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Austrian bank Erste says will repay state aid

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(Globalpost/GlobalPost)

Shares in Austrian bank Erste Group fell almost seven percent on Monday after it said it planned to repay some 1.8 billion euros ($2.4 billion) in aid received during the 2008 global financial crisis.

Erste, a major lender in central and eastern Europe, said 1.2 billion euros from the state and 559 million euros from private investors would be paid back in the third quarter.

It also said it planned to compensate for the loss of capital and meet international requirements by raising 660 million euros via a capital increase in the third quarter.

Like other banks in Austria and worldwide, Erste, with 50,000 employees in seven countries, was bailed out in 2008 when the global financial system came close to meltdown.

Erste also said operating income would fall by up to five percent this year while banking taxes in Austria, Slovakia and Hungary would "continue to adversely impact net profit".

It predicted a "slight improvement in economic performance for central and eastern Europe in the second half of 2013, even though growth rates ... are expected to remain moderate".

Shares in the bank were last trading down 6.81 percent in Vienna, underperforming a weaker overall market, with the benchmark ATX 2.88 percent lower.

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http://www.globalpost.com/dispatch/news/afp/130624/austrian-bank-erste-says-will-repay-state-aid