Investor Presentation July 2020
EAA at a Glance ▲ German Federal Wind-down Agency established by the FMSA ▲ EAA’s stakeholders are irrevocably obligated to offset all losses without undue delay ▲ Public mandate based on the legislation on Financial Market Stabilisation ▲ Wind-down of the assumed portfolio to about 31 bn EUR from around 200 bn EUR ▲ Frequent issuer of benchmark bonds in USD and EUR ▲ EAA’s risk weighting is derived from that of the State of NRW (see: https://www.eba.europa.eu )
Legal Statement ▲ Agency under Federal Law EAA is a structurally and financially independent public law agency with partial legal capacity operating under the umbrella of the Federal Agency for Financial Market Stabilisation (FMSA). EAA was established by the FMSA as a Federal Winding-up Agency in accordance with Article 8a of the Stabilisation Fund Act (StFG; formerly known as FMStFG). ▲ Not defined as a bank EAA is not a credit institution as defined by the German Banking Act (KWG) nor does it conduct business that requires license pursuant to EU Directive 2006/48/EC. EAA is supervised by the German Federal Financial Supervisory Authority (BaFin) only with respect to applicable regulations according to KWG ▲ Funding restriction As a consequence of the non-bank status EAA‘s funding is achieved solely by Institutional Investors, hence not by receiving deposits or other repayable funds from the public.
Legal Framework FMS („SoFFin“) EAA‘s public mandate: Financial Market Stabilisation Fund to stabilise the financial market FMSA Federal Agency for Financial Market Stabilisation Winding-up Agency Erste Abwicklungsanstalt Referring to StFG 1 sec. 8a (1), upon application the (‘ First Winding-up Agency ’) FMSA could establish public-law institutions, to which risk positions as well as ‘not strategically required’ � Winding-up agency under business divisions could be transferred for the German federal law (StFG 1 ) purpose of liquidation. � Established in December 2009 EAA has been established by the FMSA on application by WestLB to assume a portfolio of risk positions and � Portfolio transfer in 2009, non-strategic businesses for the purpose of winding- 2010 and 2012 up these positions. 1 StFG: Stabilisation Fund Act; formerly known as Financial Market Stabilisation Fund Act FMStFG 4
Business Volume as of 31.12.2019 ▲ Asset transfer and accounting in accordance with German Commercial Code (HGB) ▲ Total assets according to HGB are 37.8 bn EUR. ▲ Including contingent liabilities of approx. 1.8 bn EUR and other liabilities of approx. 0.2 bn EUR the total business volume amounts to 39.8 bn EUR. Portfolio development – business volume in bn EUR 160 2nd Transfer 140 120 100 80 60 40 20 0 Dec 10 Dec 11 Dec 12 Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Dec 18 Dec 19
Portfolio Structure as of 31.12.2019 (in bn EUR) 31. Dez 18 9,1 ▲ EAA has assumed a highly diversified portfolio. 7,1 7,3 31. Dez 19 6,0 A substantial amount of USD-denominated assets 1,7 1,4 0,3 0,2 instigates generic USD funding . EMEA Germany Americas APAC ▲ Approximately 69% of EAA’s assets of the investment book 12,5 10,3 have investment grade. 3,6 2,6 1,5 1,4 0,6 0,5 Investment Non-investment Special rating not rated grade grade ▲ The segmentation of EAA’s investment book leads to about Equity/Mezzanine; 0,1 20 clusters by products or industries. A total size of roughly Corporates; 0,8 Structured 15.8 bn EUR comprises assets on balance, contingent Securities; 6,1 Public Finance & FI; 4,1 liabilities and loan commitments as well as a look-trough on exposures held by EAA’s subsidiaries. Together with the Structured trading book’s market value of approx. 15.4 bn EUR, the Products; 1,3 Real Assets; 2,6 combined portfolio of EAA adds up to about 31 bn EUR. Loans & investments; advances to 1,1 securities; 5,4 banks; 5,7 ▲ EAA’s refinancing relates only to the total assets of the Loans & balance sheet but again these need to be scaled down by advances to customers; 8,3 the market value of the trading book as these positions are nearly balanced on both sides of EAA’s balance sheet. trading book Cash reserve; assets; 15,4 1,8
Duty to Offset Losses Pursuant to StFG 1 sec. 8a para. 4 (1) ff. in conjunction with EAA‘s charter sec. 7 (see: www.aa1.de) EAA's stakeholders and the SoFFin are obligated to provide EAA with such amounts at such times as are necessary in order to ensure that EAA is always in a position to meet its due liabilities on first demand. The proportional amounts per guarantor are defined by EAA’s charter. up to EAA Charter Section 7, para. 1-4 9.52bn EUR on first Insolvency-remote Investor by the guarantee demand unlimited mechanism Charter Section 7, para. 5 Details of the duty to offset losses is regulated in Section 7 of the Charter of EAA. For losses exceeding the agreed proportional liabilities of all stakeholders, the State and the SoFFin will agree upon the apportionment based on the StFG 1 . 1 StFG: Stabilisation Fund Act; formerly known as Financial Market Stabilisation Fund Act FMStFG
EAA in the Capital Market ▲ EAA‘s Issuer Credit Ratings are the same as for the State of NRW Moody‘s Aa1 / P1 Standard & Poor's AA / A-1+ September 2019: upgrade from AA- Fitch AAA / F1+ ▲ EAA‘s risk weighting may be determined alike that of the State of NRW. EAA has been included on EBA‘s list for public sector entities treated alike their governments. ▲ Frequent issuance under an EMTN programme ▲ Benchmark-issues: minimum volume of 1 bn EUR or USD, no taps, fixed interest rates ▲ Rating of the Debt Issuance Programme and the notes thereunder by Moody‘s and Fitch ▲ Commercial Paper for liquidity management in EUR, USD, GBP. ▲ ECP and USCP with maturities up to 12 month ▲ Rating of the Global Commercial Paper Programme by Moody‘s, Fitch and Standard & Poor‘s
Issuance as per 31.03.2020 Tenors outstanding (in bn EUR) ▲ EAA‘s outstanding securities are composed of 0,5 0,2 0,7 1-3 Y transferred bonds issued by the former WestLB 4-7 Y and own issuance by EAA. 9,0 8-10 Y > 10 Y Currencies outstanding (in bn) ▲ EAA‘s assumed annual volume of term funding amounts to an equivalent of 3 bn EUR. EUR 5,4 5,5 USD ▲ Placements in the capital market (ex CP) Average Investor Base ▲ 2018: 1 bn EUR and 2.25 bn USD ▲ 2019: 1 bn EUR and 2.25 bn USD 70% 60% USD ▲ 2020 (YTD): 1.25 bn USD 3Y MS +10bp 30% EUR 20% 10% 10% Official Asset- Banks Institutions managers
Disclaimer and Contact Information This presentation is intended as information only and does not constitute investment advice or financial analysis, and as such does not comply with legal requirements regarding impartiality of financial analyses. This presentation is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from EAA and that will contain detailed information about EAA and its management, as well as financial information. For more information about the EAA www.aa1.de please visit our website Please address questions relating to Erste Abwicklungsanstalt EAA’s funding to Investor Relations / Treasury 0049-211-826 7913 holger.dohra@aa1.de
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