Why is the RBI banks merging

The merger of RZB and RBI will take place on Saturday

Raiffeisen Bank International and its parent, Raiffeisen Zentralbank, merge on March 18. Johann Strobl is CEO from this day. The banks hope that the merger will strengthen their equity capital.

The merger of Raiffeisen Zentralbank (RZB) with its roughly ten times larger listed subsidiary, Raiffeisen Bank International (RBI), will take place next Saturday. The merger will be entered in the commercial register on March 18, the bank announced on Wednesday. This is the last legal act in the merger process.

The merged bank will continue to be called Raiffeisen Bank International and will remain listed on the stock exchange. With the merger, the designated CEO Johann Strobl will take up his job. He succeeds the previous head of the bank, Karl Sevelda.

For 2016 there is definitely no dividend from RBI again, the bank said. The last time there was a dividend was for 2013.

The merger is a merger of RZB into RBI. In order to compensate the shareholders of RZB - mainly the Raiffeisenlandesbanken - for their shares, RBI issues new shares, which increases the number of shares. This would reduce RBI's free float from 39.3 percent to around 35 percent. But because some former RZB minority shareholders will be included in the free float in the future, this free float in the RBI-new will increase to 41.2 percent. The Landesbanken hold 58.8 percent.

The banks hope that the merger will strengthen their equity capital. Together, according to a pro forma calculation, the institutions achieved a core capital ratio (CET 1, fully loaded) of 12.4 percent at the end of 2016. In the medium term, the merged bank now wants to achieve a core capital ratio of around 13 percent. The cost-income ratio should be 50 to 55 percent in the medium term.

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(APA)