Raiffeisen: Hungarian unit lacks shareholder value
Raiffeisen Bank International can-not indefinitely ignore a lack of profits at its Hungarian operation, the Austrian group's head of corporate business said yesterday. The remarks by Peter Lennkh at a Euromoney conference in Vienna came as Raiffeisen began reviewing its portfolio, potentially resulting in a withdrawal from one or more foreign markets this year.
"It is a great business. It does everything right, but for the moment it doesn't come through with shareholder value and this cannot be ignored forever," Lennkh said at a panel discussion on the outlook for the sector in Central and Eastern Europe.
Banks in Hungary have suffered under high taxes and government measures offering debt relief for many borrowers, Reuters added. Raiffeisen had previously considered selling the Hungary business but did not follow through.
Lennkh said that the Czech Republic, Slovak and Polish markets are definitely attractive when gauging the macroeconomic environment and the prices banks can charge for financial services compared with risk costs they face. He described Croatia as a difficult market.
Meanwhile, László Wolf, deputy chief executive of OTP Bank, the largest lender in Hungary, told the conference that he thought the worst of the cost burden from Hungarian government policies was now over. Raiffeisen Bank International (RBI) booked a €301 mln loss in Hungary in Q1-Q3 last year, mainly because of a provision made for compensation it must pay retail clients under borrowers' relief legislation approved last summer, the latest earnings report of the group published at the end of last November showed.
"The market environment in Hungary continues to be difficult and is currently under closer observation," RBI said in the report. The Hungarian unit of Raiffeisen has recorded after-tax losses every year since 2009, earlier Econews information shows.
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