Norway Bank Mergers & Acquisitions (DNB)

 

Photo: Norwegian bancassurance DnB NOR's London branch at the corner of St. Dunstan's Hill and Lower Thames Street.  In December 2011, DnB NOR was renamed DNB.

 

Photo was taken during my Yorkshire & London trip in 2007.

 

Prelude to Norway’s Wave of Banking Consolidations

 

Norway, like the rest of Scandinavia, had a highly fragmented banking system until the 1990s. Before that time, Norway's retail banking sector was dominated by small, regional banking co-operatives that were mutually-owned by the banks’ customers. In the mid-1980s, a credit-fuelled (over-lending) boom across Scandinavia led to an unsustainable real estate bubble that began to unravel in the late 1980s. The subsequent pan-Scandinavian real estate slump coincided with a global economic recession that resulted in a serious banking crisis in Norway.

 

By 1991, bank failures had depleted both the savings banks’ guarantee fund and the commercial banks’ guarantee fund and the government stepped in to intervene the beleaguered banking industry. Many small, regional savings banks were consolidated into larger ones, and the country’s largest bank DnB was nationalized in 1991.

 

DNB ASA

 

The present-day DNB (formerly DnB NOR) was created when Sparebanken NOR, insurance-pension group Gjensidige Forsikring and DnB (Den norske Bank) combined between 1999 and 2003.

 

 

DnB (Den norske Bank)

 

DnB’s history goes back to the 1855 establishment of Bergens Privatbank in Bergen, the second largest city in Norway. Two years later, another commercial bank known as Den norske Creditbank (DnC) was founded in the capital city of Oslo. In 1928, the Bergens Kreditbank was founded. Bergens Privatbank and Bergens Kreditbank eventually combined in 1975 to form Bergen Bank.

 

Meanwhile, Den norske Creditbank grew to become Norway’s largest bank during the 20th century, but it was hit very hard by the late 1980s real estate slump. In 1990, the ailing DnC merged with Bergen Bank to form Den norske Bank (DnB). Unfortunately, putting two sick banks together really did not solve the bad loan problem. Just one year later, Norway’s No. 1 bank Den norske Bank had to be rescued by the government and was nationalized.

 

 

Gjensidige Forsikring

 

In 1689, a clergyman and community leader named Jens Colstrup in Nes in present-day Norway lost his family and parsonage in a tragic fire. Seeing the emotional and financial devastation the fire caused him, he established a mutual fire insurance business to provide a sense of security and financial compensation for the locals against fire losses. While the Gjensidige group can be remotely traced back to Jens Colstrup’s fire insurance company, Gjensidige in its present form dates from the 1810s and 1820s. In 1816, a mutual fire insurer called Lands Brannkasse (“brannkasse” is Norwegian for “fire chest” or “fire treasury”) was established. This was followed by the 1823 founding of the Ringsaker Brannkasse. The Lands Brannkasse did not fare well and shut down in 1829, though the Ringsaker Brannkasse became part of Gjensidige.

 

The number of such mutual fire insurers blossomed during the 19th century and by 1920, some 260 mutual fire insurers existed across Norway. Each often confined to a small and specific market, these regional insurers were exposed to potentially devastating payout liabilities if a major fire were to affect their insured clients. In recognition of such risks, the 260 mutual fire insurers in collaboration with the Landkreditt (a mortgage credit association) and the Norges Bondelag (the Norwegian Farmers’ Union) created a joint superstructure called Samtrygd, Norsk Gjensidige Forsikringsforening (“Norwegian Mutual Insurers Association”). Samtrygd acted as the ultimate re-insurance company to collectively share the 260 fire insurers’ risks.

 

Meanwhile, in the 1840s, Norwegian mathematician Ole Jacob Broch was commissioned to investigate the application of the relatively new discipline of actuarial science in assessing life insurance risk and premiums. In 1847, Mr. Broch launched Scandinavia’s very first life insurance company, the Christiania almindelige, gjensidige forsørgelsesanstalt (literally, the Christiania [present-day Oslo] General, mutual provident institute). Christiania almindelige changed its name to Gjensidige Liv (meaning “Mutual Life” in English) in 1893 and in 1932, adopted the now familiar Watchman logo.

