By Jörn Poltz
MUNICH (Reuters) - A Munich court ordered Austrian "bad bank" Heta to repay loans to BayernLB [BAYLB.UL] in a surprise ruling on Friday that hands the German state-controlled lender a partial victory in its efforts to recoup 2.4 billion euros (£1.7 billion).
Presiding Judge Gesa Lutz told Heta, the vehicle set up to wind down the remnants of former BayernLB unit Hypo Alpe Adria, to pay BayernLB 1.03 billion euros and 1.29 billion Swiss francs (£897.3 million) plus interest.
Heta [HAABI.UL] said it would lodge an appeal, arguing the Munich court had incorrectly analysed Austrian law.
"We see today's decision ... as just an interim step toward final legal clarification," its chief executive, Prince Sebastian von Schoenaich-Carolath, said in a statement.
BayernLB Chief Executive Johannes-Joerg Riegler said in a statement: "This is evidence that Heta's first house of cards is collapsing. Now Austria must live up to its responsibilities and repay its debts."
Using new EU rules aimed at protecting taxpayers' money, regulators in March took control of Heta and imposed a debt moratorium until May 2016 after an audit found a capital hole of up to 7.6 billion euros in its balance sheet.
That left holders of Heta debt in limbo and facing losses that could grow larger should BayernLB get its hands on billions in funds.
BayernLB had sued for repayment of what it said were loans to Hypo but which Austria has insisted should be treated as equity. The Munich court said Heta had not sufficiently proven its grounds for considering the money equity.
The court did not, however, award BayernLB the full amount it had sought, saying that 300 million Swiss francs worth of debt did not fall within its jurisdiction.
Austria played down the Munich state court's ruling in one of a number of pending suits. The finance ministry in Vienna said the decision had no impact on the federal government.
A ministry spokeswoman said the Financial Market Authority watchdog was now responsible for Heta. An FMA spokesman said only that Heta would analyse the verdict and then the FMA would decide how to proceed.
Austrian Finance Minister Hans Joerg Schelling had earlier held out little hope of a quick deal with BayernLB, backed by the German state of Bavaria, to settle a series of lawsuits over who should pay for the mess at Hypo, which Austria nationalised in 2009 after a decade of breakneck expansion.
"The case will take a long time because it's clear that if one wins the other one appeals. Then the whole thing starts again," he told Reuters in an interview.
The FMA is considering the size of losses it might impose on creditors of Heta to fill the capital gap.