EU must avoid Greek bankruptcy, says BA boss
Bank Austria (BA) CEO Willibald Cernko has warned from letting Greece go bust.
Cernko said at the weekend Europe “should consider very well whether it would be a good idea to dismiss a country from the Eurozone.” The banker claimed such a move “would put the European project into question.”
The BA chief warned that the European Union (EU) could not financially compensate a controlled insolvency of the debt-stricken EU and Eurozone member state either. He deplored a lack on investments in Greece and criticised EU state and government leaders for focusing on drastic austerity and cutbacks in the country.
The BA boss also expressed criticism of the Austrian government’s savings package. The Social Democrats (SPÖ) of Chancellor Werner Faymann and the People’s Party (ÖVP), which is headed by Michael Spindelegger, announced its ambition to save 26.5 billion Euros by 2017 earlier this month. The parties engaged in lengthy internal and public discussions about how Austria’s debt ratio could be lowered before finally presenting their plans.
Cernko said the Austrian government took a “step into the right direction” but also hit out at the coalition over a lack of growth incentives and substantial reforms. “Lots of measures must follow,” he said about the country’s need to work more efficiently.
The Austrian government reportedly stepped on the gas in presenting its budget consolidation package because of rating agency Standard & Poor’s (S&P) decision to downgrade the country’s solvency from AAA by one notch to AA+. Cernko said Austria might need three to six years to win back the best possible ranking.
OGM asked around 800 Austrians a few days before the federal reform package was presented about their expectations. Around one in five citizens said they expected an annual effect on their incomes and spending of up to 1,200 Euros while 34 per cent expressed fears that the upcoming measures might cost them up to 600 Euros a year.
The research group interviewed 500 Austrians following the government’s revelations to find that 50 per cent felt “strongly affected” by the package. Around 53 per cent said the upcoming burdens were not shared fairly and socially balanced while a majority of 73 per cent expressed fears that another savings package would be necessary before 2016.
Cernko’s latest attack on European and Austrian decision-makers follows an interview last September in which he deplored that politicians failed to create an “effective European crisis mechanism”. The banker added that the Austrian government did well in combating the immediate effects of the economic downturn which started in 2008.
He also warned from reducing the responsibilities of the federal parliaments of the EU-27. “Politicians must show commitment to solve the crisis,” he said, adding that plans to turn the EU into the “United States of Europe” would “go too far”.
BA is one of the leading banks in Central and Eastern Europe (CEE). The Viennese finance institute manages UniCredit’s Eastern European operations except activities in Poland. The Italian bank holds a majority stake in BA. UniCredit chiefs recently rubbished business newspaper reports that they planned to scrap its Austrian affiliate’s name to integrate it further into the banking group.
Cernko plans to reduce BA’s workforce level by 200 a year in the coming years by stopping hiring new employees if staff retire or join another bank. The banker also wants to increase the number employees of BA’s EE subsidiary companies 1,135 within the next four years despite difficulties of its affiliates in Kazakhstan and Ukraine.