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Interview with Dr Hannes Schmid |
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| Interview with Dr Hannes Schmid
Tyroleans appreciate
Raiffeisen as a local banking partner
How did the Tyrol Raiffeisen banks get through the difficult
past few years of the economic and financial crisis?
DR HAN-
NES SCHMID: Everywhere in the world, 2008 and 2009 were
economically challenging years, which the Tyrol Raiffeisen banks
overcame very well on balance. Our success in coping profes-
sionally with these two years is primarily due to the fact that we
have such a solid customer-oriented business model. This model
is specifically aligned with the needs of customers and is based
on Tyrol's economic cycle. As a simplification, this means that
we collect local deposits and grant our loans to local borrowers
or, as the case may be, to small and medium-size enterprises
(SMEs). We have also borne our full share of the political initia-
tives to stimulate investment in construction and renovation and
in SMEs. This focus has been received very well by Tyroleans and
by local businesses.
Tyrol's renovation of residential properties and regional
businesses as a factor in stability?
Definitely. Private work on
residential properties and construction/renovation have stimu-
lated Tyrol's economy significantly. Jobs have been maintained
in Tyrol as a result. Tourism has also been a key factor in success
during the crisis. Many of our customers are in the tourist trade, in
which we have financed very many investments. Tourism in par-
ticular made an outstanding contribution to performance in 2010
and was successful in countering the difficult general economic
situation.
On an equal footing
Have Tyrol Raiffeisen banks come through the crisis better
than other financial institutions?
Yes indeed. After all, we do not
operate in the global financial business, but in Tyrol. The bottom
line is: "If Tyrol people are doing well, and Tyrol companies are
doing well, then Raiffeisen banks are also doing well!" We are on
an equal footing with our customers. As far as corporate custom-
ers are concerned, our main clients are SMEs, customers whom
we understand and can help a lot. Although major international
enterprises are also Raiffeisen customers, they are not part of our
core target groups.
Some politicians have claimed that the banks were respon-
sible for the financial crisis, as a result of which the bank tax
was introduced as a kind of compensation.
I don't consider the
bank tax to be a punishment for the originators of the crisis, as is
sometimes presented in the political arena. If that were the case,
the wrong ones would be affected. We, the Raiffeisen organisa-
tion, do not consider ourselves responsible in any way for what
has happened during the global financial crisis. Our business
model is based on the local regional value-added chain. This has
nothing at all to do with risky international speculation, the cause
of the financial crisis.
So what do you think of the bank tax?
I believe that every Austrian
is interested in balancing the budget. Of course, this is also in the
interests of every business enterprise and consequently in the
interests of the banking sector. Policymakers should nevertheless
ensure that the revenue from the bank tax is not used exclusively
to reduce the budget deficit, but particularly for investment in the
future. I am convinced that the revenue from the bank tax would be
used better and with longer-lasting effect in an education initiative
in Austria.
What are the greatest concerns of the Raiffeisen banks in the
next few months?
The bank tax affects Austrian banks to quite a
large extent. There are also new regulations for the deposit guar-
antee, even though Raiffeisen already guarantees the deposits of
its customers up to 100% through the Customer Guarantee Col-
lective. However, Raiffeisen banks are affected even more through
over-regulation at European level. The flood of banking rules e.g.
for a Credit Suisse, UBS, BNP Paribas or Deutsche Bank apply to
the same extent for a local Raiffeisenbank. It is certainly a noble
objective for the European legislator to create the same general
framework through one regulation for all banks. The accompany-
ing over-administration or over-regulation is a big problem for rela-
tively small banking institutions, however, and is also a competitive
disadvantage adversely affecting local customers.
"Classic robbery operations"
Requirements in the banking sector will become more strin-
gent in future, e.g. through the "Basel III" banking conven-
tion. Loans must be backed up by the banks with more equity
capital. Can a small Tyrol business count on receiving just as
much credit finance in future as has been the case so far?
In
principle yes, if the statutory requirements are met and the repay-
ments are feasible from a business management viewpoint. On
the other hand, those companies that are already at their limit in
relation to repayments will in future find it difficult to access funds.
At all events there will be no relief measures due to the new
rules. Nonetheless, Basel III will not strike "like a cudgel", as
sometimes claimed in the media: there are transitional phases,
after all. Basel III is not an event like the bank tax or the capital
gains tax on securities, which were introduced in a "cloak-and-
dagger" operation to a certain extent.
What advice can you give to the savers and borrowers in
Tyrol, then?
The key is: "Seek advice from the experts at Raif-
feisenbank!" Tyrol Raiffeisen banks have proved themselves
as a stable, reliable partner with personal proximity and with
the security that is guaranteed by the whole Raiffeisen organi-
sation. We did not engage in speculation before and during
the financial crisis, and we will not do so in future. Our busi-
ness model is based on customer needs. Feedback proves
us right: on the one hand there is great mistrust directed at
banks in general, while on the other there is an extremely
positive attitude towards personal Raiffeisen account manag-
ers. This is precisely where the success of the Raiffeisen
organisation is to be found: we have a local presence, with lo-
cal decision-makers. All this proved its effectiveness at times
when it was difficult during the crisis.
Will that also be endorsed by customers, or will they
quickly forget the lessons from the financial crisis and
return to investing in risky prospects of returns?
It would
be wonderful if the stable value system of a local value-added
chain could be anchored permanently in people's conscious-
ness. The temptations of the international capital market, with
all its big promises, nevertheless continue to arouse a human
trait that has always existed, namely, greediness. Despite this,
people have recognised in recent times that even apparently
"unsinkable ships" such as whole countries can be called into
question. This has greatly strengthened our local business
model. Our customers now appreciate the stability, security
and reliability of Raiffeisen even more.
What are your biggest concerns in the near future?
Over-regulation in the banking sector is certainly a concern.
It takes up our employees' time, which we would prefer to
use for customers. For this reason it is very important that
we nonetheless increase the personal quality of service for
Tyroleans and maintain it in the long term. Consequently we
will not only invest in bank branches and IT, but especially in
our employees.
Dr Hannes Schmid, Chairman of the Board of Managing Directors of Raiffeisen-
Landesbank Tirol AG, sees endorsement of Tyrol Raiffeisen banks' regional busi-
ness model in both good and bad business years. Even though regulations in the
banking sector are becoming more stringent, with an increasingly adverse impact,
the outlook for Raiffeisen banks is good, since Tyroleans appreciate a local, reliable
and long-term banking partner.