March 11, 2014 / 1:41 PM / in 4 years

Raiffeisen may have to hang onto some state aid-source

VIENNA, March 11 (Reuters) - Austrian lender Raiffeisen Bank International may not get regulatory approval to repay state aid in full this month as planned, a source close to the situation said on Tuesday.

The source said RBI may need to hold on to more of its capital in view of the impending European Central Bank-led assessment of the balance sheets of the big euro zone banking groups and the bank’s weighty exposure to Ukraine.

“I wouldn’t be surprised if (the repayment) could not take place - at least not in full - especially given the upcoming comprehensive assessments for stress tests and the situation in Ukraine, which is a very relevant asset,” the source said.

RBI had said last month that pending approval from the Financial Market Authority and its supervisory board it aimed to repay on or around March 15 the 2.5 billion euros ($3.5 billion) in non-voting capital the group raised from the state and private investors in 2009 to help weather the financial crisis.

But it has not yet got these approvals, a spokeswoman said.

Raiffeisen is the fourth-biggest bank in Ukraine by loans, with 3 million customers and 818 business outlets.

“What we said in the ad hoc (release) is valid: (repayment is) pending decisions from supervisors and the supervisory board,” the Raiffeisen spokeswoman said by text message.

The FMA does not comment on pending regulatory decisions.

Raiffeisen had signalled the move in January when it made a 2.8 billion euro cash call that buoyed its balance sheet.

Like other Austrian lenders eager for help to ride out the financial crisis, Raiffeisen raised participation capital from the state - in Raiffeisen’s case 1.75 billion euros, plus 1.25 billion euros from the private sector.

Interest payments rise in stages on the funds, which will not count as Core Tier 1 capital after 2017 under international rules.

Rival Erste Group repaid all of its 1.76 billion euros in such capital last year with the help of a 660 million-euro rights issue. BAWAG PSK has also begun repaying state aid. ($1=0.7205 Euros) (Editing by Greg Mahlich)

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