(Bloomberg) -- Austrian banks plan to help households struggling to repay mortgages in response to a growing public outcry over windfall profits they’re reaping from rising interest rates.
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The firms plan to present joint measures in the coming days to help borrowers struggling with variable-rate mortgages, said Willi Cernko, the Chief Executive Officer of Erste Group Bank AG.
“Should borrowers with variable—rate credit face individual stress situations, Austrian banks will make a contribution via concessions,” Cernko, who also heads the industry group at the Austrian Chamber of Commerce, said in a post on LinkedIn. About half of all loans are already safeguarded by fixed rates, he wrote.
The announcement comes as Austrian politicians heading into elections next year join lawmakers from across Europe in criticizing banks for raising the cost of borrowing while keeping rates on savings low. Italy last week became the latest country to shock markets with plans for a surprise tax on banks’ windfall profits.
Opposition lawmakers in Austria have demanded several measures to support households, including a special bank tax, capping interest on loans and forcing lenders to offered higher rates on deposits. Austria’s Minister for Social Affairs, Johannes Rauch, has asked the VKI consumer protection agency to launch class action to establish whether banks were unfairly keeping deposit rates near zero.
Cernko said banks were abiding by years-long calls by the European Central Bank to boost profitability and help build capital buffers for future crises.
“Arbitrary and short-sighted measures that weaken the banking industry also damage the investment climate in Austria,” he said.
In Austria’s retail banking market, Erste Group Bank AG competes with the Raiffeisen group of regional lenders, Bawag Group AG and UniCredit SpA’s Bank Austria.
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