Austria, famous for its rivers and mountain scenery, is likely to also go down in history as the country setting precedents in EU banking regulation. Financial difficulties at its Hypo Alpe Adria bank, which came to light during the global financial crisis, required financial assistance from the Austrian government and taxpayers. But with the EU’s adoption of a single rulebook for the resolution of large banks and investment firms through the Bank Recovery and Resolution Directive (BRRD), the ramifications of the difficulties now make the remnant of the bank a blueprint for resolution and restructurings.
Hypo Alpe Adria, headquartered in Austria’s most southerly province of Carinthia and formerly majority owned by Germany’s BayernLB, was nationalised in December 2009 when faced with high non-performing exposures, especially in its central and eastern European (CEE) subsidiaries and low capitalisation.