Vienna Chapter, October 6, 2010

Perspectives from Andreas Treichl

On October 6, 2010, in the absence of CAA Vienna Chapter Coordinator Wolfgang Fenkart-Fröschl, Gustav Dressler welcomed Andreas Treichl, CEO Erste Group, as guest of honor at the CAA luncheon in Vienna.  Since Erste is strongly engaged in Central Europe, Treichl concentrated in his speech on CEE and the recent financial turmoil.   

Erste Group** is focused on the eastern part of the European Union (Austria, Czech Republic, Romania, Slovakia, Hungary, Croatia), where it is the region's leading retail bank, bond originator and fund management company, as well as one of the leading corporate banks.

Among Treichl's most telling observations:

  • "When you see how Central and East European countries have responded to the crisis and look at the way these countries reacted, it's clear that this will be the region to which investments will go again. Economic and tax policy, the situation on the labour market, social policy - all these are based on a much longer growth pattern than is the West....people still have to catch up on nearly everything. The biggest problem seems to be the demographic development and the outdated healthcare system. ie in 25 years, Austria's population will be larger than the one of the Czech Republic. However, if we put these problems aside, everything points to the fact that investments will gradually move - if not to Asia - so to CEE.
  • "Europeans are frequently, particularly in the West, convinced that it is an obligation of the government to take care of them. You need to be able to afford a welfare state and you need to have productivity that can finance it.  Eastern Europeans are by far less spoiled and will stay eager to improve their living conditions."
  • "We will have to think hard again about how to strengthen the capital markets in Eastern and Central Europe, because financing among our customers will shift from the credit business to the capital market. The regulations will heighten the pressure to securitize loans again. And to give you an example: when Erste Bank gives a loan to an SME, we need 10 times as much equity as if we were to buy a bond issued by Iceland or Ireland for the same amount. Lobbying by the investment banks is stronger than ours."
  • "We do not yet know the details of the future global banking system. In the United States and in the United Kingdom, the separation of classic banking from investment banking is still under consideration. I think that banks that manage individuals' money, either through savings or through pension funds, should be limited as to the amount of risk they assume by investments. The banks that do not have such deposits should be allowed to do what they want. The only question is whether such banks should exist. I believe that banks should adopt the principle of operation similar to the pharmaceutical industry. There should be some kind of bank 'prescriptions' that would be 'prescribed' to clients depending on the individual financial strength, so not all banking products would be available to everyone."


Present at the CAA luncheon were: Richard Belcredi, Peter Boehler, Willi Bruenner, Andreas Calice, Armin Dallmann, Christine Dornaus, Gustav Dressler, Gerhard Eisenburger, Edith Fischer, Rainer Franz, Erhard Grossnigg, Andreas Heger, Franz Hodous, Guenter Korp, Michael Kraus, Peter Puespoek, Heinz Ratka, Wilhelm Rosenfeld, Maria Steiner, Herbert Strobl, Ernst Traun, Andreas Treichl, Jens Weidenbruch, Gundi Wentner, Eberhar Winkelbauer, Richard Wolf and, visiting from abroad, Wolfgang Drewes (from Berlin) and Edward Muenzberg (from Scotland).

** Erste Group

Tier 1 ratio:                         11.4 %
Solvency ratio:                   13.0 %   
Market Cap:                       11.7 bn EUR,    
Share price:                       29.37 EUR (low 7 EUR , 17.02.2009)
Total Assets:                    206.5 bn EUR,      
Rating:                             A / Aa3    
Number of employes: 48,200
Number of branches:    3,215
Number of customers:       17.4 mn