The board of directors of BN Bank has resolved to refine the bank as a bank for the retail segment and is winding down its corporate business which consists of lending to commercial property.
The background to this decision is a desire to further develop the retail banking business by cultivating BN Bank as an offensive bank for customers who prefer a self-service concept and favourable borrowing rates over time.
BN Bank is a part of the SpareBank 1 Alliance. SpareBank 1 SMN, which owns 33% stake in BN Bank, will maintain its owner interest in BN Bank and will play its part in ensuring that the business change is carried through in a manner that secures creditors' interests.
The process of winding down the corporate banking business will be carried out in a controlled manner over time. For SpareBank 1 SMN this will in isolation reduce consolidated risk weighted assets and thereby improve capital adequacy.
BN Bank's corporate banking business has focused on funding well secured commercial property exposures, and the corporate market has traditionally been an important area for BN Bank. However, capital adequacy rules that are peculiar to Norway and strong foreign competition from actors operating under far better framework conditions cause return on equity on this low risk segment to be relatively low. There is no prospect of changes to this specifically Norwegian capital adequacy regime. As a result profitability will remain too low since the prices are set by foreign actors operating under other framework conditions.
The bank has in recent years built up a substantial retail banking operation with satisfactory profitability. The board of directors of BN Bank sees a major development potential in this area, and will channel all effort and energy into the retail business. The bank aspires to increased growth and a further increase in profitability.
The downsizing of the corporate loan portfolio includes lending secured for commercial properties, which have been sold and transferred to SpareBank 1 Næringskreditt. SpareBank 1 SMN currently owns 33.8 per cent of the shares in SpareBank 1 Næringskreditt. Approximately NOK 9 billion of SpareBank 1 SMN risk-weighted balance of NOK 90 billion is linked to the portfolio of loans to the corporate market belonging to BN Bank ASA and BN Bank ASAs loans sold to SpareBank 1 Næringskreditt. When completed this will constitute approximately 1.3 percentage point of core capital ratio for SpareBank 1 SMN.
Contact persons at SpareBank 1 SMN:
Group CEO Finn Haugan on +47 900 41 002
Executive Vice President, Finance, Kjell Fordal on +47 905 41 672
This information is subject of the disclosure requirements acc. to §5-12 vphl (Norwegian Securities Trading Act)
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Source: SpareBank 1 SMN via Globenewswire
HUG#1944841