Bond Grencke 5.375% ( XS2087647645 ) in EUR

Issuer Grencke
Market price refresh price now   94 %  ▼ 
Country  Germany
ISIN code  XS2087647645 ( in EUR )
Interest rate 5.375% per year ( payment 1 time a year)
Maturity Perpetual



Prospectus brochure of the bond Grenke XS2087647645 en EUR 5.375%, maturity Perpetual


Minimal amount /
Total amount /
Next Coupon 31/03/2026 ( In 272 days )
Detailed description Grenke provides leasing and financing solutions for IT equipment, primarily to small and medium-sized enterprises (SMEs).

Grenke's perpetual bond (XS2087647645), issued in Germany, currently trades at 81.94% of its face value in EUR, offering a 5.375% coupon rate with annual payments.







Prospectus dated 29 November 2019



GRENKE AG
(Baden-Baden, Federal Republic of Germany)
Perpetual Non-cumulative Fixed to Reset Rate Additional Tier 1 Notes

GRENKE AG ("GRENKE AG" or the "Issuer") will issue unsecured Perpetual Non-cumulative Fixed to Reset Rate Additional Tier 1 Notes (the
"Additional Tier 1 Notes") with an aggregate principal amount of EUR 75,000,000 (the "Aggregate Principal Amount") on 5 December 2019
(the "Issue Date") at an issue price of 100 per cent. of the Aggregate Principal Amount (plus accrued interest). The Additional Tier 1 Notes will
be issued in bearer form in denominations of EUR 200,000 (the "Principal Amount").
The Additional Tier 1 Notes wil bear interest from and including the Issue Date to but excluding 31 March 2026 (the "First Reset Date") at a
fixed rate of 5.375 per cent. per annum (the "Initial Interest"), payable annually in arrears on 31 March of each year, commencing on 31 March
2020 and ending on the First Reset Date (each an "Initial Interest Payment Date"). Unless previously redeemed, the interest of the Additional
Tier 1 Notes wil be reset on the First Reset Date and at 5 year intervals thereafter (each a "Reset Date"). On each Reset Date, the interest wil
be determined on the basis of the then prevailing 5 year EUR swap rate plus the initial credit spread (each a "Reset Interest" and together with
the Initial Interest the "Interest") in accordance with § 3 (2) (b) of the Terms and Conditions of the Additional Tier 1 Notes (the "Terms and
Conditions"). Each Reset Interest is payable from and including the Reset Date to but excluding the fol owing Reset Date. It is payable annual y
in arrears on 31 March of each year, commencing on 31 March 2027 (each a "Reset Interest Payment Date" and together with the Initial
Interest Payment Date the "Interest Payment Date").
The Issuer, at its sole discretion, is entitled to cancel payments of Interest on any Interest Payment Date. In addition, Interest wil not accrue, in
whole or in part, on any Interest Payment Date to the extent set forth in § 3 (6) (a) and (b) of the Terms and Conditions. Interest payments are
non-cumulative, i.e. Interest payments wil not be increased in order to compensate shortfalls in preceding Interest payments. Furthermore, since
the holders of the Additional Tier 1 Notes (each a "Holder") have no enforceable right to Interest payments, a shortfal in Interest payments does
not qualify as an event of default.
The Additional Tier 1 Notes bear Interest on the Aggregate Principal Amount of the Additional Tier 1 Notes as amended from time to time. The
Aggregate Principal Amount may be reduced as a result of a write-down. A write-down occurs if the Common Equity Tier 1 capital ratio of the
Issuer and its consolidated subsidiaries and structured entities pursuant to International Financial Reporting Standards as adopted by the
European Union (the "GRENKE Group") fal s below 5.125 per cent. (the "Trigger Event"). In this case, the redemption amount and the Principal
Amount of the Additional Tier 1 Notes wil automatically be reduced by the amount which is required to fully restore GRENKE Group's Common
Equity Tier 1 capital ratio. It does not exceed the Aggregate Principal Amount that is outstanding at the time of the occurrence of the Trigger
Event. The write-down procedure is more ful y described in § 5 (8) (a) of the Terms and Conditions. Once the Additional Tier 1 Notes have been
written down, the Issuer may, in its discretion, write-up the redemption amount and the Principal Amount of the Additional Tier 1 Notes to the
Aggregate Principal Amount pursuant to § 5 (8) (b) of the Terms and Conditions.
The Additional Tier 1 Notes have no final maturity date. The Holders are not entitled to demand redemption of the securities. However, the
Issuer may redeem the Additional Tier 1 Notes with effect as of the First Reset Date and any Reset Interest Payment Date thereafter in
accordance with § 5 (4) of the Terms and Conditions. Generally, any preceding write-down of the Aggregate Principal Amount of the Additional
Tier 1 Notes must have been compensated by a subsequent write-up prior to redemption unless the Holders accept that the Issuer redeems the
Additional Tier 1 Notes at a reduced Aggregate Principal Amount. The Issuer may furthermore redeem the Additional Tier 1 Notes for regulatory
or tax reasons with a notice period of not less than 30 days in accordance with § 5 (2) and (3) of the Terms and Conditions. In any case,
redemption requires consent by the competent supervisory authority.
The Additional Tier 1 Notes are subordinated securities. In the event of the dissolution, liquidation or insolvency of the Issuer or the
commencement of insolvency proceedings against the assets of the Issuer or any other public or private proceedings serving to wind up and/or
avert the insolvency of the Issuer, the obligations under the Additional Tier 1 Notes shall be fully subordinated to (i) the claims of unsubordinated
creditors of the Issuer, (i ) the claims specified in § 39(1) of the German Insolvency Code, (i i) the claims under Tier 2 Instruments pursuant to
Article 62 of the CRR (as defined below in the section "Risk factors ­ Risk Factors regarding the Additional Tier 1 Notes"), (iv) the claims of
subordinated creditors of the Issuer which do not rank pari passu with, or junior to, the claims under the Additional Tier 1 Notes, and (v) the
claims under other instruments which pursuant to their terms or mandatory provisions of law rank pari passu with, or senior to, Tier 2
instruments. The Additional Tier 1 Notes rank pari passu among themselves and among any other claims which are equally subordinated to al
of the claims mentioned in the foregoing sentence.
This Prospectus has been approved by the Commission de Surveillance du Secteur Financier (the "Commission") in its capacity as competent
authority under Regulation (EU) 2017/1129 of the European Parliament and the Council of 14 June 2017 on the prospectus to be published
when securities are offered to the public or admitted to trading, as amended (the "Prospectus Regulation") (the "Prospectus"). This
Prospectus constitutes a prospectus within the meaning of Article 6 of the Prospectus Regulation and wil be published together with al
documents incorporated by reference in electronic form on the website of the Luxembourg Stock Exchange (www.bourse.lu) and on the website
of GRENKE Group (www.grenke.de). Application has been made to list the Additional Tier 1 Notes on the official list of the Luxembourg Stock
Exchange and to admit them to trading on the regulated market "Bourse de Luxembourg", which is a regulated market for the purposes of the
Directive 2014/65/EU on markets in financial instruments, as amended (the "Regulated Market"). By approving this prospectus, the
Commission does not give any undertaking as to the economic and financial soundness of the operation or the quality or solvency of the Issuer
in accordance with Article 6 (4) of the Luxembourg act relating to prospectuses for securities dated July 16, 2019 (Loi du 16 juillet 2019 relative
aux prospectus pour valeurs mobilières et portant mise en oeuvre du règlement (UE) 2017/1129 - the "Luxembourg Law"). The Commission
only approves this Prospectus as meeting the standards of completeness, comprehensibility and consistency imposed by the Prospectus
Regulation. Such approval should not be considered as an endorsement of the issuer or of the quality of the Additional Tier 1 Notes that are the
subject of this Prospectus. Investors should make their own assessment as to the suitability of investing in the Additional Tier 1 Notes.
The Additional Tier 1 Notes have been assigned the following securities codes: ISIN XS2087647645, Common Code 208764764, WKN A255D1.
The Additional Tier 1 Notes are expected to be rated with a rating of BB- by Standard & Poor's Credit Market Services Europe Limited.
The Additional Tier 1 Notes are not intended to be sold and should not be sold to retail clients in the European Economic Area
("EEA"), as defined in the rules set out in the Product Intervention (Contingent Convertible Instruments and Mutual Society Shares)
Instrument 2015 (as amended or replaced from time to time) other than in circumstances that do not and wil not give rise to a
contravention of those rules by any person. Prospective investors are referred to the section headed "Restrictions on marketing and
sales to retail investors" on page 2 of this Prospectus for further information.
Structuring Advisers to the Issuer / Bookrunners
Deutsche Bank

