DIE ERSTE österreichische Spar-Casse ... - ERSTE Stiftung

Furthermore, if Erste Group would be required to hold more capital and/or capital of better
quality (e.g. because of the implementation of Basel III or tighter capital requirements
imposed by the regulator), Erste Group would be required to dispose of assets and/or to raise
capital and/or to retain profits. Raising new capital could result in a dilution of the Issuer's
shareholding in Erste Group Bank which could reduce the Issuer's dividend income and the
value of the shares held by the Issuer (because it loses minority voting rights). If Erste Group
Bank retains profits to comply with increased capital requirements, it would not distribute
dividends which could materially adversely affect the Issuer. In addition, if the Issuer would
not be able to participate in a capital increase of Erste Group Bank, there is a risk that the
Issuer's voting rights in Erste Group Bank would drop below 15% and therefore the Issuer
would have to be liquidated pursuant to the provisions of the statutes of the Issuer, unless the
statutes of the Issuer would be amended accordingly.
All this may adversely affect the Issuer's financial and assets position.
There is a risk that the Issuer will not have sufficient funds at its disposal for meeting
its payment obligations or that such funds can be procured only at less favourable
terms (Liquidity Risk)
The Issuer is subject to liquidity risks which may materialise in the event of a mismatch of
cash inflows and outflows. Failure to adequately manage these risks may adversely affect the
Issuer's ability to meet its payment obligations under the Notes issued under this programme.
The Issuer will fund a material part of its interest payments under its borrowings from dividend
income from its interest in Erste Group Bank. If Erste Group Bank does not distribute
dividends in amounts adequate to service liabilities to third parties, this will have material
adverse effects on the Issuer's business, liquidity and results of operations (for risk
information about the operations of Erste Group see below, from page 19).
The Issuer is exposed to the risk of interest rate changes (Interest Risk)
The Issuer pays interest to its creditors. If the market interest rate rises, the amounts paid by
the Issuer to its creditors rise as well. This may adversely affect the Issuer’s liquidity but also
its financial and assets position.
The Issuer is exposed to the risk that existing liabilities cannot be settled or refinanced
at maturity
The Issuer has funded the purchase of shares of Erste Group Bank by borrowings from
various credit institutions. If the Issuer is unable to repay these loans (or other existing
liabilities) at maturity or to refinance them by new loans, this could have material adverse
effects on its operations, financial position and results of operations and on the Issuer’s ability
to make payments under the Notes.
Payment default, suspension of payments or deterioration in the creditworthiness of
the Issuer's counterparties may lead to losses (Credit Risk)
The Issuer is exposed to counterparty and credit risks. Third parties that owe the Issuer
money or other assets may fail to meet their obligations towards the Issuer due to insolvency,
lack of liquidity, deterioration of creditworthiness, economic downturns, operational problems
or for other reasons.
The loss of key personnel may have a materially adverse impact on the Issuer’s
operations
The Issuer’s key personnel, including members of the Management Board and other
members of the Issuer's top management have a material influence on the development and
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