Including the one-off effects of the sales of Raiffeisenbank Ukraine and of a minority stake in Bank TuranAlem in the amount of 596 million.

Transcription

1 ANNUAL REPORT 2009

2 2 Section Overview RZB Group Monetary values in million 2009 Change * 2005 Income Statement Net interest income 3,462 (13.7%) 4,010 2,942 2,186 1,606 Provisioning for impairment losses (2,247) 95.3% (1,150) (308) (346) (207) Net fee and commission income 1,422 (19.6%) 1,768 1,516 1, Net trading income 418 2,061.2% General administrative expenses (2,795) (10.3%) (3,117) (2,645) (2,113) (1,574) Profit before tax % 597 1,485 1, Profit after tax % 432 1,190 1, Consolidated profit % , Earnings per share, Statement of Financial Position Loans and advances to banks 33, % 29,115 30,910 32,006 29,647 Loans and advances to customers 74,855 (11.8%) 84,918 73,071 53,106 39,613 Deposits from banks 49,917 (7.8%) 54,148 48,899 44,129 43,416 Deposits from customers 55,423 (6.3%) 59,120 55,369 44,727 32,158 Equity (including minority interests and profit) 10, % 8,587 ** 8,422 6,637 4,950 Total assets 147,938 (5.7%) 156, , ,629 93,863 Regulatory Information *** Risk-weighted assets (credit risk) 74,990 (15.8%) 89,040 83,091 62,908 47,968 Total own funds 12, % 10,801 10,297 7,614 5,199 Total own funds requirement 7,516 (11.6%) 8,505 7,491 5,652 4,463 Excess cover ratio 63.8% 36.8 ppt 27.0% 37.5% 34.7% 16.5% Tier 1 ratio (credit risk) 11.8% 3.4 ppt 8.4% 8.8% 9.0% 8.3% Own funds ratio 13.1% 2.9 ppt 10.2% 11.0% 10.8% 9.3% Performance Return on equity before tax 8.8% 1.5 ppt 7.3% 22.2% 39.1% 23.9% Return on equity after tax 6.1% 0.8 ppt 5.3% 17.8% 33.9% 18.1% Consolidated return on equity 6.3% 5.4 ppt 0.9% 16.5% 34.0% 15.5% Cost/income ratio 51.9% (0.9 ppt) 52.8% 56.9% 56.7% 58.9% Return on assets before tax 0.54% 0.14 ppt 0.40% 1.17% 1.83% 1.17% Net provisioning ratio (average risk-weighted assets, credit risk) 2.76% 1.57 ppt 1.19% 0.41% 0.63% 0.52% Risk/earnings ratio 64.9% 36.2 ppt 28.7% 10.5% 15.8% 12.9% Resources Number of staff on the reporting date 59,800 (10.3%) 66,651 61,351 55,434 46,243 of which in Austria 3, % 3,179 2,858 2,577 2,529 of which in the CEE region 56,192 (10.8%) 63,029 58,111 52,528 43,430 Business outlets 3,038 (6.6%) 3,251 3,036 2,866 2,461 * Including the one-off effects of the sales of Raiffeisenbank Ukraine and of a minority stake in Bank TuranAlem in the amount of 596 million. ** Retroactive reclassification of participation capital as equity (see note 34 in the Notes to the Consolidated Financial Statements) *** Basel II rules have been applied from 2008 Ratings Long-term Short-term Financial strength Outlook (long-term) Fitch Ratings A F1 Stable Moody s Investors Service A1 P-1 D+ Stable Standard & Poor s A A-1 Negative

3 Section Contents 3 Introduction Preface by the Managing Board 6 The Managing Board of Raiffeisen Zentralbank 8 Supervisory Board's Report 10 Overview of RZB 12 RZB's Capital Market Operations 13 Social Responsibility 18 Raiffeisen in Austria 20 The Raiffeisen Banking Group in History of the Raiffeisen Organisation 26 Group Management Report 32 Economic Conditions 32 Developments in the Banking Industry in RZB s Principal Markets 37 The Course of Business in Results of Operations, Financial Position and Assets 39 Risk Management 56 Supervisory and Risk Management System in Consolidated Accounting 61 Human Resources 64 Information Technology 67 Outlook for Material Events After the Balance Sheet Date 71 Business Divisions 72 Corporate Customers 72 Treasury and Investment Banking 73 Retail Customers 76 Selected Raiffeisen Zentralbank Equity Investments 78 Segment Reports 84 Austria 86 Central Europe 89 Southeastern Europe 98 Russia 108 CIS Other 111 Rest of the World 116 Consolidated Financial Statements 118 Income Statement 118 Profit Development 121 Statement of Financial Position 122 Statement of Changes in Equity 123 Cash Flow Statement 124 Segment Reporting 126 Notes 132 Notes to the Income Statement 153 Notes to the Statement of Financial Position 161 Risk Report 189 Other Disclosures 223 Board and Officers 236 Overview of Equity Investments 238 Unqualified Auditor's Report (Report by the Independent Auditor) 243 Statement of the Managing Board 245 Glossary (important terms and abbreviations) 246 Addresses and Contact Details 250 Publication Details 254 * Audited by KPMG In this report, RZB refers to the RZB Group and Raiffeisen Zentralbank is used wherever statements refer solely to Raiffeisen Zentralbank Österreich AG. Adding and subtracting rounded amounts in tables may have led to minor discrepancies. Statements of rates of change (percentages) are based on actual figures and not on the rounded figures presented in tables. * * * * * * * * * * * * * * * * * * * * * * * * *

4 4 We are here for our customers. Norway Finland Sweden Ireland Denmark Russia United Kingdom Netherlands Belgium Luxembourg Germany Poland Czech Republic Slovakia France Liechtenstein Switzerland Austria Hungary Slovenia Croatia Italy Bosnia and Herzegovina Serbia Spain Montenegro Kosovo Macedonia Albania Greece Algeria Tunisia Malta

5 And there and there and there... 5 Introduction Estonia Latvia Russia Lithuania Belarus Kazakhstan Ukraine Moldova Romania Georgia Azerbaijan Armenia Bulgaria Iran Turkey Iraq Syria

