Bank Austria Creditanstalt – from an early starter to CEE market leader with UniCredit

Central and Eastern Europe is Bank Austria Creditanstalt’s second home market. The opening of a representative office more than 30 years ago, the pioneering role played by Bank Austria and Creditanstalt in making equity investments in CEE banks in the late 1980s, and the build-up of operations in the difficult phase of transformation in the 1990s are significant stages in BA-CA’s corporate history. Through mergers with HVB’s local banking subsidiaries in 2001 and 2002,
BA-CA took a major step forward towards building the most extensive CEE banking network. After a phase of consolidation and rationalisation, the bank started – in 2003, just in time before the first CEE countries joined the EU – to expand substantially through strong organic growth and improved profitability. This expansion is still under way. Further acquisitions gradually opened up the markets in South-East Europe (SEE). Over the past five years, risk-weighted assets (RWA) in the CEE business segment increased by an average 15% per year and profit before tax rose by 29% annually.

At the beginning of 2007 we find that, looking back on developments so far, European integration is a success story with even greater future potential. In January 2007, Bulgaria and Romania joined the EU, and this marks more than just another stage in the process of European integration. The economies in Central and Eastern Europe have made significant progress over the past ten years: in the older EU member states, the convergence progress has reached an advanced stage, key industries are fully integrated in division of labour in the EU internal market and are highly productive. Economic growth, though still comparatively high, is somewhat lower than in the early years after the transformation, and interest rates and price levels are converging. Although closing the prosperity gap vis-à-vis Western Europe will take some time, one can hardly speak of “emerging markets” any longer. This development, the internal market, has spread further, other countries in Eastern Europe are following the same path, new countries in SEE are opening up and creating the conditions required for an economic upswing.

Borders are becoming less significant – also in economic terms – and economic integration is advancing; last but not least, the banking sector in these markets is quickly moving towards higher levels of maturity. It is in this environment that UniCredit Group was formed one and a half years ago, at the very best moment.

UniCredit Group with its cross-regional business model in the mature markets of the “old EU” acts in line with its claim to be the first truly European bank by bundling operations in Central and Eastern Europe to form a strong network. We underline this claim, and our common identity and philosophy, with the UniCredit master brand, which we are introducing in the current Group-wide rebranding process. The basic principles of UniCredit’s business model apply in all markets, whether young or old: