(Bloomberg) -- DNB Bank ASA will acquire all the shares of rival Swedish firm Carnegie Holding AB for about 12 billion kronor ($1.1 billion), providing yet another example of consolidation in the Nordic region as banks look to adjust geographical footprints and revenue lines.
The Oslo-based bank entered into an agreement with Carnegie’s main owner, Harald Mix’s Altor Equity Partners, as well as the minority shareholders, to buy the Swedish group in cash, according to a statement on Monday.
The deal follows a spate of merger and acquisition activity in the region in recent years as lenders such as DNB aim to fine-tune strategies in the face of headwinds that include international regulatory costs and competition from challenger banks.
Swedish bank Svenska Handelsbanken AB struck a deal in 2023 to divest its private, life insurance and small-to-medium-sized enterprise operations in Finland. The lender also sold its Danish unit, with assets of almost $10 billion, to Jyske Bank A/S a year earlier in what was the biggest bank deal in Denmark in two decades.
Elsewhere, Finland’s Nordea Bank Abp is expected to complete its acquisition of Danske Bank A/S’ Norwegian personal customer and private banking business later this year.
With central banks cutting interest rates or — in the case of Norway — considering when to start easing, the fastest growth in net interest income is over, prompting financial firms to hone in on ways to boost fee and commission income.
“The transaction marks a step change in increasing the share of fee related income for DNB as a whole,” Chief Executive Officer Kjerstin Braathen said in the statement.
For DNB, net interest income accounts for almost three quarters of its revenue lines, with fees and commissions making up about 16% of total income.
Speaking in an interview in Oslo later on Monday, Braathen ruled out job cuts at Carnegie as a result of the acquisition. DNB is already working to eliminate about 500 jobs, or about 5% of its headcount, a move announced in September that’s set to exclude Carnegie, she said.
DNB shares edged up as much as 1% in Oslo on Monday, taking overall gains for the year to about 4%. Citigroup analyst Shrey Srivastava described the transaction as “fairly expensive.” Writing in a client note, the analyst said that “we calculate the share of fee income for DNB would rise to 17% from 14%, which would still place it amongst the least fee-geared names in the space.”
Carnegie Holding is the parent company of the Carnegie Group, comprising a Nordic investment bank and asset manager with 850 employees. The group revenue is split 56% from investment services and 44% from wealth management.
Altor Moves
Carnegie was acquired by Altor in 2009 with the strategic objective to build the leading investment bank and asset manager in the Nordic region. The Swedish bank had long been considered a candidate for an initial public offering. In June, Altor partner Mix said that the group was a good fit for the stock exchange but declined to give a timeline.
Altor is part of a consortium with Centerbridge Partners that’s shown initial interest in acquiring Denmark’s Saxo Bank A/S, Bloomberg News reported on Monday, citing people with knowledge of the matter, who said Interactive Brokers Group Inc. is also interested.
DNB Markets will be globally renamed DNB Carnegie. The transaction is expected to compete in the first half of next year, and closing conditions include regulatory approvals.
In September, Carnegie had 436 billion kronor in assets under management, spanning private banking and asset management, and reported net income of 535 million kronor for the first nine months of the year.
“On paper it looks like a good strategic fit to us, though integrating these kinds of businesses is always a bit challenging,” Arctic Securities’ analyst Roy Tilley said.
--With assistance from Stephen Treloar, Christian Wienberg, Jonas Ekblom, Heidi Taksdal Skjeseth and Ott Ummelas.
(Updates with analyst comment, share price.)
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