Looking back into the article this one links, it looks like the bank in question was Hypo Group Alpe Adria which Austria nationalized in 2009. I guess the Austrian government is saying that it's Carinthian's problem, -their own little Greece.“We are at a very delicate phase when Europe’s banking system switches from a bail-out regime into a much tougher bail-in regime, and Austria has just thrown this into sharp relief,” said sovereign bond strategist Nicholas Spiro. The biggest bondholders are Deutsche Bank’s DWS Investment, Pimco, Kepler-Fonds and BlackRock. The World Bank also owns €150m of Hypo debt.
Well now I'm truly curious. Looking over the Wiki article it looks like they only do half their business within the EU. Not only that, but many of their creditors aren't in the EU. So if I understand correctly (big if) this move gives them the ability to shaft non-EU holders of debt. EU holders as well, but that's internal and all on the same currency so it'll shake out... but it seems like one of the least harmful ways to get the debt off the books. I mean, if you get to shaft Serbia, Pimco and BlackRock, you might as well!