As snow falls on Vienna, a veteran banker gazes through the window and reminisces about his time at Creditanstalt, once the country's most prestigious financial institution but since 1997 a dismembered subsidiary of Bank Austria. "We had an ésprit de corps," he says about the days of independence. "We were proud of being very internationally minded, back when most other Austrian bankers couldn't see further than their local church tower." He recounts how Creditanstalt got its licence to bank in New York in 1983. US officials stared in disbelief at its founding charter: a note scribbled in 1855 by Habsburg Emperor Franz Josef, allowing a group that included Prince Egon von Fürstenberg and Salomon Mayer von Rothschild to create a credit institute.
Today, Austrian banks' domestic business is mediocre. Lending margins are among the narrowest in Europe. The retail market is captive, but the banks suffer from too many branches and the national antipathy to downsizing. Activities from corporate treasury services to consumer credit are coming under pressure from German and US competitors. The Bank Austria group and its main rivals, Raiffeisen Zentralbank (RZB) and Erste Bank, hope to escape stagnation by extending their catchment area.