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

implementation of the Issuer's strategies. Loss or failure to recruit and keep key personnel
could have a material adverse effect on the Issuer's operations.
Changes in the legal and taxation conditions may adversely affect the Issuer
In Austria and in other countries in which the Issuer operates it is subject to the relevant
national and international laws and treaties. Changes in existing laws and/or regulations
and/or tax rules in countries in which the Issuer operates may have material adverse effects
on the Issuer's business, financial position and results of operations.
In the development and execution of its projects the Issuer is dependent on
cooperation partners
In the development and execution of its projects, the Issuer is dependent on cooperation
partners. Due to this dependency there is a risk that in case of misconduct of the cooperation
partners, projects cannot be implemented as planned or only with delay. This may have
financially adverse effects on the Issuer and may also adversely affect the Issuer's reputation.
Risk factors arising from the Erste Group’s business operations
The Issuer is the Erste Group Bank’s principal shareholder and controls 25.63% of the share
capital. The Issuer’s business operations and a material part of its interest payments on
borrowings and interest rate derivatives is funded through dividend income from its
investment in Erste Group Bank. With regard to Erste Group Bank, the Issuer is exposed to
the risks of a shareholder. Therefore, ERSTE Foundation (through its shareholding in Erste
Group Bank) has a substantial exposure to risks resulting from the business operations of
Erste Group Bank (and its consolidated subsidiaries, together the "Erste Group”). Especially
the risk factors set out below in connection with the Erste Group, in the event of their
materialisation, may have considerable negative effects on the Issuer’s liquidity, business,
results of operations, and financial position and may result in a worst case scenario in the
total loss of the capital invested under the Notes.
The recent global financial and economic crisis and the current sovereign debt crisis
have had and are likely to continue to have a material adverse effect on the Erste
Group and its markets
Extreme volatility and the downturn in global capital and credit markets from mid-2007
through the first half of the year 2009 have had a material adverse effect on the international
banking sector. These conditions reduced the availability of private financing for both financial
institutions and their customers, compelling many financial institutions to seek liquidity from
governments and central banks. The lack of confidence in the international financial markets
and worsening economic conditions have had adversely affected Erste Group's business and
results of operations and may still have adverse effects on its financial condition in the future
as Erste Group must expect inter alia higher default rates of borrowers.
Banks are also faced with the turmoil that is caused by the European sovereign debt crises
that commenced in the first half of 2010 and which is continuing and worsening. The new
flare-up in the European sovereign debt crisis in 2011 might lead to further impairments and
write-offs of European sovereign debt for market participants, in particular banks and other
financial institutions, adversely affecting the financial position of these market participants,
thereby causing market disruptions, volatility, contractions of lending, nationalisations, and in
a worst case scenario, bankruptcies. All this could have a materially adverse effect on the
economy as a whole, thereby seriously affecting Erste Group's business, and may also cause
unexpected currency fluctuations. It is expected that the difficult conditions in the international
financial markets and economic conditions in the countries where Erste Group has operations
will not improve significantly in the near future. If this happens to be true, it can be expected
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