September 7, 2017 / 11:18 AM / a year ago

Austria's increased debt issues to cover costs linked to "bad banks"

VIENNA, Sept 7 (Reuters) - An increase in the amount of debt Austria plans to take on this year is needed to cover the financing costs of one “bad bank” and fund part of a settlement with another’s creditors, the head of the Federal Financing Agency (OBFA) said on Thursday.

KA Finanz, which was split off from nationalised lender Kommunalkredit, lost its banking license on Wednesday as part of its wind-down, meaning it could no longer turn to the market for funding.

OBFA said on Thursday it was raising its funding outlook for 2017.

OBFA chief Markus Stix said 7 billion euros ($8.4 billion) would be needed to provide financing for KA Finanz, and another billion euros would go towards the cost of buying back specially issued bonds given to creditors of another “bad bank”, Heta Asset Resolution, as part of a settlement. ($1 = 0.8347 euros) (Reporting by Francois Murphy; Editing by Shadia Nasralla)

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