Austria probes near-demise of Hypo Alpe Adria

AP News
Posted: Dec 15, 2009 8:20 AM

Austria's justice ministry says an investigation has been launched to clarify the circumstances surrounding the near demise of troubled financial institution Hypo Alpe Adria.

Austria on Monday nationalized Hypo Alpe Adria, a unit of German public-sector bank BayernLB, to prevent it from sliding into a bankruptcy fueled in part by bad loans _ most of them in Eastern Europe.

The ministry says prosecutors in the southern city of Klagenfurt are probing whether those responsible for the bank committed breach of trust and fraud. The statement Tuesday did not provide any names and stressed the presumption of innocence.

The ministry also said that a special commission of experts is being set up in the Federal Criminal Police Office to assist Klagenfurt prosecutors.