UPDATE 2-Raiffeisen opts for continuity with new CEO

Fri Jun 7, 2013 10:07am EDT

Related Topics

* Deputy CEO Sevelda to replace Stepic, effective now

* Chief Risk Officer Strobl named deputy CEO

* Officials stress no change in strategy (Adds comments from news conference, analyst)

By Michael Shields

VIENNA, June 7 (Reuters) - Raiffeisen Bank International (RBI) named veteran insider Karl Sevelda on Friday to succeed Herbert Stepic as chief executive, signalling no quick change in strategy for central and eastern Europe's second-biggest lender.

Sevelda, 63, has been deputy CEO since 2010 and remains head of corporate banking for now at the Austrian group, which extended his contract until mid-2017 to avoid the kind of rushed succession debate triggered by Stepic's exit under a cloud.

Stepic, 66, has denied wrongdoing in using front companies in the Caribbean and Asia to buy three apartments in Singapore, and said he decided to quit last month to spare the bank a damaging debate about his personal investments.

His departure may eventually trigger structural changes or asset sales at the bank, which some analysts think are needed to improve its capital position. But Sevelda and Chairman Walter Rothensteiner took pains at a news conference to stress the sprawling group was firmly behind existing strategy.

"The chapter of corporate history beginning today is absolutely a sign of continuity," Rothensteiner said, while adding: "It is clear that with such passings of the baton in such volatile times nothing can be carved in stone. On the contrary, you have to be able to react flexibly."

Both men tried to play down suggestions the bank faced internal divisions over its path and whether it was time to put a shorter leash on RBI after Stepic's eastern expansion drive, as sources close to the matter told Reuters.

RBI is owned by unlisted Raiffeisen Zentralbank (RZB) , controlled by eight provincial Raiffeisen landesbanks which are in turn owned by hundreds of local cooperative banks.

"There will always be discord in an organisation with 1,000 independent managers," Roethensteiner said, but that did not mean any policy U-turns were looming.

RBI shares were up 0.3 percent to 25.735 euros at 1324 GMT, while the European bank sector index gained 0.7 percent.

The stock trades at 8.2 times 12-month forward earnings, a discount to Austrian peer Erste Group Bank on 10.6 times, according to Thomson Reuters StarMine, which weights analyst estimates by previous forecasting accuracy

"Karl Sevelda has been a member of RBI's board since 1998 and therefore part of the decision-making process for the past 15 years. I do not expect any change in strategy or culture. Therefore I maintain my bearish view on the stock," said Berenberg Bank analyst Eleni Papoula.

OUT OF THE SHADOWS

"I see my election in no way as changing our strategy, and why should I?," Sevelda said, noting Stepic alone did not set the strategic direction. "The supervisory board as well stood and stands fully behind this."

He said the bank's growth focus would be on Austria, Russia, Poland, Slovakia, the Czech Republic and Romania. It would keep business volumes steady in other markets but scale back in places with waning potential, as it has done in Slovenia.

He stuck to the line that a share sale to strengthen its balance sheet was an option depending on market conditions.

Sevelda has until now lived in the shadow of the larger-than-life Stepic, whose payout package is still being determined. Rothensteiner said Stepic's contract would now end at the end of 2014, a year earlier than scheduled.

Serious and bespectacled, Sevelda has had little to do with investors, preferring to confine himself to the corporate clients for whose business he was responsible.

"He is a relationship person," said one former close colleague who asked not to be named. "He is socially very intelligent. He's extremely charming."

Sevelda, an economics and social science graduate of Vienna University, joined Raiffeisen group in 1998.

He did research for Austria's science and trade ministries while preparing for his doctorate before starting work in the export finance department of Creditanstalt, now UniCredit , where he rose through the ranks.

"As a former department manager at Creditanstalt, he has the necessary tools for the job," Erste Bank central and eastern Europe banking analyst Guenter Hohberger has said.

Sevelda broke his service at Creditanstalt for three years, returning briefly to the trade ministry and doing stints at banks in Britain and the United States before joining RZB. (Additional reporting by Georgina Prodhan and Angelika Gruber; Editing by Mark Potter)

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