RBI equity ora negativa a 11,20€. Dopo lo sprint iniziale che l'ha portata quasi sui 12€.
Raiffeisen Bank International AG (RBI), the international arm of an Austrian cooperative banking group, may cause a “domino effect” of capital shortfalls if it’s forced into a dilutive cash call, according to JPMorgan Chase & Co.
A share sale that would require Raiffeisen’s 61 percent shareholder Raiffeisen Zentralbank Oesterreich AG to let its stake fall below 50 percent could prompt RZB to deconsolidate the holding, said JPMorgan analysts led by Axel Finsterbusch. That could cause the core equity Tier 1 capital ratio of RZB and that of its biggest shareholder Raiffeisenlandesbank NOe-Wien to fall below regulatory minimum levels.
“In essence, the corporate structure is like a row of dominoes,” Finsterbusch said in a telephone interview from
London. “Whatever they do, they’re going to have to consider the potential impact on the regional banks, where you could have some sort of domino effect.”
Raiffeisen Bank International is the eastern European arm of a cooperative group that goes back to
19th century German reformer Friedrich Wilhelm Raiffeisen. About 490 local lenders and nine regional banks carry out the domestic business in towns and villages across the country. Collectively, they have assets of 282 billion euros ($322 billion), equivalent to 87 percent of
Austria’s 323 billion-euro economy.
Susanne Langer, a spokeswoman at Raiffeisen, said the group doesn’t plan a capital increase and declined to comment on “unrealistic scenarios.” An official at RLB NOe-Wien declined to comment on “hypothetical scenarios.”
Share Sale
Risks that could trigger a share sale include writedowns of its Russian unit, loan losses in
Asia, and the soaring Swiss franc and its impact on loan books in eastern
Europe.
The risk is reflected in bond prices. RZB’s 306 million euros of undated 5.126 percent notes, which ended November at 87.1 cents on the euro, are now quoted at about 45 cents, data compiled by Bloomberg show. Raiffeisen LB’s 5.875 percent subordinated bonds due November 2023 are at 73.2 cents, down from 100.49 cents at the end of November, the data show.
Trailing only
UniCredit SpA (UCG) in the former communist East, Raiffeisen has been struggling with the fallout of the conflict in Ukraine. On top of losses in that country, the turmoil has hampered Raiffeisen’s Russian business, which has been its biggest profit generator since 2011.
“What is unique about RBI’s Russian exposure is if you assume a tail-event worst-case scenario it would leave the capital position quite close to minimum requirements,” Finsterbusch said.
Franc Surge
The Swiss franc’s surge last week impaired one of the options to mitigate the Russian risk because its biggest impact will be on Raiffeisen Bank Polska SA, the most valuable asset it can sell.
“Essentially, that will mean additional loan-loss provisions, and this makes it even more difficult to sell this asset if they need the capital,” Finsterbusch said. “One of the additional capital buffers of the bank is now more difficult to realize.”
RZB already watched its 78 percent stake shrink last year when it didn’t take up its part of a 2.8 billion-euro rights issue. If RZB would deconsolidate its holding, the remaining stake would then be marked to fair value, eating into
capital ratios at RZB and at RLB NOe-Wien, the biggest of the regional Raiffeisen banks and 35 percent
RZB shareholder.
A full writedown of Raiffeisen’s Russian and Ukrainian business would cause its
CET1 ratio to shrink to 7.4 percent from 11 percent it reported as of end-September, according to JPMorgan’s estimates. As for RZB, deconsolidation of Raiffeisen would let its CET1 ratio shrink to 6.1 percent from 10.8 percent, JPMorgan says. RLB NOe-Wien’s CET1 ratio would drop to 5.7 percent from 16.3 percent in that case.
“Given the ownership structure of RBI, equity market access may be limited,” Finsterbusch said. “RZB may not have the financial flexibility to come up with additional resources.”
To contact the reporters on this story: Boris Groendahl in Vienna at
[email protected]; John Glover in London at
[email protected]
To contact the editors responsible for this story:
Patrick Henry at
[email protected]; Simone Meier, Steve Bailey
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