Austrian ‘bad bank’ set to cash in on Greek bonds in buyback

Austrian state-owned «bad bank» KA Finanz stands to make a book profit by selling Greek state debt it had marked down sharply, Chief Executive Alois Steinbichler said on Tuesday.

KA Finanz holds Greek debt with a nominal value of 200 million euros ($261.4 million) on its books at 30 million, so could make a gain by selling the bonds on the secondary market or taking up an offer by Athens to buy back the debt, he said.

“It is open whether we do the one or the other,» Steinbichler told Reuters.

Greece said on Monday it would spend 10 billion euros to buy back bonds in a price range that topped market expectations, boosting hopes it can cut its ballooning debt and unlock long-delayed aid.

KA Finanz, split off after Austria nationalised troubled lender Kommunalkredit during the financial crisis in 2008, got more than 1 billion euros in state aid in April in a fresh bailout prompted by writedowns on its Greek debt and exposure to credit derivatives.

The Austrian government has said it thought additional state aid may be needed for nationalised banks Hypo Alpe Adria and KA Finanz in 2013.

Austria will run bigger public deficits than hoped this year and in 2013 as the economy performs less well than expected and aid for struggling banks eats into its finances.


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