Erste Group Bank - AGM 10 November 2020
General: The AGM is to be held in the form of a virtual AGM 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.
Item 2: On 15 October 2020, the Management Board and the Supervisory Board resolved to adjust the proposal for the appropriation of net profits of the financial year 2019 due to the economic effects of the COVID-19 pandemic. The Boards are proposing a dividend of EUR 0.75 per share (decreased by 46.43% from EUR 1.40) which corresponds to a payout ratio of 23.22% per share (EPS: EUR 3.23). According to the Company, in deciding the amount of the dividend payout the Management Board and the Supervisory Board carefully weighed all stakeholder interests in light of the current business environment, the bank's current and expected profitability and the bank's strong capital position. The initial proposal provided for the payment of a dividend of EUR 1.50 per share. The payment is scheduled for 15 February 2021 and is conditional upon regulators adjusting their current recommendation to refrain from distributions to shareholders and no other legal restrictions being in force prohibiting such distributions as of 8 February 2021. The dividend is covered by earnings but is not covered by free cash flow for a second consecutive year. 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 Erste Group Bank 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, we consider the payment of a dividend, albeit significantly decreased compared to the previous year, inappropriate at this time and therefore recommend to oppose the dividend proposal.
Item 6.3: We recommend to oppose the election of Friedrich Santner to the Supervisory Board due to concerns over aggregate time commitments.
Item 8: The Management Board and the Supervisory Board propose to amend various aspects of Section 19 of the Company's Articles of Association in a bundled resolution which is not considered as best practice by ECGS. As parts of the proposed amendments are considered as being detrimental to shareholders we recommend to oppose the whole agenda item.
Erste Group is a financial services provider based in Austria. As of Dec 31 2015, Co.'s total assets amounted to Euro199,743 million and the number of customers was approximately 16.5 million. Co.'s key business is the retail business, covering the entire spectrum from lending, deposit and investment products to current accounts and credit cards. In addition to providing financial services to private individuals, Co.'s core activities also include advisory services and support for corporate clients in financing, investment and access to international capital markets, public sector funding and interbank market operations.
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