Austrian Central Bank President Claus Raidl said his nation’s financial institutions didn’t lend money irresponsibly in eastern Europe.
“No Austrian bank did give money recklessly,” Raidl said in an interview in Vienna yesterday. “We have some problems because of the slower economic development, slower growth, foreign-currency loans, political situations in some of the countries -- so we have to adapt,” he said. “I know there are no hidden risks.”
Austrian banks, including UniCredit SpA (UCG)’s Bank Austria, Erste Group Bank AG (EBS) and Raiffeisen Bank International AG (RBI), are the biggest lenders in the former communist part of Europe. Bank profits in eastern Europe have eroded as the euro-zone debt crisis has hurt the the region, which relies on exports to western Europe.
The Austrian central bank last year introduced rules asking Bank Austria, Erste and Raiffeisen to stop lending significantly more than they raise in local deposits in eastern Europe. Fitch Ratings said yesterday that a survey of 43 foreign-owned banks in the region indicated that their parent funding decreased “moderately” since 2008.
Austria had to nationalize Hypo Alpe-Adria-Bank International AG, the third-biggest lender in the former Yugoslav nations, in 2009. Hypo Alpe has to fill a capital gap of 2.19 billion euros next year. A third of the bank’s loan book is delinquent.
Another Austrian bank, Oesterreichische Volksbanken AG (VBPS), had to be partially nationalized this year. While Volksbank sold its eastern Europe unit to OAO Sberbank before the state took its stake, the Russian lender refused to take on Volksbanken’s money-losing Romanian unit.
Still, Raidl wouldn’t want Austrian lenders to turn their back on the region.
“The engagement and the investment of the Austrian banks in that region of central and eastern Europe is -- when I take the last 10 years -- a success story,” he said.
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