Hypo Alpe Adria Bank guarantee, offered a debt hair-cut to buy the senior bonds for 75% face value and 30% face value for subordinated bonds. On 4 August 2016, a private equity fund advised by Bain Capital purchased Heta Asset Resolution Italia S.r.l. (former Hypo Alpe-Adria Leasing S.r.l.) from Heta. During the year, Financial Market Authority also made a debt hair cut using the power as a resolution authority of EU "Bank Recovery and Resolution Directive", making the bad bank had a positive equity for the first time. Hypo Alpe Adria Bank Heta Asset Resolution A.G. is a "bad bank" that was the residual
Fair value accounting and the subprime mortgage crisis as trading assets and are marked to market. However, as the crisis evolved and liquidity deteriorated, fair value assets held by banks increasingly became Level 3 inputs because their market prices became unobservable. As mentioned in the 2010 article written by Laux and Leuz, linking banking capital regulation and fair value accounting is the most plausible way fair value accounting could have contributed to the crisis: Asset prices deviate from their fundamental values, which causes a bank to write down its assets and, in turn, depletes its capital. Consequently, the asset write-downs may force the bank to sell such assets