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The Creditanstalt

The Creditanstalt (also referred to as The Credit Anstalt or Credit-anstalt) based in Vienna, was one of Austria's most important banks.

Origins of The Credit-Anstalt

In 1820, Salomon Mayer von Rothschild (1774-1855) established his business, S M von Rothschild, Vienna, then the capital of the Austrian Empire. The Credit-Anstalt was founded in 1855 by Salomon Mayer's son Anselm von Rothschild (1803-1874) as K. k. priv. Österreichische Credit-Anstalt für Handel und Gewerbe. Anselm's son Salomon Albert Anselm von Rothschild (1844-1911) assumed the direction of the Credit-Anstalt in 1872, succeeded by Louis Nathaniel von Rothschild (1882-1955) in 1911. The Credit-Anstalt quickly became the largest industrial investment bank in Austria and by 1913 had grown to be the largest bank in the whole of the Empire with a balance practically the same as that of the Austrian state budget. 

Collapse of the Credit-Anstalt, 1931

Business dramatically changed with Austria's defeat in the First World War and the dissolution of the Austro-Hungarian monarchy and empire. In the late 1920s, a principal debtor, the Steyr-Werke AG faced financial difficulties, with bad loans leading to a drain on finances. In October 1929, the Austrian Schober government compelled the allegedly well-financed Credit-Anstalt to assume liabilities, which together with the simultaneous Wall Street Crash led to the financial imbalance of the then-largest Austrian credit provider. In 1929 the Credit-Anstalt merged with the second largest Viennese bank, the Allgemeine Öesterreichische Boden Credit-Anstalt. The Boden Credit-Anstalt had extensive industrial holdings and a considerable part of Austrian industry depended on this bank for day-to-day financing.  However, the Boden Credit-Anstalt was suffering badly due to a range of business errors and a large number of withdrawals. In order to save it, the Austrian Chancellor decided that a strong partner had to be found. The Creditanstalt was the only bank considered strong enough for this and Baron Louis eventually, albeit very reluctantly, bowed to political pressure. 

The taking over of the Boden Credit-Anstalt to create this so-called 'superbank' proved to be a grave mistake and one which undoubtedly was a major contributing factor to the collapse of the Credit-Anstalt, and The Credit-Anstalt had to declare bankruptcy on 11 May 1931. The Credit-Anstalt was ultimately rescued by Chancellor Otto Ender, who distributed the enormous share of costs between the Republic, the National Bank of Austria and the Rothschild family.