Raiffeisen CEO Tries to Mollify Coop Owners Over RussiaBoris Groendahl
Raiffeisen Bank International AG is ready to pull back in Russia and eastern Europe if risks are too high and profits too low, Chief Executive Officer Karl Sevelda told his bank’s cooperative owners through their weekly newspaper.
Raiffeisen, which may have lost more than 500 million euros ($591 million) last year because of the crisis over Ukraine and Russia, is reviewing all of its markets and businesses and will decide about disposals and cutbacks within six months, Sevelda told Raiffeisen-Zeitung in an interview. Raiffeisen is owned by 490 local cooperative banks via eight regional Raiffeisen Landesbanks and Raiffeisen Zentralbank.
“I fully sympathize if the Landesbanks and the primary Raiffeisen banks are a bit alarmed -- what you’re reading about Russia is indeed alarming,” Sevelda said in the interview that was e-mailed by Raiffeisen before publication in the edition dated tomorrow. “I can assure our shareholders that we’ll continue to proceed in a risk-adequate way.”
Raiffeisen is the third-biggest foreign bank in Russia after UniCredit SpA and Societe Generale SA. It’s the bank with most at risk in the country compared with its size and because Russia was its biggest profit generator every year since 2011. While it was profitable in Russia last year, the collapse of the ruble diminished its capital and it turned to its first annual net loss last year because of bad loans in Ukraine and litigation costs in Hungary.
Raiffeisen shares fell as much as 2.1 percent to 11.45 euros in Vienna, the lowest since Dec. 17. The 5.169 percent Tier 1 perpetual bonds issued by closely held parent RZB declined to as little as 63.75 cents on the euro, the lowest in more than two years.
To return to profit, Raiffeisen will revisit all of its 15 markets across eastern Europe and curb or get rid of underperformers, Sevelda said.
“Wherever we can’t make satisfactory profits and where an improvement isn’t in sight, we will cut back our business and may even leave one market or the other,” he said. “We haven’t decided yet, but we’re looking at all markets and all business areas and will make our decisions in the first half of 2015.”
Sevelda said the company is focusing on Romania, the Czech Republic, Slovakia and Austria, dropping Russia and Poland from a list of “focus countries” it published in 2013. Sevelda said Raiffeisenbank Polska hasn’t met expectations linked to the purchase of Polbank in 2012.