Raiffeisen Zentralbank Oesterreich AG (RZBOPA), which is raising capital to meet stricter bank regulations, faces delays to a 342 million-euro ($453 million) capital measure over a tiff with one of its minority shareholders.
Oesterreichische Volksbanken AG (VBPS), which owns 5 percent of RZB, is seeking to nullify approval of the non-voting capital sale and an asset purchase linked to it, which was given in a Dec. 28 shareholder meeting, Volksbanken spokesman Walter Groeblinger said. RZB, the main shareholder of Raiffeisen Bank International AG (RBI), said Volksbanken’s lawsuit in the Vienna Commercial Court has “no material basis,” according to spokesman Gregor Bitschnau.
“There are questions regarding the measure, which we want to have clarified in court,” Groeblinger said by telephone from Vienna. He declined to elaborate.
RBI shares tumbled in Vienna trading. RZB and Raiffeisen have until the end of June to fill a 2.1 billion-euro capital shortfall determined by the European Banking Authority. While the so-called participation capital challenged by Volksbanken isn’t recognized as core capital by the EBA, RZB planned to convert it into common stock later. To help fill the EBA gap, RZB plans a similar swap of as much as 1 billion euros in participation capital it has previously issued.
Raiffeisen fell as much as 8 percent to 26.01 euros in Vienna trading, the lowest intraday level since Jan. 31. It was 6 percent lower by 1:32 p.m. local time, making it one of the worst performers in the 43-member Bloomberg Europe Banks and Financial Services Index, which was 2.1 percent lower.
RZB and Raiffeisen have completed measures equivalent to raising 1.4 billion euros, which included making some forms of capital compliant with EBA rules and reducing assets, the banks said Jan. 25. Raiffeisen, which is eastern Europe’s third- biggest lender, is also revisiting plans for a rights offering after its shares nearly doubled from their 12-month low in November, four people with knowledge of the talks said.
Closely held RZB, 88 percent owned by eight regional cooperative banks led by Raiffeisenlandesbank NOe-Wien AG and Raiffeisenlandesbank OOe AG, used the approval at the December EGM to sell the non-voting capital to some of its shareholders two days later. In a linked deal, it agreed to buy 24 percent of Czech Raiffeisenbank AS and 13 percent of Tatra Banka AS (TAT) for the same amount from RLB NOe-Wien and from RLB OOe.
The main rationale for the asset purchases was that they help both RZB and the shareholders selling them to meet capital rules introduced by the Basel Committee for Banking Supervision. The rules foresee capital deductions if banks own partial stakes in other lenders, such as Raiffeisenbank and Tatra Banka.
Volksbanken can use laws protecting minority shareholders’ rights to cause delays as RZB works toward the EBA’s deadline to fill the capital gap by June. Its move comes after RZB’s majority shareholders walked away from a deal to buy out Volksbanken’s stake for about 500 million euros last year.
“From Volksbanken’s point of view, this is an understandable step, because they were shown a bit of a cold shoulder last year,” said Wilhelm Rasinger, a lawyer and president of Austria’s small shareholder association, who is not involved in the case on Volksbanken’s or RZB’s side.
Volksbanken, which failed the EBA stress test last year, planned to sell the RZB stake as one of three main measures to shore up its capital and repay state aid last year. The only measure it completed was the sale of its eastern European business to Russia’s OAO Sberbank, due to close next week.
Minority shareholders can challenge majority resolutions of shareholder meetings in court under Austrian law. Possible basis for challenges include the argument that some shareholders gained an advantage at the expense of minority shareholders or the company. Another possible argument is that they didn’t receive sufficient information to make decisions at the meeting.
“The valuation of such assets,” like the two bank stakes RZB is buying from its shareholders, is “something you can endlessly fight about,” Rasinger said.
The case is 27 Cg 10/12 v at the Commercial Court in Vienna.
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