Opinion of the European Central Bank of 29 July 2014 on reorganisation and winding-up measures regarding Hypo Group Alpe Adria (CON/2014/61)
Date: 2014-07-29
Institutions: European Central Bank
Subjects: Austria, bank, banking supervision, financial stability, liquidation, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 29 July 2014 

on reorganisation and winding-up measures regarding Hypo Group Alpe Adria 

(CON/2014/61) 

Introduction and legal basis 

On  11  June  2014  the  European  Central  Bank  (ECB)  received  a  request  from  the  Austrian  Ministry  of 

Finance for an opinion on a draft law on reorganisation and winding-up measures regarding Hypo Group 
Alpe Adria, including the establishment of a run-off unit1 (hereinafter the ‘draft law’). 

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 

Functioning  of 
indent  of  Article  2(1)  of  Council 
Decision 98/415/EC2,  as  the  draft  law  relates  to  the  rules  applicable  to  financial  institutions  insofar  as 

the  European  Union  and  on 

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they  materially  influence the  stability  of financial institutions  and  markets.  In  accordance  with the first 

sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council 

has adopted this opinion. 

1. 

Purpose of the draft law 

1.1  Under  the  draft  law3,  Hypo  Alpe-Adria-Bank  International  AG  (HBInt)  can  be  turned  into  a 

deregulated run-off unit that does not have to comply with own funds and liquidity rules for credit 

institutions.  The  unit  can  be  established  once  HBInt’s  banking  licence  lapses,  which  will  occur 

when the Financial Market Authority (FMA) issues a notice confirming that HBInt has ceased its 

deposit-taking  business  and  no  longer  has  any  qualifying  holdings  in  other  credit  institutions  or 

investment firms. The purpose of the run-off unit is to wind down HBInt’s remaining portfolio and 

to realise its assets. HBInt is obliged to establish a run-off plan to this effect, and may only conduct 

business transactions that serve this purpose. Such transactions include banking activities, with the 

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Federal  Law  adopting  the  Federal  Law  establishing  a  divestment  unit  (GSA),  the  Federal  Law  incorporating  a  federal 
divestment holding company for HYPO ALPE-ADRIA-BANK S.P.A. (HBI Federal Holding Law), the Federal Law in-
corporating a federal divestment (public limited) company (ABBAG Law) and the Federal Law on the reorganisation of 
HYPO ALPE ADRIA BANK INTERNATIONAL AG (HaaSanG) and amending the  Law on financial market stability 
and the Law on the Financial Market Supervisory Authority. 
Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national authorities 
regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 
Federal Law establishing a divestment unit (GSA). 

 
 
 
 
                                                 
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exception of deposit-taking business. Nevertheless, only certain provisions of the Law on banking4 

apply to the run-off unit, including the requirement that its managing directors and the members of 

the supervisory board are fit and proper persons to hold such positions, and provisions relating to 

internal audits, the prevention of money laundering and accounting. The draft law also enables the 

Minister for Finance (MoF) to transfer assets and liabilities of HBInt to third party institutions and 

authorises the MoF to establish a run-off holding company to take over and administer the shares in 
the run-off unit5. 

1.2  The  draft  law6  authorises  the  MoF  to  establish  a  separate  holding  company  (HBI-Bundesholding 

AG) to take over all of HBInt’s shares in its Italian subsidiary, Hypo Alpe-Adria-Bank S.P.A. 

1.3  The draft law7 also enables the cancellation and deferral of liabilities and contains other measures 

regarding HBInt that aim to facilitate the run-off of the bank. The draft law provides that certain 
subordinated8  and  shareholder  liabilities  are  extinguished  on  publication  of  a  regulation  to  that 

effect by the FMA. At the same time, most guarantees and collateral for such liabilities terminate 

by  operation of law,  with the  exception of certain  disputed liabilities. The  due  date  in respect  of 

such disputed liabilities is deferred until the making of a final court order in respect of the liability 

in question. The draft law also disapplies creditors’ contractual or statutory rights to terminate their 

relationship  with  a  reorganised  entity,  seek  the  alteration  of  terms,  or  enforce  security  as  a 
consequence of the reorganisation and winding-up measures9. The draft law appoints the FMA as 

the  competent  authority  to  implement  the  reorganisation  and  winding-up  measures.  The 

explanatory  memorandum  accompanying  the  draft  law  explains  that  statutory  measures  ensuring 

that the losses arising from the reorganisation and winding-up are borne by lower ranking creditors 

and  former  shareholders  with  a  close  relationship  to  HBInt  are  justified  in  order  to  achieve  the 

Government’s aims of achieving an orderly run-off of the bank and preserving financial stability. 

1.4  The draft law also enables the MoF to provide measures pursuant to the Law on financial market 
stability10  in  respect  of  the  run-off  unit  and  to  raise  the  maximum  amount  of  costs  of 

recapitalisation measures permitted thereunder from  EUR 15 to EUR 22 billion. These funds are 

financed from the general budget without direct recourse to bank levies. 

