Luminor Bank is one of the major financial services providers in the Baltic banking markets


Image: Nordea Bank plans to sell its remaining stake of 20% in Luminor Bank. Photo: courtesy of Nordea.

Nordea Bank and DNB Bank have completed sale of their 60% stake in Luminor Bank for €1bn (£886.35m) to a consortium led by private equity funds managed by Blackstone.

The deal, which was first announced in September 2018, has been closed after it received all customary regulatory approvals.

Luminor Bank is a key financial services provider in the Baltic banking market, with operations in Estonia, Latvia, and Lithuania.

The bank was established after merging the operations of Nordea Bank and the Norwegian banking group DNB Bank in the Baltics.

At the time of signing the deal, Luminor Bank has nearly 23% share in the Baltic lending market. It had €15bn (£13.31bn) in assets, employed 3,000 people and operated 64 branches.

The bank, at the time of announcing the deal, reportedly held more than €8bn (£7.1bn) of customer deposits, while its total equity was around €1.7bn (£1.51bn).

With the closing of the transaction, Nordea Bank and DNB Bank have slashed their stake in the Baltic banking company to 20% each. Prior to the deal, Nordea Bank and DNB Bank held 36% and 43.5% stakes, respectively.

Nordea Bank plans to sell its entire stake in Luminor Bank

Nordea Bank undertook the deal to simplify and focus its operations to the Nordic core markets and to provide better service to its customers in the region. In this regard, the Finnish banking group had also signed a forward sale agreement last year with Blackstone to sell its remaining 20% stake in Luminor Bank over the near to medium term.

The forward sale, which remains subject to certain conditions, is likely to be wrapped up over the next three financial years, said Nordea.

The Finnish bank, in a statement, said: “Nordea will realise a positive impact on the Common Equity Tier 1 (“CET1”) ratio of approximately 10bps from closing the transaction. Nordea already received approval from the ECB to treat the holding in Luminor, for prudential purposes, using the equity method in 2019 Q2.

“This approval had a positive impact on CET1 of approximately 10bps, recorded in our Q2 financial results. The total positive CET1 impact from the transaction is therefore approximately 20bps.”

Earlier this year, Nordea completed its NOK5.5bn (£490m) acquisition of Norwegian online bank Gjensidige Bank which offers a suite of digital banking services, car financing, mortgages, unsecured loans, and savings and investments.