Österreichische Postsparkasse, architect: Otto Wagner, built 1904-1906

The Great Depression hit Hungary hard, stopping the slow recovery and leading to a dramatic decline. The crisis hit Hungary first through the collapse of the international agricultural market with a 60-70 per cent decline in agrarian prices. But the most severe blow was dealt by the break-down of the Credit-Anstalt and was followed by the international financial and banking crisis. Hungary was heavily indebted, but new credits stopped arriving and substantial portions of the short-term credits were withdrawn from Hungary. The Hungarian National Bank lost most of its gold and foreign exchange reserves and the banking system reached the edge of the abyss in 1931. Between 1931 and 1933 70 banks collapsed. By 1938 the number of banks had been reduced by more than 300 that had been operating in 1929. The effect of the shrinking banking sector was the decrease in its share of industry. Strict government measures were introduced after the financial collapse and the repayment crisis in 1931, the gold Standard was abolished and foreign exchange controls were introduced. After the trade agreement with Nazi Germany in February 1934 barter trade became dominant and a clearing system was introduced to replace hard currency payments in foreign trade. State interventions, economic nationalism, high protection and the policy of self-sufficiency became stronger. Hungary was isolated from the world market and became integrated into the German Nazi economic system.


In 1928 the Wiener Bank-Verein took over an important part in the establishment of the Allgemeiner Jugoslavischer Bankverein AG in the Kingdom of Serbs, Croats and Slovenes. In 1929 King Aleksandar dissolved Parliament, forbid political parties, abolished the constitution and proclaimed the hereditary Kingdom of Yugoslavia. While the financial institutions were trying to adapt to the new political and economic developments, the European banking crisis hit Yugoslavia. When the Austrian government became the new shareholder of the Credit-Anstalt, it decided to withdraw most of its investments abroad, including Yugoslavia, where it owned a number of banking and industrial affiliates. A chain reaction set in and created a difficult situation for the largest privately owned Yugoslav banks of that time, such as the First Croatian Savings Bank and the Yugoslav United Bank. This was the result of the connections between financial, industrial and commercial capital and had similar effects on the activities of the Wiener Bank-Verein, among other banks. When the Wiener Bank-Verein was merged with the Credit-Anstalt, the Allgemeiner Jugoslavischer Bankverein became majority-owned by the Credit-Anstalt (50.3 per cent of shares).The rest of the shares were owned by Belgian, Swiss and Czech banks. Due to the huge financial difficulties the Viennese and Budapest Banks were facing, their role as financial intermediaries in Yugoslavia and in the Balkans as a whole weakened substantially. Foreign capital was not prepared to continue financing the old Austrian arrangements and supporting the method of co-operation with certain domestic economic and political representatives because they only produced losses. The traditional Austro-Hungarian type of bank, the universal bank, that financed industry and accepted deposits, was abandoned. The Allgemeiner Jugoslawischer Bankverein was more or less the only monetary institution from which foreign capital was not withdrawn. On the contrary, it provided Yugoslav institutions with necessary funds. The significance of this bank was due only to the reputation of the European bankers on its board and the business and political connections that had been established in the decades before. It was the main bank in Yugoslavia because it could maintain the confidence of both the domestic depositors and the foreign creditors and became the main financial hub for foreign capital investment in the Yugoslav economy.


In addition, on the Polish capital market, the Credit-Anstalt achieved the strongest position among the Austrian banks. It created a consortium of banks including Akcyjny Bank Hipoteczny S.A., Bank Dyskontowy Warszawski S.A. and Slaski Zaklad Kredytowy S.A. The Credit-Anstalt owned 33 per cent of the shares of those banks. Further informal co-operations were established with Bank Zachodni S.A. When the Credit-Anstalt merged with the Boden-Credit-Anstalt, Bank Malopolski S.A. was acquired as well as part of the Boden-Credit-Anstalt in 1930. With the Viennese superbank merger of Credit-Anstalt and Wiener Bank-Verein the Viennese bank also gained influence in the Powszechny Banku Zwiazkowy w Polsce. The expansion of the consortium contributed to the extensive flow of Austrian capital into the Polish industry. The failure of Credit-Anstalt had a negative effect on the situation of Polish banks controlled by the consortium. Deposits fell rapidly, but the Polish banks did not seek the assistance of the Polish government or the Polish National Bank in this financial crisis. The ties with Austrian capital weakened and after 1938 German capital took over as the Creditanstalt-Bankverein was subordinated to the Deutsche Bank.


The Viennese banks, Credit-Anstalt, Boden-Credit-Anstalt and Niederösterreichische Escompte-Gesellschaft, continued to hold large shares of industrial capital in Czechoslovakia after 1918.These banks also operated in co-operation with Zivnobanka in Czechoslovakia, as two of them owned shares in Zivnobanka and the Zivnobanka board had close personal connections to Vienna. Yet the position of Viennese banks weakened gradually, especially after the failure of the Boden Credit-Anstalt and the Credit-Anstalt. Zivnobanka and other Czech banks took over some of their shares. By that, the Austrian influence in Czech banking declined dramatically, yet strong personal connections to Vienna persevered. So, Austrian capital still exerted an influence on Czech industry, but a much reduced one. The share of Austrian direct investment in Czechoslovakia was 13.1 per cent in the interwar years, compared to 30.8 per cent British and 21.4 per cent French direct investments. The Great Depression hit the Czech banking system as severely as it hit the Austrian banking system in 1931. Several banks had to get state assistance to cope with the crisis, such as Anglo-Pragobanka, Ceská prumislová banka, Moravská banka, Böhmische Union-Bank, Agrární banka. None of the banks went bankrupt, but all suffered severe losses. After the crisis of 1931 many Austrian financial groups sold their capital shares in Czechoslovakia, the most important were shares in Ceská eskomptní banka and sugar refineries and distilleries. In the 1930s the flight of Jewish capital that was closely connected to the Viennese banks took effect due to the anti -Semitic atmosphere in Czechoslovakia. To sum up, the close ties between Viennese and Bohemian banks in the 1920s weakened continually until 1938 when the whole banking system was liquidated in the course of the German occupation.

Literature: Berend, Ivan T.,Banking and the Hungarian Economy in the 20th Century, in: Rathkolb, Oliver / Venus, Theodor / Zimmerl, Ulrike (eds.), Bank Austria Creditanstalt. 150 Jahre österreichische Bankengeschichte im Zentrum Europas, Zsolnay 2005, 212-225

Aleksic, Vesna, The History of the Allgemeiner Jugoslawischer Bankverein AG in Belgrade in the Context of Yugoslav Banking History after 1918, in: Rathkolb, Oliver / Venus, Theodor / Zimmerl, Ulrike (eds.), Bank Austria Creditanstalt. 150 Jahre österreichische Bankengeschichte im Zentrum Europas, Zsolnay 2005, 226-238

Lacina, Vlastislav, Tschechische Banken und ihre Verbindungen zum österreichsichen Bankwesen bis 1945, in: Rathkolb, Oliver / Venus, Theodor / Zimmerl, Ulrike (eds.), Bank Austria Creditanstalt. 150 Jahre österreichische Bankengeschichte im Zentrum Europas, Zsolnay 2005, 239-252

Kalinski, Janusz, Austrian Banks in Poland up to 1948, in: Rathkolb, Oliver / Venus, Theodor / Zimmerl, Ulrike (eds.), Bank Austria Creditanstalt. 150 Jahre österreichische Bankengeschichte im Zentrum Europas, Zsolnay 2005, 253-267