HSBC






IMPORTANT NOTICE
Restrictions on marketing and sales to retail investors
The Additional Tier 1 Notes described in this Prospectus are complex financial instruments and are not a
suitable or appropriate investment for al investors. In some jurisdictions, regulatory authorities have adopted or
published laws, regulations or guidance with respect to the offer or sale of securities such as the Additional Tier
1 Notes to retail investors.
In particular, in June 2015, the U.K. Financial Conduct Authority (the "FCA") published the Product Intervention
(Contingent Convertible Instruments and Mutual Society Shares) Instrument 2015 (the "PI Instrument").
In addition, (i) on 1 January 2018, the provisions of Regulation (EU) No. 1286/2014 on key information
documents for packaged and retail and insurance-based investment products ("PRIIPs") became directly
applicable in all European Economic Area ("EEA") member states and (ii) the Markets in Financial Instruments
Directive 2014/65/EU (as amended) ("MiFID I ") was required to be implemented in EEA member states by
3 January 2018. Together, the PI Instrument, PRIIPs and MiFID II are referred to as the "Regulations".
The Regulations set out various obligations in relation to (i) the manufacture and distribution of financial
instruments and (ii) the offering, sale and distribution of packaged retail and insurance-based investment
products and certain contingent write down or convertible securities, such as the Additional Tier 1 Notes.
Potential investors in the Additional Tier 1 Notes should inform themselves of, and comply with, any applicable
laws, regulations or regulatory guidance with respect to any resale of the Additional Tier 1 Notes (or any
beneficial interests therein) including the Regulations.
Each Manager (as defined below) is required to comply with some or al of the Regulations. By
accessing the Prospectus and/or purchasing, or making or accepting an offer to purchase, any
Additional Tier 1 Notes (or a beneficial interest in such Additional Tier 1 Notes) from the Issuer and/or
the Managers, each prospective investor represents, warrants, agrees with and undertakes to the Issuer
and the Managers that:
1.
it is not a retail client in the EEA (as defined in MiFID II);
2.
whether or not it is subject to the Regulations, it will not:

