Bank collapse in Austria brings debt in Eastern Europe center stage
In the links yesterday, I pointed to an FT article detailing the Austrian government’s nationalization of the insolvent bank Hypo Group Alpe Adria (HGAA). The financial institution, which has 40 billion Euros in assets, is the country’s sixth largest bank. But, in relative terms, this is a very large bankruptcy – using GDP at purchasing power parity, an American HGAA would have assets of $2.5 trillion, larger than any of the American banks. So, this is a very big deal and it points to renewed risks in banking and the possibility of contagion.
HGAA is considered a subsidiary of the troubled German state-controlled bank of Bavaria BayernLB.
