EUR 1000.00 For Business Accounts Only

BAWAG Group - EGM 03 March 2021

General: The EGM is to be held in the form of a virtual EGM in accordance with the Austrian COVID-19 Company Law Act and COVID-19 Company Law Regulation. The physical presence of shareholders or their authorised proxies is not possible. The voting rights may therefore be exercised solely by granting authority to the special proxies designated by the Company.

BAWAG Group is one of Austria's leading banking groups with 2.3m retail, small business, corporate and public sector customers across Austria, Germany, Switzerland, Netherlands and other developed markets. The Group operates under various brands and across multiple channels offering comprehensive savings, payment, lending, leasing, investment, building society, factoring and insurance products and services. Its main operating subsidiary is BAWAG P.S.K. Bank für Arbeit und Wirtschaft und Österreichische Postsparkasse Aktiengesellschaft (BAWAG P.S.K. AG). BAWAG Group AG has been listed on the Vienna Stock Exchange since 25 October 2017.

The Company has issued 89,142,237 shares that amount to a share capital of EUR 89,142,237. As of 9 February 2021, GoldenTree Asset Management LP held 21.8% and T. Rowe Price Group Inc. held 5.6% of the Company's shares. The Company held 287,190 shares in treasury (~0.32% of the share capital).

On 9 February 2021, the Company released its preliminary results for financial year 2020, reporting a net interest income of EUR 916.3m (+4.2%), a net profit of EUR 284.2m (-38.1%) and EPS of EUR 3.19 (2019: EUR 4.54). As of 31 December 2020, the CET1 ratio stood at 16.3% (2019: 14.4%) prior to any deduction of dividends. Considering earmarked dividends of EUR 460m in total for financial years 2019 and 2020, the CET1 ratio was 14.0% (2019: 13.3%).

Item 1: The AGM 2020 on 30 October 2020 resolved to carry forward to new account the entire profit available for distribution recognised in the annual financial statements for financial year 2019. BAWAG Group thus followed the recommendation of the European Central Bank (ECB) as of 27 July 2020 to banks not to pay a dividend for financial years 2019 and 2020 until at least 1 January 2021, given the uncertainties caused by the COVID-19 pandemic. According to the Company, the Management Board repeatedly noted that a profit in the amount of approximately EUR 230m for financial year 2019 has been earmarked for future distribution independent of any potential dividend for financial year 2020 and shall be resolved upon by an upcoming general meeting in line with the Group's dividend policy and taking into consideration any further formal guidance or recommendations from the ECB or governmental bodies. On 15 December 2020, the ECB published a further recommendation on dividend distributions during the COVID-19 pandemic which foresees that until 30 September 2021 significant credit institutions should exercise extreme prudence when deciding on or paying out dividends or performing share buybacks aimed at remunerating shareholders. On 9 February 2021, the Company announced that the Management Board had resolved to distribute dividends in the aggregate amount of EUR 460m in 2021, corresponding to the earmarked profits in the total amount of EUR 372m for financial years 2019 and 2020 as well as a special dividend of EUR 88m for financial year 2020. To this end, the Management Board and the Supervisory Board propose to the EGM to distribute a dividend in the amount of EUR 0.4551 per share for financial year 2019, adding up to a maximum amount of EUR 40m, which corresponds to the maximum amount BAWAG Group is allowed to distribute at the time being pursuant to the recommendation of the ECB as of 15 December 2020. In the upcoming AGM 2021 to take place in the second half of 2021, the Management Board intends to propose the distribution of the remaining EUR 420m. The proposed dividend for financial year 2019 is covered by earnings but is not covered by free cash flow for financial year 2019. We note that information on free cash flow for financial year 2020 has not yet been provided by the Company. ECGS considers that in light of the current uncertainties and potential impact of the COVID-19 pandemic on the real economy, large banks such as BAWAG Group should generally refrain from paying any dividend at this stage. Furthermore, due to the fact that the dividend is not covered by free cash flow for a second consecutive time, we consider the payment of a dividend, albeit significantly decreased compared to the dividend paid for financial year 2018, inappropriate at this time. Finally, we question the need to make fully use of the limited leeway provided by the ECB on dividend distributions at this stage and not to wait with a decision on the dividend payment for financial year 2019 until the upcoming AGM later in 2021. We therefore recommend to oppose the dividend proposal.