Erste Group Bank AG: plans to fully redeem participation capital and to increase capital in Q3

trading update

Vienna (pta007/24.06.2013/07:50 UTC+2) NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA AND JAPAN.

Erste Group plans to fully redeem participation capital of EUR 1.76 billion and increase share capital by about EUR 660 million in Q3 2013; provides trading update

The management and supervisory boards of Erste Group Bank AG ("Erste Group") have today resolved to fully redeem the outstanding participation capital of EUR 1.76 billion (EUR 1.205 billion held by the Republic of Austria and EUR 559 million held by private investors) in Q3 2013. This decision is based on the fact that the cost of the participation capital will increase annually from 2014, while the eligibility of participation capital as a common equity instrument under new regulatory requirements is decreasing over time.

The planned redemption of participation capital will further strengthen Erste Group's ability to generate capital and improve capital ratios as there will be no annual dividend payments on the participation capital from 2014. These gross savings amount to EUR 149 million post tax in 2014 and EUR 158 million post tax in 2015, with higher savings in subsequent years. For 2013, Erste Group expects to pay a dividend on the participation capital on a pro rata basis in 2014, subject to the dividend being approved by the annual general meeting.

Erste Group plans, subject to market conditions and the approval by its management and supervisory boards, to implement a capital increase (with pre-emptive rights for existing shareholders) in Q3 2013. The planned capital increase of approximately EUR 660 million will further strengthen Erste Group's capital base so that Erste Group expects to meet its targeted 10% fully loaded Basel 3 common equity tier-1 ratio by 31 December 2014.

The planned redemption of the participation capital is expected to be EPS accretive from 2014 onwards despite the capital increase.

Erste Group's core tier 1 ratio (Basel 2.5, excluding participation capital and retained earnings for Q1 2013) as of 31 March 2013 adjusted for the net proceeds of the planned capital increase would have been 10.2%, compared to 9.6% as reported. Erste Group estimates the negative impact from the switch to a fully loaded Basel 3 capital regime (based on currently available public documentation) on the capital ratios to be approximately 30bps. As a result of the planned change from the standardised to the internal ratings based (IRB) approach for the calculation of risk-weighted assets in Romania in 2015, Erste Group expects, based on its current business plan and estimates, a negative impact on its capital ratios in 2015 of approximately additional 40 bps.

Outlook
Erste Group expects a slight improvement in economic performance for Central and Eastern Europe in the second half of 2013, even though growth rates in the region are expected to remain moderate. Erste Group expects the operating result to decline by up to 5% in 2013, due to expected lower operating income only being partially off-set by lower operating cost. The risk costs of Erste Group are estimated to decrease by approximately 10-15% in 2013, mainly due to the expected improvement of the risk situation in Romania. Banking taxes in Austria, Slovakia and Hungary in the amount of approximately EUR 260 million pre-tax (approximately EUR 200 million post-tax) are expected to continue to adversely impact net profit in 2013. Erste Group continues to expect that its Romanian subsidiary BCR will return to profitability in 2013.

As previously communicated in the release dated 20 December 2012, Erste Group will report the negative currency translation effect from the sale of the Ukrainian subsidiary (Erste Bank Ukraine) in the amount of approx. EUR 81 million (pre-tax) following closing of the transaction in Q2 2013. This will not affect the capital position of Erste Group.

This document does not constitute an offer of securities, nor a solicitation for an offer of securities nor marketing or sales activity for such securities in countries where such an offer or solicitation for an offer is subject to legal restrictions. This document must not be used for such an offer or such marketing activities. If a public offer is made, a prospectus will be published in accordance with the Austrian Capital Market Act ("Kapitalmarktgesetz").

This document is not for distribution, directly or indirectly, in or into the United States (including its territories and possessions, any State of the United States and the District of Columbia). This document does not constitute or form a part of any offer or solicitation to purchase securities in the United States. The securities mentioned herein have not been, and will not be, registered under the United States Securities Act of 1933, as amended, (the "Securities Act") and may not be offered or sold in the United States, except pursuant to an exemption from the registration requirements of the Securities Act. There will be no public offer of securities in the United States.

This communication is directed only at (i) persons who are outside the United Kingdom or (ii) persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") and (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2) of the Order (all such persons together being referred to as "relevant persons"). Any investment activity to which this communication relates will only be available to and will only be engaged with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

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Emitter:	Erste Group Bank AG Milchgasse 1 1010 Wien Austria
Contact Person:	Thomas Sommerauer/ Simone Pilz
Phone:	+ 43 (0)5 0100 - 17741
E-Mail:	investor.relations@erstegroup.com
Website:	www.erstegroup.com
ISIN(s):	AT0000652011 (Share)
Stock Exchange(s):	Vienna Stock Exchange (Official Trade)