(A)
sell or offer the Additional Tier 1 Notes (or any beneficial interest therein) to retail clients in
the EEA (as defined in MiFID II); or

(B)
communicate (including the distribution of the Prospectus) or approve an invitation or
inducement to participate in, acquire or underwrite the Additional Tier 1 Notes (or any
beneficial interests therein) where that invitation or inducement is addressed to or
disseminated in such a way that it is likely to be received by a retail client in the EEA (in
each case within the meaning of MiFID II).
In selling or offering the Additional Tier 1 Notes or making or approving communications relating to the
Additional Tier 1 Notes each prospective investor may not rely on the limited exemptions set out in the
PI Instrument;
3.
it will at all times comply with all applicable laws, regulations and regulatory guidance (whether
inside or outside the EEA) relating to the promotion, offering, distribution and/or sale of the
Additional Tier 1 Notes (or any beneficial interests therein), including (without limitation) the
Regulations (as applicable) and any other applicable laws, regulations and regulatory guidance
relating to determining the appropriateness and/or suitability of an investment in the Additional
Tier 1 Notes (or any beneficial interests therein) by investors in any relevant jurisdiction.
Each prospective investor further acknowledgse that:
(i)
the identified target market for the Additional Tier 1 Notes (for the purposes of the product governance
obligations in MiFID II) is eligible counterparties and professional clients (each as defined in MiFID II);
(ii)
all channels for distribution to eligible counterparties and professional clients are appropriate; and
(iii)
no key information document ("KID") under PRIIPs has been prepared and therefore offering or selling
the Additional Tier 1 Notes or otherwise making them available to any retail investor in the EEA may be
unlawful under PRIIPs.
MiFID I product governance / Professional investors and ECPs only target market ­ Solely for the
purposes of each manufacturer's product approval process, the target market assessment in respect of the
2



Additional Tier 1 Notes has led to the conclusion that: (i) the target market for the Additional Tier 1 Notes is
eligible counterparties and professional clients, each as defined in Directive 2014/65/EU (as amended, "MiFID
II"), (ii) al channels for distribution to eligible counterparties and professional clients are appropriate. Any person
subsequently offering, selling or recommending the Additional Tier 1 Notes (a "distributor") should take into
consideration the manufacturers' target market assessment; however, a distributor subject to MiFID II is
responsible for undertaking its own target market assessment in respect of the Additional Tier 1 Notes (by either
adopting or refining the manufacturers' target market assessment) and determining appropriate distribution
channels.
PROHIBITION OF SALES TO EEA RETAIL INVESTORS ­ The Additional Tier 1 Notes are not intended to be
offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any
retail investor in the European Economic Area ("EEA"). For these purposes, a retail investor means a person
who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of MiFID II; or (i ) a customer
within the meaning of Directive 2016/97/EU (as amended, the "Insurance Distribution Directive"), where that
customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (i i) not a
qualified investor as defined in the Prospectus Regulation. Consequently, no key information document required
by Regulation (EU) No 1286/2014 (as amended, the "PRIIPs Regulation") for offering or selling the Additional
Tier 1 Notes or otherwise making them available to retail investors in the EEA has been prepared and, therefore,
offering or selling the Additional Tier 1 Notes or otherwise making them available to any retail investor in the
EEA may be unlawful under the PRIIPs Regulation.

