Here you can find the answers to some important questions. We have grouped the questions in the following categories:
The acquisition
Why has Danske Bank invested in Sampo Bank?
Two of the reasons why the Danske Bank Group decided to acquire Sampo Bank were that the business profile and structure of the bank match those of Danske Bank's desired retail banking focus. In addition, the Finish economy is healthy with a solid basis for growth.
The acquisition of the bank is well in line with our ambition to expand our branch network outside our core market in Denmark. The acquisition will enable Danske Bank to utilise our competencies, in particular regarding product range, efficient and centralised working processes, and IT infrastructure.
Sampo Bank has a large branch network and sound market positions in Finland and the fast-growing Baltics.
When was the deal completed?
The deal was completed February 1, 2007 after approval of the regulatory authorities in the European Union.
How much has the Danske Bank Group paid for the bank?
The Danske Bank Group paid €4.050bn, the equivalent of DKr30.2bn, for the shares of Sampo Bank. The payment was in cash.
How is the deal financed?
The deal is financed in the following way:
- Share capital: approx. DKr14bn
- Hybrid capital and other liquidity: approx. DKr16bn
How much is the Danske Bank Group paying in goodwill for the banks?
The goodwill amounts to DKr17.8bn pre-tax.
How will the goodwill affect the accounts of the Danske Bank Group?The goodwill will be capitalised and included in shareholders' equity. It is therefore subject to impairment test according to IFRS.
When was Sampo Bank consolidated in the Group's accounts?
Sampo Bank was consolidated February 1, 2007.
How much of the goodwill has been allocated to intangible assets?Danske Bank has allocated €0.7bn/DKr5.2bn of the total goodwill to intangible assets. The main component is Customer Relations.
Over how long a period will the intangible assets be amortised?
The intangible assets of €0.7bn/DKr5.2bn will be amortised over 5-10 years.
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Sampo BankWhat are the characteristics of Sampo Bank?
Sampo Bank (
www.sampopankki.fi/english/) is the third-largest bank. It has subsidiaries in Estonia, Latvia and Lithuania and recently acquired a small bank in Russia. Sampo Bank has 125 branches in Finland and about 3,500 employees. Its subsidiaries in Estonia, Latvia and Lithuania have a total of 33 branches and some 1,100 employees.
Sampo Bank's business focus is on retail customers, small and medium-sized business customers and institutional clients.
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 with retail customers is within home financing.
Sampo Bank is technologically advanced and has 800,000 online banking customers.
Most of the bank's business originates in Finland, but the subsidiaries in Estonia, Latvia and Lithuania have seen considerable growth and rising market shares within home financing in particular. Sampo Bank is the third-largest foreign bank in the Baltic region.
In 2006, Sampo Bank took over Industry and Finance Bank in St. Petersburg with a view to expanding its potential for serving large Finnish corporate customers doing business in Russia.
In 2005 Sampo Bank acquired an asset management company from Sampo Group. Those entities are now grouped in the Asset Management and Funds segment of Sampo Bank. The asset management entity is a leading asset manager in Finland, with mutual fund assets under management of €11bn and a market share of approx. 20% at end-2006.
Read more about Sampo Bank in the presentation
Sampo Bank (PDF 694 KB). You can also download key figures in a
financial spreadsheet (XLS 153 KB).
How good is the credit quality of Sampo Bank?
The bank's portfolio amounts to €21.559bn. The credit quality is high, and losses are historically low. Mortgages comprise 43% of the loan exposure.
At end-2006, Sampo Bank had the following rating
Retail lending accounts for approximately 47% of the total portfolio. Of this 47%, mortgages account for more than 39%.
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The Finnish marketWhy Finland?
The market in Finland is characterised by good macroeconomic conditions and strong consumer confidence. GDP grows approx. 3% per annum, and this is expected to continue over the next few years. The unemployment rate is 7.9% and is expected to fall in the coming years.
Who are the main competitors?
These are the major competitors in Finland:
Nordea has a retail and corporate focus. The bank is a major player in all Nordic countries except Iceland, Faeroe Islands and Greenland. The company is listed, and among main shareholders are the Swedish Government (20%) and Nordea-Danmark fonden (4%).
