Bond Hypo Landesbank NÖ-Wien AG 3.8% ( XS1233130118 ) in NOK

Hypo Landesbank NÖ-Wien AG

100 % ⇌

Austria

XS1233130118 ( in NOK )

3.8% per year ( payment 1 time a year)

20/05/2030

Prospectus brochure of the bond HYPO NOE Landesbank für Niederösterreich und Wien AG XS1233130118 en NOK 3.8%, maturity 20/05/2030

1 000 000 NOK

200 000 000 NOK

21/05/2026 ( In 45 days )

HYPO NOE Landesbank für Niederösterreich und Wien AG is an Austrian regional bank primarily serving Lower Austria and Vienna, offering a range of financial services to private and corporate clients.

An analysis of the bond market reveals details concerning the debt instrument identified by ISIN XS1233130118, issued from Austria by HYPO NOE Landesbank für Niederösterreich und Wien AG, a prominent regional state bank based in Lower Austria and Vienna, which is currently quoted at 100% of its par value, denominated in Norwegian Krone (NOK), carries an annual coupon rate of 3.8%, represents a total issue size of 200,000,000 NOK with a minimum subscription lot of 1,000,000 NOK, and is set to mature on May 20, 2030.

HYPO NOE Landesbank für Niederösterreich und Wien AG
(incorporated as a joint-stock corporation (Aktiengesellschaft) in the Republic of Austria)
Euro 7,500,000,000
Debt Issuance Programme
for the issue of the Notes (including Pfandbriefe and fundierte
Bankschuldverschreibungen) (the "Programme")
Under this Programme, HYPO NOE Landesbank für Niederösterreich und Wien AG ("HYPO
NOE" or the "Issuer"), subject to compliance with all relevant laws, regulations and directives,
may issue notes (the "Notes", which term shal include references to Pfandbriefe governed by
Austrian law and fundierte Bankschuldverschreibungen governed by Austrian law where the
context so permits) as further specified in the relevant final terms (the "Final Terms") in the
German and/or English language.
This base prospectus dated 12 June 2020, as supplemented from time to time (the
"Prospectus") constitutes a base prospectus for the purposes of Article 8 of the Regulation (EU)
2017/1129, as amended (the "Prospectus Regulation") and has been drawn up in accordance
with Annexes 6, 14, 15, 22 and 28 of the Commission Delegated Regulation (EU) 2019/980, as
amended. This Prospectus has been approved by the Commission de Surveil ance du Secteur
Financier (the "CSSF") of the Grand-Duchy of Luxembourg in its capacity as competent authority
pursuant to Article 20 of the Prospectus Regulation. The CSSF 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
and the quality of the Notes that are the subject of this Prospectus. Investors should make their
own assessment as to the suitability of investing in the Notes.
The Issuer has requested the CSSF to provide to the competent authorities (i) in other host
member states within the European Economic Area ("EEA"), including the Republic of Austria,
the Federal Republic of Germany and the Netherlands, as well as (ii) in the United Kingdom
("UK") with a certificate of approval attesting that this Prospectus has been drawn up in
accordance with the Prospectus Regulation.
The Notes have not been and wil not be registered under the U.S. Securities Act of 1933, as
amended (the "Securities Act"), or with any securities regulatory authority of any state or other
jurisdiction of the United States, and are subject to U.S. tax law requirements. Subject to certain
exceptions, the Notes may not be offered, sold or delivered within the United States or to, or for
the account or benefit of, U.S. Persons (as defined in Regulation S under the Securities Act).
Prospective investors should have regard to the factors described under the section headed "Risk
Factors" in this Prospectus. This Prospectus does not describe all of the risks of an investment in
the Notes, but the Issuer believes that al material risks relating to an investment in the Notes
have been described.
This Prospectus is valid for 12 months after its approval. The obligation by the Issuer to
supplement this Prospectus in the event of significant new factors, material mistakes or
material inaccuracies does not apply when this Prospectus is no longer valid.
Arranger and Dealer
BNP PARIBAS

