Austrian banks are taking steps to address the concerns raised by households struggling to meet their mortgage repayments amidst the backdrop of surging interest rates. The banks, led by Erste Group Bank AG, are preparing to introduce collaborative measures aimed at aiding borrowers dealing with variable-rate mortgages.
In a statement on LinkedIn, Willi Cernko, the CEO of Erste Group Bank AG and head of the Austrian Chamber of Commerce industry group, expressed that Austrian banks are committed to making concessions to assist borrowers facing individual financial stress due to variable-rate credit. He noted that a significant portion of loans already benefit from fixed-rate protections.
This development, which Cernko says he will share the plans for in the coming days, comes as Austrian politicians join a chorus of European lawmakers criticizing banks for elevating borrowing costs while maintaining low savings rates.
Italy’s recent unexpected proposal for a tax on bank windfall profits has further fueled the discourse.
A report from Bloomberg notes that the country’s opposition lawmakers have demanded various measures to support households, including a potential special bank tax, limitations on loan interest rates, and incentives for higher deposit rates. Austria’s Minister for Social Affairs, Johannes Rauch, has also instigated a class-action inquiry, led by the VKI consumer protection agency, to assess whether banks’ low deposit rates are unjust.
Cernko underscored that the banks’ actions are aligned with long-standing European Central Bank directives aimed at bolstering profitability and fortifying capital reserves for future economic challenges. He cautioned against rash measures that could destabilize the banking industry and hinder Austria’s investment climate.
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