6 6 Preface Preface by the Managing Board Dear Sir or Madam, After the strong growth seen by our Group in recent years and the steady broadening and deepening of our banking network in Central and Eastern Europe, 2009 was a year of consolidation. The global crisis brought a collapse in demand across the board in the real economy. And analysis of the causes of the financial crisis led to a paradigm shift both from the point of view of capital market participants and from a regulatory perspective. Although the regulatory discussions are far from over, one thing is clear: in future the banks will have to meet signficantly higher capital requirements. Previously, RZB had maintained sufficient capital through retention of profits and through the financial strength of its Austrian shareholders. As a result of the crisis, a signifcant increase in this capital buffer was required. RZB therefore issued participation certificates to the value of 2.5 billion. Of these, 1.75 billion worth of certificates were subscribed by the Republic of Austria. As with the imposition of higher capital requirements, the Republic of Austria also acted in step with many other European countries in undertaking measures to strengthen the liquidity of systemically important financial institutions. The successful placing of government-guaranteed bonds by Austrian banks was not only essential, with the financial markets largely closed for business at the time it also had a positive impact on perceptions of risk with regard to Austrian banks and their operations in Eastern Europe. In 2009, RZB issued three government-guaranteed bonds worth a total of 4.25 billion. This means that RZB is currently sufficiently well supplied with liquidity and capital. A glance at the liabilities side of the statement of financial position also shows that this refinancing is well diversified and not critically dependent on any one source of funding. As the central institution in the Austrian Raiffeisen Banking Group (RBG), RZB has a central role in liquidity balancing. The largest proportion of bank deposits therefore comes from the Raiffeisen Banking Group. In view of the general business environment, the past year was extremely challenging. Nonetheless, 2009 was a very successful year in operational terms. The record figure posted in the previous year was within range. Traditional banking operations remain the main pillar of RZB's business, with net interest income accounting for a high proportion of overall profits. Being part of Austria's leading banking group gives RZB the reassurance of solid back-up, whilst the sound make-up of RZB's assets and profits demonstrates the robustness of its business model. With an eye to the current economic environment and expected market changes, RZB's Managing Board is looking into various options aimed at ensuring that the organisation it manages retains an optimal structure for the future.

7 Preface 7 Introduction One of the strategic options on the table is a merger of Raiffeisen Zentralbank and Raiffeisen International. This would mean splitting off Raiffeisen Zentralbank's operations connected with being the central institution in the Austrian Raiffeisen Banking Group (RBG) and transferring this business to a new company. A merger would see Raiffeisen Zentralbank's other areas of business principally its business with Austrian and international corporate customers combined with the Central and Eastern European operations of Raiffeisen International. Integrated refinancing in connection with the stock market listing of the merged bank would bring wider access to the capital, money and bond markets, facilitate the utilisation of long-term growth opportunities and at the same time offer a stronger basis for meeting potential Basel III requirements. The elimination of parallel structures would provide broader scope for managing the new group. Incorporation of the stable Austrian business operations would result in better risk diversification for the listed group as against exclusive concentration of Central and Eastern Europe. Furthermore, the new entity would combine Raiffeisen Zentralbank's selective emerging markets business at its Asian locations with Raiffeisen International's operations in Central and Eastern Europe. The strategic development process is complex and has not yet been completed at the time of writing. The basics are currently being worked out, in order to enable subsequent decisions to be taken and the correct path to be laid out. We would like to thank our customers for their trust in RZB and the solid relationship we have with them. We would also like to thank our shareholders, their representatives on the executive bodies of Raiffeisen Zentralbank, and our business partners. A special thank you also goes to our staff, of course, whose hard work and commitment make RZB what it is. We look forward to working together to ensure that our past success continues in the future. Walter Rothensteiner Herbert Stepic Patrick Butler Karl Sevelda Johann Strobl Manfred Url

8 8 The Managing Board The Managing Board Walter Rothensteiner Responsible for Corporate Development, Subsidiaries and Equity Investments, Public Relations, Human Resources, Legal and Compliance, Audit, Tax, Group Head Office/ Executive Secretariat. Born in 1953; read Commercial Science at the Vienna University of Economics and Business Administration; senior positions at Raiffeisenlandesbank Niederösterreich-Wien (most recently on the managing board), member of the managing boards of Leipnik-Lundenburger Industrie AG and the sugar industry group Agrana. Joined Raiffeisen Zentralbank in 1995 as Vice-Chairman of the Managing Board; Chairman of the Managing Board and CEO since June Selected supervisory board posts and other positions: Casinos Austria AG (C), Kathrein & Co. Privatgeschäftsbank AG (C), Österreichische Lotterien Ges.m.b.H. (C), Raiffeisen Bausparkasse Ges.m.b.H. (C), Raiffeisen Centrobank AG (C), Raiffeisen International Bank-Holding AG (C), Leipnik-Lundenburger Invest Beteiligungs AG, Oesterreichische Kontrollbank AG, Oesterreichische Nationalbank AG (General Council), UNIQA Versicherungen AG, Wiener Staatsoper GmbH, Vorsorge Holding AG (C). Herbert Stepic Responsible for International Business Units, Branches and Representative Offices; Chairman of the managing board of Raiffeisen International Bank-Holding AG. Born in 1946; read Commercial Science at the Vienna University of Economics and Business Administration. Joined RZB in 1973, where he developed the Raiffeisen Foreign Trade Service; was also interim CEO of trading house F. J. Elsner & Co; a member of the Managing Board of Raiffeisen Zentralbank since 1987 and Deputy to the CEO since Selected supervisory board posts and other positions: chairman of the supervisory boards of numerous RZB Network Banks; member of the supervisory boards of OMV AG, Oesterreichische Kontrollbank AG, Raiffeisen Centrobank AG, and Raiffeisen International Direct Bank AG (C). Patrick Butler Responsible for Global Treasury, Global Credit Markets, Global Credit Sales/ Financial Institutions and Sovereigns, Economics and Financial Markets Research Born in 1957; read Modern History at Oxford. Began his banking career in 1979 with Chemical Bank and County Bank (NatWest Group), working in London and New York; later joined the BACA Group, most recently as Group Treasurer, later Global Treasurer of Arab Bank; a member of the Managing Board of Raiffeisen Zentralbank since October Selected supervisory board posts: RZB Private Equity Holding AG (C), Kathrein & Co. Privatgeschäftsbank AG, Raiffeisen Centrobank AG, Raiffeisen Investment AG, Raiffeisen International Bank-Holding AG, Raiffeisen Wohnbaubank AG, Wiener Börse AG, CEESEG Aktiengesellschaft, RSC Raiffeisen Daten Service Center GmbH. Karl Sevelda Responsible for Austrian Corporate Customers; Multinational Corporate Customers; Corporate, Trade and Export Finance; Global Finance Products. Born in1950; read Social Science and Economics at the Vienna University of Economics and Business Administration, then a freelance researcher and staff member at the Wirtschaftspolitisches Institut (economic policy institute); subsequently worked for banks abroad and held senior positions at Creditanstalt-Bankverein. A member of the Managing Board of Raiffeisen Zentralbank since 1998.

