Austria's Raiffeisen aims for EUR 600m capital increase

(VIENNA) - Austria's Raiffeisen Zentralbank (RZB) said Wednesday it was seeking to raise 600 million euros ($778 million) via participation capital to relieve its subsidiaries involved in eastern Europe.

Subscription to the participation capital, which does not carry voting rights, will end at 1600 GMT on Thursday, RZB said in a statement after an extraordinary general meeting of the bank's shareholders.

The bank said the funds would be used to "purchase shareholdings that Raiffeisen Regional Banks... currently hold in network banks in Central and Eastern Europe," it noted.

The bank said the move would help it better comply with Basel III international banking regulations -- which require banks to raise their high-quality core capital to 7.0 percent of total assets from the current 2.0 percent, and which will be implemented in Austria by 2013.

Last month, Herbert Stepic, chief of Raiffeisen Bank International, had said its parent company RZB would need to raise 2.5 billion euros in fresh capital to meet new European rules and that the bank was already looking at ways to achieve this.

Amid concerns of the eurozone crisis hitting the region, Raiffeisen may pull out of some markets in central and eastern Europe where it has almost 14 million customers in 18 countries, he noted.