Profit-hungry Austrian banks consolidate and look east
For years, overbanked Austria has been a byword for murderous competition and razor-thin margins. Now there are indications that it is becoming a more benign environment for bankers. Austrian banks are belatedly focusing on the business of making money, both at home and through energetic expansion in the central and eastern European region.
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Austria's domestic banking sector may not be Europe's biggest money maker, but it is becoming much more profitable thanks in large part to consolidation. This reached a peak in 2000 with the acquisition of Bank Austria (BA) by Germany's HypoVereinsbank (HVB). Bank Austria had itself pushed the domestic consolidation process along three years earlier with its acquisition of rival Creditanstalt (CA). As it was stipulated that Creditanstalt would operate as a separate legal entity for five years, the full BA-CA merger won't be finally consummated until this summer.
Already, though, the merger between Bank Austria and Creditanstalt is stripping out costs. According to Standard&Poor's, Bank Austria expects to save e100 million ($89 million) straightaway, with another e100 million to come from further streamlining.