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 31.12.2020

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; volumes of mortgage covered bonds and senior unsecured bonds have risen ytd

Maturity Profile as of 31.12.2020

Regarding capital market activity, 2020 turned out to be one of themost active years in the recent past. Through seven benchmarksized transactions across various seniorities, EUR 4.5bn were raised in total. Pre-funding activity for 2021 started early with two senior preferred notes in September and November 2020.
Erste Group started with a EUR 750 million 10-year mortgage covered bond at MS+3bp followed by a EUR 500 million (AT1) note (CRD IV-/CRR-compliant Additional Tier 1) with a coupon of 3.375%, representing the second-lowest coupon for a EUR denominated AT1 at the time of issuance. In May, Erste Group proved its access to capital markets amidst the Covid-19-crisis by placing a EUR 750 million senior preferred note at MS+115bp. September led to further attractive issuance opportunities that were realised with a EUR 500 million Tier 2 instrument at MS+210bp, succeeded by another EUR 500 million 5y senior preferred note issued at MS+52bp. Erste Group was again very active in the fourth quarter by issuing two further benchmarks in November. Its inaugural callable senior preferred note (EUR 750million at MS+52) – the first of an Austrian issuer – supports the eligibility of outstanding instruments and a diversification of the investor base. Finally, a EUR 750 million AT1 note with a 4.25% coupon was issued mid-November and concluded the funding year for Erste Group.