E.U. Mulls Legality Of BAWAG Bailout

Law360, New York (November 17, 2006, 12:00 AM EST) -- BAWAG PSK’s bailout by the Austrian government may run into trouble soon, after the European Commission said it would decide next week whether Austria’s financial help constituted illegal state aid.

BAWAG is the fifth-largest bank in Austria. After a string of scandals hit the bank both in Europe and abroad, BAWAG fell into disarray—customers, fearing that BAWAG would soon be insolvent, began withdrawing their savings, further destabilizing the bank.

The government came to the rescue, offering up to €900 million in bad credit, contingent liabilities and...
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