9 The Managing Board 9 Introduction The members of Raiffeisen Zentralbank's Managing Board. Top: Patrick Butler, Walter Rothensteiner, Manfred Url. Below: Herbert Stepic, Karl Sevelda, Johann Strobl (from left to right). Selected supervisory board posts and other positions: Bene AG, Raiffeisen Centrobank AG, Raiffeisen International Bank-Holding AG, RZB Private Equity Holding AG, Rail Cargo Austria AG, HFA Zwei Mittelstandsfinanzierungs AG, Raiffeisen Investment AG. Johann Strobl Chief Risk Officer with responsibility for Management Services, Credit Management, Portfolio Management and Risk Controlling. Born in 1959; graduated from the Vienna University of Economics and Business Administration, joined Creditanstalt-Bankverein (subsequently Bank Austria-Creditanstalt) in 1989 where he held management posts in the treasury and risk management fields; in addition, he was at the same time a Head of Division at HVB, Munich; most recently a member of the managing board of Bank Austria-Creditanstalt as Chief Risk Officer and Chief Financial Officer. A member of the Managing Board of Raiffeisen Zentralbank since October Selected supervisory board posts: Oesterreichische Clearingbank AG (C), Raiffeisen Centrobank AG, Raiffeisen International Bank-Holding AG. Manfred Url Responsible for Transaction Services, Marketing, Organisation/IT Management, Verbund (Raiffeisen Banking Group), Group Head Office/Executive Secretariat (jointly with Walter Rothensteiner). Born in 1956; read Commercial Science at the Vienna University of Economics and Business Administration, followed by a period abroad in France (ESSCA business school in Angers und Banque Indo suez in Paris); held several senior posts most recently as a managing board member of Raiffeisen-Landesbank Steiermark. A member of the Managing Board of Raiffeisen Zentralbank since Selected supervisory board posts: Raiffeisen Datennetz Ges.m.b.H. (C), Raiffeisen Informatik GmbH (C), Raiffeisen Vermögensverwaltungsbank AG (C), RSC Daten Service-Center GmbH (C), card complete Service Bank AG, PayLife Bank GmbH (C), Raiffeisen International Bank- Holding AG. (C) = Chairman.

10 10 Supervisory Board s Report Supervisory Board's Report The Managing Board of Raiffeisen Zentralbank Österreich AG (Raiffeisen Zentralbank) kept all members of the Supervisory Board fully abreast of significant business events and the development of the bank and its Group in a timely manner in the 2009 financial year, in four ordinary meetings and one extraordinary meeting. The Supervisory Board performed all the tasks that are incumbent upon it by law and pursuant to the memorandum and articles of association, fulfilled its supervisory duties conscientiously and took all its decisions in a carefully reasoned way. This took place through five meetings of the Working Committee, two meetings of the Audit Committee and one meeting of the Personnel Committee. The chair of each committee reported regularly on its work to the Supervisory Board. The present consolidated financial statements and the Group Management Report, as well as the annual financial statements and Management Report for Raiffeisen Zentralbank have been audited by KPMG Austria GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft, Vienna. The audit revealed no grounds for objections and the legal requirements were met in full. An unqualified Auditor's Report was therefore issued. The Audit Committee and the Supervisory Board concur with the Managing Board's report on the results of the audit for the 2009 financial year and with the Managing Board's proposal for the appropriation of profit. The annual financial statements of Raiffeisen Zentralbank for 2009 have thus been adopted in accordance with Section 96 paragraph 4 of the Austrian Stock Corporation Act (AktG). In accordance with Section 87 paragraph 2 of the Austrian Stock Corporation Act, elections to the Supervisory Board were held at the Annual General Meeting on 18 June 2009 as a result of the expiry of periods of office. Ten Supervisory Board members were re-elected. Business economist Wilfried Hopfner, who chairs the managing board of Raiffeisenlandesbank Vorarlberg Warenund Revisionsverband reg. Gen.m.b.H., and Gerald Wenzel, CEO of Österreichische Volksbanken AG and successor to CEO Franz Pinkl (who left the Supervisory Board on 30 April 2009), were newly elected to the Supervisory Board. The period of office of the Supervisory Board will end with the Annual General Meeting with resolves on approval of its actions for the 2013 financial year. Gerald Wenzel resigned his seat at 31 December 2009 at his own request. The Supervisory Board would like to extend its thanks and appreciation to the Managing Board, the managers and the staff of Raiffeisen Zentralbank and the entire Group for their hard work and unremitting dedication in 2009 under trying economic circumstances. For the Supervisory Board Christian Konrad Chairman

11 Vision 11 Introduction RZB is the leading banking group in Austria and Central and Eastern Europe. Mission We seek long-term customer relationships. In Austria and Central and Eastern Europe we provide a full range of highest quality financial services. In the world s financial centres and Asia we are an important niche player. As the central institution of the Raiffeisen Banking Group in Austria we offer specific services to our owners. We achieve sustainable and above-average return on equity. We empower our employees to be entrepreneurial and to show initiative, and we foster their development.

12 12 Overview of RZB Overview of RZB The Raiffeisen Zentralbank Österreich AG was founded in 1927 as the central institution in the Austrian Raiffeisen Banking Group under the name "Genossenschaftliche Zentralbank" (GZB). In Austria, Raiffeisen Zentralbank looks after the country's largest companies and institutions and regards itself as a full-service bank and leading foreign trade bank for these customers. In trade finance, project finance in Central and Eastern Europe (CEE), cash management, treasury and fixed income products in particular, Raiffeisen Zentralbank serves not only the needs of a large number of large-scale customers and multinational companies in Austria, but also internationally. Numerous financial service providers also make use of Raiffeisen Zentralbank's services as a financial engineer. In conjunction with its subsidiary Raiffeisen Centrobank AG, Raiffeisen Zentralbank has established its position amongst the leading providers of investment banking. It is the leading market participant on the Vienna Stock Exchange, in bond trading and in the equity and bond primary markets. Specialized subsidiaries round off Raiffeisen Zentralbank's product offering encompassing, for instance, leasing, M&A consultancy, asset management, private banking, and property and trading services. Raiffeisen Zentralbank is also the core company in the RZB Group, Austria's third-largest banking group with total assets of 148 billion as at 31 December Raiffeisen Zentralbank's shareholders Holding * Raiffeisenlandesbank NÖ-Wien 31.41% Raiffeisen-Landesbank Steiermark 14.94% Raiffeisenlandesbank OÖ 14.94% Raiffeisen-Landesbank Tirol 5.85% Raiffeisenverband Salzburg 5.80% Raiffeisenlandesbank Kärnten 5.63% Raiffeisenlandesbank Burgenland 4.63% Raiffeisenlandesbank Vorarlberg 4.59% Zveza Bank 0.04% Total held by Regional Raiffeisen Banks ** 87.83% Österreichische Volksbanken AG 5.15% UNIQA Versicherungen AG 2.64% RWA Raiffeisen Ware Austria 2.58% HYPO Investmentbank AG 1.17% Landeshypothekenbank Steiermark AG 0.63% Total held by other shareholders 12.17% Total % * Ordinary and preference shares held directly and/or indirectly. ** percentage points of which held by R-Landesbanken-Beteiligung-GmbH. As well as playing a leading role as a provider of commercial banking services in Austria, Raiff eisen Zentralbank is the parent company of Raiffeisen International, which set up the first network bank in Central and Eastern Europe in 1987 and now has the most closely knit banking network in the region. As well as operating in Austria and the CEE region, RZB has a presence in a number of international financial centres and in the Asian growth markets. As the central institution in the Raiffeisen Banking Group in Austria, Raiffeisen Zentralbank has important liquidity balancing responsibilities, as well as providing international representation and playing an advisory role. All in all, the Austrian Raiffeisen Banking Group is the country's strongest banking organization. Further information on the Austrian Raiffeisen Banking Group can be found from page 21 onwards.