3



RESPONSIBILITY STATEMENT
GRENKE AG ("GRENKE AG" or the "Issuer", and together with its consolidated subsidiaries and
structured entities pursuant to International Financial Reporting Standards as adopted by the European
Union the "GRENKE Group") with its registered office in Baden-Baden, Germany, accepts responsibility
for the information given in this Prospectus including the documents incorporated by reference herein.
The Issuer hereby declares that the information contained in this Prospectus for which it is responsible is,
to the best of its knowledge and belief, in accordance with the facts and that this Prospectus makes no
omission likely to affect its import.
NOTICE
This Prospectus should be read and understood in conjunction with any supplement hereto and with any
other documents incorporated herein by reference.
No person is authorised to give any information or to make any representations other than those contained
in this Prospectus and, if given or made, such information or representations must not be relied upon as
having been authorised by or on behalf of the Issuer or the Bookrunners set forth on the cover page (the
"Managers"). The Managers have not independently verified the Prospectus and does not assume any
responsibility for the accuracy of the information and statements contained in this Prospectus and no
express or implied representations are made by the Managers or its affiliates as to the accuracy and
completeness of the information and statements herein. Neither the delivery of this Prospectus nor any
sale made hereunder shall, under any circumstances, create any implication that there has been no
change in the financial situation of the Issuer or GRENKE Group since the date of this Prospectus, or, as
the case may be, the date on which this Prospectus has been most recently supplemented, or that the
information herein is correct at any time since the date of this Prospectus or, as the case may be, the date
on which this Prospectus has been most recently supplemented.
Neither the Managers nor any other person mentioned in this Prospectus, except for the Issuer, is
responsible for the information contained in this Prospectus or any other document incorporated herein by
reference, and accordingly, and to the extent permitted by the laws of any relevant jurisdiction, none of
these persons makes any representation or warranty or accepts any responsibility as to the accuracy and
completeness of the information contained in any of these documents. The Managers have not
independently verified any such information and accepts no responsibility for the accuracy thereof.
The distribution of this Prospectus and the offering, sale and delivery of Additional Tier 1 Notes in certain
jurisdictions may be restricted by law. Persons into whose possession this Prospectus comes are required
to inform themselves about and observe any such restrictions. For a description of the restrictions
applicable in the European Economic Area in general, the United States of America and the United
Kingdom see "Important Notice" and "Selling Restrictions". In particular, the Additional Tier 1 Notes have
not been and wil not be registered under the United States Securities Act of 1933, as amended, and are
subject to tax law requirements of the United States of America; subject to certain exceptions, Additional
Tier 1 Notes may not be offered, sold or delivered within the United States of America or to U.S. persons.
The language of the Prospectus is English. For the purpose of issuing the Additional Tier 1 Notes under
German law the German language version of the Terms and Conditions shal be controlling and legally
binding.
The securities described herein are complex financial instruments and are not a suitable or appropriate
investment for al investors and should not be promoted, offered, distributed and/or sold to investors for
whom they are not appropriate. Any person who might promote, offer, distribute or sell the securities
described herein is hereby notified by the Issuer and the Managers that it shall comply at all times with al
applicable laws, regulations and regulatory guidance (whether inside or outside the European Economic
Area) relating to the promotion, offering, distribution and/or sale of the securities described herein
(including without limitation the Prospectus Regulation) and any other applicable laws, regulations and
regulatory guidance relating to determining the appropriateness and/or suitability of an investment in the
securities described herein by investors in any relevant jurisdiction.
Notice of Product Classification by the Issuer under Section 309B(1)(c) of the Securities and
Futures Act (Chapter 289) of Singapore (the "SFA") ­ The Issuer has determined, and hereby notifies
all relevant persons (as defined in Section 309A(1) of the SFA) that the Additional Tier 1 Notes are
classified as prescribed capital markets products (as defined in the Securities and Futures (Capital
Markets Products) Regulations 2018 of Singapore) and Excluded Investment Products (as defined in MAS
Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on
4



Recommendations on Investment Products).
The Additional Tier 1 Notes may only be offered and sold in Hong Kong to professional investors, as
defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong (the "SFO") and any rules made
under the SFO.
Interest amounts payable under the Additional Tier 1 Notes wil , after the First Reset Date (as defined in
the Terms and Conditions) be calculated by reference to the 5 year EUR swap rate which is provided by
the European Money Markets Institute (EMMI). As at the date of this Prospectus, EMMI appears on the
register of administrators and benchmarks established and maintained by the European Securities and
Markets Authority (ESMA) pursuant to Article 36 of the Benchmarks Regulation (Regulation (EU)
2016/1011).
This Prospectus may only be used for the purpose for which it has been published.
This Prospectus may not be used for the purpose of an offer or solicitation by anyone in any
jurisdiction in which such offer or solicitation is not authorised or to any person to whom it is
unlawful to make such an offer or solicitation.
This Prospectus does not constitute an offer or an invitation to subscribe for or purchase any
Additional Tier 1 Notes and should not be considered as a recommendation by the Issuer or the
Managers that any recipient of the Prospectus should subscribe or purchase any Additional Tier 1
Notes. Each recipient of the Prospectus shall be taken to have made its own investigation and
appraisal of the condition (financial and otherwise) of the Issuer.
The validity of the prospectus will expire 12 months after its approval as of the date hereof. The obligation
to supplement a prospectus in the event of significant new factors, material mistakes or material
inaccuracies does not apply when a prospectus is no longer valid.
The information on any website included in the Prospectus, except for the website www.bourse.lu in the
context of the documents incorporated by reference, do not form part of the Prospectus and has not been
scrutinised or approved by the Commission.
FORWARD-LOOKING STATEMENTS
This Prospectus contains certain forward-looking statements. A forward-looking statement is a statement
that does not relate to historical facts and events. They are based on analyses or forecasts of future
results and estimates of amounts not yet determinable or foreseeable. These forward-looking statements
are identified by the use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect",
"intend", "may", "plan", "predict", "project", "will" and similar terms and phrases, including references and
assumptions. This applies, in particular, to statements in this Prospectus containing information on future
earning capacity, plans and expectations regarding GRENKE Group's business and management, its
growth and profitability, and general economic and regulatory conditions and other factors that affect it.
Forward-looking statements in this Prospectus are based on current estimates and assumptions that the
Issuer makes to the best of its present knowledge. These forward-looking statements are subject to risks,
uncertainties and other factors which could cause actual results, including GRENKE Group's financial
condition and results of operations, to differ materially from and be worse than results that have expressly
or implicitly been assumed or described in these forward-looking statements. GRENKE Group's business
is also subject to a number of risks and uncertainties that could cause a forward-looking statement,
estimate or prediction in this Prospectus to become inaccurate. Accordingly, investors are strongly advised
to read the fol owing sections of this Prospectus: "Risk Factors" and "General Information about GRENKE
AG and GRENKE Group". These sections include more detailed descriptions of factors that might have an
impact on GRENKE Group's business and the markets in which it operates.
In light of these risks, uncertainties and assumptions, future events described in this Prospectus may not
occur. In addition, neither the Issuer nor the Managers assume any obligation, except as required by law,
to update any forward-looking statement or to conform these forward-looking statements to actual events
or developments.

