Nordea Life & Pensions Denmark, the Danish pensions subsidiary of the Nordic banking group Nordea, is becoming a partially mutually owned company as a result of a deal by the customer-owned association Foreningen NLP to buy one-quarter of its share capital.
Foreningen NLP, jointly owned by Nordea Life & Pensions Denmark’s customer base of some 330,000 people, is buying the 25% stake – which has a book value of just over DKK1bn (€133m) – for DKK2.175bn, from the Danish business’s owner Nordea Life Holding.
As well as this, the association will invest DKK932.5m in Tier 1 subordinated debt issued by Nordea Life & Pensions Denmark, Nordea said.
Nils Bolmstrand, chief executive at Nordea Life Holding, said: “This is a unique opportunity to serve the mutual interests of customers and Nordea Life & Pensions.”
He said his company welcomed customers as co-owners.
“For the benefit of customers and the company, with a co-ownership structure, we will further strengthen the position of Nordea Life & Pensions in Denmark,” Bolmstrand said.
In relation to the transaction, the company said Nordea Life & Pensions would distribute €375m to Nordea Life Holding, which it said would improve the life group’s solvency capital position by around 16 percentage points.
The deal has been signed by Foreningen NLP and Nordea Life Holding, but is still dependent on approval by the Danish FSA.
Foreningen NLP exists as a result of the complex history of Nordea and the Tryg insurance group, which originated in the aftermath of the Copenhagen Fire of 1728.
Tryg contributed to the formation of Nordea in 2000.
Nordea Life & Pensions Denmark said Foreningen NLP had total assets of DKK8bn and that, following the deal, the return on these assets would bolster returns for customers in the Danish Nordea unit via a bonus that would be paid to the unit from the association.
Steen Michael Erichsen, chief executive at Nordea Life & Pension Denmark, said: “We are now taking on a unique model of value creation based on mutual ownership, a bonus from Foreningen NLP, a return from DinKapital, access to personal advice everywhere in the country, a big product offering and robust financial strength with the support of the Nordea group.”
DinKapital, which means ‘your capital’, and is a new type of savings product the firm is introducing at the beginning of next year.
It pays customers a fixed interest rate of 5% for contributions that Nordea will use as part of its capital base – the resources forming part of the safety net covering payment guarantees, and other risks.