Raiffeisen Ukraine Unit Written Down by Quarter on CrisisBoris Groendahl
Raiffeisen Bank International AG wrote down the value of its unit in Ukraine by 216 million euros ($295 million) after unrest gripped the former Soviet republic.
The Austrian lender, the biggest foreign bank in Ukraine, disclosed the writedown on Raiffeisen Bank Aval in its earnings report for the first quarter. It reflects the country’s diminished economic prospects and does not change the bank’s consolidated earnings or its regulatory capital, said Susanne Langer, a spokeswoman for the group.
“At 216 million euros, the partial writedown on the Raiffeisen Bank Aval JSC, Kiev, participation had a negative impact on the net income of Group head office,” said the report published yesterday. Raiffeisen didn’t mention the charge in its investor presentation and its press release yesterday.
In 2012, the lender wrote off the entire goodwill on Bank Aval, which it bought for $1 billion in 2005. The latest writedown was on the book value of the equity investment, which comes to 611 million euros after the writedown. The charge is canceled out by a corresponding position in the reconciliation part of its profit-and-loss accounts.
Raiffeisen yesterday said it expected an “adjustment recession” to cause the Ukrainian economy to shrink 5 percent this year. As of November, the bank had forecast 1.5 percent growth.
A violent rebellion followed by Russia’s annexation of Crimea and a standoff with armed separatists in other parts of Ukraine sent the country’s currency sliding. The hryvnia has weakened 31 percent to the dollar this year, the worst performance among more than 170 currencies tracked by Bloomberg.
The writedown doesn’t show up in the consolidated net income, which rose 2.5 percent to 161 million euros in the first quarter, beating analyst estimates. It does appear in the unconsolidated profit under Austrian accounting rules, which is only reported once a year.