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. We could lower our ratings on EAA if we downgrade NRW. Downward pressure on the ratings could also emerge if we revise down our assessment of EAA's role for and link to NRW. An upgrade of NRW could trigger a similar rating action on EAA based on our assumption of government support. EAA's bylaws state that stakeholders must provide sufficient funds to ensure that it can make timely payments as liabilities come due. If EAA posts losses exceeding its equity base, NRW (48.2%), both savings bank associations

...S&P Global ratings expects support for Erste Abwicklunganstalt (EAA) from NRW (##/Stable/A-1+) if needed. Our ratings reflect that we think that EAA will be supported by its owners under any scenario if continuing losses exceed its capital base. However, we consider this scenario unlikely. We anticipate that EAA's wind-down pace will slow. While EAA has exceeded the targets of its original wind-down plan in recent years (see chart 1), we expect the pace will gradually slow over the coming years. Remaining assets are often long dated and increasingly difficult to sell in the market, in our view. We think that, in the higher interest rate environment, there could be fewer favorable market opportunities for it to sell assets, since more attractive alternatives have emerged for potential investors....

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