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Erste Group: Capital Shortfall to be Covered by Profits

Published: December 27, 2011; 16:45 · (Vindobona)

The new equity requirements will be fulfilled, Erste Group´s CEO Treichl says. The capital shortfall amounts to € 743m.

Erste Group: Capital Shortfall to be Covered by Profits / Picture: © Erste Group / Daniela Beranek

For Treichl, Erste Group´s operating business is one of the strongest in Europe. A capital increase will not be needed in order to fulfill the equity requirements. The major part will be covered by profits of the fourth quarter of 2011 and of the first half year of 2012. European banks have to raise their core equity quota up to 9.0% by June 2012. Erste Group´s capital shortfall amounts to € 743m.

Moreover, risk-weighted assets apart from the CEE-region will be reduced. “We want to provide all our resources – capital and employees – to our customers in Austria and the CEE region.”, Treichl states. “If Erste Group would not be able to cover these € 750m, then Austria and the whole CEE region had completely different problems than Erste Group. This would be an incredible financial crisis.” When the euro-system and the financial system in the CEE countries would collapse, there would be other considerations than the equity base of Erste Group, Treichl believes.

Treichl is quite optimistic for the future. Romania, which is currently seen as problematic country, will “surprise positively” within the next years. There is no need to worry about the banks in that region, Treichl explains. The write-offs in Hungary and Romania are already done and operations will be profitable again soon, Treichl says.