DJ DGAP-Adhoc: Erste Bank der oesterreichischen Sparkassen AG: Erste Bank sells insurance operations for EUR 1,445m and signs 15 year distribution agreement with Vienna Insurance Group
DJ DGAP-Adhoc: Erste Bank der oesterreichischen Sparkassen AG: Erste Bank sells insurance operations for EUR 1,445m and signs 15 year distribution agreement with Vienna Insurance Group
Erste Bank der Oesterreichischen Sparkassen AG / Disposal
26.03.2008
Release of an Ad hoc announcement, transmitted by DGAP - a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.
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Ad-hoc information Vienna, 26 March 2008
Erste Bank sells insurance operations for EUR 1,445m and signs 15 year
distribution agreement with Vienna Insurance Group
· Erste Bank to sell s Versicherung and its CEE insurance subsidiaries as
well as the insurance subsidiaries of BCR to Vienna Insurance Group
(VIG). Erste Bank or its respective CEE banking subsidiaries will
retain a 5% share in each of the local life insurance companies
· Both companies will sign a 15 year distribution agreement. Erste Bank
and VIG will become preferred partners and will mutually distribute
their products to their more than 20 million customers in a region of
120 million people.
· The total transaction price is EUR 1,445m (corresponding to a
price/gross written premium multiple of 1.2x).
· Proceeds will be used to strengthen the capital base. Tier 1 ratio will
increase by some 70 basis points.
· Closing is expected in Q3 2008.
· Erste Bank's financial targets for 2008 and 2009 - excluding this
transaction's impact - remain unchanged.
Subject to competition authorities and the local insurance regulators'
approval, Erste Bank der oesterreichischen Sparkassen AG will sell its
insurance investments including s Versicherung in Austria and in the
countries of Central and Eastern Europe to WIENER STÄDTISCHE Versicherung
AG - Vienna Insurance Group (VIG). The agreement was signed today by the
two CEOs Andreas Treichl and Günter Geyer after the resolutions were passed
by the respective supervisory bodies.
In addition to the sale of the insurance subsidiaries, a distribution
co-operation agreement was signed by the two groups. This agreement has a
term of 15 years and will form the basis for closer co-operation between
Erste Bank and VIG. In the agreement, the two partners commit to sell each
other's products through their respective sales channels, and to give them
preferential treatment. This provides VIG with access to over 2,900
branches and to the over 16 million Erste Bank customers in the region. In
return, Erste Bank gains access to around 10 million VIG customers, in
those countries in which both partners are currently active.
VIG has been a partner of Erste Bank Group in the P&C insurance business
for many years. In this context, the non-life business of Erste Bank's
Czech insurance subsidiary was sold to VIG in 2004. The transfer of the
life insurance business therefore is as a logical next step and will allow
Erste Bank to concentrate on its core business, namely, selling financial
services.
'With this transaction Erste Bank and VIG prove that successful long-term
co-operation between independent partners does not need significant
cross-shareholdings. In addition we secure VIG's strong CEE customer base
for us, creating additional cross-selling potential for our products',
states Andreas Treichl, CEO of Erste Bank commenting on the transaction.
As a measure to strengthen the distribution partnership, Erste Bank and the
local subsidiaries will each retain 5% in the local life insurance
companies. As the insurance company, Donau Versicherung, in which VIG has a
controlling interest, already owns 10% of s Versicherung, in Austria Erste
Bank will sell only around 85% of s Versicherung to VIG. s Versicherung has
participation in almost all local insurance subsidiaries (except for
Romania).
The total value of the transaction based on the valuation for 100% of the
insurance companies would correspond to a purchase price of EUR 1,600m and
thus to a price/gross written premium multiple of 1.2x. As a result of the
ownership structure, the total value of the proceeds for Erste Bank is EUR
1,445m. The transaction comprises the sale of shares of all life insurance
companies and the P&C insurance company of BCR in Romania as well as the
country distribution agreements for 15 years between the local banks and
the local insurance companies.
The net effect on consolidated income for Erste Bank (after taxes and
minorities) will amount to nearly EUR 1,000m, taking into account the
netted carrying values of the assets sold. The distribution agreement will
most likely be deferred over 15 years according to IFRS, leading to an
expected positive net profit contribution of EUR 600m in 2008.
Erste Bank will use this income to strengthen its equity base (tier 1 ratio
will rise by around 70 basis points) and thus expand the company's
strategic flexibility. The tier 1 ratio at year-end 2008 is therefore
expected to be in excess of 8%.
The proceeds from the sale of the local insurance subsidiaries and from the
distribution agreements will flow into the results of the local
subsidiaries.
The strong market position of s Versicherung and its subsidiaries in the
countries of Central and Eastern Europe as well as the insurance subsidiary
of BCR will help VIG to broaden its market position in CEE. The premium
income from insurance activities of the Erste Bank Group was just below EUR
1,300m in 2007.
The closing of the transaction is expected in Q3 2008, subject to the
approval of the competition authorities and the local insurance regulators.
Erste Bank, Investor Relations
1010 Wien, Graben 21, Telefax: 0043 (0)5 0100 DW 9 13112
Gabriele Werzer, Tel. 0043 (0)5 0100 DW 11286, E-Mail:
gabriele.werzer@erstebank.at
Thomas Sommerauer, Tel. 0043 (0)5 0100 DW 17326, E-Mail:
thomas.sommerauer@erstebank.at
26.03.2008 Financial News transmitted by DGAP
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Language: English
Issuer: Erste Bank der Oesterreichischen Sparkassen AG
Graben 21
1010 Wien
Österreich
Phone: +43(0)5 0100 - 17693
Fax: +43(0)5 0100 9 - 13112
E-mail: investor.relations@erstebank.at
Internet: www.erstebank.com
ISIN: AT0000652011
WKN: 909943
Listed: Freiverkehr in Berlin, Stuttgart, München, Hamburg; Open
Market in Frankfurt; Foreign Exchange(s) Wien
End of News DGAP News-Service
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