* Schelling on mission to reshape Austrian finances
* Bad bank Heta solution vindicates direct approach
* Moustachioed pragmatist knows 700 jokes by heart
By Michael Shields
VIENNA, July 7 (Reuters) - Finance Minister Hans Joerg Schelling has an unusual fondness for tackling thorny issues head on, an attribute displayed with a proposed solution to the festering problem of Vienna's obligations to neighbouring Bavaria over bad bank Heta.
Schelling, 61, has made it his mission to reshape Austria's finances and halt its slide into economic mediocrity, shepherding his cabinet colleagues to put aside debate and finally act since taking the role less than a year ago.
The millionaire management consultant breaks the mould of Austrian politicians, who traditionally join their party's youth wing and rise up through the ranks.
His success this year in forging a 5 billion-euro tax-relief package on schedule, bridging entrenched positions from the centre-left Social Democrats and the centre-right People's Party, showed he has the clout to make things happen.
His well-received offer of 1.23 billion euros ($1.34 billion) to compensate Bavaria for its deep-seated grievances over Heta was a breakthrough after years of fudges, fruitless lawsuits and unpopular legislation under his predecessors. ID:nL8N0ZN0Y9
The maverick conservative policymaker attributes his hands-on approach to years in the private sector, where he made a fortune by building two separate home-furnishing chains into market leaders.
His credo is: analyse issues, consider alternatives, then decide. "I am someone who thinks that a problem you don't solve will blow up on you," he told Reuters in a recent interview.
That was his guiding principle when he decided in March not to put any more public money into the Heta "bad bank" winding down the remnants of failed lender Hypo Alpe Adria, triggering a debt moratorium that has outraged many investors facing losses.
"It may be that the decision I made with the government on the moratorium... was wrong in the end, but it got made and everyone was relieved," he recalled.
BANKING EXPERTISE
Thomas Saliger, marketing chief at the XXXLutz home furnishings chain Schelling once led, called his former boss a pragmatic man of action driven by results, not ideology.
"It is not important to him if the path goes left, right or up the middle but the path has to lead to the goal," he said.
Schelling, known for his bushy moustache, proudly notes he is the first finance minister in Austria to pass the fit and proper test that regulators demand of bankers.
He needed it to become chairman in 2012 of part-nationalised Volksbank AG, a role that he said immersed him in capital markets and how the banking system works.
He is quite a change from some predecessors who embraced a popular Austrian view of investors as cold-hearted speculators.
Rainer Polster, the head of Deutsche Bank in Austria, calls Schelling's approach "refreshing" given his knowledge of markets and instinct for grasping the policy nettle.
But Schelling, a native of Vorarlberg in western Austria, has raised hackles among some powerful provincial governors who have traditionally pushed around federal government ministers.
Schelling acknowledges he has unusually broad leeway on policy initiatives.
"The federal government and my whole team grant that I have a certain expertise," he said.
Gerhard Stuermer, a management consultant who has known Schelling since their student days, describes him as a man with supreme self-confidence and a robust sense of humour, but who has a thin skin when it comes to criticism.
Stuermer said Schelling knows 700 jokes by heart and often breaks the ice at tense meetings by telling one. The modern art collector enjoys spending time on the vineyard he operates in his adopted province of Lower Austria. ($1 = 0.9154 euros)