Austrians make bridgehead
Austria's banks may have had regional expansion thrust upon them, but they have achieved much over the past decade in broadening their franchise, developing retail banking in central and eastern Europe and acting as a bridgehead between transitional economies and the western capital base. Austrian banks reacted very quickly to the opportunities that were opened up in the region as a result of political reform.
"We opened in Hungary in 1987 when it was still under communist rule," says Herbert Stepic, deputy chairman of the board of management at Raiffeisen Zentralbank (RZB) in Vienna, "and we have been a forerunner and a pioneer in the region ever since. We wanted to make sure we were ready to service our existing and new customers before they even arrived in the region, which gave us the opportunity to generate first-mover advantage in a number of the central and eastern European economies."
Although it dates back to the 1980s, RZB's strategy of establishing a foothold in new markets - either in terms of product development or geography - continues. It claims to have introduced internet banking to the Slovak Republic before Austria, while last July it acquired a 90% holding in Market Banka, the most profitable bank in Bosnia-Herzegovina, the previous shareholders of which included the EBRD, Futura Investment, Soros Economic Development and DEG.
RZB says it has capitalized on its first-mover advantage in the region prudently, in spite of the misgivings of ratings agencies that assume the risk-reward ratio is much higher in central and eastern Europe than it would be in the EU.