Vienna (AFP) - Standard & Poor's has cut the credit ratings of three major Austrian banks in response to new legislation winding up the deeply troubled and nationalised lender Hypo Alde Adria.
The ratings were cut by one notch for Erste Group, Raiffeisen Zentralbank and UniCredit of Italy's local unit Bank Austria, S&P said late on Wednesday. The outlook for the ratings is negative.
In July parliament passed a law forcing holders of 890 million euros ($1.2 billion) worth of Hypo Alde Adria bonds to take a hit in order to help finance a winding up of the bank, which has already needed billions of euros in state aid.
This so-called "bail-in" was despite the debt being guaranteed by Hypo Alde Adria's home state of Carinthia, raising concerns that Austria was setting a dangerous precedent.
S&P said that the legislation indicates "that the authorities' stance toward supporting systemically important banks is wavering" and that government support for a "systemically important bank is now less predictable".
Hypo Alpe Adria, formerly owned by Germany's Bayerische Landesbank, had to rescued by the Austrian state in 2009 after allegations of fraud, embezzlement, money laundering and false accounting and being hit hard by the global financial crisis.