Austrian Banks’ Bad Debt Eroded 65% of Profit Since 2008

Austrian banks must reconsider a business model that forced them to use 44 billion euros ($60 billion), or almost two-thirds of their profit since 2008, to provision for bad debts, the central bank said.

Austria’s largest banks, the biggest lenders in eastern Europe, must strengthen capital to catch up with competitors, cut costs and remain wary of the next bubble, Deputy Governor Andreas Ittner told reporters in Vienna today. If they do, the former communist part of Europe still offers more growth than their home market, he said.