Raiffeisen’s Biggest Owner Passes Dividends on to Local Lenders

Raiffeisen-Holding Noe-Wien regG, the largest indirect holder of Raiffeisen Bank International AG, is increasing its dividend even after writedowns and revaluations led to its first-ever loss.

Raiffeisen-Holding, the biggest of the interconnected cooperatives that own 78.5 percent of Raiffeisen Bank International, will pay a dividend of 41.5 million euros ($54.3 million) to its 170 members, which include mutual banks, farmers’ cooperatives and individuals, it said in an annual report today. The payout is 6 percent higher than last year, while the company reported a 64.1 million-euro loss, the first since at least 2001 when it was created in its present form.

“This loss has been caused by valuation effects and isn’t cash-relevant,” Chief Executive Officer Klaus Buchleitner told journalists in Vienna. “The dividend income we had from our holdings was more than sufficient. That’s why we rely on continuity in this respect.”

Raiffeisen-Holding’s dividend increase mirrors higher payouts by other banks in the Raiffeisen group, defying falling profits and calls by regulators and investors to retain earnings and strengthen capital. A low level of capital reserves is Austrian banks’ key weakness, Standard & Poor’s said last week.

513 Coops

Raiffeisen Bank International is the second-biggest lender in eastern Europe after UniCredit SpA and caters to large corporate clients in Austria. Through several layers of local and regional banks, it is ultimately owned by about 1.7 million members of 513 local Austrian credit cooperatives.

The local cooperatives own eight regional banks, of which Vienna-based Raiffeisen-Holding is the largest, followed by Raiffeisenlandesbank Oberoesterreich. Those regional banks own Raiffeisen Zentralbank Oesterreich, which in turn owns 78.5 percent of Raiffeisen Bank International.

Raiffeisen Bank International is raising its dividend by 11 percent while net income dropped 25 percent last year, bringing its payout ratio to 43 percent. RZB will pay out 48 percent more than last year, or more than two-thirds of its net income, which also fell in 2012.

Raiffeisen Holding’s net loss was caused mainly by an 80 million-euro loss it posted on the sale of a Hungarian bank stake as well as other revaluations, and by a 31 percent decline in net interest income that was due to an increase in more expensive long-term funding, the company said.