Erste Group’s decade-long expansion of its DCM franchise has created a covered bond powerhouse with expertise stretching from Canada to eastern Europe. Dedication to issuers and investors alike secured Erste wins for Best Bank for Distribution and Syndication, two of the most coveted categories for covered bond dealers. In a testament to the strength of its team, the firm also saw a trio bankers win awards for individual excellence.
For years, Erste has been on a mission to expand and develop the capital markets across the jurisdictions in which it operates. In the firm’s home region of central and eastern Europe (CEE) it has long been a major force in the covered bond market — consistently topping league tables for deal volume and number of issues. The bank commands more than 80% of the Austrian and CEE market and has been recognised for its role in bringing a succession of inaugural trades to market.
Strategic hires across DCM, trading, sales and research have built a franchise ideally placed to expand across Europe. “One of the pillars of our success has been to present issuers from Germany, the Nordics, from Benelux and so on to the investor universe in our core region,” says Stefan Rekelj, head of origination and funding at Erste. The firm’s covered bond team now comprises two dozen highly experienced professionals across syndicate and origination.
“You can only cover the market in depth if you have the right setup and we’ve always had full support from our top management in building up and expanding the team,” says Rekelj. The bank’s steady progress up the league table rankings and the increasingly frequent award nominations testify to this support. From August 2023 to July 2024, the bank executed around 70 transactions, a similar volume to the previous 12 months despite a much quieter primary.
“We have been able to keep the number of issues more or less constant in a market that was declining in volume, which meant we once again increased market share,” says Rekelj. “This is very positive and gives a lot of motivation to continue on the same path.”
Not only has Erste branched out to become a truly pan-Europe covered bond franchise, it has crossed the Atlantic. The bank has brought several highly successful deals for Canadian issuers, who are becoming a regular feature of the euro market. Between August 2023 and July 2024 Erste worked on half of all Canadian covered bond deals. The bank has yet to move into the Asian and Australasian covered bond markets, but the potential for expansion is on Erste’s radar.
“We’ve really managed to grow the business in terms of volume and number of transactions across different markets,” says Simon Sovic, Erste’s head of FIG & SSA capital markets. “I think that’s one of the reasons why we’ve received so much support from the market.”
Erste’s win for Best Syndicate Bank is its first, but the firm takes home Best Bank for Distribution for the second year in a row. Sovic points to the strength of the bank’s sales team and the cooperation between syndicate and the sales force. Erste is tireless in its efforts to bring issuers and investors together whether on a deal or non-deal basis.
“We really encourage sales to invest in every single investor relationship, we are not steered by the idea that you make 80% of revenue from 20% of your clients,” Sovic says. “Sometimes this brings five additional investors into a deal, sometimes it doesn’t, but we are there for the long term and we encourage and value those smaller tickets.”
This focus on the full spectrum of potential investors is one of several reasons why Erste has been so successful in guiding issuers new to covered bonds to a successful debut. “For that to happen you need to put inaugural issuers in front of investors, and those investors need to become familiar with a new name and open up lines,” Rekelj says. “All this is only possible if you do a lot of pre-work before a deal is even awarded or mandated.”
Rekelj and Sovic are eager to highlight the extent to which the bank’s success reflects a team effort. The fact that Erste’s covered bond awards haul includes no less than three individual awards is a testament to how the bank has nurtured talent. Mladen Djurdjevic, head of the debt syndicate, was voted Best Syndicate Banker. Florian Gritzky and Maxim Börsig share the Covered Bonds Rising Star award.
“Gaining market share in a very competitive environment is only possible if you have a team at hand that is really going the extra mile, day in, day out,” says Rekelj. “Erste is lucky to have one of the best, most dedicated teams in Europe.”