Banks in Lviv covers the history of banking in Lviv, Ukraine. Banking emerged during the Middle Ages and actively developed after Galicia became part of the Habsburg Empire. Initially, loans secured by property were provided by wealthy burghers. Later, the first credit institutions emerged under the largest Lviv confessions, which were eventually replaced by classical banking organizations. During the Austrian period, Lviv's banking system played an important role in the development of regional railway transport and oil production. Additionally, many banks commissioned the construction of monumental buildings for their headquarters and branches.
By the beginning of the 20th century, Austria-Hungary had developed a specific financial system model in which banks were closely linked to industry and railway transport. This model resembled the German financial system, as it was influenced by German financial culture, but it also had its own peculiarities. In the multi-ethnic empire, there were several interconnected financial networks with their own centers in Vienna, Budapest, Prague, Krakow, and Lviv. The entire banking system of Galicia depended heavily on loans from the Austro-Hungarian Bank and foreign banks that operated in Lviv.
The First and Second World Wars caused significant damage to Lviv's banking sector. In 1939–1940, after the annexation of Western Ukraine by Soviet authorities, all commercial banks in Galicia were liquidated. During the Soviet period, regional branches of USSR state banks operated in Lviv, and the first commercial banks were opened in 1990. After Ukraine became independent, banks of various forms of ownership began operating in the city: private, state, and foreign (both local and all-Ukrainian). Lviv's banking system was negatively affected by the financial and economic crises of 1997–1998, 2008–2009, and 2014–2015.
The first Polish period
In the 15th to 17th centuries, lending to private individuals and city authorities (magistrates) was traditionally carried out by owners of large financial capital who possessed the greatest fortunes in Lviv. The most notable among them were the German Valerian Alembek, the Greek Konstanty Korniakt, and the Polish burgher family Kampianov. In the first half of the 17th century, charitable lending institutions, similar to European religious banks (known by their Latin name Montes pietatis, or Mountains of Piety), began to appear in Lviv, initially specializing in mortgage and short-term loans.Петро і Іван Радковець. pp. 11, 16. В: Банки давнього Львова // Галицька брама. 2001. No. 4 (76) (April).
In 1640, St. Gregory's Brotherhood at the Armenian Cathedral founded the first financial institution in Lviv, the Armenian Pious Bank, which operated until 1939. In 1665, a pious bank was founded at the Lviv Catholic Cathedral (for some time, it operated in the Kampian Chapel at the Latin Cathedral). Additionally, since the mid-17th century, the Lviv Dormition Brotherhood assisted its members and later others with interest-free loans.Юрій Смірнов. pp. 6—7. В: 300 років історії вірменського побожного банку «Mons Pius» // Галицька брама. 2001. No. 4 (76) (April).
The charter of St. Gregory's Church Brotherhood, approved by Archbishop Mikołaj Torosowicz, detailed to whom, for how long, and at what interest rates money could be lent, what could be accepted as collateral, and how to deal with debtors. In the first decades of its activity, the Armenian Pious Bank granted loans only to members of St. Gregory's Brotherhood and only for one year, accepting gold, silver, and precious stones as collateral (the collateral had to be worth twice the loan amount). The interest rate at the Armenian Pious Bank was up to 8 percent per annum. If the loan was not repaid within the specified period, the brotherhood reminded the debtor three times; after that, the collateral was sold. After deducting the debt and interest, any remaining money was returned to the client.
In fact, pious banks, especially those established at Catholic cathedrals, were designed to combat the influence of numerous moneylenders (it is no coincidence that the first Lviv pawnbrokers also opened near the Latin Cathedral, operating under the patronage of the clergy and the magistrate.After a period of wars and decline, the Lviv Pawnshop was reorganized by the Burgomaster Bartolomey Zimorowic, and in 1668 the Catholic Archbishop of the city, Jan Tarnawski, approved a new statute of the institution, according to which the pawnshop was fully owned by the clergy. Initially, these banks provided interest-free loans secured by real estate, but over time they began to charge customers a low interest rate. Larger loans were issued by Jewish qahal, as well as individual moneylenders among Lviv's Jews and Armenians (the activity of Jewish moneylenders often contributed to antisemitism among the city's residents).
In the second half of the 16th century, the Jewish moneylender Isaac Nachmanovich, who lent money to the Polish nobility and financed the construction of the Golden Rose Synagogue, along with Jewish wine merchants Chaim Cohen and Abraham de Mosso, held significant influence in Lviv. By the mid-17th century, Lviv's Armenian merchants amassed enormous wealth and wielded considerable influence in both the business and political spheres. For instance, the fortune of merchant Jan Varteresovich was estimated at 600,000 zlotys, while the fortune of the richest Polish merchant in the city, Jan Alternmayer, did not exceed 120,000 zlotys. Another Armenian merchant, Christopher Bernatowicz, lent King Władysław IV 300,000 zlotys, and during the by Bohdan Khmelnytsky's troops in 1648, it was the Armenian community that paid a ransom of 90,000 zlotys.
