We assess as highly probable the planned merger of Raiffeisen Zentralbank Oesterreich (RZB) into Raiffeisen Bank International (RBI) following the transaction's approval by RBI's shareholders on Jan. 24, 2017. Assuming the transaction will be closed as planned, we now regard RBI--as a new combined entity--as a core group member for Raiffeisen Banking Group (RBG). As a result, we are raising our long-term counterparty credit rating on RBI to 'BBB+' from 'BBB' and affirming our 'BBB+' rating on RZB. The negative outlook on both RBI and RZB mainly reflects our view that, although the merger will benefit RBG's credit profile, exposure to continued geopolitical and economic risk creates potential downside risk to the group's creditworthiness over the next two years that,
