Erste Abwicklungsanstalt

Our stable outlook on EAA reflects that we do not expect changes to the ownership structure or strong commitment from NRW in the next two years. The outlook also mirrors that on NRW, signifying our expectation that the state's need for net new borrowing will remain limited amid increasing inflationary pressure. Our base-case scenario does not include a sharp recession, large revenue losses, or sizable support packages weighing on NRW's budgetary performance. We would lower our ratings on EAA if we were to downgrade NRW, which could be triggered by NRW having to respond to a significantly deteriorating economy, in particular a complete stop of Russian gas deliveries to Germany, and this could lead to a collapse of budgetary performance

...S&P Global Ratings expects support from NRW (##/Stable/A-1+) if needed. We believe that Erste Abwicklunganstalt (EAA) will be supported by its owners if continuing losses exceed its capital base. However, we consider this scenario unlikely. We think EAA's wind-down proceedings will continue according to plan. The company recently completed the closure of its covered bond subsidiary. The Russia-Ukraine war's impact on EAA is limited, but there could be fewer favorable market opportunities for it, somewhat dragging further wind-down progress. However, overall, we expect EAA will continue to further reduce its banking and trading book portfolio as planned....

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