Raiffeisen's eastern strategy on the line after CEO exit
By Michael Shields, Angelika Gruber and Georgina Prodhan
VIENNA (Reuters) - The central and eastern European banking empire that Herbert Stepic forged at Austrian lender Raiffeisen may be the casualty of a power struggle at the group exposed by his sudden exit.
Stepic, 66, has depicted his abrupt resignation last month as chief executive of Raiffeisen Bank International (RBI) as a selfless effort to protect the group from damaging publicity about his personal property investments.
In fact, sources say, discord from the provincial Austrian banks that control RBI helped topple the burly banker who made Raiffeisen into emerging Europe's second-biggest lender by aggressively expanding in the post-Communist east.
RBI is 78 percent owned by the unlisted Raiffeisen Zentralbank group, which is in turn controlled by eight provincial Austrian banks known as landesbanks.
The landesbanks are themselves owned by hundreds of small cooperative Raiffeisen banks forming the Raiffeisen system.
Revelations that Stepic used letterbox firms in the British Virgin Islands and Hong Kong to buy apartments in Singapore offered a chance for the provincial banks to challenge, and perhaps unwind in part, his eastern expansion campaign in order to retrench and build up capital, the sources said.
Stepic has denied any wrongdoing in using front companies for the deals, which are being investigated by the bank, Austria's central bank and financial markets regulator, and said he always acted in line with tax rules.
With RBI's supervisory board due to pick his successor on Friday, the group's strategy is on the line as its owners seek to shift power back to the center and rein in its high-flying eastern reaches. Continued...