Erste Group Bank AG (EBS), eastern Europe’s second-biggest lender, said it has agreed to buy back 828.3 million euros ($1.1 billion) of hybrid securities to boost net income and capital.
The lender will book a gain of about 150 million euros on the transaction because it repurchased the securities below face value, spokeswoman Hana Cygonkova said in an e-mail. Erste agreed to redeem preference shares and subordinated debt.
European banks are adjusting their capital structures to be ready for new regulations designed to force them to hold bigger cushions against losses. Erste’s offer targeted securities whose qualification as core capital is being phased out by bank regulators.
The Vienna-based lender offered a premium of between 5 percent and 10 percent of the notes’ market price before the announcement.
Erste repurchased an aggregated 496 million euros of four series of preference shares and of a perpetual subordinated note. It also bought back 332.4 million euros of the 800 million euros outstanding of a subordinated note due 2017, a so-called lower Tier 2 bond, it said.
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