TABLE OF CONTENTS

TABLE OF CONTENTS .......................................................................................................................... 2
RISK FACTORS ...................................................................................................................................... 3
Risk Factors relating to HYPO NOE..................................................................................................... 3
Risk Factors relating to the Notes ..................................................................................................... 11
RESPONSIBILITY STATEMENT .......................................................................................................... 27
IMPORTANT NOTICE ........................................................................................................................... 27
THIRD PARTY INFORMATION ............................................................................................................ 29
GENERAL DESCRIPTION OF THE PROGRAMME AND THE NOTES ............................................. 30
General Description of the Programme ............................................................................................ 30
General Description of the Notes ....................................................................................................... 31
TERMS AND CONDITIONS OF THE NOTES AND RELATED INFORMATION ................................ 38
I. General Information applicable to the Notes (including Pfandbriefe and fundierte
Bankschuldverschreibungen) ..................................................................................................... 39
II. Terms and Conditions of the Notes ............................................................................................... 41
III. Terms and Conditions of the Pfandbriefe and of the fundierte
Bankschuldverschreibungen ..................................................................................................... 176
IV. Form of Final Terms ..................................................................................................................... 308
V. Information relating to Pfandbriefe and fundierte Bankschuldverschreibungen .................. 361
VI. Description of the German Bond Act ......................................................................................... 363
SUBSCRIPTION AND SALE .............................................................................................................. 366
DESCRIPTION OF HYPO NOE LANDESBANK FÜR NIEDERÖSTERREICH UND WIEN AG ....... 371
GENERAL INFORMATION ................................................................................................................. 389
DOCUMENTS INCORPORATED BY REFERENCE .......................................................................... 393

2

RISK FACTORS
This section "RISK FACTORS" comprises the following parts:
·
Risk Factors relating to HYPO NOE; and
·
Risk
Factors
relating
to
the
Notes
(including
Pfandbriefe
and
fundierte
Bankschuldverschreibungen).
Risk Factors relating to HYPO NOE
Prospective investors should consider careful y the risks set forth below and the other information
contained in this Prospectus prior to making any investment decision with respect to any Notes.
Prospective investors should note that the risks described below are not the only risks the Issuer faces.
The Issuer has described only those risks relating to its business, operations, financial condition or
prospects that it considers to be material and specific and of which it is currently aware. There may be
additional risks that the Issuer currently considers not to be material and specific or of which it is not
currently aware, and any of these risks could have the effects set forth above.
Prospective investors should also read the detailed information set out elsewhere in this Prospectus and
should consult with their own professional advisers (including their financial, accounting, legal and tax
advisers) and reach their own views prior to making any investment decision.
Each of the Issuer related risks highlighted below could have a material adverse effect on the Issuer's
business, operations, financial condition or prospects which, in turn, could have a material adverse effect
on the amount of principal and interest (if applicable) which investors wil receive in respect of any
securities to be issued. In addition, each of the Issuer related risks highlighted below could adversely
affect the trading price of the Notes or the rights of investors under the Notes and, as a result, investors
could lose some or all of their investment.
The Issuer believes that the fol owing factors may affect its ability to fulfil its obligations under the Notes.
Most of these factors are contingencies which may or may not occur and the Issuer is not in a position to
express a view on the likelihood of any such contingency occurring.
The Issuer believes that the factors described below represent the principal risks inherent in investing in
the Notes, but the inability of the Issuer to pay interest, principal or other amounts on or in connection with
any Notes may occur for other reasons which may not be considered significant risks by the Issuer based
on information currently available to it or which it may not currently be able to anticipate.
The risk factors relating to HYPO NOE each are assigned to one of the following categories (each a "Risk
Category").
1.
Credit Risks
2.
Market Risks
3.
Liquidity Risks
4.
Operational Risks
5.
Business Risks
A prospective investor shall be aware that an incident may trigger several risk factors and more than one
Risk Category.
The selected order of the Risk Category and the risk factors within a Risk Category is neither a statement
of the probability of realisation nor the extent of the economic effects or the significance of a risk factor.
Without prejudice to the aforementioned paragraph, the risk factor mentioned first in each Risk Category
is what the Issuer believes to be the most material risk factor. A prospective investor should consider each
risk factor carefully.
1. CREDIT RISKS
Credit risk is a strong risk driver as the main business model of the Issuer is based on lending money to
borrowers.
3

