Iceland could now have the local sub-custodian bank growing international interest in the market warrants. Bnadarbanki slands and Kaupthing Bank, the two leading Icelandic banks, have agreed to merge. The proposed name of the merged bank is Kaupthing Bunadarbanki.
A ratio of exchange has been decided whereby shareholders in Kaupthing Bank will receive 51.77 per cent of the merged bank and shareholders in Bnadarbanki slands receive 48.23 per cent. The merged bank will be listed on the Iceland Stock Exchange and on Stockholmsbrsen in Sweden.
Kaupthing Bunadarbanki will be by far the largest bank in Iceland and a leading player in almost all areas of the local financial markets. It will also be the highest-valued listed company on the Iceland Stock Exchange and amongst the ten largest banks in the Nordic countries.
The bank has just 36 branches throughout Iceland which will work under the name of Bnadarbanki, but the management say they plan to strengthen considerably its commercial banking operations. Costs will be cut where operations overlap.
The combined market capitalization of the banks is ISK 61.7 billion based on the price at the close of trading in equities on 28 March 2003. The combined shareholders’ equity as of year-end 2002 is ISK 33.5 billion and total assets amount to ISK 434 billion. The banks posted a combined net profit of approximately ISK 5.4 billion last year and return on equity was 24.3 per cent. The banks’ combined operating income amounted to approximately ISK 21.4 billion.