UPDATE 1-Erste Group writes down Romania unit, plans dividend

Tue Jan 15, 2013 5:12am EST

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* Erste writes down 300 mln euros, mainly for Romanian BCR

* Expects net profit of 450 mln euros for 2012

* Shares down 0.6 percent (Adds details, background)

VIENNA, Jan 15 (Reuters) - Austrian bank Erste Group is writing down goodwill by 300 million euros ($401 million), mainly on its Romanian subsidiary BCR, it said on Tuesday.

The bank said it now expects to post a net profit of about 450 million euros for 2012 as a result of the writedown and the recently announced disposal of its Ukranian subsidiary, after a loss in 2011, but intends to pay a dividend for 2012.

The bank, which vies with Raiffeisen Bank International as central and eastern Europe's second-biggest lender after UniCredit, reiterated its forecast for operating profit and lending risk costs.

It said in October that its operating profit in 2012 would dip as weak European economies and its reduction in non-core assets weighed on revenues, and that it expected risk costs of around 2 billion euros for 2012.

Erste made a loss of 206 million euros in the first nine months of 2012 in Romania, which has proved a tough market for banks amid an economic slump and concerns about corruption and fraud, but has said it expects the unit to return to profit this year.

It said on Tuesday the writedown was due to higher market risk premiums resulting in rising discount rates employed in impairment tests.

The bank added that it would report significantly improved capital ratios as of end-2012, as goodwill was excluded from the regulatory capital calculation.

Shares in Erste slipped 0.6 percent to 26.42 euros by 0958 GMT, when the Stoxx Europe 600 banking sector index was down 0.4 percent. ($1=0.7482 euros) (Reporting by Georgina Prodhan; Editing by Greg Mahlich)

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