1.1 The Issuer may suffer complete or partial loss due to a default or a decline in its
creditworthiness in relation to borrowed money; due to its heavy dependence on the economic
environment in Lower Austria and particularly on the creditworthiness of the state of Lower
Austria a deterioration in the credit quality in this region may result in substantial losses of the
Issuer and a rapid and material decline in the market price of the Notes, or in the worst-case
scenario with respect to unsecured Notes, in a total loss of interest and the amount invested by
investors.
With respect to borrowed money, the Issuer is exposed to the risk that (i) its borrowers may not repay their
loans when due, (ii) where loans are secured by col ateral, the realization of collateral does not ful y cover
such loss or (ii ) incoming cash flows upon which the Issuer's creditworthiness depends are not sufficient
to pay the debts.
Due to the large portion of the Issuer`s business activities in the public sector, a sovereign debt crisis or a
rating downgrade of the state of Lower Austria would have substantial material adverse effects on HYPO
NOE's net assets, financial position and results of operations.
Also, global economic developments with impact to the Austrian economy (i) could have a strong adverse
effect on the creditworthiness of the Issuer's debtors and/or the value of col ateral securing HYPO NOE's
loan portfolio and/or (ii) might lead to higher interest rates on loans and thus to a higher exposure for the
Issuer (Exposure of Debt).
In particular an economic situation resulting in high unemployment rates or deteriorated financial
conditions of borrowers in Lower Austria would affect the Issuer disproportionately as Lower Austria is the
core market of the Issuer`s (i) retail business which credit quality, inter alia, mainly depends on a solid
income stream and (i ) public sector business which credit quality partly depends on the credit quality of
tax payers of that region.
With respect to loans denominated in currencies other than the currency in which the Issuer's customers
generate their income ("loan currency"), an increase in value of the loan currency in relation to the
income currency may worsen the borrower's financial capability to repay the loan. This would affect HYPO
NOE's retail loan portfolio denominated in currencies other than Euro and HYPO NOE's real estate
financing business in countries outside the Eurozone (i.e. Poland, Hungary, Romania and Bulgaria).
1.2 Deterioration in credit quality may also arise from economic developments in certain countries
where the Issuer finances real estate projects, holds mortgages and other collateral assets or is
invested by way of sovereign bonds.
The Issuer finances real estate projects, holds mortgages and other collateral assets or is invested by way
of sovereign bonds in certain countries, i.e. in particular in Germany, France and Poland. In case of a
deterioration in credit quality arising from negative economic or political situations in these countries this
may have a material affect particularly on the Issuer's real estate customer segment and may lead to
lower profitability in this sector and to a substantial need for impairments for the Issuer.
The corona virus ("COVID-19") pandemic may also have a negative impact on the market value of the
assets that are financed by the Issuer, serve as collateral for the Issuer's repayment claims and/or are
included in the Issuer's cover pool. This is especially due to (i) payment moratoriums issued by certain
countries, in which collateral assets of the Issuer are located, in relation to rent payments and (i ) the risk
of high vacancies in (or rent holidays in relation to) commercial properties, such as hotels, retail centers,
cancellation of trade fairs and exhibitions and potential bankruptcies of tenants, sponsors, guarantors and
other providers of col ateral, which may impair the solvency of clients of the Issuer and may lead to
defaults under financings provided by the Issuer.
1.3 The Issuer is exposed to the risk that financial institutions default under derivative or
securities financing collateral transactions. Due to the high-volume nature of such transactions
the Issuer may face significant losses even if those transactions are collateralized.
The Issuer has entered and may continue to enter into financial derivatives, repurchase agreements and
security lending transactions for hedging, funding or liquidity purposes which are not central y cleared.
Where the Issuer enters into financial transactions only on col ateral basis, the collateral may not be
sufficient to ful y cover any loss of the Issuer fol owing a counterparty default. To uphold the purpose of
these transactions, i.e. hedging, funding or liquidity, the Issuer needs to replace financial transactions at
market price which costs may exceed amounts received by the defaulted counterparty.
4

