“Based on its best ever nine-month result, achieved despite the difficult market situation, the highest equity capital base in the history of the bank and facing the backdrop of new capital adequacy standards imposed by international competition, the Republic of Austria will acquire participation capital in Erste Group amounting to EUR 2.7 billion,” says Andreas Treichl, CEO of Erste Group at the presentation of the third quarter results.
The tier 1 capital of Erste Group was expected to increase from a ratio of 7% at year-end 2007 to at least 7.5% by the end of this year, driven by the economic success of the first three quarters of the current business year. This step improves core capital by an additional EUR 2.7 billion. The Tier 1 ratio will therefore increase to over 10% by the end of 2008, reaching a level in line with the raised international benchmarks for capital requirements.
“We have a fundamentally sound position and are taking this step to better equip Erste Group to cope with a tougher economic outlook and to be able to fully support economic growth in Austria and of its trade partners in such an environment,” says Andreas Treichl. “The participation certificates that will be acquired by the Republic of Austria will ensure that, above all, Austrian companies will have enough liquidity at their disposal in times of difficulty. In agreement with the Austrian government, Erste Group undertakes to ensure jointly with the savings banks that both Austrian commercial and retail customers will each have access to at least EUR 3 billion in credit over the next three years.”
D.C.