Den Norske Bank (DnB), which has somehow escaped repeatedly from the consolidation of the Scandinavian banking industry, has had its NOK 1.05 billion takeover bid for Nordlandsbanken recommended by the board of the Northern Norway bank.
The acquired bank will remain headquartered in Bod. The Nordlandsbanken brand will also be maintained -as Den norske has with previous acquisitions, Postbanken and Vital – and Bod will be made a financial services centre, offering a trading desk for equities, bonds and capital market instruments. Some customer-related functions in Nordlandsbanken currently based in Oslo will also be moved to Bod.
There is not much overlap in terms of branches.However, there will be economies. The banks’ offices in Bod, Troms, Mo and Sortland will be merged, while Nordlandsbanken’s Oslo operations will be folded into those of DnB. Annual cost synergies of just over NOK 100 million before taxes have been identified, deriving in part from transferring operations in the new regional bank to the DnB Group’s platforms.
“The merging of the operations of Nordlandsbanken and Den Norske Bank in Northern Norway will create a financial services organisation which will play a key role for businesses, households and public sector entities throughout the region,” says the board chairman in Nordlandsbanken, Ivar Jrgensen.
“Our strategic goal is to be the customers’ best financial partner, and Nordlandsbanken’s customers will be offered a wider range of products and services. Customer relationships will be maintained and supported locally,” adds Svein Aaser, group chief executive in DnB. “We wish to make Bod a financial stronghold backed by Norway’s largest financial services group. Also, we would like Nordlandsbanken to maintain its role as a strategic investor in the business community in Northern Norway.”
Nordlandsbanken has already announced loan-loss provisions of NOK 804 million, most of iot incurred on loan losses to the Norwegian debt collecting firm, Finance Credit Group, and to fish farmers and offshore oil and gas companies. Based on its current guidelines for credit and loan-loss provisions, DnB has estimated additional loan-loss provisions of around NOK 700 million on top of this figure.
DnB says the acquisition will increase earnings per share from this year. The DnB Group’s pro forma core capital ratio will be around 7.6 per cent based on figures as at 30 September 2002 adjusted for loan-loss provisions, revaluations and including 50 per cent of profits for the period.