RBI mulls rights issue

By bne IntelliNews February 9, 2012

bne -

Raiffeisen Bank International (RBI) confirmed reports that it's looking at a possible rights issue once more as part of its efforts to meet the 9% Tier 1 capital ratio that the EU has called for by the end of June. That may be be good news for borrowers, and the economies, in the region.

Emerging Europe's third-biggest lender has returned to the plan of selling up to €1bn worth of shares after abandoning preparations for a sale last year, according to four unnamed sources, reports Bloomberg. RBI has discussed a possible offering with banks, but has yet to decide whether to proceed, the sources claimed. Whatever is decided, the issue won't take place until the bank publishes full-year results in March.

For its part, RBI admitted that plans for an issue - first mooted in late summer 2011 but shelved as bank stocks plummeted in the autumn - remain open. "We don't comment on rumours, but we said at the half year (of 2011) that a capital increase could be a possible option depending on how markets develop," a spokesman said, according to Reuters.

Patrick Butler, a member of the RBI board, told bne in an interview in January that the EU deadline for European banks to raise their Tier 1 capital by July is "shock therapy". He added, however, that the bank has no intention of selling assets, but admitted that lending in CEE would slow. Whilst a share issue is likely bad news for current shareholders, it should reduce the risk of a more serious lending pullback around the region.

RBI, and parent Raiffeisen Zentralbank Oesterreich, need to fill a €2.1bn gap to meet the criteria, according to the European Banking Authority, which puts the shortfall across the European sector as a whole at €115bn. The pair have completed measures equivalent to raising €1.4bn thus far by adjusting the form of some capital to make it compliant with EBA rules and reducing assets.

RBI said back in August that it may issue new shares within the next 12 months, and went out to meet investors the following month. However, the price of banking shares plummeted in the final quarter of 2011 as debt crisis fears gripped Europe, and RBI's stock saw its price halved to a low of €14.155 per share in November. The stock is now back at the level seen in the summer.

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