13 Overview of RZB 13 RZB's Capital Market Operations Market development Banking Group The collapse of the investment bank Lehman Brothers in September 2008 led to investors being much more averse to risk and thus resulted in much wider spreads for corporate and government bonds. From the second half of March 2009 the trend turned, owing to generous government rescue packages and associated hopes that the financial markets would soon return to a more normal state of affairs. The package of measures announced by the Austrian government in October 2008 designed to restore security and stability to the financial market currently with a total volume of 90 billion was extended until 30 June 2010 with approval from the European Commission. Besides a guarantee for customer deposits ( 10 billion), the package included a bank bond guarantee ( 65 billion) to revive the interbank market and funds to strengthen banks' equity base ( 15 billion). On this basis, the Republic of Austria subscribed about 5.4 billion in participation capital of Austrian banks in 2009 (RZB: 1.75 billion). The high bid-ask spreads in bond, currency and commodity trading led to good quarterly results for banks, particularly in the first half of Combined with a clear improvement in the liquidity situation, these resulted in a drop in risk premiums as the year progressed. Significant improvement in transparency With the growth in the RZB network over the past decade, the Group's refinancing needs have expanded. Most of this refinancing comes in the shape of stable customer deposits and, of course, deposits by the Raiffeisen Banking Group, which are included in the balance sheet item deposits from banks. However, the expansion in the balance sheet item debt securuties issued shows to what extent the capital market has also gained in importance as a funding source for RZB. At the end of 2009, this item amounted to 19.9 billion and accounted for around 13.5 per cent of the balance sheet total. Hand in hand with this development has come an increase in corporate transparency requirements. In response to this, RZB's Investor Relations unit, set up in 2006 and responsible among other things for the RZB Annual Report, started publishing quarterly reports in 2009 although this is not a legal requirement for unlisted companies and also provides conference calls for institutional investors. Overview of RZB ratings Long-term Short-term Financial strength Outlook (long-term) Fitch Ratings A F1 Stable Moody s Investors Service A1 P-1 D+ Stable Standard & Poor s A A-1 Negative

14 14 Overview of RZB Diversified investor base An analysis of investors conducted last year showed that RZB's bonds are held by a broad spread of geographically diverse institutional investors. The analysis, covering a selection of bonds representative of the bank's capital structure, revealed that around 270 of the world's biggest investment managers place confidence in the Austrian banking sector and in RZB in particular. RZB 500 million 4.5%, 2014/19 subordinated capital Issued: ISIN: XS RZB 500 million 5.875%, 2012 senior Issued: ISIN: XS Rest of the world 4.4% UK 20.5% Austria 13.4% Finland 2.7% France 7.2% UK 9.1% Switzerland 0.9% Spain 0.5% Luxembourg 10.7% Italy 0.1% Austria 14.7% Belgium 8.3% Switzerland 2.2% Norway 4.6% Netherlands 9.9% Germany 33.2% Germany 55.7% Italy 1.8% RZB 600 million 5.77%, 2015 supplementary capital Issued: ISIN: XS RZB 1,250 million 5.875%, 2011 senior Issued: ISIN: XS Rest of the world 4.0% Switzerland 2.7% Spain 3.9% Norway 2.9% Netherlands 6.3% Germany 8.3% Austria 45.1% Rest of the world 2.2% Switzerland 0.9% Spain 6.2% Luxembourg 1.7% Italy 1.8% Austria 28.3% Belgium 2.2% France 19.9% Belgium 4.4% Germany 50.3% Finland 4.5% France 1.8% Denmark 2.6% RZB primary market operations in 2009 Within the context of the package of measures passed by parliament and extended until 30 June 2010, RZB successfully placed three government-guaranteed bonds in the first half of 2009 with a total value of 4.25 billion. The total value of government-guaranteed bonds issued by Austrian banks in 2009 was billion. The fixed-rate 1.5 billion bond with a term of 5 years issued on 28 January 2009 with a guarantee from the Republic of Austria came at a premium of 68 basis points over the reference rate. The government-guaranteed 1.25 billion bond with a term of 3 years issued on 4 March 2009 to a broad geographical spread of investors was priced at 85 basis points above the benchmark mid-swap rate. RZB's third bond, for 1.5 billion with a term of 2 years, was successfully placed on 23 April This issue price was set at a premium of 62 basis points over the mid-swap rate. The average rate for the annual coupon bond (2.5%) elicited lively investor interest and is trading at an average price of

15 Overview of RZB January 2009: 3.625% 1.5 billion 5-yr senior govt-guaranteed, new issue premium: MS+68bps Allocation by region Allocation by investor type Rest of the world 4% Asia 1% UK/Ireland 13% Austria 29% Others (= corporates, retail, brokers, etc.) 6% Insurers 9% Banking Group Continental Europa 21% Investment managers 32% Banks 52% Germany 32% Central banks and suprantional institutions 1% 4 March 2009: 3.0% 1.5 billion 2-yr senior govt-guaranteed, new issue premium: MS+85bps Allocation by region Allocation by investor type Rest of the world 1% Middle East 4% UK/Ireland 3% Continental Europa 29% Austria 36% Germany 26% Others (= corporates, retail, brokers, etc.) 8% Insurers 4% Investment managers 18% Banks 66% Central banks and suprantional institutions 4% 23 April 2009: 2.5% 1.5 billion 2-yr senior govt-guaranteed, new issue premium: MS+62bps Allocation by region Allocation by investor type Rest of the world 3% Middle East 5% UK/Ireland 19% Austria 27% Others (= corporates, retail, brokers, etc.) 1% Insurers 8% Investment managers 17% Banks 67% Continental Europa 20% Germany 26% Central banks and suprantional institutions 7% Structure of capital market funding A glance at the different refinancing components shows that even when liquidity was very tight in 2008, RZB was able to make up the shortfall with private placements. This indicates a high level of investor confidence in RZB. 2009: 7.7 billion 2008: 8.23 billion 2007: 4.5 billion 1% 24% 11% 11% 15% 10% 20% 55% (governmentguaranteed) 63% 28% 62% Benchmark bonds Private placements Deposits Notes

16 16 Overview of RZB Secondary market performance of RZB bonds 2,000 Benchmark comparison hybrid capital 1,600 1, ET10 (euro benchmark index hybrid capital) RZB hybrid capital bond 5.169% May 2106 ISIN: XS ,000 Benchmark comparison supplementary capital 1,600 1, EUT2 (euro benchmark index supplementary capital) RZB supplementary capital bond 5.77% October 2015 ISIN: XS ,400 Benchmark comparison subordinated capital 1,200 1, ELT2 (euro benchmark index subordinated capital) RZB subordinated capital bond 4.5% March ISIN: 2019 XS Benchmark comparison senior bond Ebxs (euro benchmark index senior bonds) RZB senior 5.875% June 2011 ISIN: XS

