(Reuters) – Austria has taken a major step in winding down its failed lender Hypo Alpe Adria by closing the sale of its Balkan network to U.S. private equity firm Advent and the European Bank for Reconstruction and Development (EBRD).
Advent and EBRD agreed to pay up to 200 million euros ($218 million), depending on 2014 and 2015 earnings.
A payment of 50 million euros has been made already, Austria’s finance ministry said on Friday.
However, state guarantees for the network’s portfolio worth 2.2 billion euros remain in place, according to Advent.
Hypo Alpe Adria was nationalised by Austria in 2009 in a bailout costing 5.5 billion euros after it became apparent that a headlong expansion into Balkan and other frontier markets had been over-ambitious.
The European competition watchdog only approved the bailout on the condition that the businesses in Slovenia, Croatia, Serbia, Bosnia-Herzegovina and Montenegro were sold by the end of 2015.
The new owners of the Balkan unit, which will continue to operate under the name Hypo Group Alpe Adria, plan to expand the retail customer business and the lending business for small and medium sized entities, newly appointed Chief Executive Ulrich Kissing said.
The remains of the former Hypo Alpe Adria are to be wound down by its “bad bank” Heta.