The business done with Austrian corporate customers and with international customers managed out of Vienna makes a constant and significant contribution to the overall group profit of Raiffeisen Bank International AG (RBI). This group of customers represents the lion’s share of the Group Corporates business segment, which generated a pre-tax profit of € 125 million in the first quarter of 2012. After the elimination of interim results and cross-segment consolidation, this accounted for 15 per cent of the total pre-tax profit for the period of € 685 million. The credit volume for the segment increased year-on-year by more than a fifth to around € 21.4 billion.
For Karl Sevelda, Deputy Chairman of the RBI Managing Board and responsible for corporate customer business, this is clear proof of the fact that the Austrian and international corporate customer business is a reliable and in every respect safe contributor to the bottom line, especially in difficult economic times. "On the one hand, we have recorded a significantly higher credit volume for this customer group. On the other, net provisioning for impairment losses have fallen sharply." From RBI's perspective, Sevelda therefore sees no bottleneck in providing the domestic economy with liquidity: "If a customer with appropriate creditworthiness needs financing, then he’ll get it. Either as a classic loan or, something which is gaining in importance especially at large companies, as a corporate bond."
While RBI acts as a classic universal bank in Central and Eastern Europe (CEE), i.e. it processes all customer segments from private customers to multinational companies, in Austria it focuses solely on dealings with large corporate customers, the so-called Top 1,000. The other customer segments are supported within the Austrian Raiffeisen Banking Group by the local Raiffeisen Banks or the Regional Raiffeisen Banks in the respective provincial capitals.
RBI is Number 1 for corporate bonds in Austria
Due to the constant rise in refinancing costs in recent years as well as the higher equity costs imposed on the banks by regulatory requirements, large companies in particular are increasingly covering their need for liquidity directly on the capital market by means of corporate bonds. While the ratio of loans to corporate bonds in the USA is currently about 20 to 80, in Austria it is exactly the reverse, although the situation has improved over the past months. This is where Sevelda sees big potential for development and therefore business: "We will not reach America's figures even in the long term, which is mainly due to companies in Austria being much smaller on average. However, I believe a balanced ratio is entirely achievable and desirable in the medium term."
With nine transactions and a total issue volume of about € 3 billion, RBI was the leading force for corporate bonds issued on the Austrian market in 2011. Decisive for this were on the one hand the excellent structuring competence of RBI's product specialists and on the other the high sales and placement capacity of the Raiffeisen Banking Group. RBI is also expecting continued high levels of activity and great interest in 2012, and is anticipating to at least reach the record level of the previous year. So far this year, RBI has placed almost € 2 billion in eleven transactions for Austrian and German customers, namely Scholz, HeidelbergCement, Otto, Telekom Austria, MEG Möbelhandels GmbH, STRABAG, Alpine, Constantia Flexibles, Montana Tech, conwert and Immofinanz.
Treasury with innovative solutions
The treasury experts at RBI are, due to the current uncertainty and volatility on the financial markets, not only points of contact for the classic hedging of currency, interest or product risks, but also for the development of innovative solutions for the challenges that customers are faced with in their area of business. In the present environment of historically low interest rates, the specialists recommend many customers to hedge against any future rise in interest rates, and offer the optimisation of financing costs and risks with intelligent solution strategies as part of a comprehensive examination of the financing portfolio. For example, the volume of products sold for the hedging of interest rate change risks rose by a half to € 1,150 billion in the first five months of 2012 compared to last year. Clear increases in corporate deposits were also achieved in the first quarter of 2012: the flexible and innovative solutions for the best possible investment of liquidity surpluses led to an increase of 14 per cent to € 7.6 billion.