17 Overview of RZB 17 Outlook RZB has sufficent liquidity for the current financial year. At the time of reporting, only 1.6 billion remained to be repaid in 2010 out of an original bond redemption total around 3.0 billion. The largest repayment amount was on a benchmark issue for 1 billion maturing on 4 February 2010, which was issued in There are no plans at present to issue more government-backed bonds. The procurement of long-term liquidity on the capital market is currently based on private placements in local markets. Issuing activity in the coming months will be guided by actual volumes of new business with customers. Banking Group In contrast to the current calendar year, in 2011 RZB's capital market refinancing requirments will be somewhat higher. Thus, based on RZB's business planning, it is possible that pre-funding activities will be instigated in 2010 in readiness for Maturity profile of RZB bonds billion Senior Hybrid capital Senior govt-guaranteed Subordinated capital Supplementary capital Other issues 0

18 18 Social Responsibility Social Responsibility Corporate Responsibility (CR), the commitment to social responsibility and environmental sustainability, is aligned with how the RZB Group perceives itself as a company. In terms of implementation, this equates to a way of thinking and a management method which focus on striking a balance bet ween economic, social and environmental considerations. The aim is therefore to firmly establish a responsible form of corporate action that extends above and beyond individual measures. The commitment to corporate responsibility is reflected in the modern Raiffeisen principles, which are based on Friedrich Wilhelm Raiffeisen's concept of "helping people to help themselves". Our principles We have defined our self-image and our values in five principles. These are an expression of both our traditional roots and our internationalism: A future always needs a past The principle that "A future always needs a past" focuses on the origins, tradition and history of Raiffeisen. Our strategies and business activities are derived directly from it. We are here to stay "We are here to stay" expresses our cooperative roots. We feel responsible for regions and the people in them, and pursue long-term strategies. The best become better with us "The best become better with us" is about our staff. We are a performance-oriented company and a socially committed employer in equal measure. Our clients success defines our own success The "success principle" is at the core of our corporate mission as a bank and the basis for the responsible way we treat our customers. Success is the fruit of our constant striving for improvement. A strong cultural mix We are committed to cultural diversity. Our development into a multicultural group of companies with a global presence in more than 30 countries has both economic and social benefits and creates new opportunities.

19 Social Responsibility 19 Embedding corporate responsibility into the organization The importance of sustainability to the RZB Group was underlined in 2009 with the ongoing development of the strategic corporate responsibility organization. Control and decision-making powers for sustainability agendas lie with the Managing Board at the RZB Group. Banking Group In an additional step, the "Extended Corporate Responsibility Committee" (CR Committee) was established and met for the first time in June The committee is composed of important stakeholder representatives, including owners, non-profit organizations and a representative of the network banks. The CR Committee is tasked with informing and advising the Managing Board about currently relevant social trends from the various areas, thus helping to accentuate the RZB Group's corporate responsibility activities. As one of the first measures to implement the sustainability programme, a new post of CR officer for the RZB Group was created during the period under review. The CR officer is tasked with defining and implementing measures on the basis of a strategy to be developed for corporate responsibility. Corporate responsibility as part of business activities One key aspect of corporate sustainability involves forging a link between acting responsibly and the core purpose of the business. The RZB Group achieves this by ensuring high standards in the areas of compliance and combating corruption, by assuming environmental responsibility in financing facilities that use renewable energy resources and by investing in measures to boost energy efficiency. The detailed report on RZB's social responsibility can be downloaded in PDF format at CR highlights in 2009 Raiffeisen Zentralbank generating its own energy In 2009, photovoltaic equipment with 120 collectors covering a total area of 200 m 2 was put into service on the roof of the Raiffeisen Zentralbank head office Vienna. The expected energy production of 21,000 kwh/year corresponds to an annual CO 2 reduction of around 8,000 kg. In addition, a collector facility with 90 modules and an area of 100 m 2 was installed to provide hot water. These measures will enable Raiffeisen Zentralbank to generate annual thermal energy of some 62,000 kwh, which equates to a CO 2 saving of around 14,000 kg per year. RZB financing power station in the Kingdom of Bhutan Raiffeisen Zentralbank has arranged a loan of 41.2 million with the Kingdom of Bhutan. This loan, which is largely secured by a guarantee from Oesterreichische Kontrollbank (OeKB), will be used to finance the construction, operation and maintenance of the Dagachhu hydroelectric power plant. Bhutan harbours great potential for obtaining energy from hydroelectric power. At present, less than 10 per cent of the potential capacity is being used. The project financed by Raiffeisen Zentralbank is part of the Green Power Development Projects programme initiated by the Asian Development Bank and should be completed in the next four years.

20 20 Raiffeisen in Austria Raiffeisen in Austria Proven recipe for success The Raiffeisen organisation in Austria is a group of companies organized according to cooperative principles and encompassing numerous other sectors in addition to finance. In Austria it comprises 1,600 independent cooperatives (with 2.1 million members) in which more than 52,000 employees look after around four million customers. The system of cooperative groups of companies dates back to the vision and pioneering work of Friedrich Wilhelm Raiffeisen ( ). In line with the model he developed, farmers formed local cooperatives with their primary aim not to maximize profits, but to give their members commercial support. The emancipation of peasants from the obligations to their landlords also meant that they were directly exposed to intense competitive pressure. This was accompanied by a sharp rise in their debt levels, and many farmers lost the battle to maintain an independent existence. Following several attempts at charitable support, Raiffeisen became convinced that a successful model had to enable people to help themselves. In line with the concept he developed, farmers went on to form cooperatives which were not geared towards profit, but to supporting their members. Members' savings were pooled in so-called loan fund associations and were available for distribution to members in the form of low-cost, long-term loans. This gave many people the first opportunity they had ever had to borrow money for investments or to tide them over in years of meagre harvests. The Raiffeisen model spread quickly, especially in German-speaking countries. The individual local cooperatives soon started working together and in turn founded regional cooperatives, marking the beginning of the multi-tiered nature of the Raiffeisen organization. This not only helped to strengthen market positioning, but also enabled better management and risk mitigation. Numerous product and service cooperatives were also founded on the back of increasing specialization and market integration. Although financial services continue to be the most important segment for Raiffeisen in Austria, today's Raiffeisen organization encompasses far more than just finance. Through its major shareholdings, Raiffeisen is the country's largest employer by some distance and also acts as a driver of the real economy. Its holdings in leading Austrian companies include voestalpine (steel industry), STRABAG (construction industry), various real estate investment companies and agencies, media holdings (e.g. Sat.1 Austria, Kurier Group), services (e.g. DO&CO) as well as the food industry (e.g. AGRANA, NÖM AG) and trading (e.g. the Raiffeisen-Lagerhausgruppe/warehouse group).