5




TABLE OF CONTENTS
Page

Risk Factors .............................................................................................................................................. 7
Risk Factors regarding the Additional Tier 1 Notes .................................................................................. 7
Risk Factors regarding GRENKE AG and GRENKE Group ..................................................................16
Terms and Conditions of the Additional Tier 1 Notes .............................................................................21
Interest Payments and Available Distributable Items of the Issuer ........................................................53
Available Distributable Items of GRENKE AG........................................................................................54
Potential write-down and Common Equity Tier 1 Capital Ratio of the Issuer ........................................56
GRENKE AG as Issuer ...........................................................................................................................58
General Information ................................................................................................................................58
History and Development of GRENKE AG .............................................................................................58
Investments ............................................................................................................................................58
Known Trends ........................................................................................................................................58
Business Overview and Principal Markets .............................................................................................58
Organisational Structure .........................................................................................................................59
Trend information ...................................................................................................................................61
Administrative, Management and Supervisory Bodies ...........................................................................61
Conflict of Interests .................................................................................................................................62
Control ing Persons ................................................................................................................................62
Historical Financial Information ..............................................................................................................62
Auditors...................................................................................................................................................62
Legal, Arbitration and Other Proceedings ..............................................................................................63
Significant Change in GRENKE AG's Financial Position .......................................................................63
Share Capital ..........................................................................................................................................63
Articles of Association ............................................................................................................................63
Rating .....................................................................................................................................................64
Taxation ..................................................................................................................................................65
Subscription and Sale of the Additional Tier 1 Notes .............................................................................69
Sel ing Restrictions .................................................................................................................................69
General Information ................................................................................................................................72
Authorisation ...........................................................................................................................................72
Use of Proceeds .....................................................................................................................................72
Listing and Admission to Trading ...........................................................................................................72
Clearing Systems ...................................................................................................................................72
Credit Rating ...........................................................................................................................................72
Documents available ..............................................................................................................................72
Documents Incorporated by Reference ..................................................................................................73
Comparative Table of Documents incorporated by Reference ..............................................................73
Availability of Incorporated Documents ..................................................................................................74
Names and Addresses ...........................................................................................................................75

6




RISK FACTORS
The following is a description of material risks that are specific to GRENKE AG and/or may affect
its ability to fulfil its obligations under the Additional Tier 1 Notes and that are material to the
Additional Tier 1 Notes in order to assess the market risk associated with these Additional Tier 1
Notes. Prospective investors should consider these risk factors before deciding whether to
purchase the Additional Tier 1 Notes.
Prospective investors should consider all information provided in this Prospectus and consult
with their own professional advisers (including their financial, accounting, legal and tax advisers)
if they consider it necessary. In addition, investors should be aware that the risks described may
combine and thus intensify one another.
Words and expressions defined in "Terms and Conditions" of the Additional Tier 1 Notes below
shall have the same meanings in this section.
RISK FACTORS REGARDING THE ADDITIONAL TIER 1 NOTES
The risk factors regarding the Additional Tier 1 Notes are presented in the fol owing categories depending
on their nature with the most material risk factor presented first in each category:
1.
Risks related to the nature of the Additional Tier 1 Notes
2.
Risks related to specific Terms and Conditions of the Additional Tier 1 Notes
3.
Risks related to the ranking of the Additional Tier 1 Notes
4.
Other related Risks
1.
Risks related to the nature of the Additional Tier 1 Notes
The Aggregate Nominal Amount of the Additional Tier 1 Notes is rather low. Therefore, an active
trading market for the Additional Tier 1 Notes is unlikely to develop.
The Additional Tier 1 Notes constitute a new issue of securities. Prior to this offering, there has been no
public market for the Additional Tier 1 Notes. Furthermore, the Aggregate Nominal Amount of the
Additional Tier 1 Notes is rather low. Although application has been made for the Additional Tier 1 Notes to
be listed on the official list of and to be admitted to trading on the Regulated Market of the Luxembourg
Stock Exchange, there can be no assurance that an active public market for the Additional Tier 1 Notes
wil develop, nor can there be an assurance about the ability of Holders to sel their Additional Tier 1 Notes
or the price at which Holders may be able to sel their Additional Tier 1 Notes. In fact, there is a high risk
that there wil be no liquidity at all in the secondary market.
Even if such a market develops, there remains a risk that the Additional Tier 1 Notes trade at prices which
are lower than the initial offering price. This depends on many factors, such as prevailing interest rates,
GRENKE Group's operating results, the market of similar securities, general economic conditions,
performance and prospects, as well as recommendations of securities analysts. The liquidity of, and the
trading market for, the Additional Tier 1 Notes may also be adversely affected by declines in the market for
debt securities in general. Such a decline may affect any liquidity and trading of the Additional Tier 1 Notes
independent of GRENKE Group's financial performance and prospects. If a market develops, the
Managers are under no obligation to maintain such a market. In an il iquid market, an investor might not be
able to sell the Additional Tier 1 Notes at al or at any time at fair market prices. The possibility to sel the
Additional Tier 1 Notes might additionally be restricted due to country-specific reasons. Furthermore, there
can be no assurance that a market for the Additional Tier 1 Notes wil not be subject to disruptions. Any
such disruptions may have an adverse effect on the Holders.
Resettable fixed rate securities have a market risk.
A holder of fixed rate securities is particularly exposed to the risk that the price of such securities falls as a
result of changes in the market interest rate. While the nominal interest rate of the Additional Tier 1 Notes
is fixed until the relevant First Reset Date and wil thereafter be reset every 5 years on the basis of the
Reference Rate plus the relevant margin as set out in § 3 (2) (a) of the Terms and Conditions, the
current interest rate on the capital market (the "market interest rate") typically changes on a daily basis.
7



