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Greece 'will exit Eurozone'

The head of one of Central Europe’s biggest banks has sent shockwaves across the continent by saying he expects Greece to leave the Eurozone.

Erste Group Bank AG (Erste Bank) CEO Andreas Treichl told Die Presse on Saturday that "Ireland chose a good path. The situation in Spain and Italy is different from the constellations in Greece." Treichl said that both countries had excellent export opportunities. Asked whether it was a realistic estimation to expect Greece exiting the Eurozone, the banker replied: "Yes."

Treichl said it would be a matter of discussions to determine when the time would come for the cash-strapped country to leave the group of the European Union (EU) countries which used the Euro. The performance of Treichl’s bank is barely affected by developments in Greece but it is one of the main investors in Central and Eastern Europe (CEE). The Erste Bank chief said he was not afraid of a Hungarian bankruptcy "because the situation is different to the one of Greece."

Erste Bank runs 43 branches in Hungary which is struggling to reduce its state debt and lower the budget deficit. Only last month, Treichl announced plans to reduce the workforce level of Erste Bank’s Hungarian affiliate by 400 to 450 in the next years. He said his finance institute would not hire new Hungarian staff if others retired or left the company. The banker presented plans to carry out "restructuring and re-dimensioning procedures" – and promised not to stop operating in the country which became a member of the EU in 2004.

Treichl criticised decision-makers in Europe for failing to make clear decisions in crisis times. He claimed on Saturday they "seem to manage getting away with it". Treichl added he had "a certain understanding" for politicians’ hesitancy due to the current economic developments. "I have never experienced such a dramatic scenario before," he told Die Presse. The Erste Bank boss said: "The banking business has become very complex. Even professional investors lost the impression of being aware what is going on."

The high volumes of credits Austrian banks provided firms in Hungary with are seen as a risk factor by the world’s leading rating agencies for the alpine country and its banks. Only on Friday, Standard & Poors (S&P) decided to lower Austria’s credit rating by one notch to AA+. The rating of France which is, behind Germany, the second-strongest European economy, was affected in the same way.

Hungary is depending on further credits by the International Monetary Fund (IMF) and the EU to get through the crisis. The country is under fire for setting up charges on foreign companies. Several Austrian enterprises like supermarket chain Spar Austria and furniture company XXXLutz are affected by the measures. Speaking to Austria’s Kurier newspaper last Friday, Hungarian Foreign Minister Janos Martonyi promised that the crisis tax would be abolished again "when the crisis is over".

Martonyi stressed that the controversial tax was a "temporary measure". Speaking about his country’s tax on banks, the minister pointed out that Austria introduced a similar charge at the beginning of last year as well. Austrian finance ministry officials said the new taxation tool helped the state to additional revenues of 500 million Euros. Martonyi told the Kurier Austrian banks "should increase their engagement in Hungary. They should provide more credits."

The Hungarian foreign minister said: "There are close ties between the Austrian and the Hungarian economy. Everything which harms us has negative effects on the Austrian economy as well." Martonyi added that he ruled out a bankruptcy of his country.

Austrian Times

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Minister credits Central Europe Greece crisis Austrian Hungarian Erste Eurozone Presse investors Treichl rating Kurier Martonyi economy Bank rsquo Hungary

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