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Schoenherr, Linklaters, and Wolf Theiss Advise on Erste Group's Inaugural Issue of EUR 500 Million Additional Tier 1 Notes


Schoenherr has advised an international banking syndicate consisting of Morgan Stanley (technical lead), UBS, J.P. Morgan, and HSBC as Joint Lead Managers on the successful issuance of a EUR 500 million undated and subordinated fixed to fixed resettable bond by Vienna-based Erste Group Bank AG (Closing Date June 2, 2016). The Joint Lead Managers were advised on German law matters by Linklaters Frankfurt, while Erste Bank was advised by Wolf Theiss. 

The bond was structured to comply with the eligibility criteria for Additional Tier 1 (AT1) capital under the CRR. It was issued as a drawdown under Erste Group's EUR 2,000,000,000 Additional Tier 1 Notes Programme dated April 20, 2016, and is listed on the Vienna Stock Exchange. The bond was rated BB by Standard & Poor's.

This is the first international benchmark transaction of Additional Tier 1 capital seen in Austria. The deeply subordinated Additional Tier 1 Notes (senior only to share capital) do not have a scheduled maturity and will have a first regular call date after 5 years. The distribution rate is 8.875 % p.a. and is resettable in 2021 to another fixed rate. The transaction carries restrictions on distribution based on the profit and capital situation of the Issuer, temporary write-down loss absorption (5.125 % Common Equity Tier 1 at the level of the Issuer and/or its consolidated group), as well as regulatory and tax call features. The bond is governed by German law except its status clause.

The Schoenherr team was led by Partner Walter Gapp, with tax advice from Partner Michaela Petritz-Klar and additional support from Attorney Stefan Paulmayer.

The Linklaters team consisted of Partner Peter Waltz and Attorney Konrad Uhink.

The Wolf Theiss team advising Erste Group was led by Partner Claus Schneider, who was supported by Consultant Christina Siegl and Associate Nikolaus Dinhof.

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