Austria to pay 1 bln euro in bank bailout

A Greek insolvency would cost Austria around 1 billion euros (1.3 billion dollars) in bailout money for Kommunalkredit, one of its banks most exposed to Greek debt, dpa quoted Finance Minister Maria Fekter as saying Saturday. Her comments followed a decision by US rating agency Moody's to revise its evaluation of Greek sovereign debt to default status. There is a possibility that Greece might become insolvent and Austria would have to make good on its loan guarantees, the minister told radio Oe1. 'Then this bank would suddenly need a lot of money,' she said. Kommunalkredit, which specializes in the financing of infrastructure projects, was nationalized in 2008 following the global financial crisis, with its risky assets split off into a separate entity. As of the middle of 2011, both units had 1.2 billion euros of outstanding Greek debt on their books, mostly in the form of government bonds and credit default swaps. Earlier this week, Fekter announced that the government would spend more than 1 billion euros to partly nationalize Oesterreichische Volksbanken, the third Austrian financial institution to be nationalized since 2008.