These changes of the market interest rate result in changes of the price of the Additional Tier 1 Notes. If
the market interest rate increases, the price of the Additional Tier 1 Notes with a fixed interest rate would
typical y fal . If the market interest rate falls, the price of the fixed rate Additional Tier 1 Notes would
typical y increase. Potential investors should be aware that movements in these market interest rates can
adversely affect the market price of the Additional Tier 1 Notes and can lead to losses for Holders
seeking to sell the Additional Tier 1 Notes.
Risk of a change in market value.
The market value of the Additional Tier 1 Notes is influenced by a change in the creditworthiness (or the
perception thereof) of the Issuer and by the credit rating of the Issuer and a number of other factors
including, but not limited to, market interest, rate of return and certain market expectations with regard to
the Issuer making use of a right to cal the Additional Tier 1 Notes for redemption.
The value of the Additional Tier 1 Notes depends on a number of interacting factors. These include
economic and political events in Germany or elsewhere as well as scenarios which generally affect the
capital markets and the stock exchanges on which the Additional Tier 1 Notes are traded. The price at
which a Holder can sell the Additional Tier 1 Notes might be considerably below the issue price or the
purchase price paid by such Holder.
The credit rating of the Additional Tier 1 Notes may not reflect all associated risks.
The market value of the Additional Tier 1 Notes from time to time is likely to depend on the level of
credit rating assigned to the long-term debt of the Issuer. Rating agencies may change, suspend or
withdraw their ratings at short notice. A rating's change, suspension or withdrawal may affect the price
and the market value of the outstanding Additional Tier 1 Notes. Therefore, an investor may incur
financial disadvantages because he may not be able to sel the Additional Tier 1 Notes at a fair price.
One or more independent credit rating agencies may assign credit ratings to the Additional Tier 1 Notes.
The credit rating assigned to the Additional Tier 1 Notes may not reflect the potential impact of al risks
related to their structure, market, the factors discussed above and other circumstances that may affect
the market value of the Additional Tier 1 Notes. The trading price of the Additional Tier 1 Notes may be
adversely affected, if the ratings of the Additional Tier 1 Notes are lowered. In addition, Moody's, S&P or
any other rating agency may change its methodologies applied to rate securities with features similar to
the Additional Tier 1 Notes in the future. This may include the relationship between ratings assigned to
an issuer's senior securities and ratings assigned to securities with features similar to the Additional
Tier 1 Notes, sometimes cal ed "notching". If the rating agencies change their practices for rating such
securities in the future and the ratings of the Additional Tier 1 Notes are subsequently lowered, the
trading price of the Additional Tier 1 Notes may be adversely affected. A credit rating is not a
recommendation to buy, sel or hold Additional Tier 1 Notes and may be revised or withdrawn by the
relevant rating agency at any time.
Risk of the Additional Tier 1 Notes being written down or converted to equity by the resolution
authority.
The Additional Tier 1 Notes are relevant capital instruments within the meaning of Article 3 (2) no. 51 of
Regulation (EU) No 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing
uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms
in the framework of a Single Resolution Mechanism and a Single Resolution Fund ("SRM Regulation")
and § 2 (2) of the German Act of 10 December 2014 on the Recovery and Resolution of Credit Institutions
and Groups of Credit Institutions, as amended, (Gesetz zur Sanierung und Abwicklung von Instituten und
Finanzgruppen vom 10. Dezember 2014, in der jeweils gültigen Fassung, (Sanierungs- und
Abwicklungsgesetz ­ "SAG")) which are issued at the level of GRENKE AG, the parent undertaking of
GRENKE BANK AG, and intended to be recognized for the purposes of meeting own funds requirements
on a consolidated basis. Under Article 7 (3), sub-paragraph 1 item (f) SRM Regulation and § 65 (1) no. 2
SAG, the German Federal Agency for Financial Market Stabilisation (Bundesanstalt für
Finanzmarktstabilisierung ­ "FMSA")) has the power to write down or convert the Additional Tier 1 Notes,
in whole or in part, into shares of the Issuer where the conditions for resolution are met with respect to
GRENKE Group. Such conditions for resolution are met in accordance with §§ 65 (2), 62 (1) SAG if
GRENKE Group violates or is likely to violate regulatory requirements on a consolidated basis in a manner
justifying supervisory measures under § 45 (1) sentence 3 KWG, there is no reasonable prospect that
alternative private measures would prevent such existing or likely violation within a reasonable timeframe,
and such write-down or conversion is necessary in the public interest.
In this case the Holder of the Additional Tier 1 Notes might lose the entire or a substantial part of its
8



