UPDATE 1-Raiffeisen delays merger decision until October

(Adds spokeswoman’s comment, detail, background)

VIENNA, Sept 21 (Reuters) - Austria’s Raiffeisen Bank International and parent Raiffeisen Zentralbank have deferred a decision on whether to merge to boost their capital reserves after coming third-last in European stress tests.

A spokeswoman said a merger would bring advantages for both but significant issues needed to be examined in more detail, including ones relating to their valuations.

“The management boards of RZB and RBI would like to advise that the merger evaluation is now in its final stages,” the banks said in a statement on Wednesday, using abbreviations of their full names.

“The results are expected at the beginning of October,” they said, apparently referring to a ‘go/no-go’ decision that had been expected this week.

Only Italy’s Monte dei Paschi di Siena and Allied Irish Banks fared worse than the two Raiffeisen banks combined in stress tests of 51 major European lenders. The test results were published in July, increasing pressure on Raiffeisen to bolster its capital reserves.

Raiffeisen Bank International (RBI), which operates across central and eastern Europe, and unlisted Raiffeisen Zentralbank (RZB) said in May they were considering a merger, and RZB has since said it plans to sell shares in insurer Uniqa, both steps designed to increase RZB’s capital buffer. (Reporting by Francois Murphy and Alexandra Schwarz-Goerlich; editing by David Clarke)