Erste Group Bank (EBS) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition of a 49% stake in Poland's third-largest bank and 50% of its asset management arm for €7bn fulfills a long-standing goal to expand in Central and Eastern Europe, focusing on core, highly connected markets and enhancing capital allocation discipline.

• Transaction provides immediate critical mass in Poland, increasing the regional loan book and client base by up to 50%.

• Strategic partnership and cooperation with the seller enable continued network effects and leverage both groups' strengths in corporate banking, investment banking, and payments across Central and Eastern Europe.

• Retention of the Polish consumer finance business leverages global scale and competitive positioning in consumer lending.

• Decision aligns with the principle of best owner for each asset, maximizing shareholder returns.

Financial terms and conditions

• 49% stake in the Polish bank and 50% in its asset management arm acquired for €7.0bn in cash, valuing the business at 2.2x spot tangible book value.

• Funded entirely from internal resources, including cancellation of a €700m share buyback and a temporary reduction in 2025 dividend payout to a maximum of 10%.

• Net capital gain of approximately €2 billion, increasing CET1 ratio by 100 basis points, with pro forma CET1 ratio expected to be above 13.5% at closing and 14.25% in 2026.

• No conditions or lockup on the 13% stake retained by the seller; can be reviewed or sold at any time.

• Purchase price of PLN 584 per share for the bank; asset management stake valued at €0.2bn.

Synergies and expected cost savings

• Strategic cooperation expected to unlock opportunities in corporate and investment banking and payments, leveraging combined client bases and product capabilities.

• Buyer will leverage group platforms for payments and CIB, potentially expanding benefits to other Central and Eastern European markets.

• Revenue synergies expected from cross-sale opportunities and leveraging digital banking expertise.