30. 08. 11. - 11:58

RBI has €3.6bn PIIGS exposure

Raiffeisen Bank International (RBI) chief Herbert Stepic has revealed the bank has an exposure of more than 3.6 billion Euros in Europe’s five most economically challenged countries.

Stepic said yesterday (Thurs) RBI invested 3.622 billion Euros in the so-called PIIGS states, Portugal, Ireland, Italy, Greece and Spain. Spending in debt-ridden Italy takes the lion’s share with 1.465 billion Euros. Spain, which has an unemployment rate of over 20 per cent, is in second place in this regard as RBI invested 1.04 billion Euros there. Stepic said RBI’s exposure among the PIIGS countries was lowest in Ireland at 59 million Euros. He added his institute did not hold any Greek or Irish government bonds.

Stepic stressed he was unconcerned despite RBI’s high exposure in Italy. The banker called Italy "too big to fail." He added his team did not expect a national bankruptcy in the southern country. Stepic pointed out RBI was in the black in all the countries it operated in in the first six months of 2011 apart from Slovenia and Hungary, calling the market situation in the latter state a "real problem" because of the 18 billion Euros RBI’s affiliate in Hungary spent on Swiss Franc loans.

The RBI boss added he was also worrying about a "contagion" of the financial industry’s difficulties to the global and European real economy. However, he also emphasised the risk that Central and Eastern Europe (CEE) – where 70 per cent to 80 per cent of RBI’s business activities occur – could be affected was "moderate" in his opinion. Stepic attacked Europe’s political elite, saying he doubted their capability of solving the current crisis.

RBI – which manages the foreign operations of Raiffeisenzentralbank (RZB), one of Austria’s most powerful banks – achieved a profit of 615 million Euros in the first half of this year after 472 million Euros in the same time span of 2010. Stepic called the finance institute’s overall performance a "very positive" one. Stepic informed shareholders and analysts RBI was planning a capital increase within the coming 12 months. He refused to say which amount he had in mind.

An increase of some employees’ wages and new taxes heaved on banks in Austria and Hungary cost RBI 68 million Euros, Stepic explained yesterday. Earlier this week, BAWAG PSK (BAWAG) officials said they planned to put 20.4 million Euros aside for the Austrian bank solidarity levy. Erste Bank Group AG (Erste Bank) recently explained its annual business figures could be 100 million Euros worse due to the Austrian version of the controversial tax. Bankers criticised the Austrian government of Social Democrats (SPÖ) and the People’s Party (ÖVP) for implementing the tax – and were attacked themselves when some of them hinted intending to pass any extra costs straight onto their customers. The Austrian bank tax came into effect in 1 January.

RBI achieved profits before tax of 1.287 million Euros last year. The bank was created based on the network of Raiffeisen International (RI), RZB’s former international businesses operator, in 2010. RZB chief Walter Rothensteiner dismissed speculations that the restructuring process was carried out due to financial difficulties.

RBI snatched up a majority interest in Polbank in February. The Vienna-based institute paid 490 million Euros for the 70 per cent share in the Warsaw-based bank which has one million clients.

RBI is one of the biggest investors in CEE while RZB is Austria’s biggest private employer due to the participations it holds in publishing houses, agricultural companies and other enterprises.