Nationalised Austrian lender Hypo Alpe Adria announced on Friday to sell its domestic business to a British investor. According to a government source, the deal was announced when Austria was sending the Commission a revised plan for reorganizing Hypo. The source declined to give any more details.

The Commission has been building pressure on Hypo to break itself by the end of the year or return more than two billion Euros. The amount is of state aid received since Austria took over the bank in 2009.

A step was taken by the Hypo to sell the domestic business to London-based investor Sanjeev Kanoria for 65.5 million euro. Hypo is also looking forward to sell a small banking unit in Italy and Balkans banking network.

The bank has requested more time for its restructuring due to Europe's weak economic climate, which makes it difficult to sell businesses. The purchase price set for the Austrian unit was slightly more than half the book value, the bank said.

Antoine Colombani, spokesman for competition policy at the Commission, said, "We are currently in contact with Austrian authorities". Austrian Chancellor Werner Faymann believed that Hypo's failure to adequately reorganize could cost up to seven billion Euros.