21 Raiffeisen Banking Group 21 The Raiffeisen Banking Group Number 1 in Austria The Austrian Raiffeisen Banking Group (RBG) is the country's strongest banking organization. It has the densest branch network in Austria and a share of about one quarter of the total domestic banking market. RBG manages some 80 billion of Austrian customers' deposits (excluding building society savings) and around 50 billion in savings account deposits. It concentrates its financing activities on SMEs, tourism and agriculture. RBG has achieved its strong market position independently through healthy growth. Banking Group RBG's market share in Austria Total domestic non-bank deposit balances m 79,730 78,797 71,758 64,188 59,477 Share of total deposits market % Savings deposits m 49,787 48,776 45,065 42,083 39,998 Share of savings deposits market % Sight deposits m 21,974 19,183 16,657 15,087 13,377 Share of sight deposits market % Time deposits m 6,994 9,782 8,789 6, Share of time deposits market % Direct lending to domestic non-banks m 75,847 75,355 67,979 63,719 60,928 Share of direct lending market % Securities funds m 37,119 34,967 47,452 48,565 42,661 Share of securities funds market % Sources: Oesterreichische Nationalbank (these data relate exclusively to business conducted by Raiffeisen banks, regional Raiffeisen banks and Raiffeisen Zentralbank, but not to that of the specialist companies) and Oesterreichische Kontrollbank für Wertpapierfonds (data for the Raiffeisen Capital Management, Kepler Fonds KAG and Raiffeisen Salzburg Invest Kapitalanlage GmbH fund companies). Working together for a stronger market position RBG is a three-tiered organization comprising autonomous, locally operating Raiffeisen banks (first tier), regional Raiffeisen banks which are also independent (Raiffeisen-Landeszentralen second tier) and Raiffeisen Zentralbank (third tier). The 535 independent Raiffeisen banks (2008: 541) and 1,689 branches (2008: 1,695) make up an extensive, nationwide network of banking outlets in Austria. This gives RBG a market share of around 45 per cent of all bank branches in the country. The Raiffeisen banks within a regional state are universal banks offering customers a complete range of banking services. At the same time, they are the owners of the regional Raiffeisen bank in their particular federal state. The regional Raiffeisen banks (Raiffeisenlandesbank/Raiffeisenverband) carry out liquidity balancing and provide other centralized services for the Raiffeisen banks in their operating region. Despite its clear and rigid position within the RBG structure, the business area is not restricted to geographical boundaries. In addition, the regional Raiffeisen banks are themselves autonomous, universal banks and shareholders of Raiffeisen Zentralbank, collectively holding per cent of Raiffeisen Zentralbank's share capital. Raiffeisen Zentralbank is the RBG's highest-level institution. It was founded in 1927 and has become one of Austria's leading commercial and investment banks. Alongside Austria, it also sees Central and Eastern Europe as part of its home market and operates the second-largest banking network in this dynamic region.

22 22 Raiffeisen Banking Group Structure of the Raiffeisen Banking Group 1.7 million members Local Raiffeisen banks: 535 Raiffeisen banks Regional Raiffeisen banks: 8 regional Raiffeisen banks, Zveza Bank Investments in Austrian financial institutions: Network in CEE Foreign offices and equity investments Specialist and back-office companies Raiffeisen Centrobank, Kathrein & Co, Raiffeisen Capital Management, Raiffeisen Factor Bank, OeNB, OeKB, PayLife, Raiffeisen Leasing, Raiffeisen Bausparkasse, card complete, UNIQA, Wiener Börse AG, Österreichische Clearingbank AG, etc. Raiffeisen International: Network banks, Leasing International; Other subsidiaries Branches, Representative offices, Banks Payment and securities settlers, IT companies, property and trading companies, private equity etc. The Raiffeisen deposit guarantee association The Raiffeisen Banking Group took a pioneering step in the field of deposit protection in Austria by setting up the Raiffeisen-Kundengarantiegemeinschaft Österreich (RKÖ - deposit guarantee association). The deposit guarantee association was founded in 2000 to provide a legally binding framework in times of globalization and mega-mergers for what had already been an unwritten law within the RBG from day one. In addition to the statutory Austrian deposit protection scheme, the deposit guarantee association guarantees up to 100 per cent of customer deposits. Unlike the statutory deposit protection scheme it covers all savers' deposits, regardless of whether they belong to private individual customers or businesses. Moreover, it also applies to all foreign currency deposits and the member banks' own securities issues. In this way, Raiffeisen has formalized what its trademark the protective gable cross has always stood for, namely security and trust. In terms of its structure, the model is made up of deposit guarantee associations at regional state level which have amalgamated under the deposit guarantee association umbrella at national level. A legally binding system is used to earmark the financial reserves of all the member banks in accordance with a precisely regulated distribution Structure of the Raiffeisen deposit guarantee association and charging formula. This means that customer deposits would retain their value above and beyond the limits of the statutory deposit protection scheme even if a member were to go bankrupt, which has never been the case to date. RB RLB RB RLB Obligation to provide financial reserves Regional deposit guarantee association Austrian Raiffeisen deposit guarantee association RZB: Raiffeisen Zentralbank RLB: regional Raiffeisen bank RB: local Raiffeisenbank RB RB RB RLB RB If a deposit guarantee association at regional state level lacked the resources to cover all the protected customer claims against an insolvent bank, in line with the articles of association the members of the deposit guarantee association would jointly guarantee the timely honouring of all customer deposits and securities issues of the insolvent bank. Instead of claims against the bankrupt bank's estate, clients would be offered valuable claims on other institutions within the Raiffeisen Banking Group.

23 Raiffeisen Banking Group 23 Today around 81 per cent of all Austrian Raiffeisen banks, including Raiffeisen Zentralbank, are members of the Raiffeisen deposit guarantee association. Some 95 per cent of the Raiffeisen Banking Group's total customer deposits are therefore protected in the deposit guarantee association (based on the annual financial statements for 2008). Joint risk monitoring Joint risk monitoring within the RBG is the responsibility of the Sector Risk Committee. A risk report for the whole of the RBG is prepared for its quarterly meetings on an individual and consolidated basis. The risk report is based on a value-at-risk approach and, besides overall risk in the context of risk-bearing capacity, incorporates detailed reports on credit and country risk, equity investment risk, market risk, operational risk and liquidity risk. Banking Group In addition to regular monitoring of risk developments, an early warning system based on ratios in the statement of financial position and benchmarks as well as active market observation complement RBG's joint risk monitoring system. The Sector Risk Committee also serves as an advisory board for the Managing Board of Österreichische Raiffeisen-Einlagensicherung egen on risk matters. Number 1 in online banking One of the Raiffeisen Banking Group's key characteristics has always been that it is quick to develop innovative strategies in response to developments in the markets and society. The Internet is a highly significant example in this regard, as it has become an important part of Austrians' daily lives: some 98 per cent of businesses and 70 per cent of private households now have access to the world wide web. Raiffeisen also makes successful use of the Internet as part of its multi-channel approach and has increasingly developed it as a sales channel in recent years. At the same time, the Internet has also enabled new competitors such as direct banks to enter the market. However, thanks to systematic development of Raiffeisen online products, RBG defended its market leadership in Internet banking in More than one million Austrians now conduct their banking transactions using Raiffeisen Online Banking (ELBA), which equates to a market share of 40 per cent. Raiffeisen is the strongest banking brand Through its central institution Raiffeisen Zentralbank, Raiffeisen has become an internationally successful banking group. Its shared brand identity signals strength and professionalism while creating trust. This is underlined by a number of studies published in With a brand value of more than 3 billion as identified by the European Brand Institute, Raiffeisen is the third most valuable brand in Austria behind Red Bull and Swarovski. At the same time, the Raiffeisen brand is the undisputed number 1 among Austrian financial services providers. A European comparison provides confirmation of this positive trend. While the financial services industry as a whole suffered a decline in brand value of over 23 per cent, Raiffeisen saw its value grow by 4.3 per cent. As a result, the Raiffeisen brand moved up from 23rd place in the financial services segment in 2008 to 16th place in 2009, making it one of the top 100 company brands in Europe. A pan-european survey by Reader's Digest magazine in 2009 ranked Raiffeisen first among Austrian respondents for the fifth time in succession.

