Raiffeisen cool on Kazakhstan, eyes $400mln Russia spend

KIEV, May 18 (Reuters) - Austrian bank Raiffeisen International (RIBH.VI: Quote, Profile, Research) will not make an acquisition in Kazakhstan this year but plans to invest $400 million in neighbouring Russia, its chief executive said on Sunday.

"In Kazakhstan we have been talking to almost all of the 10 largest banks with a few exceptions and some others. Frankly speaking, their price expectations are too high, they are unrealistically high," Herbert Stepic told journalists on the sidelines of the annual meeting of the European Bank of Reconstruction and Development (EBRD) in Kiev.

Raiffeisen, which is the third-largest bank in eastern Europe, has acquired holdings in ex-Soviet states Russia, Ukraine and Belarus.

But Kazakhstan, which has been hit hard by the global credit squeeze and spikes in food prices which propelled inflation to 18.8 percent last year, is no longer as high on the bank's acquisition wishlist as it had been in the past.

"We will continue to look for an opportunity in Kazakhstan and if that doesn't happen we will open a greenfield operation," Stepic said, adding that a decision will not be taken before the end of the year.

"We don't need to buy a bank (in Kazakhstan), we can make 2 percent more growth in Russia and our results are exploding in Russia -- it's a big market," he added.

Raiffeisen will spend at least $400 million in Russia in 2008 as it strives to improve its credit portfolio, said Chairman of the Board Johann Jonach.

Expansion in other CIS states hold little interest for the bank at present.

"Armenia is too small, Azerbaijan is a market that is highly influenced by official intervention... and there are several other markets which are autocratic and foreigners are not wanted," Stepic said. (Reporting by Dmitry Sergeyev, writing by Amie Ferris-Rotman; Editing by Nick Edwards)