Profit Units issued by Banque Raiffeisen are securities which do not form part of its share capital. While they are similar to equity securities due to the rights they confer (e.g. voting rights on certain subjects at shareholder meetings), they also have similar characteristics to debt securities. The Profit Units are perpetual and generally
non-redeemable. If the Bank becomes insolvent or is wound up, the redemption of the Profit Units is subject to the prior repayment of the Bank’s other debts, which shows their similarities with subordinated debt.
Variable remuneration
The precise distribution rate is decided annually and cannot exceed the average of the European Central Bank’s key rate for deposit facilities over the three calendar years preceding the date of the decision of the Bank’s Board of Directors plus 4%. This payment may only be distributed if (i) there are distributable profits and (ii) the Bank’s Board of Directors decides to make such a distribution.
Issue price and price fluctuations
The issue price and nominal value of a Profit Unit is €25. This value is set by the Bank’s articles of association. The minimum amount that may be subscribed for is €1,000, equivalent to 40 Profit Units. The amount subscribed for must be paid in full at the time of subscription. The Profit Units are not listed and are not therefore subject to the uncertainties of the financial markets.
If a trigger event occurs (i.e. the Bank’s equity falls below a certain threshold, namely 5.125% of Common Equity Tier 1 - CET1), the Bank shall be required to irrevocably reduce the nominal value of the Profit Units.
Transfer and redemption
The Profit Units are non-transferable except where inherited, are also perpetual and are generally non-redeemable. Unlike the Bank’s shares, the Profit Units may be redeemed early only at the Bank’s discretion five years after their issue, subject, inter alia, to the CSSF’s prior approval. The CSSF’s prior approval is not guaranteed. The Bank reserves the right to redeem all the Profit Units under certain conditions, including in the event of a change in tax legislation.
Voting rights
Holders of the Profit Units have the right to attend the bank's shareholder meetings. However, they are only authorised to vote when the rights attached to the Profit Units they hold are affected by the resolution of the shareholder meeting. In such circumstances, each Profit Unit represents one vote.