Nordea Bank AB is ready to buy back shares from the Swedish government should it reduce its stake further in Scandinavia’s biggest lender, Chief Executive Officer Christian Clausen said.
“We now have the mandate to buy back shares and we have the capital resources to do so,” Clausen said in an interview with Bloomberg Television today. “We are not involved in the government process of selling or not selling. If the government starts selling in the market, we have the option to start buying.”
Nordea today reported a 2.7 percent increase in net profit to 794 million euros ($1.03 billion) for the first quarter after impairments dropped 8.7 percent. That helped the bank raise its core Tier 1 capital ratio to 13.2 percent of risk-weighted assets, from 13.1 percent at the end of last year.
Sweden’s government last sold part of its Nordea stake in February 2011, when it generated proceeds of 19 billion kronor ($2.9 billion) through an accelerated book building. That sale reduced the state’s holding to 13.5 percent from 19.8 percent.
Nordea is “monitoring the situation,” Clausen said by phone today. “The simple equation is that it is our duty to protect our shareholders as much as we can.”
Shares in Nordea have risen 17 percent this year, trouncing a 3.3 percent gain in the 40-member Bloomberg index of financial stocks. The shares traded 2.2 percent lower at 72.75 kronor as of 11:43 a.m. in Stockholm.
The government of Prime Minister Fredrik Reinfeldt earmarked Nordea for divestment back in 2006, as part of a broader strategy to sell off holdings in assets including Sweden’s largest phone company, TeliaSonera AB, and mortgage lender SBAB.
The government is using the proceeds from asset sales to help reduce public debt. The nation’s total debt burden, including borrowing by municipalities, will reach 42 percent of gross domestic product this year, the Finance Ministry said April 15. Debt will ease to 41.8 percent of GDP next year, compared with 38.2 percent in 2012, it said.
“I don’t think we could buy the shares directly from the government,” Clausen said. “They probably would have to sell it to the market. We are ready to respond to whatever strategy they choose” and “ensure we have protection also for our shareholders,” he said.