Bloomberg News

RZB Will Close EBA Capital Gap Without State Aid, Chief Says

November 01, 2011

(Updates with plan to swap capital in fourth paragraph.)

Oct. 31 (Bloomberg) -- Raiffeisen Zentralbank Oesterreich AG will close its 1.9 billion-euro ($2.7 billion) capital gap without resorting to state aid and without selling assets, Chief Executive Officer Walter Rothensteiner said.

The CEO, speaking to reporters in Vienna today, said he hasn’t yet talked to shareholders or to owners of so-called participation capital about the option to swap 1 billion euros of the non-voting shares at RZB and Raiffeisen Bank International AG, in which it holds 79 percent. A solution for the gap will be presented “before Christmas,” he said.

The European Banking Authority last week said that Europe’s banks will need to raise 106 billion euros in fresh capital under tougher rules being introduced in response to the euro area’s sovereign debt crisis.

RZB and Raiffeisen Bank International plan to ask owners of the non-voting capital that was excluded by the EBA to swap it into funds that are recognized, a person familiar with the plans, who spoke on condition of anonymity because it isn’t public, said on Oct. 27.

The EBA test results were as of June 30 and the gap hasn’t changed significantly in the third quarter, Rothensteiner said today.

The lenders tested by EBA have until Dec. 25 to submit their plans for raising the money to national supervisors. The extra reserves are needed to meet a temporary requirement for lenders to hold 9 percent in core reserves. Banks will be required to reach this capital threshold by the end of June 2012.

RZB got 1.75 billion euros in state aid in 2009 and transferred this to Raiffeisen Bank International as part of a merger of RZB units with eastern Europe’s third-biggest lender last year. Any new state aid would be in return for equity, Austrian Central Bank Governor Ewald Nowotny said on Oct. 25, adding that he didn’t expect Austrian lenders to require additional government funds.

--Editors: Zoe Schneeweiss, Stephen Taylor

To contact the reporter on this story: Boris Groendahl in Vienna at bgroendahl@bloomberg.net

To contact the editor responsible for this story: Angela Cullen at acullen8@bloomberg.net


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