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Raiffeisen banks say will look into possible merger

The logo of Raiffeisen Bank is pictured on one of its branches in Vienna, Austria, March 2, 2016. REUTERS/Leonhard Foeger/File Photo

By Francois Murphy

VIENNA (Reuters) - Austria's Raiffeisen Bank International (RBIV.VI) and its unlisted parent Raiffeisen Zentralbank [RZB.UL] (RZB) said they will look into whether they should merge, aiming to bolster RZB's capital reserves and improve efficiency.

Their announcement on Tuesday came after months of speculation over a potential merger, which would simplify the group's complex structure and relieve pressure on RZB from regulators to lift its capital reserves.

RZB's fully loaded common equity tier 1 ratio, a measure of financial strength, stood at 10.3 percent at the end of 2015, compared with Raiffeisen Bank International's 11.5 percent.

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"The objectives of a consolidation of the businesses would be simplification of the corporate structure and adapting the group more closely to increased regulatory requirements," Raiffeisen Bank International (RBI) said in a statement.

The review would be completed within six months so that any decision to merge would be approved before the end of the year, RBI said, adding that a merger would not affect RBI's listing.

RBI also announced its first-quarter results ahead of schedule on Tuesday, with net profit rising to 114 million euros (90 million pounds) from 83 million euros in the same period last year.

Net interest income fell 12.5 percent to 718 million euros in the first three months of the year, mainly because of low interest rates, RBI said.

Net provisioning for impairment losses, however, fell 59.5 percent to 106 million euros and the bank said the figure for the full year would be below 2015's 1.26 billion euros.

Its non-performing loan ratio also fell, by 0.5 percentage point to 11.4 percent.

(Editing by Susan Fenton)