Raiffeisen chief Stepic offers to quit as offshore probe widens on investments
CEO spearheaded expansion into 17 former communist countries
Published 25/05/2013 | 05:00
RAIFFEISEN Bank International chief executive officer Herbert Stepic offered to resign from eastern Europe's second-biggest lender, a day after officials began a probe into his investments through offshore accounts.
Raiffeisen will "promptly consider" Mr Stepic's offer to quit, the Vienna-based lender said in a statement yesterday. The 66- year-old chief executive has worked at the bank for four decades and spearheaded its expansion into 17 former communist countries after the Soviet Union's dissolution.
Raiffeisen ordered an internal review yesterday to determine whether Mr Stepic's offshore accounts, set up by Swiss bank UBS to invest in Singapore real estate, comply with bank rules.
Austria's financial market regulator has also requested more information. Raiffeisen fell as much as 3.6pc in Vienna trading and the shares may remain under pressure until the bank resolves the questions around its leadership.
"His departure will leave a void in the absence of credible succession planning," Eleni Papoula, a London-based analyst at Berenberg who recommends investors sell the shares in Raiffeisen, wrote in response to questions. "In the short-term, the stock will continue to be under pressure."
Raiffeisen fell 2pc to €26.47 by lunchtime in Vienna trading. While the stock has gained 12pc over the last 12 months, giving the lender a €5.2bn market value, it remains below the €32.50 initial public-offering price of April 2005.
"All investments were made with income already taxed in Austria," Mr Stepic told reporters in Vienna, without taking questions.
"I have no reservations in disclosing these facts to the relevant authorities."
Mr Stepic will stay at the bank until Raiffeisen decides whether to accept the resignation, the lender said.
The Austrian Press Agency reported that the bank will nominate a successor for Mr Stepic on May 27, without saying where it got the information.
Finding a replacement may not be easy, said Erste Bank's Guenter Hohberger, who advises investors to buy Raiffeisen shares.
"Understanding of the region where Raiffeisen operates will be a key," Mr Hohberger said in a telephone interview in Vienna. "It will be important to have a background in the region. They're in 17 different markets that aren't homogeneous."
A new chief executive will also need to address Raiffeisen's capital requirements, which Standard & Poor's said were of "increasing concern" in a report issued last month.
Raiffeisen had to cancel the April sale of a subordinated bond after failing to get enough orders.
Mr Stepic said last month he considered his bank's capital situation to be sufficient for growth and ''very relaxed".
"If someone external takes on the role with a fresh perspective, it could be positive in the longer term," said Mr Papoula. "However, the most likely scenario would be that someone internal takes over, who would carry on with the existing strategy."
The probe doesn't come as the first into Mr Stepic's investments. Austria's financial regulator ended an investigation into the chief executive's land deals in Serbia this week after he showed he had already exited the investment.
In April, he returned €2m to the bank after his 2012 salary swelled despite falling profit and job cuts.