Erste falls as Santander Polska talks raise cash call concerns

Erste Bank AG

28/04/2025 15:56

** Shares in Erste Group ERST.VI fall 3.5%, after the Austrian bank and Santander SAN.MC said they were in talks about Erste buying a 49% stake in the Spanish bank's Polish unit SPL1.WA

** A broker points to the significant size of the deal and the bank's need to fund it with equity as reason for the share price decline

** It estimates that Erste would need a capital hike of over 3 billion euros to cover the deal

** That would equal to about 12% of Erste Group's market capitalization of about 24.7 billion euros on Tuesday

** For Santander Group, a sale could release about 5-6 billion of capital, the broker says, which would be good if it were to be used for a buyback

** "We think (Santander) is not interested in having a minority stake in (Erste); therefore, (Erste) would have to undertake a large rights issue to pay with cash," KBW says, adding it struggles to see a financial rationale for the deal

** Shares in Banco Santander SAN.MC rise 1.9%, while Santander Bank Polska SPL1.WA is down 2%

(Reporting by Danilo Masoni e Linda Pasquini)

((Linda.pasquini@thomsonreuters.com))