Swedbank aims to buy out Hansabank's minority owners

  • 2005-02-16
  • By TBT staff
TALLINN - Swedbank announced on Feb. 11 that it would propose to buy out minority shareholders in Hansa-bank in an effort to increase its stake from 60 to 95 percent.
Executives of Sweden's ForeningsSparbanken, known as Swedbank, said they would buy Hansabank, which has the highest market capitalization in the Baltics, at 11 euros (172.1 kroons) per share.

By the end of the week shares in Hansa rose 11.5 percent to 11.6 euros (181.5 kroons). Much of the rise was attributed to the bank's financial report last year, as on Feb. 11 it announced that earnings soared 40 percent to 182.8 million euros.

Hansa executives stressed that the offer price was fair. Chairman Carl Eric Stalberg told the Baltic News Service that the offer reflects the bank's value and even contains a considerable premium. According to Swedbank, the offer price of 11 euros per share in Hansabank contains a 16 percent premium compared with the average market price of the share during the past three months.

"Compared with the other Central and East European banks, shares in Hansabank are very highly valued as it is," he said. "Hansapank stock has shown a very steep rise over the past six months, but it is always true that prices rise and fall on the stock exchange."

The market value of the Hansabank Group increased 80 percent last year to 3 billion euros.

Stalberg said several times that there was absolutely no intention to raise the price, and Swedbank had no Plan B if the offer was unsuccessful. If it does not achieve the aim of a 95 percent holding in Hansabank, Swedbank would decide whether to buy only those shares available or to cancel the whole offer.

If Swedbank gets an endorsement of the takeover offer from the financial supervisory authority, the proposal for Hansabank shareholders will be in effect March 1 's April 4.

Already several small shareholders said they weren't interested in selling at the price offered. Businessmen Juri Mois, Neinar Seli and Heldur Meerits said they considered Swedbank's price too low. "Eleven euros is the present level of the market," Seli was quoted as saying. "Usually such an offer is higher, particularly considering Hansa-bank's high growth potential. Looking at [the bank's] growth potential, I wouldn't like to give up my shares," he said.

Meerits said Swedbank's offer contradicted its earlier views on wishing to cooperate with small shareholders. "I don't like the idea of having to sell my shares. I would be glad to continue to be a shareholder in Hansabank in the future," he said. "I am a long-term investor, and the price doesn't suit me, considering the outlook for 10-20 years."

Mois, a founder of Hansabank, said the low takeover price could be caused by the Swedes' clumsy decision-making process. "At the time when they decided the price, 11 euros could have been quite good," he said, adding that this was the current market price and the offer should be 20 percent higher.

Mois said he was astonished that Swedbank had not made a takeover offer earlier.

Speaking of the bank's results, Indrek Neivel, Hansabank's board chairman, said the bank had achieved its goals for 2004, including strengthening its market position. He said efficiency in the group was higher and business operations in Russia had expanded.

The bank's lending portfolio totaled 5.9 billion euros in 2004, up 35 percent year-on-year. Operating profit before tax increased 25 percent to 5.9 million euros.

Neivelt said that Kvest, Hansabank's Russian subsidiary, would open offices in Moscow, St. Petersburg and Kaliningrad this year. He added that there were 21 persons already employed at the bank's Russian unit and that this would rise to a couple of hundred.

At present the bank is waiting for the Russian Central Bank's permission for purchasing Kvest. By summer Hansabank is hoping to raise Kvest's stock capital to $100 million.

In the medium term, Hansabank wants to bring the volume of Russian operations to 10 percent of the bank's risk-weighted assets.

Hansabanka, the group's Latvian branch, said it planned to become the largest bank in terms of assets in the next two years. Board chairwoman Ingrida Bluma told the press Feb. 11 that the bank would stick with the same goals that helped it double earnings last year to 29.3 million lats (41.8 million euros).

With 1.3 billion lats, Hansabanka is currently the second largest bank in Latvia by assets. Parex Bank has 1.4 billion lats in assets, according to the Latvian Commercial Banks' Association.

In Lithuania, the group's branch, Hansabankas, is no less ambitious, saying it would aim for 40 percent profit growth this year in order to become the country's number-one financial services brand by 2007. The bank's profits last year rose 82 percent to 111.1 million litas (32.2 million euros).

"This year our goal is to increase our profit by 40 percent to 155 million litas," Hansabankas CEO Giedrius Dusevicius said at a news conference. He added that the bank wanted to become number one in all major financial services. "We're aiming to earn the highest rating from customers and make our brand the best known in Lithuania."