Austria's third largest lender, Raiffeisen Bank International AG, said the bad loans it had contracted with large Austrian clients together with the current asset quality audit being conducted in Slovenia would affect its provisions this year. The bank projects that there would be a rise of as much as 20% for 2013.

The Vienna-based bank is also the second largest insitution in eastern Europe after UniCredit SpA. It is expected to allot loan loss provisions in the upwards of EUR1.2 billion for this year, according to a statement it issued yesterday. The company repeated an earlier forecast made last August 22 which said that any debt charges would be at a 'similar' level as 2012's EUR1.009 billion. Analysts estimated the provisions would top EUR1.004 billion, a figure obtained by the bank through a survey it conducted on the Raiffeisen bank website.

In the statement, Raiffeisen said, "The revision is based predominantly on the development of the corporate customer business in the segments of Group Corporates, Central Europe and Southeastern Europe. The rest of RBI's Outlook is confirmed."

The bank has been weathered by persistent bad debts from its eastern European businesses, with emphasis on Hungary, Ukraine and the republics that used to form Yugoslavia. The rising number of corporate involvencies as well as restructuring in Austria also affected its business.