NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED
STATES, AUSTRALIA, CANADA OR JAPAN.
Nordea announces measures to strengthen the Group's Core Tier 1
capital by
EUR 3 billion. The Board of Directors of Nordea has resolved to
increase Nordea's share capital through an underwritten discounted
issue of new ordinary shares with pre-emptive rights for existing
shareholders of approximately EUR 2.5 billion net (the "Rights
Offering") and secondly by proposing to reduce the dividend payment
to 19% of the net profit for 2008, to be decided by the 2009 Annual
General Meeting, which will increase the Core Tier 1 capital by
approximately EUR 0.5 billion. The Rights Offering is subject to
shareholder approval at an Extraordinary General Meeting to be held
on 12 March 2009.
Transaction Highlights
* Nordea's three largest shareholders, the Swedish Government,
Sampo Oyj and Nordea-fonden (previously Nordea Danmark-fonden),
in aggregate representing 36.1% of Nordea's shares outstanding,
will subscribe for their pro rata share of the Rights Offering.
In addition, Sampo Oyj has agreed to guarantee 13% of the Rights
Offering (subject to certain conditions). Accordingly, in total
49% of the Rights Offering is to be subscribed for or guaranteed
by core shareholders of Nordea.
* J.P. Morgan and Merrill Lynch International have agreed to
underwrite the remainder of the Rights Offering (corresponding to
51%), subject to customary terms and conditions."I am encouraged by the strong support from our existing
shareholders in pursuing these capital strengthening measures, which
gives us an additional cushion to manage for an uncertain economic
outlook. Nordea is in a strong position and well prepared for a
challenging 2009. The capital strengthening measures provide
additional flexibility to selectively explore high credit quality
business opportunities", says Christian Clausen, President and Group
Chief Executive Officer.
Background and rationale
Since the beginning of the financial crises in the summer of 2007
Nordea has managed to stay largely unaffected by the extreme market
volatility and has reported very limited negative valuation effects
on various financial instruments. Nordea's systematic approach to
managing risk, capital and funding has been an important factor
explaining the stable performance.
NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED
STATES, AUSTRALIA, CANADA OR JAPAN.
Nordea's operating results for 2008, released in a separate press
release this morning, demonstrates the continuous strength of the
organic growth strategy, where more business with existing customers,
both household and corporate customers, was the main driver for the
income growth. This reflects Nordea's well diversified credit
portfolio and the high quality of its customer base.
Also in the fourth quarter 2008, Nordea reported solid income growth
and a strong result before loan losses. Due to the rapid slowdown in
the economy the level of reported loan losses has increased, but is
in line with expectations considering the severity of the slowdown.
The reported Tier 1 capital ratio, excluding transition rules, was
9.3% as of the end of December 2008. Therefore Nordea has a strong
starting position when entering into a more challenging 2009.
Nordea's Board of Directors and Group Executive Management believes
it is responsible to act pro-actively to best position the bank for
the risks and the opportunities arising from the prevailing
extraordinarily challenging market conditions. In particular, Nordea
is seeking to achieve the following objectives, which will be
facilitated by the proposed capital strengthening measures:
* Maintain position as one of the stronger banks in Europe. Nordea
aims to be one of the strongest banks in Europe in terms of
profitability, efficiency, capitalisation, liquidity, funding and
ultimately shareholder value generation, measured by total
shareholder return (TSR). With European banks raising
considerable amounts of capital in response to investors' and
other stakeholders' requirements for higher capital ratios, the
competitive landscape is changing. The proposed capital raising
is expected to position Nordea as one of the best capitalised
banks in Europe. Furthermore, the capital raising is expected to
support Nordea's current strong credit rating, thereby retaining
the current favourable funding position relative to peers.
* Establish an additional capital cushion in light of reduced
visibility in the market and economic outlook. Nordea is
expecting its capital position to be impacted by the economic
downturn, primarily through increased loan losses and adverse
rating migration in the loan portfolio, resulting in higher risk
weighted assets. In line with its prudent risk management
policies and in light of an economic outlook which is more
uncertain than usual, Nordea believes it is appropriate to
establish an additional capital buffer above its existing target
capital ratios to cover such potential negative effects.
