Erste Bank's exposure to structured products, which amounts to 3 billion euros, has driven many investors away and caused the bank's shares to fall by 20% over the past year, yet the risk associated with such financial instruments is manageable, analysts of Czech investment bank Wood&Co believe. Structured products are complex financial instruments that can come in various forms and are used by institutions, which include banks, that wish to shield themselves from risk. Globalisation is one factor that has a strong influence on distribution, development, and the use of structured products. "With investments in structured products accounting for 23% of the capital and given that investments rated below BBB account for merely 3% of the capital, Erste Bank is less exposed than banks in Western Europe and US," a Wood&Co report says. Analysts believe Erste's portfolio quality is high and that appropriate reserves have been made for it, considering the bank does not have any direct investments on the mortgage credit market in the US, that 87% of its exposure is rated A or higher and that 61% of its exposure below A is covered.
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