Uhispank's assets grow after merger

TALLINN (ETA) - Estonia's second largest commercial bank Uhispank announced that its assets grew in July by 2.7 billion kroons ($192.8 million) to 14.7 billion kroons as a result of its merger with Tallinna Pank.

Uhispank did not reveal any profit or loss figures for July. The bank separately earned a profit of 81.6 million kroons in six months.

Uhispank and Tallinna Pank finalized their merger on July 28, when the new bank was registered at the business registry.

Uhispank's deputy president Ulo Suurkask said that the bank's market share by assets had increased to 34.2 percent by the end of July from the 23.3 percent at the beginning of the year.

The bank said that according to an initial purchase analysis on Tallinna Pank, that was carried out in July, possible loan losses in Tallinna Pank assets were considered and 124 million kroons of risky loans were written off.

Value of investments to subsidiaries was downgraded by 100 million kroons, most of which on account of Tallinna Pank's Latvian subsidiary Saules Banka.

Tallinna Pank's 1998 losses were written off as well as fees to consultation companies that advised the banks during the merger, merger expenses, bad repo loans, assets that the new bank will not need, and costs of future periods.

The difference between the real value of the merged bank's net assets and purchase price plus merger costs, i.e. goodwill, totals 349 million kroons.

Uhispank will cover the sum over a period of 10 years on account of additional income that the merger should generate.

In addition to goodwill, Uhispank also created additional loan provisions, which by the end of July totaled 220 million kroons, forming 2.9 percent of the bank's loan portfolio.

In July, Uhispank's loan and investments portfolio grew by the assets taken over in the course of the merger. Client deposits grew in July by 1.6 billion kroons of which 1.2 billion kroons were on account of the merger with Tallinna Pank.

Interest income formed 69 percent of Uhispank's income, service fees 22 percent and currency exchange 9 percent. Suurkask said that the merger with Tallinna Pank was considered successful. As a result a quality financial group operating in the whole Baltic region was created. Uhispank's capital adequacy was 10.8 percent, liquidity 39.2 percent and risk concentration 74.7 percent at the end of July.