Interim Report as at 30 September 2021
In the first 9 month of 2021 EAA has made further progress in implementing its wind-up mission.
The first nine months of fiscal year 2021 went well for the EAA in operational terms. The portfolio of loans and securities was reduced by EUR 1.8 billion to EUR 10.9 billion as of 30 September 2021 and the notional volume in the trading portfolio was reduced by EUR 22.1 billion to EUR 72.5 billion. Thanks to the sale of a further Italian bond in the third quarter of 2021, the EAA has now significantly reduced the concentration risk.
Together with the income from the reversal of loan loss provisions and the net interest result, the results from financial assets and shareholdings led to a result after taxes of EUR 14.9 million. The lion’s share continues to be attributable to the capital repatriation of Erste EAA Ireland plc, formerly EAA CBB, in the first quarter of 2021.
The EAA can draw on a solid risk buffer to wind up the remaining portfolio. Its equity as of 30 September 2021 amounted to EUR 668.5 million. The buffer of equity, equity capital drawing limit and risk provision in relation to the remaining portfolio as of 30 September 2021 has further increased by 1.1 percentage points to 13.4% compared to year-end 2020. The portfolio’s investment grade rating share is 74%.
In the reporting period, the judgement, which was covered by various media, was delivered by the Regional Court of Frankfurt/Main, whereby Portigon’s claim against the EAA in connection with WestLB’s dividend arbitrage trades was granted by the court of first instance. The EAA considers this decision to be wrong and has lodged an appeal against the judgement within the prescribed time. Given that no new facts or new or developed legal considerations were raised either in the course of the hearings before the Regional Court or in its judgement that could change the EAA’s previous evaluation of the prospect of a successful outcome, the EAA continues to adhere to its legal assessment of not having to make any payments to Portigon. Accordingly, the EAA believes it has a very good chance of success in connection with the appeal lodged. In light of this, the EAA continues to see no need to create provisions for the event of ultimate defeat in this legal dispute.
The EAA continues to optimise and variabilise administrative expenses as part of its efficient further development. This also means that the EAA will rely on a flexible servicer landscape in the medium term. The awards for four new servicers were made at the end of September 2021 and at the start of October 2021. The transfer to the new service structure is scheduled for the first quarter of 2023.