1.4 A substantial portion of the Issuer's loan portfolio is secured by mortgages. A decline of real
estate prices, in particular of real estate located in Lower Austria, would lead to (i) a significant
increase of loan loss provisions which may lead to a decline of the market prices of the Notes and
(ii) where the fall of the real estate prices in Lower Austria correlates with credit defaults, may, in
the worst case, lead to the inability of the Issuer to repay the Notes.
Real estate prices depend on many volatile factors, including the supply of and the demand for real
estate, the availability of tenants and their ability to pay the rent. The prices for commercial real estate are
even more volatile, depending, inter alia, on the investment behaviour and risk appetite of investors,
refinancing possibilities and on general economic developments.
A decrease of real estate prices may lead to impairments in respect of col ateral and to an increase of
loan loss provisions for the Issuer which may have material adverse effects on its profitability and financial
position. Where col ateral is realised by the Issuer following a default of mortgage loans, a decrease of
real estate prices may lead to the col ateral no longer being sufficient to cover the outstanding loan which
would in addition lead to actual losses at the Issuer.
A decrease of real estate prices due to factors relating to the economy of Lower Austria could correlate
negatively with the probability of defaults in relation to the Issuer's mortgage loan portfolio and hence may
have a significant negative impact on the Issuer's ability to repay the Notes.
1.5. The worldwide COVID-19 pandemic may have significant effects on the creditworthiness of the
Issuer's clients.
The Issuer's clients within all business sections, including the public sector, are exposed to certain risks in
relation to the COVID-19 pandemic and the measures taken by sovereigns, companies and others to
prevent the spread of the virus. The worldwide rapid spread of the COVID-19 pandemic and the resulting
business restrictions and cutbacks could lead to deterioration of financial conditions of the Issuer's
customers. As a result, the Issuer's loan portfolio quality could suffer or deteriorate, and non-performing
loans may increase, because the Issuer's customers may not, or not timely, be able to repay their loans,
and/or collateral securing these loans may become insufficient. If the economic conditions worsen, it could
result in credit losses exceeding the amount of the Issuer's loan loss provisions.
In response to the COVID-19 pandemic and the expected economic crises, governments in countries in
which the Issuer operates, which includes Austria, Germany, Romania and Bulgaria have already issued a
payment moratorium on finance transactions and may implement further intervention measures. Additional
countries in which the Issuer operates may follow with the issuance of a payment moratorium or have
taken or are likely to take other unprecedented state intervention measures to protect their citizens,
national economies, currencies or fiscal income. Any of these or similar state intervention measures could
have a material adverse effect on the Issuer's business, financial condition and results of operations
through any individual or a combination of lower interest income, higher risk costs or higher other costs.
2. MARKET RISKS
Market risk is a strong risk driver as the profitability of the Issuer's credit business depends strongly on
various market factors.
The Issuer is exposed to market risk, in particular, in form of interest rate risk and credit spread
risk, which may lead to losses in the book of the Issuer and thus to a rapid and material decline in
the market price of the Notes.
Because of its finance focused business, the Issuer is exposed to the risk of changes in interest rates that
arises from differences in the timing of rate changes in respect of assets and liabilities, hereby creating
open interest rate positions. Changes in market interest rates may create losses on those positions with a
material adverse effect on the Issuer's interest income and profitability.
The Issuer holds sovereign debt and other securities as assets. If spreads on those assets, in particular
on securities issued by the Republic of Austria, widen, this would lead to a decline in market values and
therefore to a loss in the cash value of the Issuer's securities assets with a material adverse effect on the
Issuer's net assets. Such risk has become more likely due to the COVID-19 pandemic especial y as the
COVID-19 pandemic has led to a global and significant loss of economic growth and increased volatility in
stock exchange prices at the end of the first quarter 2020 as well as to a rise in spreads.
5

