Former Österreichische Creditanstalt building (today the Park Hyatt Vienna hotel), founded 1855 “k.k.privilegierte Österreichische Credit-Anstalt für Handel und Gewerbe”, architect Franz Fröhlich (built 1858-60)


The components of the banking system had already been established when the above mentioned Gründerzeit took place. Different components were formed in different periods and new types of institutions were created after the crash of 1873 because the system itself was very dynamic.


The oldest element was the bank of issue in Vienna (1816). The Austrian National Bank opened its first branch in Prague in 1847 and its second one in Pest in 1851. By 1875 it had 24 branches in addition to its headquarters in Vienna. On local markets these branch offices played an important role in the distribution of Treasury notes, government paper money that had been issued again since 1866, and in the supply of bank notes. In the beginning of the 19th century savings banks were established. The Erste Österreichische Sparcasse was established in 1819 with philanthropic aims and it served as an example in other parts of the empire. Due to the crises of 1857 and 1873 a great number of private bankers, who were considered the main financiers before, disappeared from the financial scene or their business was transformed. They either specialised in certain fields or joined larger banks established at that time. The Rothschild house in Vienna was the only one to keep its former position.


The first real banks to grant short-term commercial credit were established in the 1840s and 1850s in the most important trade centres: the Hungarian Commercial Bank of Pest (Pest Magyar Kereskedelmi Bank) (1841), Niederösterreichische Escompte-Gesellschaft in Vienna (1853), Banca Commerciale Triestina (1859). They were commercial banks in the narrow sense, mainly discounting bills. At first they had no part in promotions, but by 1900 they became universal banks.


The first mortgage banks granting long-term agricultural credit were founded in 1841 following the Prussian model: the Galizische Landständische Credit-Anstalt. From 1856 on the Austrian National Bank also granted mortgage loans, unprecedented in Europe. The Hungarian Landcredit Bank (Magyar Földhitelintézet), which was founded in 1863, met the financial needs of the big Hungarian landowners. Mortgage loans were of special importance for mortgage banks as well as for savings banks. In the 1860s the model of the French corporate “immobile” bank was introduced in the Austro-Hungarian Empire. The first of these was the Allgemeine Österreichische Boden-Credit-Anstalt (1863), followed by the Hungarian Mortgage Credit Bank (Magyar Jelzáloghitelbank) (1869). The Boden-Credit-Anstalt did not deal in mortgage transactions alone, but also issued securities and later took part in current business transactions. The original mortgage banks were the provincial banks (Landesbanken) in the empire. The first one was founded in 1865 in Prague, the Hypothekenbank des Königreichs Böhmen, and fourteen more followed. They had no proper capital, but the government of the province guaranteed their loans.


The mobilier banks revolutionised banking in the 19th century. They followed the model of the French Crédit Mobilier of the Pereire brothers. Their main business was issuing securities and they absorbed long- and short-term financial credits from different resources. The first mobilier bank in the empire was the K.K. private Österreichische Credit-Anstalt für Handel und Gewerbe, founded in 1855. Before 1867 it had five branches in Pest, Prague, Lvov, Brno and Trieste. In 1867 it founded the General Hungarian Credit Bank (Magyar Altalános Hitelbank) and later incorporated the Pest branch of the parent company. A number of banks were founded in the following years, such as the Anglo-Austrian bank in 1863 with its first branch in Lvov. It helped to establish the Anglo-Hungarian bank, which did not survive the crash of 1873, but then the parent company opened branches in Budapest and Prague in 1880. The Zivnostenská Banka (1868) acted as a middle man between the central bank and the savings banks and it issued securities like a mobilier bank. In 1869 the Vseobecná Ceská Banka was established, which was more independent and more effective in issuing securities. In 1869 the Boden-Credit-Anstalt created the Wiener Bankverein, a mobilier bank, and in 1870 the Unionbank was founded in Vienna and in 1880 the Österreichische Länderbank.


The great banks of Vienna had been founded as universal banks and their efforts to extend their influence over the whole Austro-Hungarian Empire via branches and contractual obligations soon became apparent. The Bohemian and Hungarian banks followed the same path and tried to integrate the neighbouring provinces as independent units into the multinational capital market of the empire. Yet there was still one big difference before World War I, the starting capital of the Viennese banks was much higher than that of the Hungarian or Bohemian banks.


Another type of bank that was established in the empire was the credit cooperative. Two types became wide-spread in the second half of the 19th century and both had their origins in Germany. The Schultz-Delitsche type of cooperative served the needs of urban craftsmen, accepted deposits, engaged in discount business and promised high dividends to the members. The second type, the Raiffeisen cooperatives, served the needs of the rural communities. They did not pay dividends, but created social and cultural funds and supplied longer-term loans against bonds. Due to the depression in agriculture, a lot of Raiffeisen cooperatives were founded from 1885 onwards.


After the crash of 1873 the growth of joint-stock banks ceased and the boom of the Gründerzeit was only reached in the 1890s again. The savings banks were less affected by the crisis and so they could play an important role in lending. They just lost this importance in the Second Gründerzeit (1904-1912). In the 1880s the mortgage banks and the credit cooperatives gained in importance as they played a decisive role in financing agriculture, home building, and the local infrastructure. After 1867 the general public and the banks did not want to take on the risk of industrial investment, so those credit sectors that were organised on a local basis were doing fine, as funds were usually allocated within a certain region. The financial institutions as such were organised on a national basis within the multinational framework of the monarchy, as can be seen in chapter 4. The banks were trying to get closer to the depositors and the concentration of banking capital went along with the decentralisation of the institutions. Whereas in 1896 the ten large banks of Vienna had 34 branches in the monarchy, by 1905 they had 92. Consequently the competition between the banks of the different nationalities and the commercial and the savings banks increased. For example in 1913 the Bohemian Sporobanka had branches in Vienna, Lvov, Krakow, Czernovitz, Budapest and Brno.


International influence on the Austro-Hungarian banking system can be found in the area of joint-stock banks as well as savings banks and private banking houses. Even before 1848 Vienna emerged as one of the international financial centres in Europe and the Vienna Stock Exchange, established in 1771, became a site for the lending activities of the cosmopolitan dynasties of bankers. Vienna was considered to be an international centre of the money market, but a secondary one. The Hungarian and the Bohemian banks and with them Budapest and Prague had high ambitions in the same directions, but they could not gain more than local significance as their direct relations to the international financial markets were small and went via Vienna or Berlin.

Literature: Köver, Gyöegy, The Austro-Hungarian Banking System, in: Cameron, Rondo / Bovykin, V.I. (eds.), International Banking 1870-1914, OUP 1991

Teichova, Alice, Banking and Industry in Central-East Europe, in: Rathkolb, Oliver / Venus, Theodor / Zimmerl, Ulrike (eds.), Bank Austria Creditanstalt. 150 Jahre österreichische Bankengeschichte im Zentrum Europas, Zsolnay 2005