Austrian banks shrug off regional woes
By Eric Frey in Vienna
Published: October 15 2008 17:02 | Last updated: October 15 2008 17:02
The growing economic crisis in central and eastern Europe is affecting Austrian banks, which have a massive exposure in the region. But the banks are better placed to weather the storm than rival institutions and are committed to remaining, according to the governor of the Austrian National Bank.
Ewald Nowotny told the Financial Times that Erste Bank, Raiffeisen International and the Unicredit subsidiary Bank Austria “were the first to move into these markets, so they now have a comparatively strong loan portfolio”.
In Hungary, the biggest risk for banks is the large share of euro and other foreign currency loans, where defaults are expected to rise as the forint declines. Austrian banks had in recent weeks refused euro loans to their Hungarian customers and might have begun to reduce their exposure, Mr Nowotny said.
Risks were growing in Ukraine, where Raiffeisen was playing a big role. Mr Nowotny said he saw “no immediate problems” as the national bank kept the situation under close surveillance.
In Russia, Raiffeisen was poised to benefit from “a flight to quality” as savers switched from local to foreign banks. “The events of the past year have caused a sharp inflow of private deposits to foreign-owned banks, and many of them are Austrian,” the central bank chief said.
In the Czech Republic, Slovakia and Poland, which are big markets for Austrian banks, the outlook was relatively good, he added.
Key assets for Austrian banks were the strong retail networks that gave them access to relatively reliable customer deposits, Mr Nowotny said. He added that 88 per cent of all loans by Austrian banks in the region were financed by deposits collected in the region.
Total credit exposure in the region was likely to grow more slowly in the foreseeable future because of the ec ...