Spar Nord Bank A/S (SPNO), Denmark’s fourth-largest listed lender, is seeking to buy parts of FIH Erhvervsbank A/S as industry consolidation resumes six years after the nation’s property bubble burst.
Spar Nord has “expressed its interest” to FIH, the Aalborg, Denmark-based lender said today in a statement. In a separate release, closely held FIH said it had started a process to investigate a sale of its units.
Spar Nord Chief Executive Officer Lasse Nyby previously expressed frustration that potential targets were resisting offers, hampering his efforts to expand through acquisitions. Spar Nord said today that buying parts of Copenhagen-based FIH, which has assets of 27.5 billion kroner ($5.06 billion), would help it increase its corporate lending business.
“This deal will have more value for Spar Nord than for most others as it’ll deliver clients the bank wants, but has found difficult to recruit,” Christian Hede, a Copenhagen-based analyst with Nordea Markets, said by phone. “If Spar Nord is allowed to cherry pick from FIH they’ll be able to take on exactly the amount of loans they can carry on their balance sheet without having to raise more equity.”
Spar Nord shares rose as much as 3.3 percent to 63.50 kroner, the highest price since May 20, 2008. The stock added 2.4 percent to 63 kroner at 11:05 a.m. in Copenhagen. The shares jumped 91 percent in 2013 compared with a 19 percent advance in the Bloomberg Europe Banks and Financial Services Index.
FIH reported 2013 net income of 228 million kroner compared with a 1.54 billion-krone net loss a year earlier. It specializes in providing loans to Denmark’s small and medium-sized companies. It also owns a corporate finance unit and a markets division.
Denmark’s community banks suffered a crisis after the nation’s property market plunged 20 percent from a 2007 peak through last year. Since 2008, 62 community banks have been wiped out, a government-appointed commission said in September.
Jyske Bank A/S, Denmark’s second-largest listed bank and Spar Nord’s biggest rival in western Denmark, said Feb. 24 it agreed to buy BRFkredit A/S for about 7.4 billion kroner to expand in mortgage lending.
Spar Nord has said it has room to absorb an extra $1.2 billion in risky assets through takeovers. Last month Nyby said the bank would consider giving up its takeover search within a year as investors start demanding reserves be paid out as dividends. Spar Nord’s most recent acquisition was its November 2012 takeover of Sparbank A/S.