Andreas Treichl

Surviving Through Suffering

Andreas Treichl is the longest-serving chief executive of a publicly traded bank in Europe. He has built Erste Group into Austria’s leading bank.
  • Why it matters

    Why it matters

    Like many European banks, Erste Group is trying to restructure its business model to survive stiff online competition and record low interest rates. Its longstanding CEO explains the bank’s strategy.

  • Facts


    • Erste Group has closed 30 percent of its branches within the last decade.
    • The retail business of its rival, Bank Austria, is set to either be sold or restructured by its parent company, Italy’s Unicredit.
    • Fintechs pose a particularly serious threat to large banks, partly because they are less susceptible to the adverse effects of financial regulation.
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Andreas Treichl runs his far-reaching empire from a twisted old building in the historic section of Vienna.

The longest-serving chief executive of a publicly-traded bank in Europe, Mr. Treichl has built Erste Group into Austria’s leading bank, with 46,000 employees, 16 million clients and operations in seven countries ranging from the Czech Republic to Austria, Slovenia and Romania.

The 63-year-old banker has certainly experienced his ups and downs in the financial markets during his tenure. At the moment, the banking sector of his home country of Austria is experiencing especially tough times.

Rival Bank Austria’s retail division is set to be completely restructured or sold off by parent company Unicredit. Banks across Europe are struggling to earn money in the current era of low interest rates, fierce competition from new financial-technology companies that offer digital banking services, and a raft of new regulations since the 2008 financial crisis.

Mr. Treichl believes Erste Group is well-equipped to deal with changing face of European banking. The bank plans to build up its in-house digital offerings, and has closed about a third of its own branches in the last 10 years.

The Austrian banker saved most of his anger for the European Central Bank, which is likely to ease monetary policy further later this week. The ECB is making not only his life difficult, but making life tough for traditional savers, he argued.

Mr. Treichl has been the head of the Erste Group, which was founded back in 1819, for the last 18 years. His contract was recently renewed until 2020.


Handelsblatt: Mr. Treichl, the Austrian banking market is under pressure. Your competitor, Bank Austria, wants to sell its branch network. What are Erste’s plans?

Andreas Treichl: We want to win over as many customers as possible for our products and services. That’s why we have been taking a close look at the future of retail banking for some time.

And what have you concluded?

We haven’t found the magic formula yet. No one in the market has. However, the regulatory pressure of recent years has been a positive influence. Even in previous years, it forced us to bring down costs. Essentially, we are trying to combine our current business with digital opportunities in such a way that we can keep our old customers and acquire new ones, too.

But that hasn’t stopped you from constantly shutting down branches…

Well, it isn’t a question of the number of branches but of the customer care concept. Thanks to our digital fingerprint, we don’t lose the ability to communicate with our customers, despite the elimination of a few branches. There are many services for which customers don’t need to go to branches anymore.

The fintechs are undoubtedly a threat to us.

And how do your commercial customers feel about that?

We still don’t have a cashless society, which is why we will continue to need branches and other places to deposit money in urban regions. We don’t want to force our commercial customers who own small and mid-sized businesses to take the subway for six stops to deposit daily cash receipts of €2,500. On the other hand, it’s obvious that we cannot live with an inefficient branch network. We have closed 30 percent of our branches in the last 10 years.

What will the remaining branches look like?

We are testing two types: large, centrally located flagship branches, and service branches that offer customer care and digital services. We will continue to reduce our workforce, because tasks will change in the future. On the other hand, there is a growing demand for highly qualified employees.

Fintechs, or start-ups in the financial sector, are booming. Do you perceive the exclusively online financial service providers as a threat?

The fintechs are undoubtedly a threat to us. That’s because small service providers are much less adversely affected by regulatory requirements than large banks.

Why don’t you acquire fintechs?

We are currently developing digital businesses in-house. We are copying much of what we are doing from fintechs. We don’t just make it all up ourselves. I was in Silicon Valley recently to meet with people from various fintechs. We don’t want to invest in them, but we do want to tailor their expertise to the needs of our 16 million customers in seven Central and Eastern European countries. We are large enough to develop our own systems. And we’ve been successful at it. We are the most valuable publicly traded company between Central Europe and Russia.

One reason times are so tough in retail banking is that we are living in a period of low interest rates. You recently renewed your contract until 2020. Will we see an end to low interest rates by then?

No one in the market can predict that. It is clear, however, that the low interest-rate phase is bad for our customers and us. It slowly but continuously affects the middle class. And as a typical bank for the middle class, we are just as adversely affected as our customers.


Andreas Treichl ( far right) with Austrian National Bank governor Ewald Nowotny (left) and the head of the Bank for International Settlements (BIS) Jaime Caruana in 2011. Source: Reuters


What do you advise your customers?

That this is a difficult time for everyone in the financial market. We don’t want to sell our customers high-risk securities so that they can earn a decent amount of interest. It’s very annoying, but the low interest-rate phase is expropriating savers all over Europe. And it is also developing into a major problem in terms of social policy. It’s true that you have to be rich nowadays to get even richer. Nowadays, even people with good incomes are no longer able to build a small amount of capital. This is extremely problematic. We owe it to the interest rate policy of the European Central Bank (ECB).

Although it greatly benefits countries in the euro zone…

Without a doubt! It’s a way for countries with less than stellar credit ratings to keep afloat.


219 Erste Bank-01 (2)


How critical are you of the ECB’s monetary policy?

I’m not about to badmouth the policies of my regulatory agency (he laughs). And the low interest-rate policy does contribute to prosperity for some of Europe. But the ECB is harming my business and my customers.

In the past, you were practically throwing money at customers, such as in the form of mortgage loans denominated in Swiss francs in the case of Croatia and Hungary…

Yes, we pushed loans too strongly in the boom phase, and the risks we took were far too high. This is one of the reasons why people have lost so much confidence in banks – justifiably so. That’s why it’s so important now to be very strict when lending money and to explain the reasons why to customers.

You are subject to a banking tax in Austria. Is there a chance that it will be abolished?

Fortunately we have a finance minister who understands the financial market and knows that this populist tax is bad for Austria’s ability to attract business. My goal is to see that we in Austria do not pay a higher banking tax than people in Germany.

In other words, a tenth of the current taxes…

That’s right. We would be pleased to have such a reasonable solution as the one in Germany.

After 18 years at the head of Erste, you have earned more than €29 million. How does a banker like you invest his money?

Actually, I’ve only invested my assets in Erste stock and in the two properties in Vienna and Leogang, where I live with my family. I would actually like to buy some farmland and wooded land in the countryside near Salzburg, but that isn’t very easy, because the government owns the land.

Mr. Treichl, thank you for this interview.


Hans-Peter Siebenhaar conducted the interview. Mr. Siebenhaar is Handelsblatt’s correspondent in Vienna and specializes in media and telecommunications coverage. To contact the author:

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