LHV Pank, an Estonian banking and financial services company and a subsidiary of LHV Group, is set to acquire Denmark-based Danske Bank’s portfolio of Estonian private loans for €410m (£363.82m).


Image: Danske Bank to sell its Estonian private loans portfolio to LHV Pank. Photo: courtesy of RL0919/Wikipedia.org.

According to LHV, the volume of the loan portfolio of the unit it will acquire was worth €470m (£417.06m), as of the end of February 2019. Out of this, nearly 97% are home loans.

Through the transaction, the Estonian banking company will be serving close to 10,800 private customers. As per the company’s settlement analysis, about 80% of them are new customers for it.

The Estonian bank said that it is acquiring what is a well-guaranteed strong credit portfolio. The bank further said that while the interest rates of granted home loans were essentially close to cost price, the deal is only possible because of the discounted sale of the portfolio.

LHV Group CEO Madis Toomsalu said: “This is an important event for us. LHV’s loan portfolio will increase by 40% as a result of the transaction taking place, and the importance of retail banking in LHV’s business will increase dramatically.

“This event can also be considered significant in Estonian banking since a bank based on Estonian capital intends to take over the business of outgoing foreign capital and considerably increase its market share in a strategically important sector.”

The transaction is scheduled to be finalised in the autumn of 2019, once the final scope and its price will also be established. Prerequisite conditions for finalising the transaction include securing permission from the Estonian Competition Authority and increasing additional capital for the transaction.

LHV said that Danske’s current loan customers do not have to change anything in their activities due to the transaction and will be given more specific instructions once it is finalised in the second half of this year.

LHV Pank management board chairman Erki Kilu said: “After the transaction is finalised, we will certainly invite new loan clients to use all other LHV services as well. We can serve the new clients in the best possible way: we offer all banking services, the best service in Estonia, a network of ATMs across Estonia, and an extremely comfortable internet and mobile bank.”