Erste expects BCR to pay its own restructuring bill

The situation of the non-performing loans in BCR”s portfolio looks “somewhat better” than Erste Bank had estimated, Andreas Treichl, chairman of the Austrian group, said in Vienna on Friday during the presentation of the financial results for the first quarter. “We will not provide any details prior to the completion of the transaction. What I can say, however, is that the situation looks somewhat better than we expected after the due diligence,” Treichl said. He reiterated that Erste Bank believed 100 million-euro provisions had to be set up. BCR last year registered a provision-related net loss of 17.6 million euros. As for the financial implications of BCR”s integration into the group, Andreas Treichl stated that in the worst-case scenario, the integration would contribute nothing to the consolidated profit for 2006, considering all the predictable restructuring expenses. “The most pessimistic scenario we are considering for this year is that BCR”s integration will not make a positive impact,” Treichl said. This means BCR”s profit should fully cover the restructuring and provision expenses, according to Erste”s estimates. Erste Bank anticipates net profit to go up by over 20% in 2006, excluding the effects of the consolidation process the acquisition of BCR entails. The Austrian group posted nearly 240 million euros in net profit in the first quarter of this year, an increase of 49.5% on the corresponding period of 2005, while assets reached 158.8 billion euros, 4% higher than at the end of last year. ZF