Austrian bank Bawag PSK has become the first major European banking group to open up shop in Libya, with a representative office located at the Corinthia Bab Africa hotel in Tripoli. Bawag plans this to serve as an entry point to the North African market, in close co-operation with Bawag Malta Bank Ltd, a wholly-owned subsidiary which opened in Sliema two years ago, it said in a statement.
Bawag's chairman and CEO, Johann Zwettler, who led a 25-strong Austrian delegation to Tripoli for the opening, said: "We understand that Libya is on the brink of major change, with outstanding plans for transformation. When you consider the country's economic potential, these plans have strong significance.
"It is Bawag's wish to be part of Libya's evolution. We are convinced that, in opening the Tripoli office, we are taking the right step at the right time, and in the right place."
The representative office will be headed by Bashir Ghazla, Bawag's chief representative in Libya. He will be supported by Bashir Hagul, who is based in Malta.
Mr Zwettler continued: "We do not want to compete with Libyan banks for existing market share. We want to develop new means of banking in the Libyan market, in borrowing, lending and other financial services. We want to co-operate and collaborate, to provide our expertise, so that we may share the benefits of Libya's development."
The opening of Bawag's Tripoli office is to be seen in the light of ongoing talks between the European Union and Libya, about the latter's participation in the projected Euro-Mediterranean Free Trade Area, which should be in place by 2010.
"Bawag is an Austrian bank, and Austria is a member of the European Union. Our relationship with Libya has to be considered in this context," Mr Zwettler said. "As far as I know, Libya is having intensive talks with the EU about joining the Euro-Med partnership.
"In any case, the European Investment Bank is already actively preparing a mandate for activities with Libya, and Bawag has a good and close relationship with the European Investment Bank."
Ewald Nowotny, former vice-president of the EIB and its current honorary vice-president, was in Tripoli for the opening of Bawag's representative office.
Austria has had a corporate presence in Libya for many years, not least through its energy corporation OMV, which has operated there for at least 30 years.
Bawag already finances a considerable volume of export business to most of the Arab states. It is also an active participant in syndicated loans for Arab institutions and corporations, and it is the primary banker to the OPEC (Organisation of Petroleum Exporting Countries).
Since last year, Bawag has been wholly owned by the Austrian Federation of Trade Unions, the OeGB, which was already the main shareholder when it reacquired the remaining 46% stake held by the German banking organisation, Bayerische Landesbank.
Later this year, Bawag will be fully merged with PSK - Austria's postal savings bank, set up by Emperor Franz Josef in 1883 - which it had acquired from the Republic of Austria in 2000. This has created a single bank with 4,000 employees and 1.3 million customers, and the largest centrally managed distribution network in Austria, with outlets even in remote villages.
Bawag PSK now has more than 30% of the Austria domestic banking market, and is the fourth largest banking group in Austria by total assets.
Through the Austrian Federation of Trade Unions, which has 1.4 million members, Bawag has direct access to 12,500 employee representatives in 3,500 companies for the distribution of financial products.
This, together with a conservative approach to credit risk and a strong line in innovation, has helped fuel the bank's remarkable growth. Its assets have more than quadrupled since 1986: from €12.6 billion to €56.3 billion last year.
Bawag is now increasing its presence in the four central European countries that are new EU member states: the Czech Republic, Slovakia, Slovenia and Hungary, countries which have had a historical connection with Austria, and which are its geographical neighbours.
"These countries are now more attractive to Bawag since they joined the EU," Mr Zwettler said. Beyond that, Bawag operates a representative office in Hong Kong, asset management and structured international financing services in Dublin, and the Malta subsidiary.
Bawag Bank was set up in 1922 under the name of Arbeiterbank by Karl Renner, state chancellor of what was at the time the First Republic of Austria, and later, federal president of the Second Republic.
Arbeiterbank was forcibly dissolved for political reasons in 1934, and reopened only after World War II ended, in 1945. The Austrian Trade Union Federation, which was set up that same year, was its main shareholder.