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Creditanstalt

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Creditanstalt AG
IndustryFinancial services
Founded1855
FounderAnselm von Rothschild
FateMerged with Bank Austria in 2002
SuccessorBank Austria-Creditanstalt
HeadquartersVienna, Austria
Websitewww.ba-ca.com

The Creditanstalt (sometimes Credit-Anstalt,[1] abbreviated as CA, lit. 'Credit Institution') was a major Austrian bank founded in 1855 in Vienna. It underwent a historically consequential failure in 1931, and in 1934 merged with the Wiener Bankverein and Niederösterreichische Escompte-Gesellschaft to form Creditanstalt-Bankverein. It was nationalized in 1945 and eventually merged in 1997 with Bank Austria to form Bank-Austria-Creditanstalt, since 2004 a subsidiary of UniCredit. UniCredit phased out the Creditanstalt brand in 2008.

Background

In 1820, Salomon Mayer von Rothschild established the first[citation needed] bank in Vienna, then the capital of the Austrian Empire. In the course of early industrialisation, the Rothschild bank financed large development projects, such as the building of the Emperor Ferdinand Northern Railway to the Moravian mining regions. Rothschild also acted as a generous lender to Austrian state chancellor Prince Klemens von Metternich and granted copious credits to the Bohemian and Hungarian aristocracy.

Niederösterreichische Escompte-Gesellschaft

In 1853, the Niederösterreichische Escompte-Gesellschaft was formed on the model of the Disconto-Gesellschaft established two years earlier in Berlin. It mainly served Austrian merchants and industrialists. In 1901 it took over the Bohemian Discount Bank in Prague, and by 1910 was one of the seven largest banks in Vienna.[2] Following World War I, in 1919 it had to sell the Bohemian Discount Bank to Živnostenská banka.

Foundation and development until 1931

Share certificate of the Credit-Anstalt für Handel und Gewerbe, issued 31 March 1858
Building on Na příkopě 8, Prague, designed for Creditanstalt by architect Emil von Förster [de] with sculptures by Antonín Popp, built in 1894-1896
New Creditanstalt head office inaugurated in 1912, photographed in 2014, by then Bank Austria Kunstforum Wien [de]
Northern side of the former Creditanstalt head office in 2013, hosting the Austrian Constitutional Court

The Creditanstalt was founded in 1855 by Anselm Salomon von Rothschild, Salomon Mayer's son, as the k. k. priv. Österreichische Credit-Anstalt für Handel und Gewerbe (lit. 'Imperial & Royal privileged Austrian Credit Institution for Commerce and Industry'). The bank soon became the largest in Austria-Hungary.[citation needed]

Albert Salomon Anselm von Rothschild, Anselm's son, took control of the Creditanstalt in 1872 and was in turn succeeded in 1911 by his son Louis Nathaniel de Rothschild. In 1912, the CA opened a new, lavishly decorated neoclassical new headquarters in Vienna's Innere Stadt.

The CA's circumstances were dramatically affected by Austria-Hungary's defeat in the First World War, the dissolution of the Habsburg empire, and the formation of the First Austrian Republic. In the late 1920s, a principal debtor, Steyr-Werke AG, faced financial difficulties. In October 1929 at the time of Wall Street Crash, the Austrian government led by Johann Schober compelled the Creditanstalt, which was believed to be financially strong, to assume its liabilities.

Bankruptcy

The Creditanstalt declared bankruptcy on 11 May 1931. This was one of the first major bank failures that initiated the Great Depression.[3]: 2–3 [4][5] Chancellor Otto Ender organized a rescue that entailed cost-sharing by the Austrian government, the Oesterreichische Nationalbank, and the Rothschild family, rejecting nationalization plans advocated by the Social Democratic Party. Even so, the bank was de facto state-owned after Chancellor Engelbert Dollfuß in 1934 ordered the Creditanstalt's merger with the Wiener Bankverein and the Niederösterreichische Escompte-Gesellschaft, after which the merged entity was known as Creditanstalt-Bankverein. The CA's bankruptcy and its impact in producing a major global banking crisis provided a major propaganda opportunity for Adolf Hitler and the Nazi Party, allowing them to further blame Jews for German and international economic and social troubles.[6]

Anschluss and World War II

Former Wiener Bankverein head office on Schottengasse in Vienna, headquarters of Creditanstalt after 1934 and of Bank Austria-Creditanstalt after 1997

Following the Austrian Anschluss to Nazi Germany in 1938, Creditanstalt-Bankverein was targeted for both financial and racial reasons. Louis de Rothschild was immediately arrested and imprisoned for the losses suffered by the Austrian state when the bank had collapsed. Deprived of his position and property, he was released upon payment of $21,000,000, believed to have been the largest bail bond in history for any individual,[7] and migrated to the U.S. in 1939 after more than one year in custody.