3. LIQUIDITY RISKS
Liquidity is essential to the core business of the Issuer and hence a strong risk driver.
To fund its finance business the Issuer heavily depends on regular supply of money funds from
own issuances in the debt capital market and cash deposits from financial institutions. A market-
wide liquidity shortage (market crisis) or an Issuer-related liquidity shortage (name crisis) may
result in substantial losses of the Issuer and a rapid and material decline in the market price of the
Notes, or in the worst-case scenario with respect to unsecured Notes, in a total loss of interest
and the amount invested by investors.
Since the creditworthiness of the Issuer depends mainly on the creditworthiness of the state of Lower
Austria, a significant downgrade, a suspension or a withdrawal of the credit rating of the state of Lower
Austria would material y and rapidly increase the liquidity costs of the Issuer and may, in the worst case,
completely or partly prevent the Issuer's access to money funds.
Also, negative views on the financial services industry generally or about the Issuer or the state of Lower
Austria (bad reputation) specifically could impair the Issuer's ability to raise funding. In addition, the
Issuer's ability to raise funding could be impaired if lenders develop a negative perception of the long-term
or short-term financial prospects of the Issuer or the state of Lower Austria. Such negative perceptions
could develop if, for example, the Issuer incurs major losses, or suffers a decline in the level of its
business activity, or if regulatory authorities take significant action against either of them, or either of them
discovers serious employee misconduct or illegal activity. If the Issuer is unable to raise funding using the
methods described above, it would likely need to liquidate unencumbered assets, such as its financial
assets portfolios, to meet maturing liabilities.
The Issuer uses mainly Pfandbriefe and fundierte Bankschuldverschreibungen to refinance its financing
business and to secure long-term refinancing. Impairments of the market of Pfandbriefe and fundierte
Bankschuldverschreibungen, for instance due to stricter cover requirements imposed by rating agencies
or regulatory authorities, could restrict the Issuer's issuance of and hence its refinancing through
Pfandbriefe and fundierte Bankschuldverschreibungen. Impairments may have a material adverse impact
on the Issuer's ability to raise funds and may increase its liquidity costs significantly.
A downgrade in the credit rating ("downgrade") of the Issuer or of its Pfandbriefe or fundierte
Bankschuldverschreibungen may also have a negative impact on the liquidity costs of the Issuer and its
ability to refinance its financing business. Moreover, a downgrade of the Issuer could result in additional
liabilities for the Issuer or the acceleration of its repayment obligations under existing obligations which
would create additional demand for liquidity for the Issuer. In particular, a downgrade would increase the
costs of derivative and securities financing transactions for the Issuer as it would entitle counterparties to
demand additional col ateral.
The Issuer's credit rating depends heavily on the state of Lower Austria as single shareholder. A change
of the ownership structure thus might have a material adverse effect on the credit rating of the Issuer.
In response to the COVID-19 pandemic and the pandemic-related economic crises, governments in many
countries, including the Republic of Austria, have already taken and are likely to continue introducing state
aid measures to financially support their citizens and the economy, such as the issuance of guarantees for
bridge loans and other financial support programs. Such state aid programmes together with the monetary
stability programme of the European Central Bank ("ECB") increase the level of sovereign debt within the
European Union and increase the likelihood of downgrades in respect of such sovereigns, including the
state of Lower Austria and the Republic of Austria.
6

