Bloomberg News

Erste CEO Says It Was ‘Painful’ to Learn Bank ‘Lent Too Much’

October 11, 2011

Oct. 11 (Bloomberg) -- The head of Erste Group Bank AG said the world has altered “dramatically” for the lender after the “painful” discovery published yesterday that it had to clean up its balance sheet and announce a loss for this year.

“For us, the world has changed dramatically and we have learnt something very painfully,” Chief Executive Officer Andreas Treichl told European Union lawmakers discussing new banking rules in Brussels today. “We have lent too much to many people and to many governments who cannot afford to take on so much money.”

Erste, eastern Europe’s second-biggest lender, said yesterday that it expects to post a full-year loss of as much as 800 million euros ($1.1 billion) because of writedowns and provisions totaling 1.6 billion euros. It won’t pay a dividend for 2011 and shelved for at least a year a plan to repay 1.2 billion euros of aid from the Austrian government.

“We have decided as a little savings bank in central Europe that we have spent too much money on a bank in Romania, that we have given too many Swiss franc mortgage loans to clients in Hungary, that it was a mistake to lend money to governments by the way of credit default swaps,” he said. “We cleaned it up in one go yesterday, and I tell you it was painful -- but I feel a lot better today.”

To contact the reporter on this story: Boris Groendahl in Vienna at bgroendahl@bloomberg.net

To contact the editor responsible for this story: Zoe Schneeweiss at zschneeweiss@bloomberg.net


China's Killer Profits
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus