EU clears Austria's Hypo Alpe bank break-up plan

(BRUSSELS) - The European Commission on Tuesday approved plans to break-up and close scandal-hit Austrian bank, Hypo Alpe Adria, which was nationalised at huge cost at the height of the global financial crisis.

The Commission said that the Austrian government's plan was compatible with EU state aid rules and accordingly it cleared funding already provided and the further financing that might be required as the bank is broken up.

Austrian authorities have pumped about 4.5 billion euros into Hypo Alpe to prevent its collapse and last month they asked Brussels to give them another two years to 2015 to complete the process.

Hypo Alpe was rescued in 2009 after allegations of fraud, embezzlement, money laundering and false accounting compounded funding problems posed by the global financial crisis.

Under the plan, still viable operations -- mainly in Austria and southeastern Europe -- will be sold off and the remainder progressively closed down.

EU Competition Commissioner Joaquin Almunia said approval "closes this chapter once and for all ... and minimises the cost for taxpayers, who have already paid a high price."