* Provide flexibility to exploit high credit quality business
opportunities arising from the market dislocation. Due to the
deleveraging and general retrenchment by competitors in existing
core markets, Nordea sees the potential to selectively capture
high quality opportunities at expanding margins. Such
opportunities predominantly include demand for funding by
customers with a solid credit profile who are subject to the
general credit shortage in the market. Nordea believes that its
continued support of such high quality customers in the current
environment, while applying its usual stringent risk management
policies, will enhance profitability and reinforce long-term
customer relationships.
* Proposed capital strengthening measures provide a fair,
transparent market solution. The capital strengthening measures
are fully transparent and secure fair treatment of shareholders
through the application of pre-emptive rights. The proposed
Rights Offering and dividend reduction will reinforce Nordea's
capital base with straight equity, addressing investors'
preference for high quality, Core Tier 1 capital.
NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED
STATES, AUSTRALIA, CANADA OR JAPAN.
Financial Impact of the Capital Strengthening Measures
The Board of Directors has decided to propose to reduce the dividend
to EUR 0.20 per share, equal to 19% dividend pay out ratio,
corresponding to approximately EUR 519 million. This proposal will
improve the capital base by approximately EUR 0.5 billion.
The Rights Offering, in conjunction with the capital savings from the
dividend cut, will on a pro forma basis enhance Nordea's Core Tier 1
capital ratio from 8.2% to 10.0%, Tier 1 capital ratio from 9.0% to
10.8% and capital adequacy ratio from 11.7% to 13.5% in each case of
31 December 2008 and based on full implementation of Basel II rules.
Based on Basel II transition principles, the capital increase will on
a pro forma basis enhance Nordea's Core Tier 1 capital ratio from
6.5% to 7.9%, Tier 1 capital ratio from 7.1% to 8.6% and capital
adequacy ratio from 9.3% to 10.7% in each case as of 31 December
2008.
Principal Terms of the Rights Offering
The total net proceeds of the Rights Offering, after estimated
aggregate costs and expenses, are expected to be approximately EUR
2.5 billion (SEK 26 billion). The increase of the share capital, the
number of ordinary shares to be issued and the subscription price to
be paid for the new shares in the Rights Offering will be determined
by the Board of Directors at the latest on 11 March 2009.
The Swedish Government, Sampo Oyj and Nordea-fonden in aggregate
representing 36.1% of Nordea's shares outstanding will vote in favour
of the Rights Offering of the EGM and will subscribe for their pro
rata share of the Rights Offering. In addition, Sampo Oyj has agreed
to guarantee 13% of the Rights Offering (subject to certain
conditions).
J.P. Morgan and Merrill Lynch International have agreed to underwrite
the remainder of the Rights Offering (corresponding to 51%), subject
to customary terms and conditions. Accordingly, any shares not taken
up by the use of subscription rights or following subscription
without subscription rights will, subject to agreeing certain terms
and conditions, be underwritten by J.P. Morgan and Merrill Lynch
International who, together with Nordea Markets, are acting as Joint
Global Coordinators and Joint Bookrunners in the Rights Offering.
The new ordinary shares will rank pari passu in all respects with the
existing ordinary shares, including the right to all future dividends
and other distributions declared, made or paid after the date of
allotment and issue of the new ordinary shares. However, the new
ordinary shares will not be entitled to the dividend for the fiscal
year ended 31 December 2008.
The EGM will be held on 12 March 2009 at 09.00 CET at China Teatern
in Stockholm. The notice will be published on 12 February 2009. The
resolution from the Board of Directors regarding the Rights Offering,
as well as other information relating to the Rights Offering and
other proposals to the EGM, will be made available on Nordea's
website, www.nordea.com, no later than two weeks prior to the EGM.
In connection with the Rights Offering, the Board of Directors has
resolved to make additional proposals to the EGM on amendments to the
Articles of Association, and potential transfer of funds to the share
capital from other shareholders' equity and reduction of the share
capital.
NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED
STATES, AUSTRALIA, CANADA OR JAPAN.
Preliminary Timetable for the Rights Offering
The timing of events is indicative. All dates refer to 2009.
11 March Last day for the Board of Directors to
resolve on the amount of the increase of the share capital, the
number of ordinary shares to be issued and the subscription price to
be paid for the new ordinary shares in the Rights Offering
12 March EGM to approve the Board of Directors'
resolution regarding the Rights Offering
13 March First day of trading in the Nordea share
after detachment of subscription rights
17 March Record day for participating in the Rights
Offering
19 March Last day for publication of prospectus
20 March - 3 April Subscription period
8 April Announcement of preliminary outcome of
the Rights Offering
17 April Announcement of final outcome of the
Rights Offering
Early May Completion of Rights Offering
J.P. Morgan, Merrill Lynch International and Nordea Markets are
acting as Joint Global Coordinators and Joint Bookrunners of the
Rights Offering.
Press conference call
Christian Clausen, President and Group CEO, will host a conference
call for news agencies today at 8.30 CET. To participate in the
conference call, dial: +44 (0)20 3037 9110.
To listen to the audio recording of the conference call available
until 17 February 2009, dial: +44(0)20 8196 1998. Access Code:
7308947.
Press and analyst conference
Time: 10.00 CET
Place: Smålandsgatan 17, Stockholm
Christian Clausen, President and Group CEO, Group CFO Fredrik Rystedt
and Group CRO Carl-Johan Granvik will present the results and answer
questions.. The press conference is conducted in English and can be
viewed live on www.nordea.com where you will also be able to find the
presentation material.
International telephone conference for analysts
Time: 14.00 CET
To participate: dial +44 (0) 203 037 9110 latest ten minutes prior
(13.50 CET)
Christian Clausen, President and Group CEO, Fredrik Rystedt Group
CFO, Carl-Johan Granvik, Group CRO and Johan Ekwall, Head of Investor
relations, will participate. After management presentations a more
detailed Q&A session will follow.
The telephone conference can be monitored live on www.nordea.com and
an indexed on demand replay will be available on www.nordea.com. A
replay will also be available through February 17 by dialling +44 (0)
208 196 1998. Access code is 3300223#.
For further information
Fredrik Rystedt, Group Chief Financial Officer, +46 8 614 7995
Lauri Peltola, Head of Group Identity and Communications, +358 50 570
5606
Johan Ekwall, Head of Investor Relations, +46 8 614 7852
The information provided in this press release is such that Nordea is
required to disclose pursuant to the Swedish Financial Instruments
Trading Act (1991:980) and/or the Swedish Securities Markets Act
(2007:528). The information was submitted for publication at [08.00]
CET on 10 February 2009.
DISCLAIMERS
NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED
STATES, AUSTRALIA, CANADA OR JAPAN
This press release is not an offer for subscription for shares in
Nordea. A prospectus relating to the Rights Offering referred to in
this press release and the subsequent listing of the ordinary shares
at NASDAQ OMX Stockholm, Helsinki and Copenhagen will be prepared and
filed with the Swedish Financial Supervisory Authority. After
approval and registration of the prospectus by the Swedish Financial
Supervisory Authority, the prospectus will be published and made
available on inter alia Nordea's website.
The distribution of this press release in certain jurisdictions may
be restricted. This press release does not constitute an offer of, or
an invitation to purchase, any securities of Nordea in any
jurisdiction.
This press release does not constitute or form part of an offer or
solicitation to purchase or subscribe for securities in the United
States. The securities referred to herein may not be sold in the
United States absent registration or an exemption from registration
under the US Securities Act of 1933, as amended. Nordea Bank AB
(publ) does not intend to register any portion of the offering of the
securities in the United States or to conduct a public offering of
the securities in the United States. Copies of this announcement are
not being made and may not be distributed or sent into the United
States, Canada, Australia or Japan.