 

In 1958, Samtrygd won approval to offer all types of insurance products in addition to its original mandate of re-insuring Norway’s mutual fire insurers. Samtrygd took over auto insurer Norsk Bilforsikring Gjensidige (NBG) in 1974. Following a co-operation agreement with Gjensidige Liv in the same year, Samtrygd changed its name to Gjensidige Skadeforsikring (skadeforsikring means “damage insurance” in Norwegian), offering property and casualty insurance of its own and some of Gjensidige Liv’s life insurance products. After over a decade of co-operation and courtship, Gjensidige Skadeforsikring and Gjensidige Liv finally combined in 1985, under the new name of Gjensidige Forsikring.

 

Gjensidige Forsikring acquired automobile leasing company ELCON Finans in 1987. The name ELCON stands for “Equipment Leasing Co. of Norway.”

 

 

Sparebanken NOR

 

In 1822, a savings bank called Christiania Sparebank was established. Christiania was the old name of Norway’s capital city Oslo, whereas sparebank is the Norwegian word for “savings bank.” This savings bank was probably modelled after the savings bank movement in Scotland and Germany earlier in the 18th century.

 

In 1925, Christiania restored its original name of Oslo, and Christiania Sparebank changed its name to Oslo Sparebank in 1926. Subsequently, the savings bank changed its name again to Sparebanken Oslo/ Akershus. In 1985, it merged with Fellesbanken (founded 1920) to create Sparebanken ABC. In the midst of Norway’s banking crisis, Sparebanken ABC merged with four other eastern Norwegian savings banks in 1990 and adopted the new name of Sparebanken NOR, which marketed itself as the “Union Bank of Norway” in English.

 

This Sparebanken NOR can trace its heritage to more than 100 local savings banks.

 

Recent transaction(s):

• In 1992, Gjensidige Forsikring bought Inter Nordisk Bank A/S. The insurer subsequently created Gjensidige Bank in 1993 to add banking services to its insurance products.
• In 1993, Gjensidige Forsikring bought rival pension fund and insurance provider Forenede-Gruppen A/S (Forenede Forsikring).
• Between 1993 and 1996, the Norwegian government gradually reduced its holding of DnB to 52% following the nationalization of the bank in 1991.
• In 1996, DnB took over insurer and pension manager Vital Forsikring.
• In 1999, Sparebanken NOR (Union Bank of Norway) merged with Gjensidige Forsikring to form Gjensidige NOR.
• Also in 1999, DnB acquired Postbanken under the increased competition from foreign banks' expansion in Norway.
• In 2002, DnB took over insurer Skandia's global asset management operations for SEK 3.2-billion. The purchase gave DnB an additional NOK 245-billion of assets under management.
• In 2002, bancassurance group Gjensidige NOR was re-organized into non-life insurer Gjensidige NOR Forsikring and life insurance-banking group Gjensidige NOR Spareforsikring, both as subsidiaries of parent firm Gjensidige NOR ASA, which was listed on the Oslo stock exchange later in the same year.
• Also in 2002, DnB took over Nordlandsbanken for NOK 1.05-billion.
• Also in 2002, DnB acquired the asset management operations from Sweden’s Skandia insurance group for Eur 347-million (SEK 3.2-billion). The unit purchased had Eur 30.3-billion (SEK 280-billion) in assets under management.
• In 2003, DnB Holding ASA and Gjensidige NOR ASA merged to form DnB NOR ASA. The transaction valued Gjensidige NOR at NOK 18.3-billion (USD $2.46-billion, Eur 2.33-billion).
• In 2004, DnB NOR sold leasing firm ELCON Finans to Spain’s Banco Santander for NOK 3.44-billion (EUR 400-million). The sale was part of the conditions imposed by the government to approve the DnB-Gjensidige NOR merger.
• In 2005, however, the DnB-Gjensidige NOR merger was partially unwound when Gjensidige NOR Forsikring (the non-life insurance business) was spun off from the DnB NOR group. It subsequently restored its former name of Gjensidige Forsikring. The banking and life insurance operations of the former Gjensidige NOR group (Gjensidige NOR Spareforsikring) stayed with DnB NOR. Then in 2007, the now independent Gjensidige Forsikring re-set up an on-line bank called Gjensidige Bank.
• Following the partial de-merger, the banking operations of DnB NOR became known as DnB NOR Bank; the automobile and property and casualty insurance division became known as DnB NOR Skadeforsikring; and the life insurance division continues under the name Vital Forsikring.
• In 2006, DnB NOR and Germany’s Norddeutsche Landesbank (Nord/LB) established a joint-venture bank named DnB NORD. Based in Denmark, DnB NORD was 51% owned by DnB NOR and 49% owned by Nord/LB. It had 130 branches in Denmark, Estonia, Latvia, Lithuania, Finland and Poland though most of the customers are in Latvia and Lithuania.
• In 2006, DnB NOR’s 51%-owned Danish subsidiary DnB NORD bought 73.6% of Poland’s BISE Bank for Eur 140-million. BISE Bank had 46 branches in Poland.
• In 2007, DnB NOR bought auto financing firm SkandiaBanken Bilfinans’ operations in Sweden and Norway for NOK 1.9-billion. The operations acquired had 115,000 customers and a loan portfolio of NOK 11-billion.
• In 2010, DnB NOR’s Danish subsidiary DnB NORD bought the remaining stake of Poland’s Bank DnB NORD Polska from Nord/LB.
• Also in 2010, DnB NOR exercised its call option to buy the remaining stake of Danish-based DnB NORD from Norddeutsche Landesbank (Nord/LB). DnB NORD became wholly-owned by DnB NOR following the purchase.
• In December 2011, DnB NOR changed its name to DNB.

