BN Bank to be cultivated as a retail bank
The Board of Directors of BN Bank AS has resolved to cultivate the bank as a retail bank and discontinue the corporate banking business, which consists of commercial property lending.
The reason for the resolution is the desire to develop the retail banking business further by cultivating BN Bank as an offensive bank for customers who prefer a self-service concept and favourable interest rates over time.
BN Bank is part of the SpareBank 1 Alliance. SpareBank 1 SR-Bank, which owns 23.5 per cent of BN Bank, will continue its ownership in BN Bank and contribute to the implementation of the change in business focus in a manner that safeguards the interests of the creditors, customers and employees in the best possible manner.
The work to reduce the corporate banking business will be carried out in a controlled manner over time. For SpareBank 1 SR-Bank, this will contribute to a reduction in the consolidated risk-weighted balance sheet and thus improve the capital adequacy ratio.
BN Bank’s corporate market activities have focused on the financing of well-collateralised commercial property loans, and the corporate market has historically been an important area for BN Bank. Special Norwegian capital adequacy rules and regulations combined with strong competition in this segment, however, mean that the return on equity in this low risk segment is relatively low. There are no prospects of an amendment of the special Norwegian capital adequacy rules and regulations. Consequently, the profitability will remain low as a result of the prices being set by actors with a different regulatory framework.
In recent years, the bank has built up substantial retail business with satisfactory profitability. In the opinion of the Board of Directors of BN Bank, there is a great development potential in this business, and all the bank’s efforts will be channelled to the retail market. The bank has ambitions of increased growth and a further improvement 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 SR-Bank currently owns 26,8 per cent of the shares in SpareBank 1 Næringskreditt. Approximately NOK 6 billion of SpareBank 1 SR-Banks’ risk-weighted balance of NOK 120 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 AS. This constitutes approximately 0.60 percentage point of core capital ratio for SpareBank 1 SR-Bank.
Stavanger, 11 August 2015
Contact persons:
Arne Austreid, Chief Executive Officer, tel. +47 900 77 334
Inge Reinertsen, Chief Financial Officer, tel. +47 909 95 033
Stian Helgøy, Vice President Investor Relations, tel. +47 906 52 173
Thor-Christian Haugland, Executive Vice President Communications, tel. +47 480 31 633