Bloomberg News

Erste Chief Says Biggest Shareholder Doesn’t Need Dividend

October 10, 2011

Oct. 10 (Bloomberg) -- Erste Group Bank AG Chief Executive Officer Andreas Treichl said foregoing a dividend payment this year won’t put its biggest shareholder in jeopardy.

“From a liquidity standpoint we have planned ahead,” Treichl, who also heads the Erste Stiftung foundation, told reporters in Vienna today. “The foundation doesn’t need this dividend.”

Erste Stiftung, which owns 25.3 percent of the Vienna-based lender, was created in 1993. Its main revenue source is dividend payments from Erste Bank, which today announced that it won’t make a payout for 2011. The foundation had debts of about 1.39 billion euros ($1.9 billion) at the end of September 2010, according to a bond prospectus published earlier this year.

Erste Stiftung can survive for two years without dividend payments, Treichl said, adding that it would require a payout again in 2014 for the 2013 business year.

Erste Stiftung has about 50 million euros in interest payments every year, Erste Bank spokesman Michael Mauritz said in February. The foundation took out a 700 million-euro loan in 2006 to participate in Erste Bank’s share sale at the time. The organization didn’t participate in the lender’s November 2009 capital increase and sold its subscription rights to Criteria CaixaCorp of Spain, with which it entered an agreement on Erste Bank in June 2009.

Among Erste Stiftung’s aims is “to secure Erste Group Bank’s independent future as its principal shareholder,” it said in the prospectus. The charitable foundation funds social and art projects in Austria and eastern Europe.

--Editors: Stephen Taylor, Steve Bailey

To contact the reporters on this story: Boris Groendahl in Vienna at bgroendahl@bloomberg.net; Zoe Schneeweiss in Vienna at zschneeweiss@bloomberg.net

To contact the editor responsible for this story: Angela Cullen at acullen8@bloomberg.net


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