Austrian financial institutions march east

Austria Today

April 27, 2006

With the relentless march by Austria´s corporate and financial institutions into East and Southeastern Europe showing no sign of slowing down, the country’s law firms are also in expansive mode. During the past five years, Austria´s financial institutions have been especially acquisitive. The country´s socalled ‘big three’- Erste Bank, Bank of Austria and Raiffeisen – have all merged with banks in the region, providing a glut of mandates for the local firms. Notable deals include Erste Bank´s acquisition of a EUR 2.6 billion controlling stake in Romania´s BCR Bank, the largest remaining state-owned bank in the region, last December.

Baker & McKenzie Vienna partner Georg Diwok says: « The Austrian banks are trusted by investors more than local banks in the region because they are regulated by the European Union and associated with greater stability and solidarity. « The CEE market was under-serviced compared with Austria and the labour and operational costs are much lower, so it makes perfect sense. » Corporate partner Richard Wolf says: « We are the largest firm in Austria now, and we have more non-Austrian staff than Austrian staff. Our aim is to be a key firm in the CEE region and we are looking at Poland, Bulgaria and the Ukraine.

Our growth has not simply been driven by Austrian clients, we have a diverse portfolio. » One hundred-lawyer Cerha Hempel Spiegelfeld Hlawati is also looking to enlarge its footprint in the region, opening two new branches in the past six months.

The 11-lawyer Bucharest office opened its doors in November 2005. The following month, Cerha Hempel became the first Austrian firm to secure a significant presence in Poland, when it announced an alliance with Warsaw firm BSJP Brockhuis Schnell Jurczak Prusak Sp.K in December. The firm is currently weighing up its options in Southeast Europe (SEE) jurisdictions of Bratislava, Sofia and Belgrade. The only magic circle firm to have an Austrian arm is Freshfields Bruckhaus Deringer. The office came as part of the 2000 merger with Bruckhaus Westrick Heller Loeber, which had itself merged with legacy Austrian firm Heller Loeber. When or where the expansion will stop is likely to be dictated by market forces, but the progression south into the under-lawyered markets of the Balkans leaves many of the firms sitting on the border of Turkey – a huge economy on the brink of a major liberalisation programme.

For the moment, Austrian firms are focusing their expansionary efforts on CEE and SEE. But it will not be too long before Turkey enters their sights. Cerha Hempel partner Alfred Nemetschke echoes the view of others in the market when he says: « We are thinking in two or three years of having an office in Istanbul but the next privatisation tsunami will be in Bulgaria and Romania. »