UPDATE 1-Raiffeisen plays down Austrian bank secrecy row

Tue Apr 16, 2013 8:07am EDT

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By Michael Shields

VIENNA, April 16 (Reuters) - Austria's biggest bank played down a dispute over client secrecy, saying there was no sign of customers pulling out their money as EU partners pile pressure on Vienna to share information with them on accounts held by foreigners.

Austria has insisted it will protect confidentiality for law-abiding savers but may exchange some details on foreigners' accounts with fellow European Union members keen to crack down on any tax cheats who stash wealth in the Alpine republic.

Walter Rothensteiner, chief executive of the Raiffeisen Zentralbank group, told reporters on Tuesday he had not seen any big shifts in assets as a result of the debate.

"Not so far, thank God. I think savers still trust banks despite all efforts to the contrary," he told a news conference at Raiffeisen, Austria's biggest bank by assets.

Austria was left isolated within the EU in its insistence on bank secrecy after Luxembourg decided this month to share cross-border account details with other member states from 2015. Its partners in the 27-nation bloc want it to sign up to rules on the automatic exchange of information on depositors.

PRIVACY CONCERN

While Social Democrat Chancellor Werner Faymann has expressed willingness to negotiate, conservative Finance Minister Maria Fekter has dismissed exchanges of information as an invasion of privacy and chided other countries for failing to tackle what she called the real "hot spots" of money laundering.

She favours the current system in which Austria has banks withhold tax on EU citizens' interest income and returns most of the money anonymously to home countries.

EU citizens have 35 billion euros in Austrian deposits, a tenth of the total, while all foreigners have 53 billion euros ($69 billion) in banks here, the central bank says.

Rothensteiner reiterated comments from the weekend that Austria was no tax haven and did not tolerate crooks seeking to deposit suitcases full of dubious cash.

On other topics, he would not say when the group might start returning 1.75 billion euros in state aid it received during the 2008/09 financial crisis, noting the 8 percent interest it pays on the capital was not overly expensive.

While listed unit Raiffeisen Bank International has said a share sale remains an option to bulk up its balance sheet, Rothensteiner said RBI shares remained undervalued at around 26 euros. "At 26 euros it is not really the best time to go to the market," he said.

He declined to discuss whether RZB would fully take up its shares in any RBI rights issue, saying only: "What I am trying to preserve in my tenure is that we have a clear majority because I would not like to have the Raiffeisen brand depend on retail investors sitting somewhere in America."

RZB said it boosted its core tier 1 capital ratio by 1.8 percentage points to 10.9 percent of risk-weighted assets at the end of 2012 under Austrian definitions of capital.

It did not give an end-year core tier 1 ratio under European Banking Authority definitions. It had been 10.0 percent at mid-2012, or 10.6 percent including net profit, above the EBA's 9 percent minimum for major banks. ($1 = 0.7643 euros) (Additonal reporting by Angelika Gruber, editing by Mark Trevelyan)

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