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Hungarian Raiffeisen unit to receive HUF 106bn capital injection

The board of Raiffeisen Bank Zrt has decided on a HUF 106bn increase of the registered capital, the bank told MTI on Friday.

The capital increase is a further evidence of the bank’s commitment to Hungary even in the current difficult environment, said CEO Heinz Wiedner. The move will ensure that Raiffeisen Bank will continue to play an important role in the Hungarian financial sector, he said.

Raiffeisen Bank confirmed press reports earlier in December that 10 of its 141 branches were being closed, layoffs would continue and "further efficiency improvement measures are expected to result in headcount reductions next year as well".

CEO of the Austrian banking group Herber Stepic said late November that they expect full-year losses of €320m in Hungary, and at least this amount must be recapitalised. Mr Stepic said at the time that Raiffeisen Bank could pull out from one or two countries in the region, but it sees no reason to leave Hungary.

Raiffeisen Bank booked €286m loss in Hungary in Q1-Q3, largely due to €373m in provisioning and €33m for the bank levy.

Mr Stepic said late November said Raiffeisen Bank expects about 30% of its clients to avail of a government scheme allowing early repayment, in full, of foreign currency-denominate mortgages at discounted exchange rates, reducing 2012 profit by €17m. The unit’s stock of retail Swiss franc-denominated loans, once the most popular lending product in Hungary, was €1.4bn at the end of September 2011, around the time the government scheme was launched.

Raiffeisen Bank Zrt had total assets of 2,400.6bn at the end of 2010, including HUF 140.9bn of equity, audited figures published by Hungarian market watchdog PSZAF show. The bank recorded HUF 10.8bn loss last year.

Consolidated losses came to HUF 6.9bn in 2010, but excluding Hungary’s extraordinary tax on financial companies the bank would have had consolidated after-tax profit of HUF 4.2bn according to earlier information.