4. OPERATIONAL RISKS
4.1 The Issuer's operational organisation, business policy and financial position relies on the
current legal framework, the functioning of internal and external systems, the proper conduct and
compliance of people with applicable policies and rules, various assumptions in relation to
internal and external valuation methods and the assessment of those conditions by the Issuer. A
change of any of those factors or conditions may increase the risk relating to any Risk Category
and may lead to substantial losses of the Issuer and a rapid and material decline in the market
price of the Notes, or in the worst-case scenario with respect to unsecured Notes, in a total loss of
interest and the amount invested by investors.
The functioning of the Issuer's business heavily depends on a broad range of complex IT systems and
external IT system providers. In particular, the Issuer's banking operations are exposed to the functioning
of the Issuer's main computer centre, the ARZ Al gemeines Rechenzentrum GmbH ("ARZ"). The
technological infrastructure of the Issuer and the ARZ has been built up for more than ten years and has
been updated and extended since. The heterogeneous and complex IT systems make it difficult to keep
up with the fast-growing demand of both regulators and of customers and the developments towards
digitalisation. Also, computer damages, the default of service providers, operational errors, cyber-attacks
and other internet crimes may result in compensation payments to the Issuer's customers, lost data or
other assets or an interim or complete breakdown of the Issuer's business.
4.2. The increase of regulatory capital and liquidity standards and the even stricter procedural and
reporting requirements in recent years have led to significant costs of implementation and a
reduction of profit in certain business segments. If this trend continues a further increase of
regulatory costs and reduction of profitability might adversely impact the Issuer's competitive
position and even may call the Issuer's business model in respect of one or more business
segments in question.
The Issuer's business wil continue to be materially affected by the capital requirements as the lending
business involves capital-intensive business operations. The Issuer might be required to build up
additional capital buffers in the future fol owing (i) new stress tests by the ECB/FMA or (i ) new capital
requirements.
New capital requirements, for instance, will be introduced by the EU Banking Package (as defined below)
and reform of the Banking Union.
The Banking Union is a system for the supervision and resolution of credit institutions (including the
Issuer) on EU level which is based on EU wide rules and currently consists of the Single Supervisory
Mechanism and the Single Resolution Mechanism.
On 7 June 2019, a legislative package for amendments of the fol owing EU legal acts regarding the
Banking Union ("EU Banking Package") was published in the Official Journal of the EU:
(i) Directive 2013/36/EU (Capital Requirements Directive IV  "CRD IV"); (i ) Regulation (EU) No 575/2013
(Capital Requirements Regulation  "CRR"); (i i) Directive 2014/59/EU (Bank Recovery and Resolution
Directive  "BRRD"); and (iv) Regulation (EU) No 806/2014 (Single Resolution Mechanism Regulation 
"SRMR").
The EU Banking Package, inter alia, includes the fol owing measures which are a specific and material
risk to the Issuer:
o
a leverage ratio requirement for al institutions;
o
a net stable funding requirement;
o
revised rules on capital requirements for counterparty credit risk and for exposures to central
counterparties;
o
revised methods in the standard approach of measuring credit risk (Pillar 1), i.e. tighter
requirements for infrastructure financing
o
a revised Pil ar 2 framework;
o
enhanced minimum requirement for own funds and eligible liabilities ("MREL") subordination rules
for large banks referred to as top-tier banks;
7

o
stricter conditions for liabilities in order to qualify as eligible liabilities instruments for MREL
purposes;
o
a new moratorium power for the resolution authority; and
o
restrictions to distributions in case of MREL breaches.
