Erste Group Bank AG: Erste Group invests in Central and Eastern European growth

acquisition of 49% controlling stake in Santander Bank Polska, Poland's third-largest bank

Wien (pta009/05.05.2025/08:35 UTC+2)

• Erste Group to acquire a 49% controlling stake in Santander Bank Polska Group S.A. and a 50% stake in Santander Towarzystwo Funduszy Inwestycyjnych S.A. from Banco Santander S.A. for a total cash consideration of 7.0 billion euros, thereby securing access to one of the fastest growing and most profitable banking markets in Europe
• Full internal funding, including through the cancellation of the 700 million euros share buyback and temporary reduction of the 2025 dividend payout ratio
• CET1 ratio of >14.25% in 2026 (new 2026 target level)
• Transaction is significantly accretive to Erste Group's EPS and ROTE

Today, Erste Group Bank AG ("Erste Group") and Banco Santander S.A. ("Santander Group") announced that they have entered into an agreement for Erste Group to acquire a 49% stake in Santander Bank Polska Group S.A. ("Santander Bank Polska") for a cash consideration of PLN 584 per share (approximately 6.8 billion euros) and a 50% stake in Santander Towarzystwo Funduszy Inwestycyjnych S.A. ("Santander TFI") for approximately 0.2 billion euros cash consideration from Santander Group. Together, this amounts to a total cash consideration of 7.0 billion euros.

Santander Bank Polska is the third-largest bank in Poland by assets, with market share >8% (based on transaction perimeter as of December 2024), and is also one of the most profitable in the country. It offers a full suite of commercial banking products to retail, SME and corporate clients. Santander TFI is an asset management company with 6 billion euros in assets under management as of December 2024.

The proposed transaction is expected to increase Erste Group's earnings per share (EPS) by >20% and its return on tangible equity (ROTE) to ~19% in 2026 versus current market consensus of ~15%.

Peter Bosek, Erste Group CEO, commented: "With the proposed acquisition of a controlling stake in Santander Bank Polska we are fulfilling a long-standing strategic goal: as the leading lender in Central and Eastern Europe we continue to broaden our presence in the region and expand into one of Europe's most dynamic and profitable banking markets. Erste Group was founded with a clear purpose: to foster prosperity and financial health. Today's announcement, including the new strategic cooperation we have inked with Santander Group to leverage our respective strengths for our clients across our key geographies, paves the way for us to help millions more people to prosper."

Stefan Dörfler, Erste Group CFO, commented: "The acquisition of a controlling share in Santander Bank Polska will enable us to generate profitable and value-creating growth. In doing so, we are deploying our capital effectively in order to generate favourable returns for our investors. The strength of our capital position means that we are able to fund this acquisition entirely from Erste Group's internal resources."

Critical mass on market entry

Santander Bank Polska provides Erste Group with the necessary critical mass in Poland immediately on entry, strengthening its position as the leading lender in CEE by increasing its loan book in the region from 94 billion euros to 131 billion euros based on December 2024 data.

By adding Santander Bank Polska to its footprint, Erste Group would increase its total client base by ~36%, to ~23 million customers, and its CEE client base by ~50% allowing it to reach ~18 million customers outside Austria. Erste Group's potential bankable population in CEE would increase by approximately 66% to 78 million.

Poland has exhibited one of the highest real GDP growths in Europe over the last 25 years and its banking sector remains underpenetrated compared to most other European countries. The proposed acquisition would provide Erste Group with exposure to one of the fastest growing and most profitable banking markets in Europe, with an attractive long-term growth trajectory.

Fully internally funded acquisition

Erste Group would fund the acquisition exclusively from internal resources, supported by the cancellation of the planned 700 million euros share buyback announced on 28 February 2025, application of a temporarily reduced dividend payout ratio of max. 10% of 2025 net profit and various risk-management balance sheet measures, resulting in an expected CET1 ratio upon closing of the transaction, estimated around year-end 2025, subject to closing conditions, of >13.5%, and, CET1 ratio reaching >14.25% in 2026, which is also set as the new target level for Erste Group. The dividend for the business year 2024 remains unchanged at 3 euros per share, payable on 28 May 2025, subject to AGM approval. Erste Group targets to return to the current dividend payout range of 40-50% from the 2026 business year.

Improved distribution capacity

Erste Group's profitability profile, and by extension its underlying distribution capacity, is set to improve significantly following the closing of the transaction. Earnings per share (EPS) for 2026 is expected to increase by >20% compared to the latest consensus expectations. Return on equity (ROE) and ROTE for 2026 are estimated to be ~16% and ~19%, respectively. Return on investment (ROI) in the first year (2026) is projected to be ~11%, broadly in line with alternative capital deployment options.