24 24 Raiffeisen Banking Group The gable cross is part of the trademark used by almost every company in the Raiffeisen Banking Group and RZB Group in Central and Eastern Europe. It represents two stylized horse's heads, crossed and attached to the gable of a house. It is a symbol of protection rooted in old European folk tradition: a gable cross on the roof was believed to protect the house and its inhabitants from outside dangers and ward off evil. The gable cross was chosen as our trademark back in 1877, when Friedrich Wilhelm Raiffeisen was still alive. It symbolizes the protection and security that the members of Raiff eisen banks enjoy through their self-determined collaboration. Today, the gable cross is one of Austria's best-known brands and is used around the world.

25 Raiffeisen Banking Group 25 RBG's 2009 Balance Sheet The Raiffeisen Banking Group's consolidated balance sheet was prepared on the basis of the asset and liability statements and balance sheet of the local Raiffeisen banks, regional Raiff eisen banks (Landeszentralen), RZB, Raiffeisen Bausparkasse Ges.m.b.H., Raiffeisen Kapital anlage- Ges.m.b.H., Raiffeisen Wohnbaubank AG, Notartreuhandbank AG, Raiffeisen Vermögensverwaltungsbank AG and Raiffeisen Factor Bank AG. The data conform to Austrian accounting guidelines as set out in the Austrian Commercial Code (UGB). Banking Group An income statement for the Raiffeisen Banking Group cannot be prepared until June 2010, when all the audited annual financial statements are available. The unaudited preliminary figures indicate solid performance by the Raiffeisen Banking Group in 2009 despite higher provisioning for impairment losses. Traditionally, one of the Raiffeisen Banking Group's defining characteristics is its strong equity base. The following table shows the changes in the Raiffeisen Banking Group's data on its balance sheet and equity: Consolidated Balance Sheet and Equity of the Raiffeisen Banking Group million 2009 Change RBG's Balance Sheet and Equity Loans and advances to banks 31, % 28,486 30,296 29,864 27,023 Loans and advances to customers 154,960 (6.0%) 164, , , ,254 Deposits from banks 55,286 (9.0%) 60,753 50,275 45,885 44,422 Deposits from customers 144, % 143, , ,396 97,694 Equity 14, % 12,776 12,849 10,652 9,073 Total assets 260,263 (1.9%) 265, , , ,008 Regulatory Information Eligible own funds (pursuant to Sections 23 and 24 BWG) 21, % 20,505 17,747 15,116 11,971 Own funds requirement (pursuant to Section 22 BWG) 15, % 15,237 13,419 11,168 9,470 Tier 1 ratio (credit risk) 7.39% 19.1% 6.20% 7.31% 7.48% 7.40% Own funds ratio 11.41% 6.0% 10.77% 10.58% 10.83% 10.11%

26 26 History of the Raiffeisen Organization A new era begins The industrialisation of Austria began between 1800 and 1820, bringing with it huge upheaval in the economy and in the social make-up of what was then the Imperial and Royal Monarchy. While the size of the economic area and the wealth of raw materials available were conducive to development, progress was hampered by the population s low purchasing power, nationalist boycotts and the commodity-driven export trade. Hard times peasant emancipation and agricultural crisis In the revolutionary year of 1848, a law was passed on agrarian reform. This freed peasants in Austria from the remaining obligations to their landlords However, the free peasants were now under pressure from the markets, especially in the Austrian lands, where cheaper agricultural products from Bohemia and Hungary as well as international imports triggered a sharp fall in prices. In 1870, the grain price plummeted by 80 per cent. A rapid increase in farm indebtedness commenced, continuing until the turn of the century. Every year, between 5,000 and 10,000 farms owned by debt-stricken farmers were subject to compulsory auction. At the time, it was almost impossible for farmers to obtain low-cost loans to cover their ongoing capital requirements for items such as seeds, operating resources and repairs, etc. Profiteering was rife, and it was a similar picture in Germany. Friedrich Wilhelm Raiffeisen and his idea Friedrich Wilhelm Raiffeisen was a German social reformer who ascribed great importance to solving this problem. As the mayor of a community in the Westerwald region of Germany, Raiffeisen was confronted by the plight of farmers, labourers and craftsmen on a daily basis. Following several relatively unsuccessful charitable endeavours, he became convinced that people s problems could only be solved by helping them to help themselves. In line with a model developed by Raiffeisen, the farmers formed cooperatives which were not geared towards profit, but to supporting their members. Members savings were pooled in so-called loan fund associations and were available for distribution to members in the

27 History of the Raiffeisen Organization 27 form of low-cost long-term loans. This gave many people the first opportunity they had ever had to borrow money for investments or to tide them over in years of meagre harvests. The next step was the joint purchase of operating resources such as seed and the common storage and sale of agricultural products. This meant that farmers were no longer forced to sell at knock-down prices in times of oversupply, allowing them to wait until prices had recovered. Banking group Beginnings of the Raiffeisen idea in Austria The first Raiffeisen bank in Austria was founded in 1886 in Mühldorf, near the village of Spitz an der Donau. Its members included farmers, craftsmen, labourers and traders. The bank s foundation was preceded by a number of congresses which had sought solutions to the agrarian crisis. With the support of the regional state parliaments, which were convinced by the idea, it was not long before numerous Raiff eisen banks were founded. Austria s first warehouse cooperative was founded in Pöchlarn in Following the German model, a central association of cooperatives was established in 1898 in line with the Raiffeisen system, and subsequently became known as the Allgemeiner Verband landwirtschaftlicher Genossenschaften in Österreich (general association of agricultural cooperatives in Austria). When the Austro-Hungarian Monarchy collapsed in 1918, there were over 2,000 cooperatives on the territory of what subsequently became the First Republic, and a far greater number in the other succession states Between the wars It took some time for the remaining cooperatives in the Republic of Austria to reorganise after the First World War and to overcome the economic challenges of the post-war period. In 1927, today s Raiffeisen Zentralbank Österreich AG was established as a cooperative central bank named Genossenschaftliche Zentralbank (GZB) By 1938, financial independence had been achieved and the establishment of central offices in the Austrian regional states had largely been completed. This meant that the structures were broadly in place which then served as the foundations for rebuilding after the second World War. The annexation of Austria by the Third Reich in 1939 marked the end of cooperative self-determination.

