German industry leaders don’t usually publicly criticize financial decisions other countries make.
But Nikolaus von Bomhard, chairman of the management board of the world’s largest reinsurer, Munich Re, has made an exception.
Mr. von Bomhard, angered by Austria’s handling of the “bad bank” Heta Asset Resolution, wrote a letter to shareholders of which Handelsblatt has received an exclusive copy.
After Greece negotiated a debt haircut with its creditors, at great political cost, the Austrian state of Carinthia is threatened by “an erosion of public debt morality,” Mr. von Bomhard wrote.
“If this approach catches on, politicians from much less solvent regions will find their citizens asking them why they should continue to service their debts,” Mr. von Bomhard wrote.
Hypo Alpe Aldria, a small state-backed bank from the Austrian state of Carinthia, was the biggest victim in Austria of the financial crisis in 2008 and earlier this year, its debts were bundled into Heta Asset Resolution.
Carinthia has said it is unable to cover the €8 billion that the bank owes its creditors which include €5.5 billion to banks in Germany. The Austrian government has refused to help.