Strobl lights up Raiffeisen’s recovery
Three years ago, Raiffeisen Bank International was on the casualty list – today it is again one of the best-performing banks in Europe. New chief executive Johann Strobl discusses restructuring, regulation and getting back to ‘real banking’.
Illustration: Kevin February
Three years ago, Raiffeisen Bank International (RBI) was teetering on the brink of disaster. Crisis in Russia had put a severe dent in the Austrian group’s revenues, while problems in other key markets such as Ukraine and Hungary had pushed it to its first-ever full-year loss.
Bad debts were piling up across its central and eastern Europe network. Capital was in short supply, and regulators were getting restive, but the complex ownership structure of the Raiffeisen sector made equity-raising all but impossible.
Today the picture looks very different. In February, RBI unveiled one of its best sets of results since the financial crisis. Net profit more than doubled last year to €1.1 billion, giving a return on equity of close to 14%. Non-performing loans were down to less than 6% of the total, while the common equity tier-1 ratio had jumped to 13%.
Markets have been hugely appreciative of this remarkable turnaround. In late January, RBI’s share price topped €35 for the first time since July 2011, up from an all-time low of €10 in early 2015.
Debt investors were equally enthusiastic. Barely two months after Moody’s restored RBI’s single-A rating in November, an additional tier-1 bond brought by the group attracted €4.2 billion of demand and achieved one of the lowest yields ever for a new-style capital deal.
New RBI chief executive Johann Strobl, who celebrates the first anniversary in March of his appointment to the top job, admits that he took over at an auspicious moment.
“I was very lucky with the timing,” he says.
Such self-deprecation conceals the fact that Strobl has, to a large extent, made his own luck. As head of risk and deputy to former chief executive Karl Sevelda, he was a key architect of the restructuring plan that restored RBI to financial health.