History of 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 Creditanstalt
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. The Rothschilds' rivals in France, the Pereire brothers had set up their own credit bank in Paris, the Crédit Mobilier, and were looking to gain a foothold in the Austro-Hungarian Empire. The Credit-Anstalt was established to pre-empt this. The bank provided investment for industry, initially focussing on the state's rapidly developing railway network. The Viennese Rothschilds owned approximately a third of the bank's shares and Anselm was the first Vice-President.
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. In 1912, the new headquarters in Vienna's Innere Stadt central district opened in an elegant neoclassical building.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. On the eve of the bank's collapse in 1930, about 69% of all Austrian limited companies did their business through the Credit-Anstalt, its stocks were quoted on twelve foreign stock exchange's, including New York's and more than 50% of its stocks were in foreign hands. A number of prominent foreign bankers and businessmen sat on its board of directors and it had an excellent international reputation, especially since Louis von Rothschild was its President. Its business interests extended into eleven banks and forty industrial enterprises and among its creditors were 130 of the most important foreign banks, "From the moment of its birth the Credit-Anstalt of Vienna stood in the forefront of international finance" (The Economist, 27 June 1931).
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. The Credit-Anstalt itself had been experiencing problems due to the effects of the Great Depression that was squeezing Austrian industry. The absorption of the ailing Boden Credit-Anstalt was just too heavy a burden for the bank to contend with.
The Credit-Anstalt had to declare bankruptcy on 11 May 1931. This event resulted in a global financial crisis and ultimately the bank failures of the Great Depression. 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. Nationalisation plans advanced by the Social Democrats were rejected. The Credit-Anstalt bankruptcy and its impact in producing a major global banking crisis provided a major propaganda opportunity for Adolf Hitler and the Nazi Party: it allowed them to further blame Jews for German and international economic and social troubles. In 1934, Chancellor Engelbert Dollfuß ordered the merger of the institute with the Wiener Bankverein, and it it changed its name to Creditanstalt-Bankverein.
The Second World War
Following the Austrian Anschluss to Nazi Germany in 1938, Creditanstalt-Bankverein was targeted for both financial and racial reasons. Louis Rothschild was immediately arrested and imprisoned for the losses suffered by the Austrian state when the bank collapsed. Deprived of his position and property, he emigrated to the US in 1939 after spending a year in custody. Creditanstalt-Bankverein was later taken over by Deutsche Bank, and was responsible for settling the financial issues of Nazi war operations as well as the 'Aryanization' of Jewish-owned businesses. After the Second World War, the bank was nationalised by Allied-occupied Austria in 1946 and became mainly a commercial bank and highly involved in Austria's economy, holding stakes in important Austrian companies such as Wienerberger, Steyr-Daimler-Puch, Lenzing AG and Semperit. From 1956 onwards, Creditanstalt was again partly privatised by issuing 40% shares, though only 10% common stock.
The later twentieth century
In 1981, the former Social Democratic Minister of Finance Hannes Androsch assumed the office of a general manager. Industrial interests were reduced, while the government share fell to 51%. In the 1980s, Creditanstalt opened branches in London, New York and Hong Kong. In 1997, the state-owned shares were sold to Bank Austria. In 2002 Bank Austria Creditanstalt (BA-CA), was created, which in turn became part of the German HypoVereinsbank group. In 2005 HVB was taken over by the Italian UniCredit holding company, and after 153 years, the name Creditanstalt disappeared in 2008.