 

 

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Sweden/ Scandinavia Bank Mergers & Acquisitions (Nordea Bank)

Photo: A Nordea Bank office in Copenhagen, Denmark.

With special thanks to Johan Bakken of Norway, who kindly granted me the permission to use his photo. You can see more of Mr. Bakken's photos via this link: http://www.flickr.com/photos/johanbak/


Nordea Bank AB

Stockholm-based Nordea Bank group is one of Scandinavia's largest banks. The pan-Scandinavian bank has four national home markets: Sweden, Denmark, Norway and Finland. In addition, the bank also operates in Lithuania, Estonia, Latvia, Poland and Russia. Nordea was formed in 2000 but its earliest component was established in 1820 in Denmark. Since that time, over 250 banks have been amalgamated into today's Nordea.


Unidanmark/ Unibank (Denmark)

SDS Bank A/S

The earliest predecessor of the present-day Nordea Bank was founded in 1820 under the name Sparekassen for Kjøbenhavn og Omegn in Denmark. Unlike most banks in existence at the time that catered to wealthy merchants, Sparekassen for Kjøbenhavn og Omegn's main goal was to encourage savings and to provide banking services for the ordinary people. Interestingly, the savings bank counted Hans Christian Andersen (1805 to 1875), the famous children’s book author, as one of its clients. Over the years, the bank subsequently became Sparekassen København-Sjælland.

In 1973, Sparekassen København-Sjælland joined forces with two other major Danish savings banks Sparekassen Midtjylland and Sparekassen Falster-Østlolland to form Sparekassen SDS. The combination was in preparation to legislation changes in 1974 that relaxed the types of services that Danish savings banks could offer to corporate clients. In 1988, the Danish Parliament passed legislation allowing savings banks to convert to joint-stock status. In 1989, Sparekassen SDS converted itself into a limited-liability bank called SDS Bank A/S. SDS operated 316 branches as of 1989.

Privatbanken A/S

In 1857, Privatbanken i Kjøbenhavn was founded by a group of Copenhagen businessmen. During its first 100 years, the bank mainly focused on the commercial banking market by providing loans and discounting bills for larger businesses. Only after World War II did the rise of the middle class turn Privatbanken’s attention to individual clients. Over the years, Privatbanken acquired 25 smaller rivals; by 1989, the bank’s network had expanded to 189 full-service branches within Denmark, plus overseas offices in Luxembourg, New York and Singapore.

Andelsbanken A/S

In 1925, Den Danske Andels- og Folkebank was established to act as the central bank for a number of co-operative banks in the agricultural and food processing sector. In 1974, Andelsbanken/ Danebank became a public limited company. During the 1980s, Andelsbanken acquired a number of domestic rivals and by 1990; it had 230 branches in Denmark plus offices in the Isle of Man and Singapore.

In 1990, these three Danish banks Andelsbanken A/S, Privatbanken A/S and SDS Bank A/S merged to form Unibank under a holding company called Unidanmark. In 1999, Unidanmark took over Danish insurer Tryg-Baltica A/S. In the same year, Tryg-Baltica bought Norwegian insurer Vesta.


Nordbanken (Sweden)

Sweden’s Nordbanken just before its merger with Finland’s Merita Bank in 1997 can trace its history to four major Swedish banks: the original Nordbanken, PKbanken, Sveriges Kreditbank and Gota Bank.

