Bail-Ins at “Bad Bank” Unconstitutional Says Austrian Court
By: GoldCore
GoldSeek.com
Wednesday, 29 July 2015
– Austrian decision to renege on guarantees made to junior bondholders overturned
– Court does not overrule bail-ins per se
– Bail-in legislation still in place across Europe
– EU deadline to implement bail-in legislation by end of this month
– Depositors – savers and capital of SMEs exposed to bail-ins
An attempt by Austria to bail-in junior bondholders at the Heta “bad bank” has been overturned by the highest court in the country.
Last year Austria passed legislation which annulled guarantees previously given by the state of Carinthia to bondholders of Heta, effectively writing off €890 million.
Heta was set up to manage the assets of failed lender Hypo Alpe-Adria-Bank. Carinthia state had guaranteed around €10 billion of Heta debt – a figure which dwarfed its own revenue more than four fold, which eventually forced the Federal government to cover the guarantee.
The ruling does not outlaw “bail-ins” per se. It simply ensures that guarantees given to bondholders cannot be retrospectively revoked.
The Austrian government has ploughed €5.5 billion of taxpayers’ money into Heta. When auditors found a €7.6 billion hole in its balance sheet in March the government said it would not pay “one single euro” more to the bad bank which is to be wound down.
The Rest…HERE
