Eric Frey: Since 1989 Austrian Banks Have Invested Heavily In Eastern Europe
Ever since the Iron Curtain fell in 1989, Austrian banks have invested heavily in the fledgling - but highly profitable - financial sector in eastern Europe.
For Bank Austria Creditanstalt, the rise to the top of the market has even more to do with a series of takeovers that is set to culminate later this month with Europe's largest bank merger.
If Milan-based Unicredit succeeds with its bid for Germany's HypoVereinsbank, BA-CA's parent bank, the total assets in central and eastern Europe (CEE) controlled by its Vienna-based subsidiary will jump from Euros 36bn to nearly Euros 70bn.
Unicredit will put BA-CA in charge of the new larger region including Russia, the Baltic states, Ukraine and Turkey. In comparison, Erste Bank, its main rival in the region, has assets of Euros 33bn.
"Our market used to hold 100m people, in future it will hold 400m," says Erich Hampel, BA-CA chief executive, who will be in charge of all eastern business.
Unlike any other banking group, BA-CA will have operations in every east European country.
The merger is still open to question because some HVB shareholders, including powerful hedge funds, have not yet accepted Unicredit's all-share bid of five Unicredit shares for one HVB share.
Also, anti-trust authorities in Poland have refused to clear the merger of Unicredit's and HVB's local banking units. Unicredit extended its offer period until yesterday.
BA-CA's eastern network received an earlier boost when the bank arranged its takeover by Munich-based HVB in 2001.
Under the deal, the Austrians transferred their operations in Asia and the Americas to the Bavarians in exchange for the HVB subsidiaries in eastern Europe, in particular a big bank in Poland. BA-CA lost its independence, but in return, the bank became a powerhouse in eastern Europe.
Returns from its Austrian branches are modest as tough competition from the large not-for-profit sector of cooperative banks keeps interest margins extremely thin.
But eastern Europe has become one of the most profitable banking regions in the world.
For Bank Austria Creditanstalt, the rise to the top of the market has even more to do with a series of takeovers that is set to culminate later this month with Europe's largest bank merger.
If Milan-based Unicredit succeeds with its bid for Germany's HypoVereinsbank, BA-CA's parent bank, the total assets in central and eastern Europe (CEE) controlled by its Vienna-based subsidiary will jump from Euros 36bn to nearly Euros 70bn.
Unicredit will put BA-CA in charge of the new larger region including Russia, the Baltic states, Ukraine and Turkey. In comparison, Erste Bank, its main rival in the region, has assets of Euros 33bn.
"Our market used to hold 100m people, in future it will hold 400m," says Erich Hampel, BA-CA chief executive, who will be in charge of all eastern business.
Unlike any other banking group, BA-CA will have operations in every east European country.
The merger is still open to question because some HVB shareholders, including powerful hedge funds, have not yet accepted Unicredit's all-share bid of five Unicredit shares for one HVB share.
Also, anti-trust authorities in Poland have refused to clear the merger of Unicredit's and HVB's local banking units. Unicredit extended its offer period until yesterday.
BA-CA's eastern network received an earlier boost when the bank arranged its takeover by Munich-based HVB in 2001.
Under the deal, the Austrians transferred their operations in Asia and the Americas to the Bavarians in exchange for the HVB subsidiaries in eastern Europe, in particular a big bank in Poland. BA-CA lost its independence, but in return, the bank became a powerhouse in eastern Europe.
Returns from its Austrian branches are modest as tough competition from the large not-for-profit sector of cooperative banks keeps interest margins extremely thin.
But eastern Europe has become one of the most profitable banking regions in the world.