Nordbanken (Nordbanken, PKbanken, Sveriges Kreditbank)

In 1864, a bank closely connected to Sweden's forestry sector was founded under the name of Sundsvallsbanken. One year later, the Uplandsbanken was founded. In 1986, Sundsvallsbanken and Uplandsbanken merged to form Nordbanken.

In 1884, the Postsparbanken was founded by the Swedish government to provide nationwide competition to the private-sector banks. Postsparbanken was renamed Postbanken subsequently. In 1920, it became under the administration of the Svenska Postverket (Swedish Post Office).

In 1917, the predecessor of Sveriges Kreditbank, the Lantmannabanken (loosely translated to “Rural People’s Bank”) was founded. The bank failed in 1923 during an economic crisis and was nationalized and renamed Jordbrukarbanken (“Farmers Bank”). This bank subsequently renamed itself the Sveriges Kreditbank (“Swedish Creditbank"). In 1974, the Swedish Parliament transferred the banking business of Postbanken to the state-owned Sveriges Kreditbank. The new bank adopted the name Post- och Kreditbanken, or PKbanken. PKbanken gained market share rapidly from about 11% to 22% between 1974 and 1977. As PKbanken expanded rapidly, more capital was needed and an IPO was launched to list the bank on the Stockholm stock exchange in 1984.

In 1990, PKbanken acquired Nordbanken but the enlarged bank kept the Nordbanken name. The bank suffered severe losses during the pan-Scandinavian economic crisis in the early 1990s. At one point, close to half of the bank’s corporate loan portfolio was in danger of default, and the bank was fully nationalized in September 1992. In 1993, the state-owned Nordbanken further absorbed Gota Bank (see below), another ailing Swedish bank.

By 1995, Nordbanken had been nursed back to financial health and the Swedish government listed 30% of its stock on the Stockholm stock exchange in October and raised SKR 5.9-billion (USD $888-million).

Gota Bank

In 1848, a group of Gothenburg merchants founded their own bank, Göteborgs Privat Bank. In 1858, following the lead of Stockholm Enskilda Bank, Göteborgs Privat Bank changed its name to Göteborgs Enskilda Bank. In 1898, the bank merged with the Stockholms Diskontobank, which specialized in discounting bills. In 1903, it was transformed into a public limited company and renamed Göteborgs Bank. Further expansion happened when it acquired the Kopparbergs Enskilda Bank. In 1972, after a merger with Smålandsbanken (founded 1837), the Göteborgs Bank adopted the name Götabanken.

In 1990, Götabanken, Wermlandsbanken (founded 1832) and Skaraborgsbanken (founded 1865) consolidated to form the new Gota Bank. The Scandinavian economic and banking crisis in the early 1990s saw the nationalized Nordbanken taking over the ailing Gota Bank in 1993.


Christiania Bank og Kreditkasse (Norway)

In 1848, the earliest Nordea constituent bank in Norway was founded in Oslo (called Christiana at the time) under the name Christiania Kreditkasse. The bank was established by the local trade association with the expressed aim to provide modern banking for the business community. Interestingly, Christiania Kreditkasse’s attempt to expand outside of Oslo was met with great resistance. Local business interests in other towns shunned the Oslo bank, while the Oslo merchants also protested against draining the bank’s working capital out of the capital city.

During the 1920s and 1930s, Norway experienced three major economic crises and hundreds of smaller banks failed and were amalgamated into the dozens of stronger banks.

In the early 1980's, Christiania Bank og Kreditkasse bought several other Norwegian banks. However, by 1990, a severe banking crisis in Norway forced the bank into bankruptcy and the Norwegian government took control of Christiania Bank og Kreditkasse. As the bank's financial health recovered, the Norwegian government gradually sold its holdings in Christiania Bank og Kreditkasse to the public from 1995 onwards.


Merita Bank (Finland)

In 1862, Suomen Yhdyspankki ("Finnish Union Bank"), Finland's first commercial bank was established. Finland at the time was an autonomous republic of the Russian Empire. Even though a number of co-operative savings banks had existed in Finland since the 1820s, they proved too small and their operations too regional to serve the rapidly industrializing national economy. Within its first year, 10 branches were opened throughout the country.

Finland gained official independence in 1917 and the need to become self-reliant became even more urgent. In 1919, Suomen Yhdyspankki merged with a rival commercial bank called Pohjoismaiden Osakepankki ("Nordic Joint-Stock Bank") to form the Pohjoismaiden Yhdyspankki ("Nordic Union Bank"). During the tough times of the 1930s, the prudently-managed Pohjoismaiden Yhdyspankki took over a number of smaller commercial banks that had become insolvent.

