SpareBank 1 SR-Bank boosts equity by NOK 1.2 billion, including private placings to Gjensidige Forsikring BA.

SpareBank 1 SR-Bank is issuing equity certificates totalling NOK 1,200 million, of which approx. NOK 866 million is in the form of two private placings to Gjensidige Forsikring BA, and approx. 330 million is in the form of a public rights issue. Furthermore, the bank plans a private placing of up to NOK 90 million to its employees.
The board of SpareBank 1 SR-Bank resolved at a meeting on 24 September to present the issue proposals to the bank's Supervisory Committee. In total, the offerings will provide the bank with equity of between NOK 1,200 and 1,290 million.
The issues will enable SpareBank 1 SR-Bank to obtain further capital by issuing perpetual capital securities on the market. The intention is to do so before the end of 2009. In total, these transactions will increase the core capital and financial strength up to the desired level. Providing the issues are executed and approved by the authorities, there will be no need for a capital injection from the Norwegian State Finance Fund. The bank's core capital ratio is expected to be between 9.5 and 10% by the end of 2009. The proportion of equity certificate owners capital of total equity will increase to around 65% from the current level of 56.6%.
"We are highly satisfied with this agreement. This is a long-term financial investment in a profitable and competitive bank in a market with good economic prospects," says Deputy CEO Tor Magne Lønnum, Gjensidige Forsikring BA.
The issues give Gjensidige Forsikring BA a 17.3% shareholding of Sparebank 1 SR-Bank's equity certificates before calculation of the effect of the private placing to the employees. Ownership over 10% of the total equity in the bank requires approval from the authorities and Gjensidige Forsikrings BA's acceptance is provisional on such approval being granted.
"Bringing Gjensidige Forsikring BA in as the biggest shareholder of the bank's equity certificates is an important milestone for us. The company is a strong and confidence-inspiring owner with a shared set of values. We have considered several alternatives to improve our core capital situation but this solution was by far the preferred one. The injection of fresh equity will provide a strong financial basis for the bank, and a good foundation for normal lending growth and improved earnings," says Terje Vareberg, CEO of SpareBank 1 SR-Bank.
The board of SpareBank 1 SR-Bank proposes the following main points to the bank's Supervisory Committee:
Part 1: Private placing
A private placing to Gjensidige Forsikring BA, based on negotiations between the parties and approved by the boards of both. Execution of this private placing, totalling NOK 800 million, is proposed to be achieved by issuing 18,735,363 new equity certificates at a subscription price of NOK 42.55. 
Part 2: Public rights issue
A public rights issue to existing owners of approx. NOK 330 million. A guarantee consortium has been set up to ensure full subscription of this offering. The subscription price and general conditions will comply with normal practice for rights issues and the price will be set just before the bank's Supervisory Board meeting.
Part 3: Private placing to Gjensidige Forsikring BA
A private placing to Gjensidige Forsikring BA of approx. NOK 70 million. This issue will be executed on the same conditions as the public rights issue described under part 2. The transaction is designed to maintain Gjensidige Forsikring BA's shareholding due to the rights issue.
Part 4: Private placing to employees
The bank's board believes it is important to ensure that the bank's employees and management focus strongly on value-creation and owner interests. The bank has a long tradition of strong ownership among its employees which is why it has decided to propose a private placing of up to NOK 75,000 per employee. This is equivalent to total capital of up to NOK 90 million. The subscription price and conditions in general will be in line with parts 2 and 3.
The above issues will be executed in parallel. Parts 2 and 4 will be executed without regard to the conditions in parts 1 and 2.
It is expected that the ongoing process will be in accordance with the following schedule:
Supervisory Board considers issue proposal                                               20 October
Subscription price and final conditions for rights issues                          
and private placing to employees determined                                              20 October
First listing day, excluding subscription rights                            21 October
Publication of the bank's accounts for Q3                                     23 October
Publication of prospectus                                                                27 October
Public subscription period -  listed subscription rights                 28.10 to 11.11
Allocation, letters sent with allocation result                                               17 November
Payment of allocated equity certificates                                        20 November
First Securities AS and SpareBank 1 SR-Markets have been retained to manage the issues.
Contact persons:
SpareBank 1 SR-Bank:
CEO Terje Vareberg, tel.: +47 911 00448
Chief Financial Officer Erling Øverland, tel.: +47 915 56542
Group Communications Director, Thor-Christian Haugland, tel. +47 480 31633
Gjensidige Forsikring BA:
Information Director Øystein Thoresen, tel. +47 952 33382

About Us

SpareBank 1 SR-Bank is Norway’s second largest savings bank and operates in the Rogaland, Agder and Hordaland markets. We provide financial products and services, including loans and deposits, mutual funds and asset management, insurance and pension savings, payment and financing services, real estate brokerage and services related to the money and capital market. The head office is in Stavanger.