Austrian budget can handle extra Greek hit: Fekter.
Austria’s budget can absorb an extra hit of up to 400 million euros from credit default swaps (CDS) that Greece’s debt restructuring triggered at a nationalised bank, Finance Minister Maria Fekter told a newspaper.
She was also quoted on Sunday by the Oesterreich paper as saying Austria would not have to revisit a near-28 billion euro ($36.73 billion) package of spending curbs and tax hikes that aims to balance the budget by 2016.
KA Finanz, the “bad bank” split off after Austria had to nationalise Kommunalkredit in 2008, faces up to 424 million euros in costs for a CDS portfolio triggered by the Greek debt revamp.
Combined with other losses, that could require the Austrian state to provide it with up to 1 billion euros in fresh aid, although it has already made provisions for 600 million of this.
“I guarantee that even a worst-case topping up (of funds) for Kommunalkredit can be accommodated in the budget,” Fekter said.
“We have taken precautions for these looming problems, for instance via additional income from advance taxation of pensions.”
She was referring to the government’s plan to let owners of some private pensions pay reduced tax rates on them in advance so they would be largely free from income tax on the pensions in retirement.
The scheme could raise 900 million euros this year, the finance ministry says. Critics say the estimate is too high.
Credit rating agencies are keeping an eye on the support Austria may have to provide its relatively large banking sector.
Austria has agreed to take a stake of up to 49 percent in ailing lender Volksbanken in a second bailout for that bank which will cost the state more than 1 billion euros in writedowns, fresh capital and guarantees.
Hypo Alpe Adria, which the state took over in 2009, might also need more help if it is unable to get rid of risky assets.
Central bank governor Ewald Nowotny denied at the weekend a newspaper report that Hypo Alpe Adria could need 10 billion euros in additional state support.
Officials would determine by mid-year whether and how much additional aid Hypo might need, he said in a radio interview.
“You can’t rule out it will need more help, but (it would be) in a completely smaller order of magnitude,” he said.