Through the deal, the LHV Pank will take over from Danske Bank a portfolio that includes more than 670 business and 85 public sector clients, valued at €312m


Headquarters of Danske Bank, located in the Erichsens Palace building in Copenhagen, Denmark. (Credit: RL0919/Wikipedia)

The Estonian Competition Authority has given its approval to LHV Pank to acquire the Estonian unit of Danske Bank, which was announced last month.

The deal includes acquisition of Danske Bank’s Estonian corporate and public sector credit portfolio and it is expected to be finalised by this October.

The final scope and the price of the deal will be determined before the closing.

In June, LHV Pank, a subsidiary of LHV Group had signed an agreement with Danske Bank to acquire its unit operating the Estonian corporate and public sector credits.

The transaction includes acquisition of the credit portfolio of Estonian corporate clients and the public sector, with 42% of it consisting of corporate loans and 54% of loans to local governments. The total portfolio is valued at €312m.

LHV Pank claims that it is a strong credit portfolio with low capital requirements for loans involved with local governments. Through the transaction, LHV Pank will take over about 670 business and 85 public sector clients.

As part of the acquisition, employees who are working with the unit will be acquired and the exact number will be finalised during the deal closure.

Acquisition of Danske Bank’s unit to increase LHV Pank’s loan portfolio by €280m

LHV Group CEO Madis Toomsalu said “This is an important event for us. As a result of realisation of this transaction the loan portfolio of LHV will grow by about 15% and the importance of the public sector as part of LHV’s business will increase by leaps and bounds. We continue to follow our strategy and grow our business even when the times are tougher.”

“After acquiring this portfolio, LHV has financed about 85 local governments or their business entities, including several of the bigger cities in Estonia. We consider that a bank based on Estonian capital could be a good and flexible financial partner for the local governments.

“To all our customers we offer our recognized best customer service and comprehensive banking services – in addition to loan products and payment services also point-of-sale terminals, our nation-wide ATM network and handy internet bank and mobile app.”

As of this April ending, the loan portfolio of LHV Pank amounted to €1.7bn and by acquiring Danske Bank’s business unit, the portfolio is expected to grow by €280m. In addition to the existent deposits, the Estonian financial group expects to raise about €250m to finance the deal.