Sydbank A/S, Denmark’s third-largest listed lender, is defending its decision to pay a 110 percent premium on a community bank amid industry concerns acquisition targets are asking too much.
“We have done a thorough review that showed what a takeover” of DiBa Bank A/S “could mean for Sydbank,” Anders Thoustrup, chairman of Aabenraa, Denmark-based Sydbank, said today in a phone interview. “We think that we can defend offering that price.”
Sydbank offered to pay 145 kroner a share today for DiBa, compared with Friday’s closing price of 69 kroner, after the smaller lender said it was exploring options to help comply with capital requirements. Five years after Denmark’s housing bubble burst, banks in Scandinavia’s worst-performing economy are still struggling with the fallout of loan losses. The nation’s remaining healthy banks are now trying to grow through takeovers to compensate for slow economic growth.
“We want more volume,” Thoustrup said. “If you look at the banking market in Denmark, it is difficult to grow.”
Sydbank’s takeover of DiBa, which has won board approval, values the Naestved-based lender at 478.5 million kroner ($86 million) and follows measures at DiBa to cut costs and build capital. DiBa reported in August a solvency ratio of 16.3 percent compared with 12 percent at the end of 2012. Sydbank said the acquisition will have a limited impact on its own solvency.
Shares in Denmark’s 23 smallest listed lenders have jumped about 27 percent since July amid speculation that the country’s strongest lenders would tap their growing capital reserves to make acquisitions.
“There are more buyers than sellers,” said Lasse Nyby, chief executive officer of Spar Nord Bank A/S, Denmark’s fourth-largest listed lender, in an interview this month. He also warned of “price wars” complicating the process of consolidation.
DiBa said in September, and again last month, it was in negotiations to be bought.