VIENNA: Raiffeisen Bank International sets out its vision of a slimmed-down future on Monday as emerging Europe's number-two lender gradually shrinks its balance sheet by more than a fifth.
Hits from war-ravaged Ukraine and bank-hostile Hungary have battered Raiffeisen, which depends heavily on profits from Russia, its single-most profitable market. But the rouble's drop amid a faltering Russian economy has eaten into its capital.
The Austrian bank's finance chief has said that letting short-term loans expire will make up a "considerable part" of the programme, which could also entail disposals.
The goal is to improve its core capital buffer, which stood at around 10 percent of risk-weighted assets at the end of last year under fully fledged Basel 3 standards. Concern about its financial strength pushed RBI stock to a record low last week.
Raiffeisen has ruled out seeking more Austrian state aid or raising more capital, after tapping investors for 2.8 billion euros ($3.2 billion) in a rights issue a year ago which diluted parent Raiffeisen Zentralbank's stake to 61 percent.
RBI, also due to release preliminary 2014 results, has forecast its first-ever loss of more than 500 million euros if it has to write down its Russian business. The market expects a loss of 444 million, according to a consensus the bank compiled.
Raiffeisen has tried to exit Ukraine but is committed to Russia, where it says it earned over 300 million euros in 2014 and would make money even if bad-loan provisions triple.
It denied this week it was in talks with rival Erste Group to sell its Hungary business, but did not comment on any other potential suitors for the unit that it considered selling to a local investor a year ago, only to back away.
RBI has been coy about plans for its Polish unit, whose earnings have lagged expectations. It is supposed to list at least 15 percent on the Warsaw bourse by next year, but now says it may float more than 25 percent.
Market sources told Reuters in December Raiffeisen may sell the entire Polish bank, which Deutsche Bank analysts call "the only saleable asset with a significant positive impact on capital".
But Poland has Raiffeisen's biggest exposure to troublesome Swiss franc mortgages. Divesting it would also boost dependence on Russia despite plans to scale back in that market as well.
It is cutting back in Asia, where its exposure to coal mining has proved costly.
The group is chopping costs. Still, Societe Generale analysts said: "The need to refocus this diverse set of CEE franchises is ever more pressing as there is in our view still far too much duplication and inefficiency in the structure".
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