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Danske Bank to sell Lithuanian pensions business to Swedbank

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The number of pension providers in Lithuania is set to shrink to five following Danske Bank’s decision to sell its pensions business to Swedbank.

Yesterday, Danske Bank signed an agreement with Swedbank investicijų valdymas to transfer, for an undisclosed amount, 100% of its shares in Danske Capital Investicijų Valdymas, its Lithuanian pension fund management company.

The takeover, pending approval from Bank of Lithuania, is expected to be completed by the third quarter.

Danske Bank noted on its website that the planned company shareholder change would occur at no cost to its pension fund participants, and have no effect on the number of pension fund units or unit values.

The sale marks part of Danske Bank’s Baltic strategy to focus on corporate and private banking.

In March, Lithuania’s Competition Council approved Danske’s transfer of its retail banking services to Swedbank, a transaction completed earlier this month.

Last month, Danske Capital sold its Estonian pensions business to LHV Varahaldus.

For Swedbank, the acquisition will strengthen its position as Lithuania’s biggest pensions provider.

As of the end of March, according to Bank of Lithuania data, its five second-pillar funds had in total 745,192 members, a market share of 38.85% and assets of €745m (34.63%).

Danske, the smallest of the providers, had respective shares of 1.75% and 3.29% in its four funds.

Danske, unlike Swedbank, is also active in the much smaller third-pillar sector, where it runs a single high-equity fund.

This had, as of the end of March, assets of €1.7m, or 2.84% of the total, and a membership of 1,371 (2.84%).

The transaction represents a further consolidation in Lithuania’s pensions sector.

In 2014, INVL Asset Management, part of the Invalda Group, acquired the pensions businesses of MP Pensions Funds Baltic, as well as 100% of Finasta Asset Management, including the latter’s pension funds.

Recent results in the Lithuanian pensions sector have been unspectacular, with the 21 second-pillar funds recording an average nominal return of -1.18% year to date, while the 12 third-pillar funds returned -1.22%.

Despite the recent losses, second-pillar assets increased by 4.8% year on year to €2.1bn and membership by 4.5% to 1.22m.

The asset growth was boosted by this year’s increase in overall contributions.

While the base rate remains unchanged at 2%, the 2015 additional members contribution of 1%, matched by a state contribution of 1% of the previous year’s average salary, both increased to 2%.

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