The EU Banking Package entered into force on 27 June 2019. Certain amendments of the CRR already
apply since 27 June 2019; further amendments of the CRR shal apply from 28 December 2020
respectively 28 June 2021, those of the SRMR from 28 December 2020. The EU Member States shal
implement the amendments of the BRRD and the CRD IV into national legislation by 28 December 2020.
4.3 Changes in the classification of terms for accounting, regulatory or risk modelling purposes
may lead to changes in the value of the Issuer's assets.
The Issuer has valued its assets either at amortised cost or at fair value, depending on the category to
which they are assigned. Wrongful assignment of assets or a change of the relevant accounting standards
may lead to a revaluation of the Issuer's assets. As well for risk evaluation purposes the Issuer uses
valuation methods and assumptions which the future might prove wrong.
Any of those changes might have an adverse impact on the Issuer's net assets, its financial position and
its credit rating. Revaluations might also lead to additional costs which might make the Issuer's business
strategy less profitable.
Since a material part of the Issuer's assets and customers is in the public sector, a change of parameter
relating to sovereign risk, particularly with regard to the credit valuation of the state of Lower Austria,
would significantly increase the capital requirement and the refinancing costs for the Issuer.
4.4 The Issuer is exposed to losses and damages arising from the non-performance of third party
providers in the finance industry which the Issuer depends on for the operation of its business.
The Issuer relies on various counterparties providing access to financial markets, trading
facilities, settlement and clearing systems, including commercial banks acting as brokers, clearing
members and depositories.
The Issuer relies on various counterparties providing access to financial markets, trading facilities,
settlement and clearing systems, including commercial banks acting as brokers, clearing members and
depositories. This counterparty risk affects the Issuer disproportional as the majority of its security
business is settled through a primary broker and a single custodian.
Default by third party providers may result in ineffective funding, liquidity and hedging strategies,
additional costs of replacement transactions and actual losses resulting from failed trades or lost assets.
5. BUSINESS RISKS
5.1 The Issuer's main business purpose is to make profits, to strengthen the capital base and to
mitigate unavoidable risks within the legal framework and the given market and business
environment. Negative developments in any of those factors may reduce the profitability or capital
base and may lead to significant losses of the Issuer and a rapid and material decline in the
market price of the Notes, or in the worst-case scenario with respect to unsecured Notes, in a total
loss of interest and the amount invested by investors.
The Issuer's business strategy heavily depends on lending business in the Republic of Austria and
Germany. Within Austria the Issuer's business is concentrated in Lower Austria. A decrease in demand of
finance or a decrease of the Issuer's competitive position in those markets and an increase of regulatory
costs of lending, in particular of real estate financing and public sector financing, may have a severe
negative affect on the Issuer's profitability.
The banking sector in Austria is characterised by intense competition and a high pressure on margins.
The ongoing historically low interest rate level in connection with the requirement to increase own capital
additional y reduce the earnings opportunities and increase the cost pressure for the Issuer.
The increasing regulatory constraints on the Issuer negatively correlate with the opening of traditional
banking services to non-banks. The field of competition in which the Issuer operates is particularly
influenced by non-banks and other new entrants such as fintechs, which are entering the banking sector
with new technology, lower regulatory burdens and innovative banking products and services.
8

