HYPO BANK: There are interested parties, but we still have long way to go for sale

Nationalized Austrian lender Hypo Alpe Adria will not make profits this year or next as it tries to shrink its way back to financial health in a tough economic environment, Chief Executive Gottwald Kranebitter told a newspaper.

He also told WirtschaftsBlatt in an interview printed on Monday that divesting its southeastern Europe network remained a tough task while the sale of its Austrian banking business depended on finding suitable buyers, Reuters reported.

Austria took control of Hypo from Germany's BayernLB in 2009 to avoid a collapse that could have shaken the entire central and eastern Europe region, but Hypo and other banks in full or part state ownership remain a drag on public finances.

Under regulators' orders, Hypo sold hybrid debt and is getting another 500 million euro ($646 million) cash injection for the state to shore up its balance sheet by 1.5 billion euros by year's end.

Kranebitter told the newspaper that 2013 would be "a very difficult year" for Hypo, whose goal was to keep its portfolio of bad loans steady despite worsening economic headwinds.

Hypo aims to break even at the operational level this year and next, but he added: "It is illusory to expect profits from us."

The deadline for expressions of interest in Hypo's southeastern Europe bank network expired last week. "There are interested parties but we will have a long way to go for a sale," Kranebitter said.

As for the planned sale of its Austrian bank business, he said: "The chances are good that we get into the home straight in 2013. It is less a matter of price as of whether there are buyers who are placed to buy a bank."