VIENNA (Reuters) - Austria's Raiffeisen Zentralbank [RZB.UL] plans to sell most of its shares in insurer Uniqa (VI:UNIQ), it said on Monday, moving towards bolstering its capital reserves while it considers merging with a listed unit for the same reason.
Unlisted Raiffeisen Zentralbank (RZB) said it was in advanced talks to sell a 17.6 percent stake in Uniqa to Uniqa Versicherungsverein Privatstiftung, a foundation whose management board comprises Uniqa executives.
RZB would retain a stake of roughly 8.6 percent in Uniqa, the two companies said in separate statements. At Monday's closing price of 5.65 euros ($6.20) a share, the stake RZB plans to sell is worth 307.9 million euros.
"The intended transaction is part of the measures currently under evaluation by RZB to simplify the corporate structure and to adapt the group to increasing regulatory capital requirements," RZB said, referring to the proposed merger with its listed unit Raiffeisen Bank International (VI:RBIV).
The Uniqa stake sale would boost RZB's fully loaded common equity tier 1 (CET 1) capital ratio, a measure of financial strength, by around 60 basis points, it said, though both sides had agreed to keep the purchase price confidential.
RZB had a fully loaded CET 1 ratio of 10.3 percent at the end of 2015, well below Raiffeisen Bank International's 11.5 percent. Although streamlining the group's structure is a stated aim of the potential merger, boosting RZB's capital buffer is seen as the main goal.
RBI has said that a merger would improve RZB's capital ratio because of the way capital is calculated under the Basel III rules. Under those rules, RBI capital reserves that exceed the minimum requirement cannot count towards RZB's own capital ratio. A merger would eliminate that effect.