Court orders Heta to pay €2.3bn to BayernLB

A German court has ordered Heta, the "bad bank" set up to deal with the stricken Austrian lender Hypo Alpe Adria, to pay BayernLB about €2.3bn, giving the German lender a boost in a long-running dispute.

The decision in a Munich court on Friday by judge Gesa Lutz requires Heta to make payments of €1.03bn and SFr1.29bn plus interest to BayernLB, which has been trying to recoup €2.4bn from Hypo, the Carinthia-based bank which it had previously owned.

Heta said that it would appeal against the decision, adding that it felt that key parts of its arguments had been inadequately appreciated.

"We see today's decision . . . as merely an intermediate step on the way to a final legal clarification," chairman Sebastian Prinz von Schoenaich-Carolath said in a statement.

"Heta does not see any reason to change its legal position. It is now up to the higher regional court in Munich to thoroughly consider all the arguments made according to Austrian law."

The Austrian finance ministry had no immediate response to the ruling. BayernLB did not immediately respond to requests for comment.

BayernLB bought a majority stake in Hypo in 2007, before ceding control of the Austrian bank when it had to be nationalised during the financial crisis after a rapid expansion into the Balkans ended in failure.

Since late 2012, BayernLB and its Austrian counterparts have become embroiled in a dispute over €2.4bn which the German lender provided to Hypo. BayernLB says this was a loan. Heta had claimed it should be counted as equity.

In March, the Austrian government ordered a 15-month moratorium on principal and interest payments for about €10bn bonds issued by Heta, after an audit of its balance sheet revealed a capital hole of up to €7.6bn, far more than previously feared.

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