Tallinn, Helsinki stock exchanges to merge

  • 2001-03-01
  • Aleksei Gunter
TALLINN - Finland's Helsinki Exchanges Group on Feb. 27 offered to purchase more than 50 percent of the Tallinn Stock Exchange to build a stronger securities market in Estonia, the heads of the stock exchanges announced in Tallinn.

Details of the deal will be clearer after the annual general meeting of the stock exchange's major shareholders on Mar. 21, according to Gert Tiivas, CEO at Tallinn Stock Exchange.

"We can't call the 21st a crucial date, but a few days after that a final decision will be made," he said. The Tallinn Stock Exchanges' largest shareholders are Hansapank, Uhispank and LHV Investment bank, with the Estonian Finance Ministry and Estonian Central Bank each holding slightly more than 5 percent.

The offer includes a facilities management arrangement, which would extend Helsinki Exchanges Group's network to Estonia.

The offered sale price is confidential, but the Baltic News Service, quoting unofficial sources, reported the price at over 40 million kroons ($2.3 million).

The new partners plan to enable trading in Estonian securities in the Helsinki exchange trading system this year. The process would be regulated by Estonian law. Clearing and settlement would take place at the Estonian Central Depository for Securities and the Tallinn Stock Exchange would supervise the market activity. Tiivas rejected predictions of the "practical death" of the Tallinn Stock Exchange as a result of the possible delisting of Hansapank thanks to the merger of the two Swedish banks Scandinaviska Enskilda Banken and Swedbank.

"The thing bothering me in recent nights was not the delisting of Hansapank, but attracting new companies to the new stock exchange," said Tiivas.

He added that Hansapank accounts for about 10 percent of the exchange's overall revenues.

According to Eva Palu, spokeswoman at Tallinn Stock Exchange, the overall capitalization of the exchange is about 1.8 billion euros ($1.97 billion), of which 39 percent is attributable to Hansapank.

Helsinki Exchanges Group CEO Jukka Ruuska would not elaborate on possible plans to capture the exchanges in the other two Baltic capitals, which have been seriously considering joining the Stockholm-based Norex stock exchange.

Tiivas added that cooperation with Norex, which includes the Copenhagen, Stockholm, Reykjavik and Oslo bourses, was also being considered in Tallinn but that the supervisory board of the Tallinn Stock Exchange had opted for the Helsinki exchange.

Norex President Poul Erik Skaaning-Joergensen told BNS that the Norex trading system was an alliance relationship between four Nordic stock exchanges which didn't involve mutual ownership.

"We had no information that the Tallinn Stock Exchange was interested in working closely also in the area of structure of owners," Skaaning-Jorgensen said.

Cooperation with the Helsinki Stock Exchange was necessary to liven up trade on the Tallinn bourse, and the announcement also is good news for investors here, Hansabank Markets trader Mattias Mustonen told BNS.

"The bourse had to do something to prevent the market from dying out completely and in this sense it seems that a union would be good news in all respects," Mustonen said.

It is difficult to offer any specific forecasts as this point as it remains unclear whether the requirements for present members will remain valid and what the trading system will exactly look like, he said.

"Generally the cooperation between Helsinki Exchanges Group and the Tallinn Stock Exchange is the most logical option as Estonian investors have invested mostly in Finnish stocks and now those trades will become cheaper," said Mustonen.

Mustonen said however that cooperation with the Helsinki Exchanges Group was the best option for investors, but did not rule out the possibility of the Helsinki exchange also merging in the future.

"It's only a matter of time when the Helsinki exchange will join or enter into cooperation with some bigger stock exchange," he said.

The Riga Stock Exchange is also unlikely to choose Norex as its cooperative partner because of its mediocre offer, a member of the stock exchange council said.

The director of the Latvian investment company Suprema, Roberts Idelsons, said that the Helsinki offer to the Tallinn Stock Exchange could urge Norex to improve its offer for the other Baltic stock exchanges.