Austria’s Hypo Alpe-Adria has
replaced its entire leasing management in Slovenia amid mounting
speculation of financial irregularities within the

The sudden replacement last
week has been followed by confirmation by local police authorities
of an ongoing investigation in the lender’s Slovenian banking and
leasing units.

Slovenian police spokesman
Drago Menegalija said that currently no procedures are being
carried out in connection with the change of management.

He said: “However, the police
are conducting several pre-trial investigations in different cases,
looking into suspected criminal offences, which also refer to
transactions with the mentioned legal entities.”

Investigations into potential
criminal offences at Hypo’s Slovenian arms started in mid-2010, in
connection with real estate trade, financial transactions in
Slovenia and abroad, and suspicions of abuse by persons in charge
who took part in these transactions.

The Slovenian police are
still collecting the necessary documentation and are working with
law enforcement authorities in other countries.

“As regards the operations of
these legal entities, we requested the Austrian law enforcement
authorities last year for information and this year we received
their reply,” the police spokesman said.

The financial irregularities
are also linked to various institutions and businesses in

The Austrian bank refused to
comment on the financial irregularities.

A bank spokesmen said: “The
board decided that our new strategy for the new Hypo Alpe-Adria
should be implemented by a new executive board. For the leasing
business, it is our plan to integrate this separate business unit
into the bank structures to make structures easier, more effective
and more profitable.”

The new head of leasing is
Danijel Nowak. Before his appointment at Hypo Alpe-Adria he was
head of Sparkasse Leasing Slovenia, and has worked in leasing both
in Slovenia and Croatia.

Last year, Hypo Alpe-Adria’s
former chief executive Wolfgang Kulterer was arrested. He is
charged with misuse of funds and false testimony.

The Austrian state nationalised the troubled lender at the
end of 2009. Most of Hypo’s difficulties stemmed from rising loss
provisions in the Balkan region, where it had greatly expanded its
leasing business in the past seven years.