Business Day

Raiffeisen upbeat on ‘emerging Europe’


RAIFFEISEN Bank Internatio­nal plans to expand further in Central and Eastern Europe and is optimistic the region’s fragile economic situation will improve in the second half of this year.

Raiffeisen and rivals Bank Austria and Erste Group are already the biggest banks in so-called emerging Europe and want to invest more in the region because of more dynamic growth prospects than the mature markets of Western Europe.

Raiffeisen CE Herbert Stepic said stronger growth should emerge across the region in the second half of the year.

He said the bank was looking for opportunis­tic deals in promising markets such as Romania, where the bank is in the process of buying Citibank’s retail portfolio, with more than ¤90m in assets.

“More rivals will exit countries here and there for one reason or another in the years ahead, so further opportunit­ies will arise for us,” he said yesterday.

Mr Stepic said he was looking at Romanian assets being sold by Greek or Cypriot banks, but was not keen to buy entire banks after the acquisitio­n last year of Polbank, the Polish arm of Greece’s EFG Eurobank Ergasias.

Rivals are also looking to put more resources into the region.

Erste Group said in February it had secured the resources to take advantage of a fragile recovery in emerging European markets.

Bank Austria is also looking to capitalise on growth opportunit­ies in the region.

Raiffeisen, which in February reported that profit fell last year by about a quarter to ¤725m, is aiming to keep bad-debt provisions for this year on a level with last year’s because of economic conditions.

“In light of the economic prospects, the situation remains tense in several of our markets. In 2013, we therefore expect a similar net provisioni­ng requiremen­t as in the previous year.” Net provisioni­ng fell 5.1% to ¤1.01bn last year.

We regard Raiffeisen as one of the most convincing bank business models in Europe with 14.2million customers

Bad loans make up about a tenth of Raiffeisen’s lending portfolio.

Mr Stepic was relaxed about the impact on foreign customers of a potential loosening of banking secrecy in Austria.

Austria said on Tuesday it would join Luxembourg for talks with the European Union on how to crack down on cross-border tax cheats, signalling an easing of Vienna’s hardline stance on bank secrecy.

“From (Raiffeisen’s) perspectiv­e, I see no adverse impact at all,” the CEO said, but he could not speak for the rest of the group, which includes hundreds of small co-operative banks.

The bank reiterated that a capital increase remained an option depending on market developmen­ts. Prospects for a share sale have kept Raiffeisen shares trading at about eight times 12-month forward earnings, a discount to Erste’s 10.5 times, according to Thomson Reuters StarMine, which ranks analysts’ estimates according to their previous accuracy.

“We regard Raiffeisen as one of the most convincing bank business models in Europe with 14.2-million customers in (Central and Eastern Europe),” Kepler analyst Dirk Becker said in a research note. But until the bank had addressed its capital issue it was difficult to value the stock because of potential dilution.

The bank’s shares were up 1.4% at ¤26.96 yesterday.

Mr Stepic said yesterday he had decided to redeem part of his sharebased bonus out of “solidarity” and respect for his employees amid job reductions. He repaid ¤2m to his company after saying he noticed that the lender’s annual report would show his compensati­on swelled last year while he cut jobs and profit fell. Reuters

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