* Merger with parent company due to be completed on Saturday
* Shareholders expect dividend soon, new CEO says
* Firm targets modest increase in capital buffer
(Adds CEO comment, detail on bad loans)
By Francois Murphy and Alexandra Schwarz-Goerlich
VIENNA, March 15 Austria's Raiffeisen Bank
International has set its sights on resuming dividend
payments in a year's time after years of retrenchment and
restructuring in the wake of the financial crisis.
Raiffeisen Bank International (RBI), which operates across
central and eastern Europe, is merging with its parent company
Raiffeisen Zentralbank, primarily to bolster RZB's
capital buffer and appease banking supervisors. The banks came
third-last in a European stress test of 51 lenders last year.
RBI's full-year results published on Wednesday confirmed
last month's announcement that its fully loaded common equity
tier 1 capital ratio - a measure of financial strength and the
main yardstick in the stress test - came in well above
expectations at the end of 2016, reaching 13.6 percent.
For the combined bank including RZB, however, the figure was
12.4 percent, and it set itself a target of roughly 13 percent
for the next two to three years, which incoming Chief Executive
Johann Strobl said left enough leeway for a dividend.
"We have significantly raised our capital buffer and
significantly improved our risk profile," said Strobl, who will
take over as head of the combined bank when the merger is
completed on Saturday.
"We can now invest all our resources once again in the
development of our business model and in the development of our
relations with our clients," he told a news conference.
RBI last paid a dividend for 2013. A net loss of more than
600 million euros ($635 million) the following year prompted it
to retrench in various markets to shrink its balance sheet, shed
bad loans and bolster its capital buffer.
For the first time since 2012, RBI ended the year with a
non-performing loan (NPL) ratio in single digits. The ratio was
9.2 percent at the end of December, 2.7 points lower than a year
For the combined bank, the NPL ratio was 8.7 percent, and it
set itself a target of 8 percent by the end of this year.
"I think the shareholders have understood that it was right
not to pay a dividend (for this year) and instead to solve the
capital issue but it is also clear that in future there are
expectations we can fulfil," Strobl told reporters.
Asked if the aim was to pay a dividend for 2017 he said:
"That is our plan." He added, however, that it was too early to
say how big the payout would be.
($1 = 0.9414 euros)
(Editing by David Evans/Ruth Pitchford)