SEB has received approval to acquire Privatbanken.
13 Sep 2005, 17:43 GMT - The Norwegian Ministry of Finance has approved SEB's bid to acquire Privatbanken, a full-service commercial bank offering financing, deposits and money transfer services to affluent customers in the Oslo area. The acquisition should prove a good move for SEB, complementing the bank's existing wealth management activities in Norway.
Privatbanken is a relatively new bank, launched in 2000, with a focus on deposits, lending and money transfer services for wealthy individuals. Its business is focused mainly around Oslo.
The business turned profitable in 2003, with operating profit up from -NOK48.6 million (-E6.2 million) in 2002 to NOK45.1 million (E5.8 million) in 2003, and NOK78.4 million (E10.1 million) in 2004. This profitability is in large part due to the growth in its underlying business. By September 2004, the company had built up a client base of more than 12,000 clients holding 19,000 deposit accounts, and customer deposits totaled NOK6.1 billion (E780 million) by year-end 2004, up from NOK2.3 billion (E295 million) a year earlier. Given that Norway has 390,000 mass affluent and high net worth individuals, this gives Privatbanken a market share of 3.1%.
The bank's client base is not only growing fast, but it is also extremely wealthy. Currently, around 30% of Privatbanken's customers hold deposits of more than NOK2 million (E256,000) with the bank, and the average deposit size is NOK350,000 (E44,700). It is this strong deposit base that has allowed Privatbanken to build up its lending business; gross lending totaled NOK6.2 billion (E796 million) in 2004, up 60% from the previous year.
Privatbanken's business model dovetails nicely with SEB's existing private banking business in the country. The latter, known as SEB Enskilda Banken, focuses on the investment advisory side of the client relationship, offering discretionary or advisory portfolio management, segregated account services and stockbroking.
Privatbanken's clear track record in deposits, lending and money transfer services, and its lack of investment advisory services, will complement SEB's Norwegian private banking business nicely. Furthermore, the acquisition should put SEB in a stronger position to compete against Nordea, its main rival in the country.
Source: Datamonitor Commentwire
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