OP Bank Group announced in 2005 a merger with the insurance group Pohjola. The group consists of 231 independent member cooperatives and is listed.
What is the competitive situation like in the Finnish banking market?
The Finnish banking sector is more profitable and cost-effective than the EU sector overall due to the rapid adaption of new technology, expansion of banking markets and the rationalisation of the banking sector after the crisis in the early 1990s. Many Finnish banks have succeeded in using technology to reduce cost and improve efficiency.
The number of banks operating in Finland has been relatively stable for a number of years. The four largest banking groups represent roughly 95% of total assets: Nordea Bank Finland group, with a market share of 60%; OP Bank Group, with a market share of 20% (231 member banks); Sampo Bank, with a market share of 15%; and savings banks, with a market share of under 5% (40 member banks). The number of branches has declined in the last decade.
According to the Finnish Bankers’ Association, roughly 4% of Finnish household customers switch banks each year. The Finnish Bankers’ Association has reported that every fourth customer has an account in more than one bank.
Read the presentation The markets (PDF 351 KB) for further information about the Finnish and Baltic macroeconomics and the banking sectors.
How high are the margins in the Finnish markets?
Margins have been under pressure because of intense competition among banks. The average lending margins are decreasing marginally. Mortgage lending margins were 0.69%. We expect margins on lending will continue to show a gradual decline.
On the deposit side, margins have been increasing due to the higher short term interest rate environment.
What have lending volumes been like in the market?
There are three important factors driving lending growth in Finland:
- the underlying growth of the economy
- low interest rate environment
- increasing commercial property values
Real house prices in Finland rose by 3.8% p.a. from 2000-2005, compared with 5.5% in Denmark during the same period, with a recent acceleration in the Helsinki region.
The Baltic countries have seen strong economic growth over the past few years. It is expected to slow in the near future, but will still be at comparatively high levels. This has led to strong growth in lending levels within retail as well as corporate loans.
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Capitalisation and targets for Danske BankWill Danske Bank change its capital targets because of the acquisition?
Yes, the targets for the capital structure has been changed as a consequence of the migration to CRD/Basel II and the increased diversification that follows from the acquisition of Sampo Bank:
- Core capital ratio, ex hybrid capital, 5.5%-6.0% (previously 6.0%-6.5%)
- Hybrid capital 1.0%-1.5% (previously 0.5%-1.0%)
- Core capital ratio, incl. hybrid capital, 6.5%-7.5% (unchanged)
- Solvency ratio 9.0%-10.0% (unchanged)
- Dividend payout ratio: 30%-50% (unchanged)
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Danske Bank in 2007How will the acquisition affect Danske Bank's earnings?
Revenues and costs will rise because of the consolidation of Sampo Bank into the Danske Bank Group's accounts. However, integration costs will offset some of this positive effect in 2007.
The acquisition is expected to be accretive to earnings per share in the second half of 2008.
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Business developmentHow large do you expect the cost and funding synergies to be?
We expect the cost and funding synergies to amount to DKr610m. The synergies will mainly derive from IT expenses and shared service centre.
We expect to achieve about 10% of the synergies in 2007, 70% in 2008 and 100% in 2009.
How will you grow the business?
We expect to grow the business by utilising the increased efficiency, introducing new products and improving product and service offerings after the conversion to the shared platform.
What kind of trend do you expect to see in loan volumes?
In 2007 and 2008, we expect growth rates at the level of, or slightly higher than, market growth. However, we expect that growth might take a temporary dip around the conversion to our central IT platform, as we saw in Ireland.
The conversion to our central IT platform will provide the bank with a full product palette and improved service offerings, and this will lead to increased growth and improved returns. However, we have not designated any specific target for the return on equity at Sampo Bank.
Tight cost control is considered an important part of the Danske Bank story. Will this be mirrored in this acquisition?
Danske Bank has always focused on improving existing processes and systems, and we will continue to do so.
Will you change the logos of Sampo Bank?
The strategy of local branding, which has been a cornerstone of our operations in Sweden, Norway and Ireland, will also be used in Finland and the Baltics. The name of the bank will therefore be kept, and the logo will be redesigned and adapted to Danske Bank's general design standard.
Go to the topLast updated on January 31, 2008