Funding Strategy

Erste Group´s prime liquidity source is the large surplus of customer deposits the bank has due to its strong market position in Austria and the CEE countries where it is active.

Debt Structure as of 30.06.2020

The growing international activity of Erste Group led it to develop alternative sources to the classic primary funding through customer deposits. The bank employs a wide range of funding sources and programmes to meet the funding requirements of the Group, its subsidiaries and the Austrian savings banks. The bank is active in Austria and internationally as a private placement issuer as well as making public issues in varying currencies, maturities and structures. The largest portion within securitised debt is made up of mortgage covered bonds which represent ca. 40%, followed by senior and tier 2 notes. The mentioned seniorities constitute approximately 90% of outstanding bonds.

Overall, relative stable development while volumes of mortgage covered bonds have risen

Maturity Profile as of 30.06.2020

From a long term funding point of view the focus shifted from covered bond issuance to senior preferred notes in the second quarter, as this seniority supports the MREL strategy. In this context Erste Group launched a EUR 750m 7y senior preferred note at MS+115bp.

Due to the attractive interest rate structure of the TLTRO III issued in 2020 Erste Group decided to fully repay its TLTRO II transactions and rolled them into the newly offered tender operations. Given the additional incentive offered by the ECB in March for the special
reporting period from June 2020 to June 2021 with a maximum negative interest rate of -1% Erste Group has decided to increase its long term refinancing at the ECB to a total of EUR 9.9 billion outstanding end of June 2020.