Transaction perimeter and key terms

Erste Group intends to acquire 49% of the outstanding common shares in Santander Bank Polska from Santander Group for a cash consideration of PLN 584 per share, making Erste Group the single largest shareholder of the bank. The proposed acquisition of a 49% stake will offer Erste Group de facto control of Santander Bank Polska as its single largest shareholder with the power to nominate members to the Supervisory Board and through its representatives at the Supervisory Board – members of the Management Board. It would also result in full consolidation of Santander Bank Polska as part of Erste Group's financials following the completion of the transaction.

Prior to the completion of the proposed acquisition, Santander Group plans to acquire the 60% it does not own of Santander Consumer Bank S.A. ("Santander Consumer Bank") currently owned by Santander Bank Polska to own 100% of the business. Following this transaction, Santander Bank Polska is expected to have more than 37 billion euros in net loans, more than 50 billion euros in customer deposits, around 67 billion euros in assets and ~1.7 billion euros in net income (adjusted for CHF mortgage provisions) on a pro forma basis as of December 2024.

Additionally, Erste Group intends to acquire a 50% stake in Santander TFI from Santander Group with the remaining 50% stake to be owned by Santander Bank Polska directly.

Closing of the transaction is subject to customary regulatory approvals including in particular from the Polish Financial Supervision Authority (KNF) and anti-trust approval from the European Commission. The acquisition is expected to close around the end of 2025, subject to regulatory approvals and other condition precedents, including completion of the sale of Santander Consumer Bank to Santander Group.

Strategic cooperation between Erste Group and Santander Group

In addition to the proposed transactions announced today, Erste Group and Santander Group have announced they are entering into a separate strategic cooperation in corporate and investment banking (CIB) and payments across key regions. This cooperation will seek to leverage each bank's footprint, product capabilities and clients by combining Erste Group's expertise in Central and Eastern Europe, and now Poland, with Santander Group's leading positions in the UK, Europe, and the Americas.

Under the cooperation terms, both banks will seek to provide local solutions and market insights for their respective CIB clients across the whole footprint of operations via a referral model that will facilitate seamless client interactions and service offerings. Erste Group's CIB clients will also benefit from access to Santander Group's value-added solutions including advisory, capital markets and project financing solutions. Additionally, the banks are set to unlock significant opportunities in the payments sector.

J.P. Morgan SE acts as a financial advisor and Rymarz Zdort Maruta and Wolf Theiss act as legal advisors to Erste Group in connection with this transaction.

ABOUT ERSTE GROUP

Erste Group is the leading financial services provider in the eastern part of the EU. Its ca. 45,000 employees serve around 16.8 million customers in 1,841 branches in 7 countries (Austria, Czechia, Slovakia, Romania, Hungary, Croatia, and Serbia). For the first quarter of 2025, Erste Group had 358 billion euros in total assets, posted a net profit of 743 million euros, and had a common equity tier 1 ratio (pro forma) of 16.2%.

ABOUT SANTANDER

Banco Santander (SAN SM) is a leading commercial bank, founded in 1857 and headquartered in Spain and one of the largest banks in the world by market capitalization. The group's activities are consolidated into five global businesses: Retail & Commercial Banking, Digital Consumer Bank, Corporate & Investment Banking (CIB), Wealth Management & Insurance and Payments (PagoNxt and Cards). This operating model allows the bank to better leverage its unique combination of global scale and local leadership. Santander aims to be the best open financial services platform providing services to individuals, SMEs, corporates, financial institutions and governments. The bank's purpose is to help people and businesses prosper in a simple, personal and fair way. Santander is building a more responsible bank and has made a number of commitments to support this objective, including raising 220 billion euros in green financing between 2019 and 2030. In the first quarter of 2025, Banco Santander had 1.4 trillion euros in total funds, 175 million customers, 7,900 branches and 207,000 employees.

DISCLAIMER

This information is also published as press release. It is for information purposes only and shall not be treated as giving any investment advice and/or recommendation in any form. This presentation and any information (written or oral) provided therein does not constitute an offer or advise of securities, nor a solicitation for an offer of securities, nor a prospectus or advertisement or a marketing or sales activity for such securities. Further, no representation or warranty (whether expressed or implied) is made as to the accuracy, completeness or reliability of the information contained herein.

Certain statements contained in this release may be statements on future expectations and forward-looking statements that are based on the management's current views and assumptions involving known and unknown risks and uncertainties that could cause actual results, performance or event to materially differ from those expressed or implied herein.

Neither Erste Group nor any of its Group members, advisors or representatives shall have any liability whatsoever for losses arising from any use of this press-release or its content or out of or in connection with this document.

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Emitter:	Erste Group Bank AG Am Belvedere 1 1100 Wien Austria
Contact Person:	Thomas Sommerauer/ Simone Pilz
Phone:	+43 (0)50100-17326
E-Mail:	investor.relations@erstegroup.com
Website:	www.erstegroup.com
ISIN(s):	AT0000652011 (Share)
Stock Exchange(s):	Vienna Stock Exchange (Official Trade)
Other Stock Exchanges:	Bucharest Stock Exchange, Prague Stock Exchange