Despite the establishment of three more banks in Lviv before 1728, under the Armenian brotherhoods of the Holy Trinity, Immaculate Conception, and the Immaculate Conception of the Virgin Mary of Yazlovets, the Armenian Pious Bank remained the largest and most popular among them. In addition to precious metals and stones, Armenian banks began to accept other valuable items, such as weapons, as collateral. For instance, in 1737, the wife of Armenian merchant Andrei Latinovich borrowed 1,080 zlotys from the Armenian Pious Bank, leaving several bronze cannons as collateral.
Since 1702 to 1745 the assets of the Armenian Pious Bank in cash and pledges amounted from 14,946 PLN to 78,290 PLN. The profits from financial activities were not the only means of replenishing the banking capital of the Brotherhood of St. Gregory. It was not uncommon for the bank to receive donations or bequests of considerable sums. For example, in 1746, Dr. Szymon Krzysztofowicz, a doctor of medicine, donated 9,000 zlotys to the brotherhood (on average, donations ranged from 500 to 3,000 zlotys). Merchants and craftsmen, as well as representatives of the clergy and gentry, were among the clients of the Armenian Pious Bank. Notable clients included Lviv standard-bearer Józef Frantiszek Dzieduszycki, priest Yuri Godzemba Laskaris, influential princely families Lubomirski and Sapegi, and Armenian Archbishop Jakub Stefan Augustynowicz.
Before the first partition of Poland, private bankers were already operating in Lviv, for whom providing financial services had become the main occupation. Additionally, there were bankers' houses whose activities were not yet clearly distinguished from those of trading houses. There were also a number of small credit offices and savings banks that accepted deposits from citizens and residents of the surrounding villages and issued small consumer loans.
Austrian period
At the end of the 18th century, after Lviv became part of the Habsburg Empire and the reforms of Joseph II, financial activities, including banking, intensified. Lviv Armenians united the capitals of four banks under ecclesiastical confraternities and provincial institutions, reorganizing the Armenian Pious Bank (approved in 1790). The archbishop appointed the director and members of the supervisory board, and the bank's income was divided among the archbishop, the chapter, and the parishes. Part of the income went to help poor parishes, churches, schools, and priests.
During the Napoleonic Wars, the Lviv banking system went through difficult times. In 1810, the Austrian authorities confiscated about 80 kilograms of silver from the Lviv Armenian community, which negatively affected the financial stability of the Armenian Pious Bank. In 1812, the Austrian Empire declared bankruptcy, which led to the bankruptcy of many Lviv banks, including the Armenian Pious Bank.Юрій Смірнов. pp. 6-7. В: 300 років історії вірменського побожного банку «Mons Pius» // Галицька брама. 2001. No. 4 (76) (April). In 1826, the Austrian Savings Bank started its activity in Lviv. In 1829, the first project of the Vienna-Krakow-Lviv railway was developed, supported by the Viennese banker of Jewish origin Solomon Rothschild (this line was intended for the export of salt from Galicia).
In the 1830-1840s there was a period of financial stability in the Austrian Empire, banks managed to regain the shaken confidence of customers. For example, the capital of the Armenian Pious Bank in 1842 exceeded 50 thousand florins (in 1860 it was 150 thousand florins, and in 1881 — 260 thousand). In 1843 the Galician Credit Institute began its activity (in 1868 it changed its name to Galician Land Credit Partnership). In the years 1843-1868 this financial institution was located in the Ossolineum building at 3 Ossolinskieh Street (now the Stefanik Scientific Library at Stefanik Street), in the years 1868–1914 in its own building at Karl Ludwig Street, 1-3 (Svoboda Avenue nowadays).After its construction in 1822, the building belonged to the merchant and banker house Gausner & Violand.
In January 1844, the Galician Savings Bank was established to collect funds for the construction of the city and the development of industry. In 1846-1891 it was located at 2 Maerovskaya Street (today Sechevye Sagittarius Street), then it moved to Karl Ludwig Street 15 (the building of the bank was built according to the project of the famous architect Julian Zacharewicz, today it houses the Museum of Ethnography and Arts and Crafts).The sculptural group Berezhlivost in the attic of the building was designed by Leonard Marconi. The central statue holding a torch was influenced by the New York Statue of Liberty by the Frenchman Bartholdi. Diet of Galicia and Lodomeria guaranteed the clients of the Austrian and Galician savings banks the timely payment of interest and the return of their deposits on demand. Against the background of the Revolutions of 1848 in the Austrian Empire (1848), the Empire began a massive outflow of private capital and the growth of the state budget deficit, which had a negative impact on the banking sector. In 1853, the National Bank of Austria opened a branch in Lviv.Юрій Бірюльов. pp. 8—9. В: Захаревичі — будівничі львівських банків // Галицька брама. 2001. No. 4 (76) (April).
In the first half of the 19th century, Lviv's credit institutions lacked financial resources, which hindered the economic development of the region. The absence of a central bank, the small number of private bankers, and the dominance of Jewish moneylenders made it difficult to provide credit to industry. The aristocracy, which owned large fortunes, preferred to invest abroad. From the mid-19th century, however, a new banking system began to take shape with the emergence of branches of Austrian banks and joint-stock banks. These banks were dominated by the Polish aristocracy, which diluted profits through high dividends.
In the second half of the 19th century, an important role in the financial and economic development of Galicia was played by the activities of such influential Lviv residents as the following ones: