A Billion Here, A Billion There …
We always wondered a bit why the Austrian government was so eager to adopt the EU’s bail-in law (a.k.a. the Bank Recovery and Resolution Directive) one year earlier than demanded by the EU Commission. What was the rush? Well, now we know. Last year, the decision to wind down the former Hypo Alpe Adria (HAA) ‘in an orderly manner’ helped push Austria’s government debt above 87% of GDP – a level perilously close to what has so far in many cases proved to be the point of no return.
This decision was not exactly unanimously welcomed in Austria, but the government found itself between a rock and a hard place. Credit rating agencies are busy downgrading banks across euro-land, as government support assumptions are revised in light of the EU’s bail-in directive. Austria’s banks however have come under special scrutiny. This has of course absolutely nothing to do with the country’s government sometimes appearing to be sympathetic to evil Uncle Vlad in Moscow (it signed the South Stream agreement and occasionally one of its representatives will bemoan the utter uselessness of the sanctions regime). Honni soit qui mal y pense!
This post was published at Acting-Man on March 3, 2015.