The recent merger of two Austrian banks, Bank Austria and Creditanstalt, has given the Slovak banking market a new player - an entity called Bank Austria Creditanstalt Slovakia (BA/CA), which with a 3% market share is now the sixth largest bank in Slovakia.
Officials with the new bank were upbeat about their market prospects. "The merger will result in better access to the international banking network. It will widen our network of branch-offices, ensure high security for the coverage of deposits and improve conditions for payment and settlement," said Imrich Beres, vice chairman of BA/CA's board of directors, at a January 27 press conference.
"The positive aspect of this merger is that it will bring a new banking culture to Slovakia," said Martin Barto, a senior official with the state-owned bank Slovenská Sporiteľňa. "It will create pressure on other banks to improve their services."
However, Barto said, it was important not to exaggerate the impact the merger would have. "I don't think the merger had a significant effect on the Slovak banking sector, as it was mainly an internal operation [of the banks concerned]" he said. "The result is simply a stronger banking entity."
According to the consolidated balance sheets of Bank Austria (SR) and Creditanstalt a.s. Bratislava as of December 31, 1998, BA/CA has total assets of 28.9 billion Sk ($802 million). Last year's combined profits of both banks totalled 517 million Sk ($14.4). The costs of the merger are estimated at 10 million Austrian shillings (ATS - 30.3 million Sk)
Preliminary results from 1998 indicate that the volume of the provided loans of the merged banks totalled 8.904 billion Sk ($247 million) while deposits equalled 7.481 billion Sk ($208 million).
Beres revealed that the corporate sector, private clients and financial institutions would be the main target group of BA/CA. "We do not want to aim at flag ships alone, but also at mid-sized pro-export oriented companies," he said.
As far as the small and medium enterprise sector is concerned, however, the bank said it would maintain a more cautious approach to lending.
Niels Lundorff, another vice chairman of BA/CA's board of directors, said that "we are a business unit and we are here to do business where both parties are happy and earning money." Many small enterprises, Lundorff said, would not be able to get a loan at BA/CA at the moment because of risk and profitability concerns.
"We don't want to give out loans to a company if we don't feel sure we will get them back," he said.
Regina Ovesny-Straka, chairman of BA/CA's board of directors, supported Lundorff and added that even if a high risk client provided a bank guarantee or cash in deposits against a loan, the bank would not be acting responsibly if it gave him the loan expecting he would not be able to repay it.
BA/CA's biggest competitor on the Slovak banking market, according to Ovesny-Straka, is Tatrabanka (TB), which is majority owned by another Austrian bank, Reiffeisen Zentral Bank.
"We have a similar strategy to TB, but they have been on the market longer, which is an advantage for them," she said. "Of course, we want to reach them."
However, Ján Tóth, an analyst with TB, said that BA/CA could not really compete with TB. Tóth said that in terms of status on the market and the number of branch offices, TB was much further ahead.
"We are a retail bank, as opposed to BA/CA. However, they are a big competitor in terms of huge corporate clients," he said.
Ovesny-Straka explained that BA/CA planned to enlarge its net of branch offices, but said that it wouldn't happen this year.
"Every branch office has to be on its own profitable grounds. If a branch isn't able to make a profit, we won't open it," she said.