Later in 1938, the Creditanstalt-Bankverein was taken over by Deutsche Bank,[8] patronized[clarification needed] by Hermann Josef Abs. Though CEO Josef Joham at one point made contact with the Office of Strategic Services, the Creditanstalt in that period also settled the financial issues of several Nazi concentration camps as well as the Aryanization of Jewish-owned businesses, like the re-establishment of Sascha-Film as Wien-Film Limited.

Postwar development

Following Nazi defeat in World War II, the Creditanstalt was nationalized by Allied-occupied Austria in 1946. It became mainly a commercial bank and was involved in Austria's economy, holding stakes in important Austrian companies such as Wienerberger, Steyr-Daimler-Puch, Lenzing AG, and Semperit. From 1956 onwards, the Creditanstalt was partly privatized by issuing 40% in shares, though only 10% in common stock.

In 1981, the former Social Democratic Minister of Finance Hannes Androsch assumed the office of a general manager, after he had left the cabinet led by Bruno Kreisky. The bank's investments into industrial interests were reduced, while the government's ownership share fell to 51%. In the 1980s, the Creditanstalt opened branches in London, New York and Hong Kong. From 1989 onwards, its international orientation towards East-Central Europe was boosted by the fall of the Iron Curtain. In 1997, Geoffrey Hoguet ceased to work for the investment bank, the last member of the Rothschild family by then to be employed in banking in Austria.[9]

In 1997, the government sold its majority ownership stake in Creditanstalt to Bank Austria (BA), resulting in a crisis in the ruling coalition between the Social Democratic Party and the Austrian People's Party, since the Creditanstalt was considered to be part of the conservative sphere of influence under Austria's distinctive Proporz arrangement, whereas BA with its roots as Red Vienna's Central Savings Bank (Zentralsparkasse) was associated with the political left. The merger was eventually completed in 2002, creating Bank Austria Creditanstalt (BA-CA), which was purchased by Germany's HypoVereinsbank (HVB). In 2005, HVB in turn was taken over by Italy's UniCredit. After 153 years, the Creditanstalt brand name was finally phased out in 2008, but it survived in the CA Immo property subsidiary.

See also

Notes

  1. ^ "Plugging the hole". The Economist. 2010-11-25.
  2. ^ Eduard März (1963), Österreichische Industrie- und Bankpolitik in der Zeit Franz Josephs I – am Beispiel der k.k. privilegierten Österreichischen Credit-Anstalt für Handel und Gewerbe, Vienna, p. 248{{citation}}: CS1 maint: location missing publisher (link)
  3. ^ Moessner, Richhild; Allen, William A. (December 2010). "Banking crises and the international monetary system in the Great Depression and now" (PDF). BIS Working Papers (333). Bank for International Settlements. ISSN 1020-0959. Retrieved 2011-07-25.
  4. ^ "Potential for black swan 'Credit Anstalt' event," Variant Perception, 10 May 2010
  5. ^ Martin Wolf (2012-06-05). "Panic has become all too rational". Financial Times. Retrieved 2012-06-07.
  6. ^ "Educate Yourself - the Collapse of Creditanstalt Bank in 1931". Archived from the original on 2014-03-18. Retrieved 2014-03-18.
  7. ^ "Baron Louis De Rothschild Dead: Paid $21,000,000 Ransom to Nazis | Jewish Telegraphic Agency". www.jta.org. Retrieved 2018-10-26.
  8. ^ MacDonogh, G (2009). 1938: Hitler's Gamble. New York: Basic Books. pp. 49, 69. ISBN 9780465009541.
  9. ^ "Rothschilds Sell Last Piece of Austrian Empire After 200 Years". Bloomberg. Retrieved 2021-03-04.

Further reading

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