Trade and export financing with extra know-how
Foreign trade is of central importance to Austria, and the trend is rising. While exports of goods and services made up 37.1 per cent of GDP in 1990, their share amounted to 46.2 per cent in 2000 and 56.6 per cent of total economic output in 2011. Austria's export ratio in 2011 was therefore even better than Germany's (50.1 per cent). RBI supports Austrian companies as one of the country's strongest export financing banks with special knowledge, both in Austria and in many of its customers' target markets. Furthermore, close contacts with foreign export financing agencies, local authorities and correspondence banks simplify or even enable the inclusion in financing lines. To this is added the financing power of the network banks and branches, which can provide the financing of local services for the importer.
At the beginning of 2012, for example, RBI worked with its branch in Beijing to provide a loan for the construction of a plant for the production of hygienic paper in south-eastern China. The funds for the deliveries by ANDRITZ came from a tied loan of around € 12 million, covered by Oesterreichische Kontrollbank AG. The financing of the deliveries from local production sites and third countries amounting to around € 33 million was done by the RBI branch in Beijing. London's Trade Finance Magazine awarded this transaction "Deal of the Year" in March.
Further proof of the export financing competence of RBI, especially in Asia, was the signing of two loan agreements with the Vietnamese Ministry of Finance at the presidential palace in Hanoi for deliveries of Rosenbauer International AG and BIS VAM Anlagentechnik GmbH in the presence of the Presidents of Austria and Vietnam. The signing ceremonies were a highlight of the business mission led by President of the Austrian Chamber of Commerce, Christoph Leitl, which was held at the end of May to coincide with the state visit by Federal President Heinz Fischer.
Tailor-made cash management
As one of the leading providers of Cash Management services, both in Austria and across Europe, RBI counts this business segment as one of its core competences. The product range covers all customer requirements, such as account information for liquidity management, electronic communication channels with the bank, integration of all group companies into one Cash Management system, central liquidity controlling or the offsetting of debit and credit balances (cash pooling).
The tailor-made account products of RBI have one thing in common: apart from affordable account management, they focus on delivering clear and comprehensive account information. For example, fixed unit prices, the listing of all transactions and a unique monthly expense report for the Cash Management account and the WebBill make payment costs transparent, traceable and clear. Special products such as CMI@Web, the Central Conversion Solution or SWIFT for commercial customers are also suitable for highly specific customer requirements.
Above all large national and international companies are looking for a cash management bank for the entire CEE region, and RBI can meet their requirements with the highest degree of reliability.
Industry focus for even better closeness to the customer
For selected industries, RBI has introduced an industry focus to its account management activities. Under this concept, multinational firms, e.g. from the construction and pharmaceutical industries, retail chains as well as energy and utility companies, are supported by a specialist industry team of experienced Relationship Managers. The focus on companies with a strong CEE presence gives these customers even better access to RBI's network banks, which in turn optimises the overall support given. In addition, the customers profit from the profound knowledge of their personal adviser. Says Sevelda on the benefits of the advisory approach: "The specialisation covers the respective industry environment and the special needs of the companies even better, enabling solutions to be offered proactively and even faster than before. That is true of both classic and project financing topics, as well as cash management, investment banking and treasury products."
According to Sevelda, this approach is highly valued by RBI's customers, which was also apparent in personal surveys carried out recently. Very high scores for relevance and satisfaction were given in particular in the categories of Partnership/Trust, Solution-orientation/Flexibility, Specialist competence/Advisory quality and, not least, Presence in CEE.
Detailed industry analyses for companies with a focus on capital markets
With the "Raiffeisen Integrated Financial Advisory", RBI offers companies with a marked capital market focus thorough industry analyses,with a detailed overview of the respective trends, opportunities and risks. On the basis of a peer group comparison, which is developed jointly with the experts of Raiffeisen Centrobank and Raiffeisen Research, optimal solutions for debt and equity capital markets are developed for customers, as are structured financings and, if necessary, suitable acquisition targets.
For Sevelda, the sum of excellent product, processing and advisory quality is the recipe for a successful relationship bank. "The feedback from our customers confirms our advisory approach. We are perceived not simply as a supplier of financial services, but also as a trustworthy partner with excellent problem-solving competence."