Erste Bank hopes 'ordeal' over after shares slump

The market reaction to Erste Bank's announcement that it expects to book a net loss for 2014 was "harsh" but "understandably so," CEO Andreas Treichl told CNBC on Monday.

Last week, the Austrian lender - which is the third-biggest lender in emerging Europe - said it would post a full-year loss due to charges on its Hungarian and Romanian business.

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The building of the Erste bank headquarters is pictured in Budapest

ATTILA KISBENEDEK I AFP I Getty Images

Shares plunged more than 16 percent on Friday after the news, and closed down over 2.6 percent on Monday. So far this year, the bank's share price has now slipped over 25 percent.

But Treichl admitted the hit the bank was forced to take as a result of government action in Hungary and changes in Romanian National Bank policy on non-performing loans was "pretty dramatic".

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Because of the weaker results in the two country units, the group said it expected to post a net loss of between 1.4-1.6 billion euros ($1.9-2.18 billion) in 2014.

Hungary's decision to take correction on old foreign currency loans and repayment, however, is unlikely to go any further, Triechl said, adding that he hopes the "ordeal is slowly over".

"It is an approach by the Hungarian government which we have experienced during the last years, which we can basically summarize as: 'We're going to milk the cow as much as we can, but we are not going to slaughter it'," he added.