bne -

On June 7, the supervisory board of Raiffeisen Bank International (RBI) accepted Herbert Stepic's resignation as CEO of the Austrian bank and appointed his deputy and the head of global corporate banking, Karl Sevelda, to replace him.

Stepic had offered to resign on May 24 following allegations in the press concerning real estate deals using offshore structures. However, reports say the allegations provided fodder for Stepic 's critics at some of the regional landesbanks that own Raiffeisen Zentralbank, the group's unlisted parent, who have been looking to oust the dynamic CEO who masterminded the push into emerging markets, and return power to the more staid centre.

In a statement, the president of RBI's supervisory board, Walter Rothensteiner, called the appointment of Sevelda, who has worked for the bank for 15 years, "an expression of the Supervisory Board's trust in the continuation of the current strategy". "We consider continuity in both management and business alignment as one of the key success factors especially in challenging times," Rothensteiner said.

While thanking Stepic for his "strategic vision and effective implementation skills played a vital role in building RBI into a leading banking group in Austria and Central and Eastern Europe," the sudden departure of the larger-than-life CEO leaves many questioning where the bank's strategic direction lies.

RBI was undoubtedly one of the pioneers of western business in the newly opened markets of Central and Eastern Europe, and Stepic the visionary behind that expansion. Under Stepic's leadership of RBI, the rather stuffy parent Raiffeisen Zentralbank, which is controlled by eight provincial Raiffeisen banks or landesbanken, which is owned in turn by local banks, found itself with 14m new customers in 15 countries of Emerging Europe. Just a year ago, the then 65-year-old banker signed a further five-year contract to stay with RBI.

However, reports by Austria's News on May 22 that Stepic's name had come up in the "Offshore Leaks" project - a campaign by the International Consortium of Investigative Journalists to expose the owners of secretive trusts in offshore centres - upset the apple cart. News, a partner in the project that began with a leak of documents unmasking the details of 130,000 offshore accounts in April, reported that Stepic owned mailbox firms Yatsenko International Ltd. in the British Virgin Islands, and Takego Holdings Ltd. in Hong Kong. The magazine quoted Stepic as confirming the information, although he stressed the firms named were "not offshore constructions" but "project companies" used to buy three flats in Singapore, with their income taxed in Austria. Even so he tendered his resignation in order to avoid any embarrassment to the bank.

However, Reuters reports unnamed sources at RBI as claiming that the Offshore Leaks report was just "an excuse" for Stepic's internal critics at the bank, who have been manoeuvring to shift power back to the centre and rein in the risky eastern strategy, to get rid him. "They were looking for an opportunity to get rid of him in a way that would not come back to them," one Raiffeisen veteran who asked not to be named was quoted by Reuters as saying.

A Stepic confidant was quoted as saying: "Stepic wasn't liked. This move was absolutely overdue. Offshore Leaks was just an excuse."

Regardless of the truth of these reports, a new broom is sure to re-evaluate the bank's strategy, especially given the continuing crisis in the Eurozone and new, stricter global banking rules over capital, which is putting pressure on RBI's sprawling empire. The centre of the debate is surely whether to retrench to its home market and surrounding area, and sell the operations in further-flung and riskier places like Russia and Ukraine.

Stepic told bne last year that the bank was in all the markets that it feels are interesting, and there were no plans to enter new ones, nor leave existing ones. That is surely now up for debate.