investment. Consequently, any amounts so written down in respect of the Additional Tier 1 Notes would be
irrevocably lost and the Holders would cease to have any claims thereunder, regardless whether or not
GRENKE Group's financial position is restored. Holders would have no claim against the Issuer in such a
case and there would be no obligation of the Issuer to make payments under the Additional Tier 1 Notes.
Other than in the event that GRENKE Group's Common Equity Tier 1 Capital Ratio falls below a certain
threshold, the Terms and Conditions do not contain a provision which requires them to be written down in
the event of "non-viability" or resolution of GRENKE Group.
Potential investors should consider the risk that they may lose al of their investment, including the nominal
amount plus any accrued interest if a write-down or conversion of the Additional Tier 1 Notes into shares
of the Issuer occurs. In addition, the statutory provisions al owing for resolution action in respect of
GRENKE Group may have a negative impact on the market value of the Additional Tier 1 Notes even prior
to non-viability or resolution. Potential investors should furthermore note that the provisions of the Terms
and Conditions relating to a write-up will not apply if the Additional Tier 1 Notes have been subject to a
write-down (as described above) or conversion.
2.
Risks related to specific Terms and Conditions of the Additional Tier 1 Notes
Payments of Interest under the Additional Tier 1 Notes may be cancelled at the Issuer's discretion.
Interest payments depend, among other things, on the Issuer's Available Distributable Items.
Interest payments are non-cumulative.
The Issuer has the option to cancel any payment of Interest on the Additional Tier 1 Notes by giving prior
notice to the Holders without undue delay and at the latest on the Interest Payment Date as set out in
§ 3 (6) of the Terms and Conditions. Interest payments may especially be cancelled to prevent the
occurrence of a Trigger Event (as defined in the Terms and Conditions).
In the event that payment of interest on the Additional Tier 1 Notes, together with any other Distributions
that are simultaneously planned or made or that have been made by the Issuer on other Tier 1
Instruments in the then current financial year of the Issuer, would exceed the Available Distributable Items,
provided, however, that for purposes of this determination the Available Distributable Items shall be
increased by an amount equal to the aggregate expense accounted for in respect of Distributions on Tier 1
Instruments (including the Additional Tier 1 Notes) when determining the profit which forms the basis of
the Available Distributable Items, Holders would receive no, or reduced, Interest payments on the relevant
Interest Payment Date. With the annual profit and any distributable reserves of GRENKE AG forming an
essential part of the Available Distributable Items, investors should also carefully review the risk factors
under "Risk factors regarding GRENKE AG and the GRENKE Group." since any change in the financial
prospects of the Issuer or its inherent profitability, in particular a reduction in the amount of profit or
distributable reserves on an unconsolidated basis, may have an adverse effect on the Issuer's ability to
make a payment in respect of the Additional Tier 1 Notes.
Any non-payment of Interest will likely have an adverse effect on the market price of the Additional Tier 1
Notes. In addition, as a result of this Issuer's option, the market price of the Additional Tier 1 Notes may be
more volatile than the market prices of other debt securities which do not grant this option to the Issuer.
Generally, the Additional Tier 1 Notes may be more sensitive to adverse changes in the Issuer's financial
condition.
Interest payments are non-cumulative. Therefore, if Interest payments are cancelled, the Holders wil not
receive any compensation for the cancel ed Interest payments at a later point in time. Moreover, the Issuer
is not prohibited from making payments on any instrument ranking senior to or pari passu with the
Additional Tier 1 Notes. Cancellation of Interest payments does not constitute a default of the Issuer or a
breach of any other obligations under the Additional Tier 1 Notes or for any other purpose.
"Available Distributable Items" means, with respect to any Interest payment, the distributable items as
defined in Article 4 (1) no. 128 of the Regulation (EU) no. 575/2013 of the European Parliament and the
Council of 26 June 2013 on prudential requirements for credit institutions and investment firms as
amended or replaced from time to time, in particular by Regulation (EU) 2019/876 of the European
Parliament and of the Council of 20 May 2019 and Regulation (EU) No 648/2012 ("CRR"), at the time of
the issuance of the Additional Tier 1 Notes, such term refers to the profit as of the end of the financial year
of the Issuer immediately preceding the relevant Interest Payment Date, for which audited annual financial
statements are available, plus any profits brought forward and reserves available for that purpose, before
distributions to holders of own funds instruments, less any losses brought forward and any profits which
are non-distributable pursuant to the applicable laws of the European Union or Germany or the Articles of
Association of the Issuer and any sums placed in non-distributable reserves in accordance with the
applicable laws of Germany or the Articles of Association of the Issuer, in each case with respect to the
9



