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April 6, 2009

Back to basics

Fred Crawley talks to Alexander Schidecker, CEO of Austrian lessor BAWAFG PSK Leasing, about returning from the Eastern front, and what the future holds for Austria's leasing industry.

By Verdict Staff

Fred Crawley talks to Alexander Schidecker, CEO of Austrian lessor BAWAFG PSK Leasing, about returning from the Eastern front, and what the future holds for Austria’s leasing industry.

 

Alexander Schmidecker is finally getting back to the sharp end of his business. Although the 43 year-old from Vienna has been swamped with strategic meetings since he became chief executive of BAWAG PSK Leasing (BPL) on 1 February, he is at last finding some time to engage with prospective customers.

When Leasing Life caught up with him, he was fresh out of a meeting with clients that had become “more complicated than expected”, and overran by nearly an hour – but he doesn’t sound exhausted or rushed in the slightest. After all, this is the sort of face-to-face work he has always preferred to do.

Schmidecker’s leasing career developed hot on the heels of Austria’s banking market as it expanded eastward in the 1990s, starting with a position at Creditanstalt Leasing in 1994.

“The Austrian banking market was never very big,” he reflects, “but I suppose you could say it gained a lot of ‘sex appeal’ during and after the Velvet Revolution in Eastern Europe. Our banks had managed specific import and export agreements through those countries during the communist era, and so grew up quickly out of a small country to become medium-sized European players, and the leasing companies followed.”

Things moved quickly. When Schmidecker joined Creditanstalt, it had already been operating cross-border leasing with Czechoslovakia and Hungary since the fall of Soviet rule, and had run a Czechoslovakian subsidiary since 1991. Now the bank was pushing its leasing network deep into the CEE region, and Schmidecker, with a background in management consultancy, was present for a lot of tough strategic decisions.

Schmidecker says that this constant testing of markets was difficult going – “a case of two steps ahead, and one-and-a-half back” – but that constant refinement through experiencing problems allowed business models to be more successfully transplanted into new countries.

One of the toughest, and most enjoyable, times for Schmidecker was his tenure as CEO of Creditanstalt subsidiary CAC Leasing in Slovakia – a role that required an extremely entrepreneurial management style due to the nation’s volatile legal and tax climate. With no senior leasing professionals in the state, Schmidecker relied on enthusiastic but inexperienced graduates to staff CAC, growing it to 160 staff and 30,000 contracts in just five years.

But the expansion of Austrian banking had another consequence – an extremely active M&A climate. Creditanstalt was bought by Bank Austria in 1997, which was in turn subsumed into German banking group HVB by the time the merger was complete in 2002. To top things off, HVB was swallowed up by Italy’s UniCredit in 2005.

Schmidecker returned to a multinational CEO role in Vienna, and by the time the merger was complete, he was at the helm of a 14-nation, 1,500-person colossus that turned over €3 billion a year in new business, and which filled his working life with high-level bureaucratic tasks, leaving little time for meeting with clients and partners.

As 2008 drew to a close, he realised it was time to leave: “I decided that the culture shift I had experienced didn’t really fit my expectations. I had enjoyed a very entrepreneurial management position with Bank Austria Creditanstalt for 15 years, but things had grown to the point where the work was much more administrative.”

Hence the move to the leasing arm of BAWAG PSK, which operates a portfolio of around 70,000 contracts in Austria. Although BAWAG PSK sold off its CEE banking subsidiaries in 2008 after being bought by US equity group Cerberus in 2007, it kept a small leasing network throughout Poland, the Czech Republic, Hungary and Slovakia.

With only 200 staff to manage, and these small CEE portfolios, BPL has provided Schmidecker with a management prospect that puts him “closer to the business”, in his words. Better yet – and virtually uniquely for an Austrian banking and leasing network – all back office work is centralised in Vienna, meaning that CEE business is approached directly rather than through separate organisations.

Schmidecker has matched this new opportunity for hands-on management with a flurry of strategic thinking. He expects that BPL will post a profit in the single-digit euro million range for 2008, but aims to build this to a double-digit figure within the next two to three years, in order to achieve a 15 percent return on equity.

To do this he intends to strengthen BPL’s equipment leasing portfolio (which currently makes up roughly 25 percent of the lessor’s loan book), with an emphasis on mid-ticket production machinery, as well as courting clients from the downturn-resistant pharmaceutical and food processing sectors.

Also on the agenda is a focus on sales channels, involving renewed emphasis on bank branch selling, and a pursuit of vendor partnerships with larger companies in the industrial sector. Additionally, he says, BPL will be looking into syndication with other banks and leasing companies on deals in the €10 million to €30 million range – a trend which has not been seen in Austria for a long time.

The end of the post-Soviet boom has put a stop to Austrian lessors’ eastward expansion, while significant structural challenges face them in their home market. Nevertheless, one gets the feeling from talking to Schmidecker that, despite the difficulty, this is the job he has been waiting years to do.

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