2. 

General observations 

2.1  The ECB notes that the draft law was adopted by the National Council on 8 July 2014, and reminds 

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Federal Banking Law No 532/1993, as amended. 
Federal Law incorporating a federal divestment (public limited) company (ABBAG Law).  
Federal Law incorporating a federal divestment holding company for HYPO ALPE-ADRIA-BANK S.P.A. (HBI Federal 
Holding Law).  
Federal Law on the reorganisation of HYPO ALPE ADRIA BANK INTERNATIONAL AG (HaaSanG).  
A list of the relevant subordinated liabilities is listed in Annex 1 to the HaaSanG. 
See Article 5 of the HaaSanG. 
Federal Law amending the Law on financial market stability.  

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the  consulting  authority  that  Article  4  of  Decision  98/415/EC  requires  that  the  ECB  must  be 

consulted  ‘at  an  appropriate  stage’  in  the  legislative  process.  This  implies  that  the  consultation 

should take place at a point in the legislative process that gives the ECB sufficient time to examine 

the draft legislative provisions and adopt its opinion. The ECB requests that, in future, the Austrian 

authorities comply with their obligation to consult the ECB at an appropriate stage. 

2.2  The ECB understands that the MoF’s right to transfer assets and liabilities of HBInt to third parties 

aims at safeguarding the deregulated status of Hypo Group Alpe Adria in the event that it cannot be 

turned into a run-off unit because HBInt is still conducting deposit-taking business or maintaining 

qualifying holdings in other credit institutions or investment firms. 

2.3  The  ECB  also  understands  that the MoF’s  right  to  dispose  of  the  shares in  the Italian  subsidiary 

Hypo Alpe-Adria-Bank S.P.A. will create a legal basis for the shares in this subsidiary to be sold 

without hindering the run-off. 

3. 

Specific observations 

3.1  Conduct of banking and leasing activities by the run-off unit 

Once HBInt has been turned into a run-off unit, the run-off unit may continue to conduct banking 

and leasing activities if such activities either directly or indirectly serve the purpose of the run-off. 

In  this  context  the  ECB  is  concerned  that  the  run-off  unit  will  be  partly  deregulated  but  remain 

entitled  to  conduct  banking  activities.  The  condition  that  such  business  ‘directly  or  indirectly’ 

serves the purpose of the run-off is loosely worded and therefore open to broad interpretation. This 

appears  inappropriate in  view  of  the  need for thorough  and  consistent  regulation  of  the financial 

sector. Therefore, the draft law should define more precisely the conditions to be met in order for 

the deregulated run-off unit to carry on banking and leasing activities. 

3.2  Relationship with Directive 2001/24/EC 

Article  6  of  the  draft  law  states  that  the  Federal  Law  on  the  reorganisation  of  Hypo  Alpe  Adria 
Bank  International  AG  serves  the  purpose  of  transposing  Directive  2001/24/EC11.  The  ECB 

understands that the sole purpose of this provision is to establish that measures provided for in the 

draft law are reorganisation measures within the meaning of Article 2 of that Directive. 

3.3  Relationship with Directive 2014/59/EU 

Directive 2014/59/EU12 entered into force on 2 July 2014. The ECB notes that the draft law is not 

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Directive 2001/24/EC of the European Parliament and of the Council of 4 April 2001 on the reorganisation and winding 
up of credit institutions (OJ L 125, 5.5.2001, p. 15). 
Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the 
recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Di-
rectives  2001/24/EC,  2002/47/EC,  2004/25/EC,  2005/56/EC,  2007/36/EC,  2011/35/EU,  2012/30/EU  and  2013/36/EU, 
and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council (OJ L 173, 
12.6.2014, p. 190). 

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intended to implement the resolution framework or any  of the specific resolution tools under that 

Directive, but establishes a special wind-down regime purely in respect of Hypo Group Alpe Adria. 

3.4  Relationship with the Single Resolution Fund 

The  ECB  notes  that  Article  3(4)  of  the  Agreement  on  the  transfer  and  mutualisation  of 

contributions to the Single Resolution Fund provides that any amount disbursed by the resolution 

financing arrangement of a Contracting Party prior to the date of application of the Agreement in 

respect  of  resolution  actions  within  its  territory  shall  be  deducted  from  those  contributions  to  be 

transferred by that Contracting Party to the Single Resolution Fund. The ECB understands that the 

draft law does not intend to transpose  Directive 2014/59/EU or parts of it, and that the measures 

envisaged for the reorganisation and winding-up of Hypo Group Alpe Adria will not be financed 

from the national resolution fund to be established under Directive 2014/59/EU. It should therefore 

be ensured that any amounts disbursed for the purpose of reorganising and winding up Hypo Group 

Alpe Adria are not deducted from Austria’s contributions to the Single Resolution Fund under the 

abovementioned Agreement. 

This opinion will be published on the ECB’s website. 

Done at Frankfurt am Main, 29 July 2014. 

[signed] 

The President of the ECB 

Mario DRAGHI 

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