specific category of own funds of the Additional Tier 1 Notes as AT1 Instruments to which the applicable
laws of the European Union or Germany or the Articles of Associations of the Issuer relate, provided that
the distributable items and the relevant profits, losses and reserves shall be determined on the basis of the
unconsolidated financial statements of the Issuer prepared in accordance with German commercial law
and not on the basis of its consolidated financial statements. For an overview of GRENKE AG's Available
Distributable Items for the preceding financial years see the section "Available Distributable Items of
GRENKE AG".
"Distribution" means any form of payment of dividends and interest.
"Tier 1 Instruments" means capital instruments which, according to the CRR, qualify as Common Equity
Tier 1 Instrument or AT1 Instruments.
"Common Equity Tier 1 Instrument" has the meaning given to it in the CRR and means any instrument
that fulfil s the conditions set out in Article 28 of the CRR.
"AT1 Instruments" mean any (directly or indirectly issued) capital instrument of the Issuer that qualifies as
additional tier 1 instrument pursuant to Article 52 CRR (including, but not limited to, any capital instrument
or other instrument that qualifies as additional tier 1 instrument pursuant to transitional provisions under
the CRR).
Interest payments may be excluded and cancelled for regulatory reasons.
The risk described in this section applies only if and to the extent that the relevant CRR provisions and the
relevant provisions under the German Banking Act apply to the Additional Tier 1 Notes issued by
GRENKE AG. Interest payments wil also be excluded if (and to the extent) the competent supervisory
authority instructs the Issuer to cancel an Interest payment or such Interest payment is prohibited by law or
administrative order on any Interest Payment Date.
The right of the competent supervisory authority under German law to issue an order to the Issuer to
cancel al or part of the Interest payments is stipulated in § 45 (2) and (3) of the German Banking Act (as
amended by the German law implementing CRD) (Kreditwesengesetz - "KWG"). Under the relevant
provisions, regulatory action can be taken in cases of inadequate own funds or inadequate liquidity. CRD
also contains capital buffer requirements that are in addition to the minimum capital requirement (and the
additional requirements under § 10 (3) or (4) KWG or § 45b (1) s. 2 KWG, if applicable) and are required
to be met with Common Equity Tier 1 Instruments. The respective CRD requirements have been
implemented into German law through sections 10c et seq. KWG which introduced various new capital
buffers. Those include (i) the capital conservation buffer (as implemented in Germany by § 10c KWG), (i )
the institution-specific counter-cyclical buffer (as implemented in Germany by § 10d KWG) and (iv) the
systemic risk buffer (as implemented in Germany by § 10e KWG). While the capital conservation buffer
wil , after a phase-in period, be in any case applicable to the Issuer, one or all of the other buffers may
additionally be established and be applicable to the Issuer. Al applicable buffers wil be aggregated in a
combined buffer (as implemented by § 10i KWG), applying a calculation specified in § 10i KWG. As per
31 December 2018, the aggregate capital ratio pursuant to Article 92 (2) b CRR amounted to 16.03
percent (previous 14.9 percent). A minimum total capital ratio of up to 11.75 percent was complied with in
the 2018 reporting year. In addition to the 8 percent under Article 92 CRR, this ratio also included the
capital conservation buffer and the countercyclical capital buffer. As of 30 September 2019, the minimum
total capital ratio was compiled as 11.73%, and included the capital conservation buffer, a countercyclical
capital buffer and a buffer requirement on account of the Supervisory Review and Evaluation Process
(SREP). If the Issuer does not meet such combined buffer requirement, the Issuer wil be restricted from
making Interest payments on the Additional Tier 1 Notes in certain circumstances (set out in § 10i KWG, to
be read in conjunction with § 37 of the German Solvency Regulation (Solvabilitätsverordnung - "SolvV"))
until the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht -
"BaFin") has approved a capital conservation plan in which the Issuer needs to explain how it can be
ensured that the Interest payments and certain other discretionary payments, including distributions on
Common Equity Tier 1 Instruments and variable compensation payments, do not exceed the maximum
distributable amount. The maximum distributable amount is determined in accordance with § 10 (1)
sentence 1 no. 5 (e) KWG in connection with § 37 SolvV for the combined capital buffer requirement in
accordance with § 10i KWG (currently transposing Article 141 (2) CRD into German law) which is to be
determined by the Issuer on the basis of GRENKE Group or of solo requirements, if applicable. In
particular, it is calculated as a percentage of the profits of the institution since the last distribution of profits
as further defined in § 37 (2) SolvV. The applicable percentage is scaled according to the extent of the
breach of the combined buffer requirement. As an example, if the scaling is in the bottom quartile of the
combined buffer requirement, no discretionary distributions wil be permitted to be paid. As a
consequence, in the event of breach of the combined buffer requirement it may be necessary to reduce
10