UPDATE 1-Austria's Erste Group raises $860 mln to repay state aid

Tue Jul 2, 2013 4:22am EDT

(Adds market reaction, background)

VIENNA, July 2 (Reuters) - Austria's Erste Group Bank has raised around 660 million euros ($860 million) to help repay state aid in a two-stage capital increase that will ready its balance sheet for tougher regulatory requirements.

Central and eastern Europe's third-biggest lender announced plans for the capital increase last week, saying it would use the money to help repay 1.76 billion euros in non-voting participation capital it raised in 2009 to help it weather the financial crisis.

Austria provided two thirds of that capital, and private investors the rest.

The placement price for new shares was set at 18.75 euros each in an accelerated book-building process that took in 660.6 million euros, Erste said.

A rights issue for existing shareholders follows at a subscription ratio of four new shares for each 45 that investors now own.

The stock, which closed on Monday at 20.41 euros, was down 3.8 percent at 19.645 euros by 0805 GMT while the Stoxx European banking index was down 0.9 percent.

Results of the subscription offering are due on July 18.

J.P. Morgan, Morgan Stanley and Erste Group are joint global coordinators and joint bookrunners, while Commerzbank and ING Bank act as co-lead managers.

($1 = 0.7671 euros) (Reporting by Michael Shields; Editing by Mark Potter)

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