DnB confirms e2.16bn merger talks

NORWAY – Norway’s largest bank, Den norske Bank, has confirmed that it is in talks to merge with savings bank Gjensidige NOR – a move that would create the largest financial services provider in Norway.

The bank said in a stock exchange statement: “DnB hereby notifies the Oslo Stock Exchange that talks are in progress with Gjensidige NOR on a possible merger between the two financial services groups.”

“The talks have been constructive, but a number of issues remain before the companies' boards of directors will be able to consider a final merger agreement.”

DnB’s Carlson Investment Management has 26.7 billion euros in European pension fund assets under management.

DnB will offer 6.2 shares and 23 crowns in cash for every Gjensidige share – which values Gjensidige at 16.9 billion crowns (2.16 billion euros).

“The talks are guided by the principle of a merger between equal partners based on the companies' relative market capitalisations after the distribution of dividends for 2002,” DnB said.

DnB, 47%-owned by the state, posted pre-tax operating profits of 4.1 billion crowns in 2002 and recently bought Nordlandsbanken. Its asset management arm recorded pre-tax operating profits of 35 million crowns last year.

Norwegian press reports suggest that there could be major job losses as a result of a merger.

Finance Minister Per-Kristian Foss pointed out in the Norwegian press that parliament has said it wants DnB to become a leading Norwegian financial institution.

DnB, Norway's biggest bank, has total assets of 680 billion crowns and about 7,000 employees, while Gjensidige is the largest savings bank. It has around 317 billion crowns in assets and 7,800 staff.

Gjensidige’s insurance and pensions arm lost 157 million crowns in 2002, against a loss of 32 million crowns in 2001. Gjensidige increased its share of the group pensions market in 2002 and is the leading retail provider.

Ratings agency Standard & Poor’s said the merger talks would have no immediate impact on the banks’ ratings and outlooks.

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