OREANDA-NEWS. April 20, 2012.  At the Annual General Meeting on 23 May 2012, the Management Board of Raiffeisen Zentralbank Osterreich AG (RZB) will propose the withdrawal of approximately  840 million in participation capital. The participation capital in question was issued by RZB from 2008 to 2011 and is held by its owners. This repurchase will be financed with fresh capital in the amount of approximately 840 million, which can be subscribed by the existing shareholders until 22 May 2012. Pursuant to the definition of the European Banking Authority (EBA), this capital will be considered core Tier 1 capital.

With this transaction and in economic terms, RZB’s participation capital will be transformed into share capital, in order to meet the new regulatory requirements effective as of mid-2012. The transaction does not affect the participation capital of Raiffeisen Bank International AG (RBI), 70 per cent of which is held by the Republic of Austria and 30 per cent by other investors.

Transformation due to EBA requirements

The transformation of the participation capital into core capital was necessary due to the requirements of the EBA, which stipulate a minimum ratio of 9 per cent for banks in core Tier 1 capital, i.e. essentially their share capital. Due to technical reasons and reasons of stock law, the formal resolutions on the capital increase include an additional volume.

Transformation of preference shares into ordinary shares

At the RZB Annual General Meeting, it will also be proposed to the shareholders to transform the existing preference shares into ordinary shares. This transformation is necessary with an eye to the upcoming Basel III regime, as ordinary shares are ascribed a higher equity capital quality. At present, only the Regional Raiffeisen Banks hold such shares.