Uhispank announced that a Swedish banking group, Skandinaviska Enskilda Banken (SEB), was interested in acquiring the remaining shares in Estonia's Uhispank, Latvia's Unibanka and Lithuania's Vilniaus Bankas. SEB presently owns 50 percent of Uhispank and Unibanka and 41 percent in Vilniaus Bankas.
SEB is now ready to pay 40 percent above the last closing price for each remaining share in order to get full ownership in the three banks and create a market leader in the Baltics.
Indrek Neivelt, chairman of the board at Hansapank, said that competition in the banking market was becoming very tight after SEB's acquisition of the three Baltic banks.
"There is a big difference in whether SEB owns 50 percent or the whole 100 percent in Uhispank. It will definitely make us work harder," he said.
Hansapank, 55 percent of which belongs to the Swedish banking group Swedbank, is the market leader in Estonia and the Baltics at present. Neivelt said Hansapank's market share in Estonia is 55 percent, while Uhispank controls 30 percent of the market.
Hansapank's total share in the Baltics is 24 percent of deposits and 26 percent of loans, but the three banks within the SEB group will have a joint 28 percent market share of deposits and 35 percent of loans in the Baltic states, which puts them clearly ahead of Hansapank.
"Hansapank is growing fast both in Latvia and Lithuania, although our presence in Lithuania is very small," said Neivelt. According to Estonian press, Hansapank wants to buy Lithuania's Taupomasis Bankas in order to increase its size.
The third biggest bank in Estonia is Optiva Pank, which was recently taken over by the Finnish banking and insurance group Sampo.
Hansapank's market capitalization is 680 million euros ($607 million). The present market capitalization of Uhispank, Unibanka and Vilniaus Bankas is 5.2 billion kroons ($304 million), and their total aggregate assets amount to over 46 billion kroons.
Kristi Liiva, spokesman for Hansapank, said that although Hansapank's market share of loans and deposits is smaller than Uhispank's market share, its market capitalization is bigger due to its other activities like, for example, leasing business. Hansapank controls 70 percent of Estonia's leasing market, and approximately 30 percent of Latvia's and Lithuania's leasing markets.
SEB's total offer for the three banks amounts to 3.7 billion kroons, 1.2 billion of which is offered to Uhispank's clients. While SEB intends to pay 41 percent over the last closing price of Uhispank's share on August 25, the total amount of premiums for 33 million Uhispank's shares is about 363 million kroons.
According to the business daily Aripaev, two-thirds of the shares belong to foreigners through foreign accounts. Uhispank has a total of 4,399 shareholders, 92 percent or 412 of which are retail customers. Aripaev believes that one-third of the money received from the sales of Uhispank shares may stay in Estonia.
According to Maris Lauri, an analyst from Hansapank, the big supply of money on the local market after the SEB's offer may result in a short-run decrease of interest rates.
The price of Uhispank's share increased by 37.41 percent from 27 kroons on Aug. 25 to 37.10 kroons on Aug. 28, when the news on SEB's decision was announced. Although the price of Hansapank's share increased only by 3 percent during the same period, the turnover of shares traded was almost 3 million kroons more than Uhispank's turnover.
Jaak Raivo, director of capital market division at Uhispank, said that a number of small shareholders saw the opportunity to earn 10 kroons per share over the weekend and sold their Uhispank's shares at once.
"They bought Hansapank, Merko, Norma, Viisnurk and Kaubamaja shares in return, because they saw new opportunities in these companies, which will soon be sold to foreign investors. Many investors believe that Hansapank will soon be taken over by Swedbank," said Raivo.
Raivo said that a lot of companies are planning to leave the Tallinn Stock Exchange including Norma, Merko, Viisnurk, Klementi, Baltika, Rakvere Lihakombinaat, Optiva Pank, Reval Hotelligrupp, Estiko and Tallinna Kaubamaja.
"Most of them are leaving due to foreign investments. The few big companies which stay will be included in the big Scandinavian stock exchange list. Some big companies, such as MicroLink and Hansa-tee, will probably enter the Tallinn Stock Exchange at the same time," he said.