* Says climate too uncertain to give guidance
* Old guidance was for 10 percent rise in operating profit
* To raise 2.7 billion euros capital from govt, investors
* To cut 2008 dividend to 0.65 euro from 0.75 euro
* Shares up 5.4 percent
(Adds analyst comment, Erste quote, detail, background)
By Boris Groendahl
VIENNA, Feb 27 (Reuters) - Austrian Erste Group Bank
<ERST.VI>, emerging Europe's No.3 lender, signed a long-expected
deal to get government support on Friday but scrapped its
outlook for 2009 in view of the uncertain economic environment.
The deal to raise up to 2.7 billion euro ($3.4 billion) in
capital comes after talks started in October and analysts said
the mounting problems in emerging Europe may already have
outgrown the support provided by the capital injection.
Economists who in October expected the former Communist part
of Europe to grow this year now forecast a contraction of the
region's economy. Recession and currency devaluations will
likely lead to a rise in bad debts and weigh on banks' capital.
"It doesn't look to me as if that's going to be the end of
capital injections," said Francois Boissin, analyst at Exane BNP
Paribas. "I don't see how their solvency will be sufficient."
Erste acknowledged the emerging European crisis had worsened
by scrapping a forecast made in December to post a 10 percent
rise in operating earnings this year, saying on Friday it was
not appropriate to give guidance in the current environment.
Erste shares were up 5.4 percent at at 8.17 euros by 0830
GMT, outperforming a 2.4 percent drop in the DJ Stoxx Banking
index <.SX7P>.
The structure of the deal Erste signed also differed from
that announced in October, as the bank now aims to raise money
from private investors as well as the government to bypass
dividend restrictions that would have come with pure state aid.
The bank said the government will underwrite up to 1.9
billion euros in non-voting participation capital, a form
similar to preference shares, and it hopes to raise 400 million
euros from current shareholders and new investors.
If it gets as much from private investors, it will have no
restrictions on dividend payments under European Union rules and
will only have to pay a coupon of 8 percent on the capital.
The remainder of the total sum is expected to be raised in
hybrid capital, Erste said in a statement.
Erste reiterated earnings partly released two weeks ago,
saying it made a 603 million euro net loss in the fourth quarter
as loan loss provisions quadrupled and as it wrote off Icelandic
bank debt and emerging European goodwill.
Net interest income, the group's main revenue source, still
grew by 22 percent in the fourth quarter, to 1.34 billion euros,
but the increase was eaten up by loan loss provisions of 469
million euros, four times the level of a year earlier.
Erste will cut its 2008 dividend to 0.65 euro from 2007's
0.75 euro.
(Reporting by Boris Groendahl; editing by John Stonestreet and
Dan Lalor)
($1 = 0.7853 euro)
