Already a Bloomberg.com user?
Sign in with the same account.
Dec. 15 (Bloomberg) -- Erste Group Bank AG, eastern Europe’s second-biggest bank, is sending Bernhard Spalt, chief risk officer, to Hungary as bad debts soared following a government decision forcing banks to swallow mortgage losses.
Spalt will take over risk management at Erste Bank Hungary Zrt., the nation’s second-biggest lender, from Feb. 1, the Vienna-based bank said in a statement today. The position had been vacant since the summer.
The lender set aside 701 million euros ($912 million) in the nine months to Sept. 30 to cover bad loans in Hungary following Prime Minister Viktor Orban’s foreign-currency mortgage law passed in September. The provision is almost four times the 180 million euros the bank set aside for souring loans in Hungary in the same period of last year.
“With Bernhard Spalt, Hungary will have the most capable risk manager anyone can hope for,” Chief Executive Officer Andreas Treichl said in the statement. “His experience and persistence are a guarantee that our subsidiary in Hungary will soon be seeing less risky times.”
Erste, which pledged to inject 600 million euros into its Hungarian unit on Oct. 10 to cover losses this year, needs a “complete strategic rethink” of its business in Hungary because of the “unstable and unpredictable” market environment under Orban, Radovan Jelasity, Erste’s Chief Executive Officer in Hungary, told analysts and investors on Dec. 9.
Spalt’s position on Erste’s management board will be taken by Gernot Mittendorfer, the board member heading corporate and investment banking. Franz Hochstrasser will take on Mittendorfer’s role as well as keeping responsibility for treasury and capital markets.
Martin Skopek, the board member overseeing the customer unit, will move to Romania and head the retail business at Erste’s Banca Comerciala Romana, the country’s biggest bank. He will replace Oana Petrescu, who has resigned and will leave in March.
The board reshuffle cuts Erste’s management board to five members from seven. The remaining five members’ contracts, which were due to expire in 2012, were extended for five years until mid-2017, Erste said.
--Editors: Francis Harris, Keith Campbell
To contact the reporters on this story: Boris Groendahl in Vienna at email@example.com; Jonathan Tirone in Vienna at firstname.lastname@example.org
To contact the editor responsible for this story: Frank Connelly at email@example.com