Erste Group Bank AG: Hungary and EBRD acquire minority stakes in Erste Bank Hungary Zrt.

The new shareholders will each own a 15 per cent equity stake

Vienna (pta017/20.06.2016/14:40 UTC+2) Hungary, represented by state-owned entity Corvinus Zrt. in the transaction, and the European Bank for Reconstruction and Development (EBRD) today signed the contractual framework with Erste Group Bank AG (Erste Group) to acquire minority equity stakes of 15 per cent each in Erste Bank Hungary Zrt. (EBH). Before the completion of the transaction, Erste Group will strengthen the capital base of EBH in order to sustainably enable the bank to provide additional lending to the Hungarian economy.

On 9 February 2015, Hungary, EBRD and Erste Group signed Memoranda of Understanding (MoU) that provided the basis for the overall improvement of the business climate in Hungary's banking sector, allowing banks to support more lending and thus economic growth. As part of this initiative, Erste Group, currently EBH's sole shareholder, offered the Government of Hungary and the EBRD an opportunity to invest in its local operation in Hungary.

The HUF 77.78 bn purchase price for the in total 30 per cent stake in Erste Bank Hungary was negotiated between Erste Group and the two buyers based on market valuation methods after the performance of due diligence with the support of external advisors. Following the capital increase, the purchase price translates to a P/BV multiple of 1.1. EBRD and Corvinus Zrt will pay the same price.

"With the transaction, the most important objective of the Hungarian Government is to foster growth, by boosting lending and helping the Hungarian banking system contribute to expansion through a stable background," said Mihály Varga, Minister for National Economy of Hungary. "Erste Bank had already declared its intention to significantly increase lending and has long-term plans in Hungary. This deal will further improve trust between one of the largest Hungarian banks and the Government," he added.

EBRD First Vice President Phil Bennett said, "With our investment we are strengthening and supporting a private bank which has successfully overcome the effects of the global financial crisis and is committed to the region. The stronger capital base will allow Erste Bank Hungary to implement its growth plan, including lending to local SMEs, thus contributing to improved financial intermediation and supporting the real economy."

The conclusion of the transaction, which is expected by autumn, is subject to all necessary approvals required from Hungarian and European banking supervisory and competition authorities, as well as the fulfilment of various conditions by the involved parties, including the conclusion of the capital increase by Erste Group within Erste Bank Hungary. The Hungarian Government already fulfilled what it had pledged when it successfully concluded the legislative process and provided for a further reduction in Hungary's banking tax in 2017 - in line with the MoU. Erste Bank Hungary will remain majority-owned by Erste Group, managed and controlled in line with Erste Group Governance principles. On the basis of their proportionate rights as minority shareholder, the Hungarian Government and the EBRD will each be able to appoint one non-executive member of Erste Bank Hungary's Board of Directors and one member of the bank's Supervisory Board.

The parties have also agreed to a pre-determined exit mechanism for the involved minority shareholdings: the put and call option scheme grants Corvinus Zrt. the right to exit any time and Erste Group the right to exercise the call option 5 years after the sale at the earliest; in the case of EBRD, the put and call option are exercisable any time between 5-9 years after the acquisition.

"Erste Group's decision to invite the State of Hungary and the EBRD to become minority shareholders in our Hungarian banking subsidiary reflects our positive expectations for the continued development of the Hungarian banking market. We welcome our new shareholders and we are looking forward to a successful cooperative relationship for the benefit of the Hungarian economy and its people in the years to come," said Friedrich Roedler, Chairman of the Erste Group Supervisory Board in Budapest at the signing ceremony.

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Emitter:	Erste Group Bank AG Am Belvedere 1 1100 Wien Austria
Contact Person:	Thomas Sommerauer/ Simone Pilz
Phone:	+43 (0)50100-17741
E-Mail:	investor.relations@erstegroup.com
Website:	www.erstegroup.com
ISIN(s):	AT0000652011 (Share)
Stock Exchange(s):	Vienna Stock Exchange (Official Trade)