UPDATE 1-EBRD eyes stake in Ukraine unit of Raiffeisen bank

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KIEV, July 6 (Reuters) - The European Bank for Reconstruction and Development said on Monday it was considering taking a significant minority stake in the loss-making Ukrainian unit of Raiffeisen Bank International (RBI).

RBI has embarked on radical restructuring, scaling back in central and eastern Europe (CEE) to strengthen its balance sheet.

The EBRD’s proposed investment in Raiffeisen Bank Aval, Ukraine’s second-largest Western-owned bank, “will send a strong positive signal to the market during the period of severe political and economic crisis in Ukraine”, the EBRD said in statement.

The Ukraine business lost 82 million euros in the first quarter, coming under pressure from a broader banking crisis, which has seen over 50 banks declared insolvent.

The central bank has asked banks to recapitalise after a 6.8 percent contraction in the economy and 50 percent slump in the value of Ukraine’s hryvnia currency last year prompted huge deposit outflows. (Reporting by Alessandra Prentice; editing by Elizabeth Piper and Jason Neely)