Erste Group: Profitable Hybrid Buyback
Erste Group expected to book pre-tax gain of up to € 300m on hybrid buyback.
Erste Group is expected to book a pre-tax gain of up to € 284m on its offer to buy back € 1.3bn of hybrid instruments.
"According to our calculations, Erste's maximum pre-tax gain would be € 284m if € 500m of priority 1 bonds and all of the LT2 are tendered. If all bonds are tendered, i.e. if Erste increases its acceptance amount, the pre-tax gain would be € 395m", UniCredit's credit analysts wrote in a note to investors. They recommend accepting Erste's invitation, "which offers a decent premium to market".
Analysts at CreditSights wrote: "Using an average take-up rate of 55%, in line what has be seen at other European banks, we reckon that the exercise would give Erste a pre-tax gain of just over € 200m".