreichische Volksbanken AG (VBAG) and its senior debt to Ba3 with a negative outlook.  This downgrade follows on from Moody’s  recent announcement  that the Austrian government’s decision with regard to HAA would be “credit negative” for the Austrian banking system and possibly also for the sovereign....  But this downgrade has much wider implications. Read the whole article here . (photo credit: Financial Times)

Especially when it is disguised. My latest post at Forbes takes a jaundiced look at who is in the race to acquire Hypo Alpe Adria's network of Balkan banks. I'm not usually much of a conspiracy theorist, but this is the Balkans, after all - the far-fetched is mundane in that part of the world. There is something very shady going on, and I reckon the Russians are behind it. Read about it here . Oh, and in case the Balkans look like a black hole to you, here's a map (courtesy of Wikipedia).

  There’s a nice little storm brewing in the Eurozone core.  Reuters reports   that the German province of Bavaria is considering legal action against Austria. And it is seeking support for its action not only from the German federal government, but also from the EU. The background to this is the failure and nationalization of the Austrian bank   Hypo Alpe Adria   (HAA) in December 2009. HAA was bought by the Austrian state from the Bavaria-based Landesbank BayernLB for a nominal 1 euro. But it seems that BayernLB left behind about 2.3bn euros in subordinated debt. And the Austrian government wants to bail this in as part of the winding-up procedure for HAA..... Read on here . UPDATE: Klaus Kastner, who knows much more about this than I do, has posted a really illuminating comment on the Forbes post about the background to HAA and BayernLB's relationship. And David Keohane has reminded me about this FT Alphaville post on the subject from December 2013. ...