Today Norway-based savings bank Skue Sparebank announced that it will be the acquiring bank in a possible merger with Tinn Sparebank. If negotiations between the banks succeed and Finanstilsynet approves, the banks expect to execute the merger in the fourth quarter of 2025. The acquisition would further strengthen Skue Sparebank's position in Telemark county after the merger with Hjartdal og Gransherad Sparebank last year.
The merger would increase Skue Sparebank's gross lending (including loans transferred to Eika Boligkreditt) to NOK 27.3bn from NOK 23.6bn based on 2024 figures. The merging banks have relatively similar historical credit metrics and are both members of the Eika Alliance, which simplifies the merger. However, Tinn Sparebank has a stronger consolidated CET1 ratio of 30.0% compared to Skue Sparebank's 20.0%. We expect Skue Sparebank's CET1 ratio to be 20.9% in the merged bank, following the allocation of the banks' gift funds to the newly formed foundations.
The plan involves utilising the foundation model in the merger process, resulting in five foundations that will own the majority of the equity capital certificates. This will also increase the equity capital certificate holder's share of equity to 45% from currently 22%.
Our 'A-' issuer and issue ratings on Skue Sparebank are unchanged.
Related publications:
- Lower interest margin will lead to a drop in profitability for Norwegian savings banks, 20 Jan. 2025.
- NCR Comments: Norway moves to adopt new standardised approach to capital requirements, 6 Dec. 2024.
- Skue Sparebank 'A-' long-term issuer rating affirmed; Outlook stable, 7 Nov. 2024.
- NCR comments: Skue Sparebank considers merger, 11 Jan. 2024.
This commentary does not constitute a rating action.
Contacts:
Geir Kristiansen, analyst, +4790784593, geir.kristiansen@nordiccreditrating.com
Anine Gulbrandsen, analyst, +4797501657, anine.gulbrandsen@nordiccreditrating.com