Erste Bank – 2.7 billion Euros capital infusion from the Austrian Govt

The Austrian state will conduct a 2.7 billion Euros capital infusion in Erste Bank, this being the first financial institution in Austria to benefit from governmental aid. The Austrian state will buy participating capital in Erste Bank, receiving an annual 8% interest. Still, the state will not have the right to vote in the institution’s board. The funds will be fully reimbursed to the state.

The transaction announced on Thursday will be concluded before the end of the year, the group officials announced. After the capital infusion, the Tier capital rate, assessing the solvency of a company, will grow over 10%, compared to 7% in 2007 and the 7.5% estimated this year.

At Erste, the members of the Board and a series of senior managers gave up the bonuses scheduled for this year.

At the beginning of October, Erste announced that it had 300 million Euros exposed in Iceland, experts having various estimations on the way the assets in Iceland will depreciate.