VIENNA, Oct 1 (Reuters) - The Austrian province of Salzburg said on Wednesday it had clawed back 6.2 million euros ($7.8 million) from a bank in the first such deal as it tries to recover money lost in a shadowy web of exotic trades by its former budget director.
Salzburg faces a total hit of about 350 million euros from the scandal which blew up in 2012, brought down the local government and exposed lax supervision of opaque provincial finances in Austria.
The government sacked budget director Monika Rathgeber in 2012 and accused her of covertly borrowing 1.8 billion euros over a decade to run a shadow financial portfolio. She has denied the charges, saying her bosses knew all about the deals.
Salzburg is going after about 20 banks that were counterparties, and has now settled with one unidentified bank whose trades it said cost it 18 million euros.
"I am glad we were able to reach this settlement because it sends a signal for talks and negotiations with the other institutions," provincial finance head Christian Stoeckl said in a statement.
"Intense preparatory work is required, so I expect this to take an enormous amount of time, but we won't let go and will try to rescue what we can for the province."
High-risk holdings in the Salzburg portfolio included 531 million euros in foreign-currency debt denominated in Turkish lira, Russian roubles, Brazilian reais and Indonesian rupiah; 837,000 euros in Greek state bonds, and a host of complex structured financial products.
More than half of the securities were linked to other currencies or had payoffs that depended on moves in yields on different maturities of debt. Many were highly structured private placements so complicated that outside experts had to value them via computer models rather than actual market prices.
$1 = 0.7938 euro Reporting by Michael Shields; Editing by Crispian Balmer