Good perceptions of corporate social responsibility have become ever more important for banks in central and eastern Europe since the start of the war in Ukraine.
Thankfully, Erste Group has not had the stigma of owning a bank in Russia. This is a group that has demonstrated an awareness of the social impact of its presence in central and eastern Europe, not least given the high proportion of the population at risk of poverty in countries such as Romania and Serbia where it owns retail banks.
By the end of 2022, Erste’s social banking division had provided €485 million in funding since its launch in 2016, during the latter part of the long tenure of former chief executive Andreas Treichl, now chairman of the Erste Foundation.
That funding has included €191 million in startup loans to help self-employed people start new businesses, often from positions of unemployment, to which it has added training and networking help. The division has also provided €141 million in micro-finance loans, including financing working capital and investment and micro-factoring, as well as cash-flow assessments and advice. This work has been particularly telling in rural areas of Romania, where Erste has worked with BCR Social Finance.
Another €130 million in loans has gone to social enterprises for bridge and investment finance. Finally, in 2022 the social banking unit extended €9.6 million of restructuring and housing loans to people in financial difficulty. Now it is also rolling out more debt-advisory services – playing to a group-wide focus on financial health.
Peter Surek, Erste Group’s head of social banking development, says work to tackle housing affordability is particularly important today, making use of partnerships with regional municipalities and non-profit organizations. He highlights how the division has helped finance housing for Roma communities in countries such as Slovakia and Hungary.
“Affordable housing has become the number-one social issue in our region, with increases in the costs of purchasing or renting housing exacerbated by the impact of the Covid-19 pandemic and, more recently, by the sharp rises in inflation and interest rates,” says Surek.
Affordable housing has become the number-one social issue in our region
Peter Surek
Access to housing became an issue of even greater urgency after the influx of refugees following Russia’s invasion of Ukraine. In the Czech Republic, Erste’s local bank set aside a floor in its head office for a group of Ukrainian families to live in for up to a year, in addition to space in other bank buildings. It also offered 30 apartments for refugees as part of its Dostupny Domov projects in the Czech Republic and Slovakia.
These housing initiatives were in addition to €3.5 million in bank donations to help in the humanitarian situation in Ukraine. Erste banks also initiated the removal of fees for Ukrainian refugees and the group rapidly rolled out a Ukrainian language version of its regional digital banking platform, George.
