Raiffeisen Bank International AG (RBI), eastern Europe’s third-largest lender, agreed to buy back 357.8 million euros ($472 million) of hybrid securities to increase capital buffers required by regulators to guard against losses.
Raiffeisen accepted for buyback three securities with a total face value of 800 million euros, which holders were invited to tender on Feb. 23, it said in a statement today. The buyback below face value creates a profit that boosts capital by 113 million euros, or 12 basis points, Raiffeisen said. A basis point is one-hundredth of a percent.
Rule-makers decided in 2010 to phase out most hybrid debt as capital starting in 2013 because it failed to provide a buffer for losses in the financial meltdown. Raiffeisen joined lenders including Erste Group Bank AG (EBS) and Commerzbank AG (CBK) in buying back or swapping such securities to strengthen its capital ratio.
Raiffeisen and its parent Raiffeisen Zentralbank Oesterreich AG (RZBOPA) were told by the European Banking Authority to fill a capital gap of 2.1 billion euros in the first half of the year by raising capital or reducing assets. The Vienna-based bank said Jan. 25 it had completed 1.4 billion euros of measures toward that goal and was planning another 1.6 billion euros. The bond buyback is in addition to those measures, according to bank spokeswoman Susanne Langer.
Raiffeisen agreed to buy back 55.4 million euros of preferred perpetual securities, 109.2 million euros of subordinated perpetual notes, and 193.2 million euros of another series of subordinated perpetual notes, the bank said. The settlement will be March 8.
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