Raiffeisen to Sell $3 Billion New Shares to Redeem State Aid

Raiffeisen Bank International AG (RBI), Austria’s third-biggest lender, may sell as much as 2.25 billion euros ($3 billion) in new shares in the first half of the year to repay state aid and boost its capital buffers.

Raiffeisen, which is 79 percent-owned by a group of cooperative banks via Raiffeisen Zentralbank Oesterreich AG, expects to significantly increase its free float in the deal, the bank said in a statement today. The exact timing and size will depend on “market conditions” and board approval, the company said.

“The strengthening of the capital base is intended to prepare Raiffeisen Bank International for the implementation of Basel III rules,” the lender said in a statement. “The transaction may be implemented in the next six months.”

New Chief Executive Officer Karl Sevelda earlier said in November he planned to exhaust other means such as selling assets in countries like Hungary and Ukraine and cutting costs before selling new shares. The bank’s parent RZB and the 494 local cooperatives that ultimately own it resisted a dilutive share deal last year.

Raiffeisen plans to bring its core equity Tier 1 ratio under new European Union rules implementing the Basel III accord to 10 percent within 18 months from 6.5 percent at the end of September, the bank said in a presentation posted on its website. It will redeem 1.75 billion euros of state aid and 750 million euros of non-voting capital linked to the aid “in full or in part in the near future,” the company said.

Raiffeisen has reviewed offers for its Hungarian unit and decided not to sell it “under the current conditions,” the bank said. Szechenyi Kereskedelmi Bank Zrt. offered to buy the unit for a notional price of 1 euro, Hungarian website Napi.hu reported yesterday.

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

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

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