HGAA stops ship leasing

Struggling Hypo Group Alpe Adria (HGAA) withdraws from nautical leasing operations in Southeast Europe.

The bank – which is currently trying to restore its finances after being nationalised in 2009 – said around 320 leased HGAA vessels were currently operating, down from 700 in 2008. International consulting company PriceWaterhouseCoopers claimed in 2009 that 400 HGAA ships had been stolen. A spokesman for the Klagenfurt-based bank dismissed the report yesterday (Sun). He said there had been just eight such cases.

HGAA said it decided to withdraw from ship leasing businesses step by step since the activity was not part of its core business. The bank sold real estate across Southeast Europe in the past months to get back in the black. It also sold Schlosshotel Velden – which is located at Carinthia’s Lake Wörthersee – to Amisola Immobillien AG, a real estate firm owned by Austrian billionaire Karl Wlaschek.

HGAA admitted yesterday it had to ask 30 business partners in the past 12 months to return leased yachts after they failed to pay the rates. Fifteen of them have been sold in the meantime, the bank said. HGAA explained it wanted to sell the other 15 yachts at fairs shortly. The envisaged deals are part of the finance institute’s bid to completely pull out from nautical leasing activities by 2015.

Experts are at odds over whether the government of Social Democrats (SPÖ) and People’s Party (ÖVP) was right in nationalising HGAA. Some analysts claim it would have been more reasonable to opt for controlled bankruptcy procedures than taking over the ailing bank in December 2009. Josef Pröll promised the Republic of Austria’s business crime investigators would ensure every possibly embezzled Eurocent would be paid back by those in charge of the near collapse of HGAA. Pröll was ÖVP chairman, vice chancellor and finance minister when the bank was nationalised. He resigned from the functions in April 2011.

Several Carinthian lawmakers hit out at the coalition for nationalising HGAA, claiming that it exaggerated when speaking out about the bank’s bad condition. The provincial government of the Carinthian Freedom Party (FPK) and ÖVP came under fire for assuming liabilities of 20 billion Euros for HGAA – more than the overall annual budget of the economically challenged province. Business papers and magazines claimed late Carinthian Alliance for the Future of Austria (BZÖ) Governor Jörg Haider considered HGAA as his “personal toy and marketing vehicle” to finance various disputed tourism projects such as a lakeside event stage and a football stadium.

ÖVP Finance Minister Maria Fekter said last week Austria’s expenses for HGAA were higher than the credits and guarantees it provided to debt-stricken European Union (EU) and Eurozone member Greece. The government has poured around 1.5 billion Euros into HGAA since taking over the bank. SPÖ and ÖVP were widely criticised for allegedly failing to get former HGAA owner Bayerische Landesbank (BayernLB) to provide more funds in stabilising the Klagenfurt-based financial institute after its demise was averted.

Ex-SPÖ Finance Minister Hannes Androsch caused a stir earlier this month by claiming that the rescue of HGAA could cost another four to seven billion Euros. The influential industrialist is the vice head of the supervisory board of FIMBAG, the state’s financial market participation company focusing on troubled banks. Androsch told the Kronen Zeitung newspaper that the government coalition reacted quickly in avoiding a “meltdown” at HGAA, Kommunalkredit and Volksbank AG (ÖVAG). Referring to HGAA, he criticised that “three years without consolidation” have passed ever since.

HGAA and Kommunalkredit are the only Austrian banks which have been taken over by the state since 2008 when a global credit and bank crisis kicked off. ÖVAG needed around 1.2 billion Euros from the state. It has not yet paid back any of the so-called participation capital.

Androsch warned that the high investments into struggling banks were a threat to Austria’s solid position on the markets. “We are already under observation,” he said. The ex-SPÖ vice chancellor warned Austria may lose its AAA rating, the highest estimation issued by rating agencies. The former finance minister also called on the current SPÖ-ÖVP administration to introduce a so-called debt brake to reduce public spending if debts reach a certain level. “It also works out in Switzerland and Germany,” he said.

Fekter branded Androsch’s claims as “nonsense”. The finance minister said it was not true that the public funding of HGAA posed a threat to the country’s AAA rating. However, the minister admitted: “What I do worry about is that the bank (HGAA) is currently owned by the taxpayer. We must find a partner as soon as possible to take this burden off the taxpayer because the state is not the best banker.”

Fekter said she hoped HGAA would break even or achieve a profit by the end of 2011.
Bank Austria (BA) – which is part of Italy’s biggest bank, UniCredit – was reportedly interested in acquiring HGAA’s Austrian branch. The department is currently up for sale. HGAA Austria has around 60,000 customers.

HGAA achieved a profit of 71.6 million Euros in the first six months of this year. HGAA CEO Gottwald Kranebitter said this was a “milestone in minimising the damage done in the past.” Kranebitter said in June he wanted to get the bank back in the black in 2012. The financial institute’s executive board head previously admitted that it was not certain whether all of the provided participation capital would be paid back with interest.

HGAA plans to keep operating in Southeast Europe where it is one of the biggest banks. Properties, participations in companies and its Austrian branch are set to be sold in the coming years to get the bank in shape for the planned privatisation.

The near collapse of HGAA – which came after years of strong expansion activities – is seen as one of the biggest business crimes in Austrian history by some commentators and columnists because of the possible entanglement of high-profile bankers and politicians. Dozens of businessmen and lawmakers could face charges for fraud, abuse of office and embezzlement. However, the pressure on investigators is increasing due to the small number of trials that took place since HGAA was nationalised and the full scale of possibly illicit operations that almost closed the bank down emerged.