Hypo Alpe Won’t Pay Austria Even after First Net in Years

http://www.businessweek.com/news/2012-03-13/hypo-alpe-won-t-pay-austria-dividend-after-returning-to-profit

Hypo Alpe-Adria-Bank International AG, a nationalized Austrian lender, won’t pay a dividend to the state even after posting its first annual profit in four years.

Net income was 69.3 million euros ($91.3 million) in 2011 under international financial reporting standards after a 1.1 billion-euro loss the year before, the Klagenfurt, Austria-based bank said today in a statement on its website. Hypo won’t pay a dividend because it still posted a full-year loss of 164.7 million euros, according to Austrian accounting standards.

Austria took over Hypo Alpe in 2009 after bad debts, mostly linked to real estate in the former Yugoslavia, soared and former owners, including Bayerische Landesbank (BLGZ), withdrew their support. Chief Executive Officer Gottwald Kranebitter has split off the bank’s “sound” units in preparation for a sale in the first half of this year.

“Clear proof of Hypo Alpe Adria’s viability, minimizing Austrian-state support and preparation for a re-privatization are in the best interest of our owners and the focus of our work,” Kranebitter, 47 said in a statement. Preparations to sell Austrian and Italian bank units are “well under way,” he said.

That leaves a “wind-down unit” comprising about 10 billion euros of assets that are non-performing or can’t be sold at a profit.

Bank Restructuring

Hypo Alpe received 1.35 billion euros in state capital in 2009 and 2010, as well as a 200 million-euro guarantee. The government, which this year also had to partially nationalize Oesterreichische Volksbanken AG (VBPS), already wrote 700 million euros off the aid for Hypo Alpe.

Kranebitter’s restructuring plan still requires approval by the European Commission, which is reviewing whether Austria’s takeover and capital injections complied with European Union state aid rules.

Hypo Alpe’s biggest unit consists of banks in Croatia, Serbia, Montenegro, Slovenia and Bosnia and Herzegovina. In this region, Hypo Alpe has said it is the third-biggest lender by assets after Italy’s UniCredit SpA (UCG) and Slovenia’s Nova Ljubljanska Banka DD.

The bank’s bad debt charge fell to 229.8 million euros from 1.2 billion euros a year earlier, when Hypo Alpe reviewed its loan book. The lender had 9.3 billion euros in non-performing loans in December compared with 9 billion euros the year before.