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UPDATE 2-Asian coal mine exposure adds to Raiffeisen woes
November 20, 2014 / 7:48 AM / 3 years ago

UPDATE 2-Asian coal mine exposure adds to Raiffeisen woes

* Ukraine, Hungary hits trigger Q3 loss of 119 mln euros

* Pretax profit in Russia drops by a fifth in Q3 vs Q2

* Raises forecast for 2014 risk provisions to 1.8 bln euros

* Cites problems with Asian borrowers in commodity sector (Recasts with comments from call)

By Michael Shields

VIENNA, Nov 20 (Reuters) - Raiffeisen Bank International added Asia to its headaches in Ukraine and Hungary, seeing a hit from exposure to Asian coal mines the bank inherited when a loan went sour.

The Austrian group’s third-quarter profits also fell in Russia as a weakening rouble undercut strong operating results.

Shares in the second-biggest Western lender to emerging Europe after UniCredit dropped as much as 5.4 percent on Thursday after it posted a quarterly loss of 119 million euros ($149.2 million).

“The book multiple is low, but the outlook is very tough, and not improving particularly quickly,” analysts at Credit Suisse wrote.

RBI had already flagged woes in Ukraine, where bad loans are mounting amid the government’s violent clash with pro-Russia rebels.

In Hungary, it added 205 million euros in provisions to the previous quarter’s 67 million to cover costs from a law requiring banks to compensate customers for what the government calls unfair lending.

Raiffeisen also started to build risk provisions for customers in the Asia coal business after the value of collateral dropped along with coal prices, officials said.

Chief Risk Officer Johann Strobl gave no details about potential charges for this, saying he wanted to avoid tipping the bank’s hand in negotiations. He said the charges were included in new guidance that risk provisions could reach 1.8 billion euros this year, up from its old 1.5-1.7 billion range.

Raiffeisen did not name the borrower, but Reuters has reported that Indonesian businessman Samin Tan was in talks to sell assets including all or part of his stake in Asia Resource Minerals to help repay Standard Chartered and Raiffeisen close to $1 billion.

Profit in Russia fell to 78 million euros in the quarter from 125 million a year ago. Finance Chief Martin Gruell said profit would ease again this quarter.

Chief Executive Karl Sevelda said RBI remained committed to Russia but would not allocate additional resources to that market until the political situation clarified.

Its loss in Ukraine, where it is the number six lender, widened to 105 million from 10 million in the April-June period as the political situation and currency devaluation weighed.

Sevelda stuck to the group’s forecast that it could lose up to 500 million euros this year, then rebound to a 2015 profit in the “mid-triple-digit millions” of euros. It has no plans to raise more equity after a 2.8 billion euro cash call this year.

1 US dollar = 0.7976 euro Additional reporting by Angelika Gruber; Editing by Maria Sheahan and Jane Baird

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