RZB’s CEO Walter Rothensteiner dismisses speculation about financial problems of the entire group. Source: Reuters
VIENNA. Parties in Austria’s largest banking group confirmed on Tuesday that the consideration of the merger are now well advanced. In six to eight weeks it could be decided. Raiffeisen was officially announced on the night of Tuesday that a merger with the East-European-paged daughter should at least tested. For five years, the RI is an independent operating company of the Austrian Raiffeisen Group. 70 percent of the shares of RZB, the remaining 30 percent is traded on the stock exchange. The Raiffeisen International are the only Eastern Europe-focused subsidiaries of the Bank Group. RZB is the central institution in Austria for the entire Raiffeisen sector. In addition, the Vienna headquarters of the fleet business in the corporate sector is responsible.
A Raiffeisen spokesman said a possible merger with the Eastern European subsidiaries was "not born out of necessity, but a concept for the future." RZB’s CEO Walter Rothensteiner dismissed speculation in a radio interview, the entire Raiffeisen Group is going bad and they need money. The Vienna Bank Group aims to achieve a merger with a better risk diversification and will facilitate the raising of capital in the sequel. The previous Raiffeisen International CEO Herbert Stepic would remain in any case within the company, was reported from corporate circles. Also to be reduced by a merger costs. The consulting firm McKinsey is at Raiffeisen already in the house and oversee the process towards the merger.
In the financial markets, the possible merger of Raiffeisen-Zentralbank is seen with her daughter in Eastern Europe much more critical. On the Vienna Stock Exchange was the RI paper on Tuesday the big loser. By the afternoon, the stock was quoted at 35.10 euros – a daily loss of more than eleven percent. "The RI is not in trouble, they could refinance in the capital market. But the RCB is clearly in worse shape than the market had expected," said Marion Swoboda-billed curlew, equities analyst at brokerage Cheuvreux. RZB is clearly a need capital market access.
Thomas Stögner, banking expert at Sal.Oppenheim, criticized the Raiffeisen leadership. The Vienna Banking Group had provided with its announcement of great uncertainty among investors. The share of Raiffeisen International has become a rather uninteresting paper, simply because no rule more clear what will happen with the company. "The independent shareholders will lose," predicted Stögner. Nobody can now say what the future business model of Raiffeisen would look like.
Even a merged institution from RZB and RI should remain listed on the stock exchange in any case. The share of outside shareholders, but will decline in any case a strong piece. Officially, expressed the company did not do so. In industrial circles, although it was considered very likely that the free float is expected to slip below the limit of 20 percent. Little pleasure has evolved over the past year, the Eastern European business of Raiffeisen International. The net profit has plummeted by 78 percent from 982 to 212 million euros. Responsibility is significantly higher loan loss provisions for bad loans. RI has the reserves to increase from 780 million to 1.738 billion euros. With these figures, the Raiffeisen Osttochter has, however, cut off even slightly better than generally expected in the financial market.
Dramatically, the situation has intensified in Ukraine, where RI is represented by a major subsidiary. The country was hit by the economic downturn the most. But in the first quarter of 2009 of Ukraine’s gross domestic product fell by 20 percent. In the crisis country, RZB subsidiary is a great power: it has taken over there once for one billion U.S. dollars, the Bank Aval, the second largest bank in Ukraine.