Strengthening its position in the Nordic region, Denmark's Danske Bank has signed an agreement to purchase all the shares of Finland's Sampo Bank for a cash amount of around $5.2 billion.
Sampo Bank, which is to be acquired from Sampo Group, is the third largest bank in Finland. It has an extensive branch network, subsidiaries in Estonia, Latvia and Lithuania, and a recently acquired bank in Russia.
The bank’s business focus is on retail customers, small and medium-sized business customers and institutional customers. With 1.1 million retail customers and 100,000 corporate customers, Sampo Bank holds 15% of the retail market and 20% of the corporate market in Finland.
Most of the bank’s business originates in Finland, but the subsidiaries in Estonia, Latvia and Lithuania have shown considerable growth and rising market shares within home financing, in particular.
Danske Bank said that the acquisition will strengthen its position as a significant competitive player on the Nordic financial services market.
Our investment in Finland is in line with the group’s strategy of expanding its retail banking activities in northern Europe, said Danske Bank chief executive Peter Straarup. Sampo Bank is attractive because its retail banking profile and structure match ours and support our strategy of further geographical and risk diversification. Another advantage is that economic growth in Finland and in Estonia, Latvia and Lithuania exceeds the EU average. That provides an excellent basis for continuing growth.
Sampo Bank will be incorporated in the Danske Bank Group’s organizational structure, but will continue to operate as a local bank brand and have its own management.
In connection with the purchase, Danske Bank plans to issue new shares, which are expected to provide proceeds of just under half of the purchase price. The remaining amount will be funded through the issue of tier 1 hybrid capital, subordinated debt and through other liquidity sources.
The deal is subject to the approvals of the relevant authorities, which are expected in the first quarter of 2007. Danske Bank said that it expects the purchase of Sampo Bank to have a positive effect on its earnings per share from the second half of 2008.