UPDATE 3-Raiffeisen can meet capital goal without rights issue

Thu Mar 29, 2012 9:31am EDT

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* Raiffeisen unit RBI sees no need for capital hike at this stage

* RBI proposes unchanged dividend of 1.05 euros

* Lowers outlook for 2012 business volume (Recasts with comments from news conference)

By Michael Shields

VIENNA, March 29 (Reuters) - Austrian group Raiffeisen is on track to meet European Union capital requirements for banks by mid-year even without a rights issue from listed unit Raiffeisen Bank International (RBI).

RBI also proposed keeping its dividend steady at 1.05 euros ($1.4), making it the only major Austrian lender to make a payout on 2011 results.

RBI Chief Executive Herbert Stepic told reporters on Thursday that emerging Europe's third-biggest lender had no immediate plans for a rights issue but was considering one as an option should market conditions improve.

"If you see me looking relaxed then it is also because we are sufficiently capitalised and see no need for a capital increase," he told a news conference.

The European Banking Authority last year identified a 2.1 billion euro capital gap at RBI parent Raiffeisen Zentralbank to reach the 9 percent core tier 1 ratio major banks need to have by the end of June.

RBI said last August it could raise its share capital within a year if conditions were right, although officials subsequently played down prospects for a rights issue given the rout in financial shares due to Europe's debt crisis.

But the bank's shares more than doubled since touching a low of 14.155 euros on Nov. 23, reviving talk it could proceed with a sale before the chairman of parent Raiffeisen dismissed the idea last week.

Raiffeisen has now plugged 1.9 billion of the 2.1 billion hole, had steps for 800 million on the way, and had drawn up measures for an extra 300 million that would lead to core capital equal to 9.4 percent of risk-weighted assets by mid-year, RBI said.

The second batch of measures include converting privately placed non-voting participation capital issued by Raiffeisen in May and switching capital calculations from Austrian GAAP to international standards next month, it said.

The final 300 million euros stems from expected profits in the first half of 2012 and "further capital clean-up and reduction, primarily in non-core activities", it added.

RBI's shares eased 0.5 percent to 26.16 euros by 1130 GMT while the Stoxx European bank sector index fell 1.4 percent.

TWEAKS OUTLOOK LOWER

RBI lowered its 2012 outlook, saying it expected to see "stable business volume due to the economic environment and restrictive regulatory requirements" rather than a modest rise.

The bank expected its net provisioning ratio to stabilise "along with only a marginal increase in non-performing loan volumes" although it could not predict when such dud loans would peak.

They should rise but flatten out this year in trouble spot Hungary, Stepic said.

Bank levies in Austria and the central and eastern Europe region were set to hit earnings by 160 million euros in 2012.

RBI shares trade at around 7.3 times 12-month forward earnings, in line with Austrian rival Erste Group Bank according to Thomson Reuters StarMine, which ranks analyst estimates by previous accuracy.

Erste, emerging Europe's second-biggest lender, has forecast improved operating results this year as provisions for bad debts fall and its Hungarian headache eases. It lost 718.9 million euros in 2011.

Net profit at UniCredit's Bank Austria unit, emerging Europe's top lender, fell 71 percent in 2011 to 209 million euros as impairments in Kazakhstan and Ukraine and writedowns on Greek debt erased underlying improvements.

RBI's 2011 pretax profit rose 7 percent to 1.37 billion euros, while net profit fell due to higher deferred taxes. ($1 = 0.7525 euro) (Reporting by Michael Shields; Editing Hans-Juergen Peters and Erica Billingham)

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