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FMA authorises interim distribution of € 5.8 billion to HETA creditors

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The Austrian Financial Market Authority (FMA) in its capacity as the national resolution authority for banks today authorised the application made by HETA ASSET RESOLUTION AG (HETA), to already distribute around € 5.8 billion of disposal proceeds to maturity to creditors holding eligible non-subordinated liabilities. By the end of July 2017, slightly more than two thirds of the total distribution amount shall be distributed to these creditors, their claims having previously been subjected to a haircut to 64.4% by way of an FMA administrative decision. In the case of claims that are still being contested, the amount in question will be transferred to a separate account, and shall only be released for repayment once the contentious legal issue has been settled in favour of the creditor.

 

“The FMA’s resolution of HETA is on schedule, and is currently running better than had originally been expected,” remarked the FMA’s Executive Board, Helmut Ettl and Klaus Kumpfmüller: “We are carrying out pioneering work, and are showing what the European resolution regime is capable of delivering.” Within only two years, € 5.0 billion out of the € 7.1 billion in assets available in March 2015 (excluding cash holdings) have already been disposed of by sale. The cash reserve as the basis for the sum of money made available for distribution to the eligible creditors, increased during this time from € 2.5 billion to € 8.5 billion. The FMA Executive Board also remarked that since a large proportion of the assets has already been disposed of by means of sale, and the resolution focus is now shifting towards resolving outstanding legal disputes as well as the liquidation of companies, the organisational structure of HETA will now be adjusted accordingly, with its Management Board becoming smaller, and the process of reduction of the number of employees being expedited.

 

Grounds for optimism

“The new resolution framework that has been made available by the FMA ensures legal clarity and financial flexibility, under which it has already been possible to date to realise around € 2.5 billion higher proceeds from resolution than had originally been forecast by the opinions delivered by independent external auditors”, remarked the FMA Executive Board: “Based on the preliminary results of the transactions that are already nearing completion we are optimistic that once the resolution process is complete that the amount of the repayment to be ultimately distributed to creditors will be able to be further increased from the current distribution rate of 64.4%.”

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