SEB tries to create Baltic banking leader

  • 2000-08-31
RIGA (BNS) - Swedish Skandinaviska Enskilda Banken has announced a cash offer to acquire the remaining shares in Latvia's Unibanka, Estonia's Uhispank and Lithuania's Vilniaus Bankas.

SEB intends to offer 1.9 lats ($3.11) per share in Latvijas Unibanka or 43 percent above the price for the bank's shares on the Riga Stock Exchange at the end of last week.

Latvijas Unibanka said that the above offer required approvals by Latvian and Swedish authorities and the respective documents had already been filed with those authorities, decisions which should come later this month.

SEB's total offer for the three banks amounts to a new investment of some 148 million lats ($242.622 mln).

"SEB can offer a premium at the current share price based on the potential that we see in the full integration of Uhispank and the other two Baltic banks into the SEB Group. At the same time, it is difficult to envisage how further integration can be accomplished under the current ownership structure," Lars Thunell, president and SEB Group chief executive, said. "This is a logical step for SEB and definitely in line with our vision to become the leading e-centric, customer-driven provider of financial services in Europe and our strategic focus on growth companies and financial institutions."

SEB Baltic Holding representatives pointed out to BNS that SEB's intention was to create a banking group which is the clear market leader in the Baltic states, with a focus on Europe.

In November 1998, SEB took an initial strategic stake in the bank, which was increased to a majority share in 1999.

Since 1998, SEB's participation and support has increased the financial strength and improved the credit ratings of Unibanka. In accordance with existing cooperation agreements, organizational structures have been developed and SEB has provided new products, international marketing support and staff training. Return on equity has increased and market capitalization has risen.

"The Baltic region and Latvia are clearly resuming the good economic growth that they have enjoyed since their regained independence," Lars Gustafsson, chairman of the board of SEB Baltic Holding, said.

"The large number of foreign investors, in particular from the Nordic area, and the growing export potential of many local companies has increased the demand for a pan-Baltic banking network and for cost-efficient and reliable international banking services. The ongoing negotiations and future membership in the European Union will further increase this demand," he said.

The bank said that SEB intended to retain Latvijas Unibanka's management and local profile in order to utilize its strong standing in the market. The full inclusion of the bank within a larger European banking group will enable Latvijas Unibanka to provide its customers with better support for their cross-border business, both in the Baltics and in Europe as a whole.

At the same time, it will enable Latvijas Unibanka to maintain its competitiveness in the face of strengthening international competition, through the maximization of business co-ordination and the realization of technical synergies.

Furthermore, SEB intends to develop further Latvijas Unibanka's Internet banking facilities. Currently the bank has an established technical platform and over 12,000 Internet customers.

According to the information provided by Latvijas Unibanka, the present market capitalization of the three Baltic banks is some 180 million lats. Their total aggregate assets amount to 1.6 billion lats.

With 750,000 retail and 114,000 corporate clients, the three banks jointly have a 28 percent market share of deposits and 35 percent of loans in the Baltic states total, which puts the group clearly ahead of competitors. The banks together have 194 branch offices and 4,115 employees.

Latvijas Unibanka has total assets of 397 million lats. With 247,000 retail customers and 32,000 corporate clients, the bank has a 27 per- cent market share of deposits and 32 percent of loans in Latvia.

The SEB Group - Skandinaviska Enskilda Banken with subsidiaries and branches - is a financial institution focused on e-banking, savings and growth companies. SEB is one of the largest financial groups in Scandinavia, with SEK 918 billion ($116 billion) in funds under management and total assets of SEK 1,100 billion as of 30 June, 2000.

SEB now holds 51.4 percent of shares in Latvijas Unibanka. Other large shareholders are Highbridge Services LLC and Swedfund Financial Markets AB.