Chief of Austrian bank offers to quit

LONDON: Raiffeisen Bank International, one of Austria’s largest lenders, said on Friday that Herbert Stepic had offered his resignation as chief executive after his personal investments in Asian real estate came under increasing scrutiny.

Mr Stepic, one of the longest-serving banking executives in Austria, said in a statement that he had offered to resign because inquiries into his investments and recent news reports about them threatened to damage Raiffeisen’s reputation.

The bank said its board would consider his proposal promptly. Mr Stepic, who has been with Raiffeisen since the 1970s, will remain chief executive until the board makes a decision.

Mr Stepic built his reputation in Austria’s banking sector when he started Raiffeisen’s expansion into Eastern Europe, a step that turned a local Austrian lender into one of the biggest banks in the region. Raiffeisen opened its first business in Eastern Europe in 1987, in Hungary, years before the collapse of Communism in 1989.

Raiffeisen now has operations in 17 markets in Central and Eastern Europe, more than 3,000 branches, and 14 million customers. The expansion has been highly profitable for the bank until recently, when rising numbers of bad loans in Eastern Europe weighed on its earnings.

The bank and Austria’s financial market regulator are reviewing the circumstances under which Mr Stepic bought three apartments in Singapore through investment vehicles set up in Hong Kong and the British Virgin Islands. Mr Stepic has repeatedly said that these were not ‘‘offshore constructions’’ and that all investments were made with income already taxed in Austria.

But the recent scrutiny added to the pressure on Mr Stepic from a separate investigation by the Austrian financial regulator into an unpaid loan linked to a real estate deal in Serbia. The investigation was stopped last week when Mr Stepic showed that he had exited the deal early. In April, Mr Stepic repaid 2 million euros ($2.6 million) of his bonus, citing solidarity and respect for employees as he cut jobs and earnings declined.

On Friday, Mr Stepic said he would resign ‘‘out of responsibility for and affinity to this organisation’’. He said he ‘‘became aware that a discussion is underway that threatens to damage’’ the bank’s image, referring to reports in Austrian newspapers about his property investments in Singapore.