BRAbank ASA: BRA-ME – Establishment of underwriting syndicate for private placement and Tier2 bond issue. Company update.

Bergen, 20 December 2019: The Board of Directors of BRAbank ASA ("BRAbank" or the "Company") intends to conduct a private placement of NOK 65-85 million at a subscription price of NOK 0.5 per share (the "Private Placement") to strengthen the Company's capital adequacy. The Private Placement has been underwritten with NOK 65 million by certain large existing shareholders in the Company.

Moreover, the Board of Directors intends to conduct an issuance of a Tier 2 bond loan in the amount of up to NOK 35 million, of which NOK 15 million has been underwritten by certain large existing shareholders. The bonds will have a floating rate coupon of 3M NIBOR + 7.0% per annum.

The Private Placement and Tier2 bond loan issue are planned to be completed ultimo February/primo March 2020.

The reason for the capital raising is that the Board of Directors has carried out a thorough review of the valuation of the loan book, which is expected to lead to extraordinary loan loss provision in Q4 2019 of around NOK 70 million. Of this, approx. NOK 45 million relates to potential sale of a Norwegian past due loan portfolio, primarily originated in 2016-17. This portfolio became non-performing before the existing forward flow agreement commenced in 2018. The remaining approx. NOK 25 million comes from the former BRAbank portfolio and IFRS 9 adjustments (primarily stage 1 and stage 2) in the existing Norwegian and Swedish loan portfolio.

After the portfolio review, BRAbank has completed an assessment of the quality of its oldest portfolios in Norway and Finland, representing improved comfort regarding credit risk on the balance sheet and enhanced quality of new loans granted in the future.

Following the NOK 70 million loan loss provision and previously communicated IFRS 9 tax effects of NOK 36 million in Q4 2019, the Company expects the CET1 ratio as per 31 December 2019 to be on par with the current minimum requirement while the tier 2 capital is estimated to be approx. 1 percentage point below. When including NOK 65 million of the underwritten Private Placement and NOK 15 million of the underwritten Tier 2 bond, the Company's CET1 ratio and tier 2 capital ratio is expected to exceed the estimated requirements with a comfortable margin.

Going forward, the Company will continue to optimize the growth, composition and size of the balance sheet in addition to operational improvements. New cost cutting initiatives will be implemented. BRAbank will also consider increasing interest rates on the existing Norwegian loans, thus better reflecting the underlying credit risk.

Further, the Company's new Board of Directors and management will for the coming year strengthen focus on commercializing the technological platform and exploration of structural initiatives for BRAbank.

The Board of Directors will call for an extraordinary general meeting to be held on or about 13 January 2020 and propose that the general meeting resolves to reduce the nominal value of the shares in the Company from NOK 1 to NOK 0.20 by way of a share capital decrease and to authorize the Board of Directors to conduct the Private Placement and a potential subsequent offering. Completion of the Private Placement will be conditional upon relevant approvals from the Norwegian Financial Supervisory Authority, expiry of a six weeks statutory creditor notice period and registration of the share capital decrease and increased equity of the Company pertaining to the Private Placement with the Norwegian Register of Business Enterprises. Each underwriter will receive an underwriting fee of 2.0% of their individual underwriting obligation.

Pareto Securities and Sparebank 1 Markets have been retained as managers in the Private Placement and the Tier 2 bond issue. Advokatfirmaet Schjødt has been retained as legal advisor to the Company.

This information is published in accordance with the requirements of the Continuing Obligations of companies admitted to trading on Merkur Market.

For further information contact:

Viggo Leisner, Chairman of the Board of BRAbank, phone: +47 920 69 998

Hans Ljøen, Chief Executive Officer at BRAbank, phone: +47 481 87 750

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