Profit cushion

How Volksbank shrank its way out of the crisis

The bank once needed state aid. However, thanks to good development, this has already been repaid.

(Bild: APA/Herbert Neubauer)

The billion-euro loss during the financial crisis turned into a solid profit cushion thanks to consistent cuts.

The bankruptcy was not far away: due to financial adventures in Eastern Europe and real estate investments, the Volksbank Group slipped into a billion-dollar loss between 2008 and 2012. Even the state had to help out with so-called participation capital to prevent a total flop.

During this dramatic phase, those responsible brought in a top manager from outside. Gerald Fleischmann(note: not the ex-spokesman of former Chancellor Kurz) had previously proven his skills at Erste Bank in Vienna and Salzburg - now he was supposed to save the Volksbank Group from going under.

After cutting costs, the bank is very profitable again
The smart banker did not hesitate for long: thanks to a wave of mergers, 50 Volksbanks became just nine, the 460 branches melted down to an efficient 230, the number of employees fell from 5,000 to around 3,000. The bank reduced its costs from 625 to 480 million euros, making it possible for the balance sheet to suddenly show a pleasing profit of 326 million euros.

CEO Gerald Fleischmann: Came from Erste Bank, saw and resolutely restructured with many mergers throughout the country.

(Bild: Klemens Groh)

In the meantime, the state aid has been repaid, the strategy is focused on personal advice, regionality is cultivated as a cooperative, and the bank continues to surprise with innovative products, some of which come from cooperation partners in neighboring countries.

Focus on business in Austria
Gerald Fleischmann, who has been at the helm of the Volksbanken Group for nine years: "We have sold our Eastern European bank, as well as other holdings (such as in Liechtenstein). We are focusing entirely on business in Austria and we have been able to score particularly well in the country."

Personal support is the key word here - while other banks want to do everything digitally, "we still have personal advisors. And part of our profits are reinvested in the respective region, which is also in line with the cooperative concept. The time of crisis is over, now growth is the order of the day again.