For these reasons structural improvements and increases in efficiency of the Issuer are of particular
importance. If the Issuer does not succeed in providing its products and services on competitive terms and
in achieving margings that at least compensate for the costs and risks associated with its business, this
may have a material adverse effect on the Issuer's net assets, financial position and results of operations.
5.2. The amount of regulatory capital required to be held in accordance with the regulatory capital
requirements depends on the level of risk the Issuer has been assuming and the amount of risk
weighted assets generated within the Issuer's business. Due to its focus on financing and lending,
the Issuer's business is strongly connected to risk weighted assets. The Issuer's refinancing
costs and its profitability therefore strongly depends on the regulatory capital requirements.
As an Austrian credit institution, the Issuer has to comply with a number of regulatory rules and
requirements at all times which continuously change and become more extensive and stricter.
The Issuer has to comply with certain regulatory capital requirements at any time:
·
In this regard, the Issuer is required to satisfy the applicable minimum capital requirements
pursuant to Article 92 CRR (so-called "Pillar 1 requirements") at all times. This includes a
Common Equity Tier 1 ("CET 1") capital ratio of 4.5 per cent., a Tier 1 capital ratio of 6 per cent. and
a total capital ratio of 8 per cent.
·
In addition, the Issuer is required to satisfy at al times the capital requirements that are imposed by
the FMA fol owing the supervisory review and evaluation process ("SREP") (so-called "Pillar 2
requirements") ("SREP add-on") in form of CET 1 capital. As of the date of this Prospectus, the
SREP add-on determined for the Issuer (on individual and consolidated basis) amounts to 1.6 per
cent.
·
Furthermore, the Issuer is required to satisfy at al times the combined buffer requirement within the
meaning of § 2(45) of the Austrian Banking Act (Bankwesengesetz  "BWG") in form of CET 1
capital. For the Issuer, the combined buffer requirement consists of the sum of the capital buffer
requirement for compliance with the capital conservation buffer of 2.5 per cent., the countercyclical
capital buffer for relevant credit exposures in Austria of 0.0 per cent. (outside of Austria the
following countercyclical capital buffer rates are relevant for the Issuer: Sweden 2.5 per cent.,
Norway 2.5 per cent., the Czech Republic 1.5 per cent., Bulgaria 0.5 per cent., the Slovak Republic
1.5 per cent., Ukraine 1.0 per cent., Denmark 1.0 per cent., France 0.25 per cent.) and the capital
buffer rate for systemic vulnerability of 1.0 per cent. (on consolidated basis only), in each case
based on the total risk exposure calculated pursuant to Article 92(3) CRR.
·
Furthermore, the Issuer shall meet MREL in accordance with the Austrian Recovery and Resolution
Act (Sanierungs- und Abwicklungsgesetz  "BaSAG")/the SRMR upon request of the FMA. This
MREL target shall be determined by the FMA and shall be calculated as the amount of own funds
and eligible liabilities expressed as a percentage of the total liabilities and own funds (TLOF) of the
Issuer. As of the date of this Prospectus, the MREL target set for the Issuer on consolidated level
amounts to 6.12 per cent.
Stricter regulatory capital requirements applicable to the Issuer may result in (unscheduled) additional
(quantitative or qualitative) capital demand for the Issuer.
5.3 The Issuer is obliged to make regular contributions to the Single Resolution Fund and to the
deposit guarantee fund. The Issuer's obligation to make such contributions may result in
additional financial burden for the Issuer and may have negative impact on its financial position
and results of operation.
The Single Resolution Fund ("SRF") has been established by the SRMR and is composed of contributions
by credit institutions (including the Issuer) and certain investment firms in the participating Member States
of the Banking Union. The SRF shall be gradual y built up during the initial period of eight years (2016
2023) and shall reach the target level of at least 1 per cent. of the amount of covered deposits of all credit
institutions (including the Issuer) within the Banking Union by 31 December 2023.
The Issuer is a member of the Einlagensicherung AUSTRIA Ges.m.b.H. ("ESA"), the statutory (Austrian)
deposit guarantee scheme within the meaning of Austrian Deposit Guarantee and Investor Protection Act
(Einlagensicherungs- und Anlegerentschädigungsgesetz  "ESAEG"). The ESAEG stipulates a target
level of the ex ante financed deposit guarantee fund for the ESA of 0.8 per cent. of covered deposits
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which shal be fully composed by contributions of its members (including the Issuer) until 3 July 2024. If (in
case of a crisis of a member institution) required, the Issuer may also be obliged to make certain (ex post)
contributions to the SRF and the deposit guarantee fund.
5.4 If the relevant conditions are met, the FMA shall apply resolution actions in relation to the
Issuer.
Pursuant to the BaSAG, the FMA may initiate restructuring proceedings against the Issuer if the following
conditions are met:
o
the Issuer is failing or likely to fail to meet its payment obligations; and
o
having regard to timing and other relevant circumstances, there is no reasonable prospect that any
alternative private sector measures, or supervisory action, including early intervention measures or
the write-down or conversion of relevant capital instruments taken in respect of the Issuer, would
prevent the failure of the Issuer within a reasonable timeframe; and
o
a resolution action is necessary in the public interest.
The resolution tools are: (i) the sale of business tool; (ii) the bridge institution tool; (i ) the asset separation
tool; and (iv) the bail-in tool.
By applying the bail-in tool the FMA may write down eligible liabilities in a cascading contribution to loss
absorption of the Issuer or convert them into instruments of ownership. Moreover, the FMA can separate
the performing assets from the impaired or under-performing assets and transfer the shares in the Issuer
or all or part of the assets of the Issuer to a private purchaser or a bridge institution without the consent of
the shareholders.
In addition, the FMA has so-called resolution powers, which it may exercise individual y or in any
combination in relation to or for the preparation of the application of a resolution tool in relation to the
Issuer.
5.5 The Issuer is obliged to comply with extensive AML rules which cause significant costs,
require the Issuer to abstain from new or terminate existing business for precaution measures and
on the basis of formal criteria's and may have reputational consequences for the Issuer if
precaution measures are not taken.
The Issuer is subject to legal provisions in connection with measures to avoid money laundering,
corruption and terrorism financing ("AML Rules") which are continuously amended and tightened.
The Issuer's obligation to comply with these AML Rules causes significant costs and expenses for the
Issuer. In addition, any (factual or even only alleged) breach of the AML Rules may have main negative
legal, financial and reputational consequences for the Issuer.

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