28 New beginnings in the Second Republic Following the end of the Second World War, rebuilding work commenced immediately. Many Austrians were suffering from malnutrition, and policymakers gave the cooperatives considerable responsibility for safeguarding the food supply The Allgemeine Verband, or general association, which was originally founded in 1898, was re-established in Since 1960, it has traded under the name of Österreichischer Raiffeisenverband. In 1961, Raiffeisen Bausparkasse (building society) started trading, becoming one of the first specialist institutions within the Raiffeisen Banking Group. The Raiffeisen banks began their efforts to acquire customers in population centres. The first Raiffeisenbank in the Austrian capital was established in Wien-Oberlaa, which was then at the border between the city and the countryside. The first brands were created in the dairy industry. The brands of Raiffeisen dairies such as Schärdinger, Desserta and NÖM are now the most successful in Austria Modernisation The Raiffeisen Banking Group set about modernising its image and pioneered some unprecedented approaches to sponsorship. Rapid Wien became the first football club to be sponsored in Austria. In the subsequent decades, Raiffeisen s advertising strategists have consistently concluded sponsorship agreements with the country s leading sportsman: Niki Lauda, Gerhard Berger, Thomas Muster and Hermann Maier are the outstanding examples in this regard. The Raiffeisen banks were locally based providers of financial services for the entire population, with a growing presence in the urban population centres. A series of mergers in the dairy and wine industries marked the start of a restructuring process that has continued until the present day The Raiffeisen Banking Group embraced modern technology. In 1980, one of the first ATMs in Austria was installed at the Raiffeisenhaus in Vienna. As far back as 1984, initial discussions were held on the possibility of home banking, with the postal service s BTX system considered as a possible underlying service In 1985, the wine scandal sent shockwaves through Austria. Exports collapsed. Although the wine growers cooperatives were not involved, they suffered from the loss of confidence in the Austrian wine industry

29 History of the Raiffeisen Organization 29 as a whole. Raiffeisen supported the concept developed by the then agriculture minister and subsequent Vice Chancellor Josef Riegler of an environmental and social agrarian policy as an opportunity for Austria s agricultural sector to hold its own against the large agricultural nations. Raiffeisen expressed its support for Austria s accession to the EU. Banking group Gradual internationalization In 1987, RZB established its first network bank in Eastern Europe. In 1988, the first measures were taken to restructure the Austrian sugar industry with the aim of achieving European standards. These efforts resulted in the foundation of AGRANA, whose future was secured in 1989 thanks to a cross-shareholding with the German firm Südzucker. AGRANA began to develop the sugar and starch industry in Central and Eastern Europe In 1989, Austria submitted its application for membership of the EU. Dairies made concerted efforts to bring about structural reform in order to ensure their competitiveness in the event of Austria s accession to the EU. The Genossenschaftliche Zentralbank (GZB), founded in 1927, was renamed Raiffeisen Zentralbank Österreich AG. The fall of the Berlin Wall triggered the collapse of the Soviet Union Raiffeisen Zentralbank systematically expanded its presence in the countries of Central and Eastern Europe. Norway Denmark Sweden Lithuania Estonia Latvia Russia In 1993, Austria s accession negotiations began with the EU. Germany Poland Belarus Russia The goods associations of the Lower Austria, Upper Austria and Styria regions jointly established the new Raiffeisen Ware Austria (RWA/warehouse group) cooperative association. Liechtenstein Switzerland Italy Czech Republic Austria Slovenia Croatia Bosnia and Herzegovina Slovakia Hungary Montenegro Serbia Kosovo Macedonia Ukraine Moldova Romania Bulgaria Georgia Kazakhstan Albania Armenia Azerbaijan In 1995, Austria joined the European Union. Greece Turkey Iran In 1998, the Raiffeisen Banking Group launched its internet banking service. The years 1999 to 2001 saw the largest ever structural changes in Austria s banking landscape. Many banks were privatised, and the public sector withdrew from its liability commitments. Many banking groups were either wholly or partially taken over by foreign owners Raiffeisen was now the second-largest banking group in Austria and the only large banking group in wholly Austrian ownership.

30 : In Lower Austria (NÖ) and Vienna, the Raiffeisenlandesbank (regional Raiffeisen bank) was divided into Raiffeisenlandesbank NÖ-Wien AG and Raiffeisen-Holding NÖ-Wien. Raiffeisen-Holding owns significant shareholdings in AGRANA; in Leipnik- Lundenburg Invest Beteiligungs AG (LLI) with its strong mill segment; in STRABAG SE, one of the largest construction companies in Europe; in a strong media group incorporating titles such as Kurier, Profil, Trend, News and other media and in NÖM. From day one, Raiffeisen Holding has been Austria s largest private investment company. Led by RZB, the Raiffeisen Banking Group had become the leading banking group in many Central and Eastern European countries : Initial public offering by Raiffeisen International Bank-Holding AG. The share issue was more than 20-times oversubscribed. There was huge interest, particularly among small investors in Austria. CEE expansion by RZB Hungary Poland Czech Republic Bulgaria Russia Ukraine Slovakia Croatia Romania 2000 Bosnia and Herzegovina 2001 Serbia Bosnia and Herzegovina Romania 2002 Slovenia Kosovo 2003 Belarus 2004 Albania 2005 Ukraine 2006 Russia Czech Republic Foundation Acquisition

31 History of the Raiffeisen Organization 31 Financial industry under close scrutiny 2007: The collapse of the US market in subprime real estate loans (property loans issued to borrowers with poor credit histories) triggered a global financial crisis on an unprecedented scale. 2008: US investment bank Lehman Brothers failed, prompting a global liquidity squeeze. Mutual mistrust and uncertainty over ongoing developments and the banks own requirements caused banks to hoard as much liquidity as possible. Across the world, governments were obliged to support their financial systems by assuming liability guarantees and providing capital. A political discussion over the systemic relevance of banks (also referred to as too big to fail ) began, which continues to this day. The owners of RZB, the regional Raiffeisen banks in Austria, strengthened RZB s equity base with an injection totalling some 900 million. 2009: After a period in which the money market almost ground to a standstill and banks only lent funds to each other over very short terms, the situation eased. Banks issued bonds backed by state guarantees. RZB further strengthened its capital base by issuing participation certificates with a volume of 1,750 million to the Republic of Austria. Concerted assistance measures by the International Monetary Fund and the European Union for the countries worst affected by the crisis prevented a further increase in risk aversion. International stock markets began their recovery in March 2009, an upswing which continued into As at the end of 2009, RZB had established a solid capital and liquidity cushion in preparation for the future Banking group