This communication is directed only at (i) persons who are outside
the United Kingdom or (ii) persons who have professional experience
in matters relating to investments falling within Article 19(5) of
the Financial Services and Markets Act 2000 (Financial Promotion)
Order 2005 (the "Order") and (iii) high net worth entities, and other
persons to whom it may lawfully be communicated, falling within
Article 49(2) of the Order (all such persons together being referred
to as "relevant persons"). Any investment activity to which this
communication relates will only be available to and will only be
engaged with, relevant persons. Any person who is not a relevant
person should not act or rely on this document or any of its
contents.
J.P. Morgan and Merrill Lynch International are acting exclusively
for Nordea and no one else in connection with the Rights Offering.
They will not regard any other person (whether or not a recipient of
this release) as their respective clients in relation to the Rights
Offering and will not be responsible to anyone other than Nordea for
providing the protections afforded to their respective clients nor
for giving advice in relation to the Rights Offering or any
transaction or arrangement referred to herein. No representation or
warranty, express or implied, is made by J.P. Morgan and Merrill
Lynch International as to the accuracy, completeness or verification
of the information set forth in this release, and nothing contained
in this release is, or shall be relied upon as, a promise or
representation in this respect, whether as to the past or the future.
J.P. Morgan and Merrill Lynch International assume no responsibility
for its accuracy, completeness or verification and, accordingly,
disclaim, to the fullest extent permitted by applicable law, any and
all liability which they might otherwise be found to have in respect
of this release or any such statement.
This press release contains "forward-looking statements", which are
statements related to future events. In this context, forward-looking
statements often address Nordea's expected future business and
financial performance, and often contain words such as "expect,"anticipate, "intend, "plan, "believe", "seek, or "will".
Forward-looking statements by their nature address matters that are,
to different degrees, uncertain and can be influenced by many
factors, including the behaviour of financial markets, fluctuations
in interest and exchange rates, commodity and equity prices and the
value of financial assets; continued volatility and further
deterioration of the capital markets; the commercial and consumer
credit environment; the impact of regulation and regulatory,
investigative and legal actions; strategic actions; and numerous
other matters of national, regional and global scale, including those
of a political, economic, business and competitive nature. These
factors may cause Nordea's actual future results to be materially
different than those expressed in its forward-looking statements.
Nordea does not undertake to update its forward-looking statements.
Nordea has not authorized any offer to the public of Shares or Rights
in any Member State of the European Economic Area other than Sweden
and any other jurisdiction into which the offering of Shares or
Rights will be passported. With respect to each Member State of the
European Economic Area other than Sweden (and any other jurisdiction
into which the offering of Shares or Rights will be passported) and
which has implemented the Prospectus Directive (each, a "Relevant
Member State"), no action has been undertaken to date to make an
offer to the public of Shares or Rights requiring a publication of a
prospectus in any Relevant Member State. As a result, the Shares or
Rights may only be offered in Relevant Member States:
(a) to legal entities which are authorized or regulated to operate in
the financial markets or, if not so authorized or regulated, whose
corporate purpose is solely to invest in securities;
(b) to any legal entity meeting two or more of the following
criteria: (1) an average of at least 250 employees during the last
financial year; (2) a total balance sheet of more than EUR 43 million
and (3) an annual net turnover of more than EUR 50 million, as shown
in its last annual or consolidated accounts; or
(c) in any other circumstances, not requiring Nordea to publish a
prospectus as provide under Article 3(2) of the Prospectus Directive.
For the purposes hereof, the expression an "offer to the public of
Shares or Rights" in any Relevant Member State means the
communication in any form and by any means of sufficient information
on the terms of the offer and the Shares and Rights to be offered so
as to enable an investor to decide to purchase any securities, as the
same may be varied in that Member State by any measure implementing
the Prospectus Directive in that Member State and the expression"Prospectus Directive" means Directive 2003/71/EC and includes any
relevant implementing measure in each Relevant Member State.
Rights Offering and Reduced 2008 Dividend to Strengthen Core Capital Position by EUR 3bn
| Source: Nordea Bank AB (publ)
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