During the 1960s and 1970s, Pohjoismaiden Yhdyspankki opened offices overseas in Geneva, London, Luxembourg, New York, Paris and Singapore.

In 1975, the bank became known as the Union Bank of Finland internationally, and its Finnish name was reverted back to Suomen Yhdyspankki. The bank merged with Helsingin Osakepankki, Finland’s No. 3 bank, in 1986.

The pan-Scandinavian real estate bust of the early 1990s severely destabilized the region’s economy and banking system. In Finland, Suomen Säästöpankki (The Finnish Savings Bank) failed in 1993 and its operations were split four-way between the Union Bank of Finland, Kansallis-Osake-Pankki ("National Joint-Stock Bank," also known as KOP Bank) and two other Finnish banks. Just the year before, Kansallis-Osake-Pankki had already taken over Suomen Työväen Säästöpankki (the savings bank belonging to the Finnish labour movement). Kansallis-Osake-Pankki itself was founded in 1889 by the Finnish national movement before Finland gained independence from Russia in 1917.

In 1995, further consolidation saw the merger between the Unitas Ltd. (parent company of the Union Bank of Finland) and Kansallis-Osake-Pankki. The enlarged entity adopted the new name Merita Bank.

Recent transaction(s):

• In 1997, Finland's Merita Bank merged with Sweden's Nordbanken to form the MeritaNordbanken. This was the first cross-border merger of the constituent banks that would later become Nordea.
• In March 2000, Finnish-Swedish bank MeritaNordbanken merged with Denmark's Unidanmark in a deal worth Eur 4.80-billion (USD $4.0-billion or 5.0 billion). Nordic Baltic Holding was created as the parent company of MeritaNordbanken and Unidanmark.
• In October 2000, Swedish-Danish-Finnish bank Nordic Baltic Holding acquired Norway's Christiania Bank og Kreditkasse for NKR 24.3-billion (USD $3.11-billion). Nordic Baltic Holding now had four national home markets: Denmark, Finland, Norway and Sweden.
• In early 2001, Nordic Baltic Holding renamed itself Nordea. The name was chosen by combining the words "Nordic" and “idea”.
• In 2001, Nordea bought Sweden's Postgirot Bank for SEK 4.1-billion (Eur 440-million). PostGirot subsequently was renamed PlusGirot.
• In May 2002, Nordea bought 54.3% of Polish bank LG Petro Bank for Eur 128-million from Korean conglomerate LG.
• In June 2002, Nordea sold its general insurance business to Tryg I Danmark for Eur 760-million.
• In June 2004, Nordea bought Kredyt Bank's operations in Lithuania.
• In September 2004, Nordea participated in the capital increase of Russia’s International Moscow Bank (IMB) for USD $100-million, raising Nordea’s stake in IMB from 21.7% to 26.4%.
• In June 2005, Nordea bought Sampo Bank’s life insurance and pension business in Poland for Eur 95-million. The purchase included Sampo PTE and Sampo Life.
• In June 2006, Nordea divested its entire 26.4% stake in International Moscow Bank to Italy’s UniCredit SpA. The value of the sale was believed to be about USD $463-million.
• In November 2006, Nordea bought a 75.01% stake in Russia's JSB Orgresbank for Eur 246-million (USD $314-million).
• In March 2008, Nordea sold its global custody business to JPMorgan Chase. The business unit sold administered Eur 200-billion of assets.
• In April 2009, Nordea raised Eur 2.5-billion (USD $3.52-billion) in new capital from a rights issue.
• In August 2009, Nordea bought Fionia Bank from Denmark’s Finansiel Stabilitet A/S. Fionia collapsed early in 2009 after massive loan losses and was nationalized by the Danish government. Nordea gained 29 branches in Denmark from the Fionia purchase, which excluded the bad assets of the bank.
• In June 2013, Nordea sold its Polish bank, life insurance and financing businesses Nordea Bank Polska to Poland's largest bank Bank PKO Polski for Eur 694-million (USD 925-million).
• During the summer of 2016, Nordea approached the Dutch government to acquire the majority-state-owned ABN AMRO, but the Dutch government was not interested in selling its stake. At the time, ABN AMRO had a market value of over EUR 17.0-billion after government partially re-floated the bank in 2016.
• In December 2019, Nordea agreed to purchase Norwegian-based SG Finans from France's Société Générale for EUR 575-million (USD $634-million). SG Finans provides equipment finance and factoring solutions in Norway, Denmark and Sweden.

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