* 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 rise, helped by World Bank package, but later fall
(Adds CEO comment, wraps World Bank package)
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 euros ($3.4 billion) in
capital comes after talks started in October and some analysts
said the mounting problems in emerging Europe may already have
outgrown the support provided by the capital injection.
Erste's deal came after news overnight that global
development banks had launched a coordinated two-year plan to
lend up to 25 billion euros to shore up banks and businesses in
eastern and central Europe. []
Erste Chief Executive Andreas Treichl told reporters the
plan was a great step and it was high time for such measures,
adding his need for additional capital was covered by the
Austrian package and he would not need more than that.
"We believe and we are convinced that we won't need more
capital," Treichl told a news conference.
"If we did need more capital that wouldn't be just a problem
for Erste Bank but a dramatic problem for the entire region."
However, analysts were not convinced this would be enough,
pointing to Erste's still relatively weak core capital ratios
even including the government capital.
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."
Shares see-sawed, rising first then trading down 2.8 percent
at 7.53 euros by 1326 GMT, but they outperformed a 6 percent
drop in the DJ Stoxx Banking index <.SX7P>.
Emerging European currencies and shares also rose on the aid
plan by the World Bank, the European Investment Bank and the
European Bank for Reconstruction and Development, but the boost
faded later in the session. [] []
TOO UNCERTAIN TO FORECAST
The structure of Erste's capital injection differed from a
first announcement 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.
Treichl said he was hoping to be able to pay back the
capital out of retained earnings. If that was not possible in
five years or later, it would issue shares to repay it.
For details of the deal, double click on []
Despite the capital need, Erste will still pay a dividend
for 2008, but cut it to 0.65 euro from 2007's 0.75 euro.
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.
It reiterated earnings partly released two weeks ago, saying
it made a 603 million euro net loss in the fourth quarter as
loan loss provisions soared 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.
(Reporting by Boris Groendahl; Editing by Dan Lalor and Andrew
Macdonald)
($1 = 0.7853 euro)
