Austrian banks won't support Hypo Alpe Adria 'bad bank': finance minister

VIENNA (Reuters) - Commercial banks will not support a "bad bank" to absorb toxic assets from ailing nationalised lender Hypo Alpe Adria, Austrian Finance Minister Michael Spindelegger said on Monday.

"It became clear that this bank involvement and privatisation model de facto is not possible," he told reporters after a meeting on whether the government could get through its preferred option for handling the lender. The state would now review other options, including a state-run bad bank, and had not ruled out an insolvency, he said.

Austrian central bank Governor Ewald Nowotny said that a state-run bad bank for Hypo should not increase Austrian debt spreads. He renewed his opposition to letting Hypo go bust.

(Reporting by Michael Shields; writing by Arno Schuetze; Editing by Anthony Barker)