Baltic lender Swedbank plans to raise SEK15bn (US$2bn) through its second rights issue in eight months.
The rights issue – fully underwritten and with pre-emptive rights for existing shareholders – is part of the bank’s plan to lessen its reliance on the Swedish government’s state guarantee scheme and is not, according to management, a response to changing circumstances since its Q2 results in July, when CEO Michael Wolf told investors the bank was “well prepared for any possible scenario.”
In a statement, the bank said that its outlook was unchanged since its last results, and reiterated that it “already has a sufficient capital position to withstand the impact of severe macro-economic scenarios.” Nonetheless, the bank has decided it is in the “best interest” of shareholders to strengthen its capital base now. Swedbank raised US$1.5bn in a rights issue completed last December.
“Nothing has changed in our view of the macroeconomic outlook or management expectations regarding the development of Swedbank going forward,” Wolf told analysts on a conference call to announce the latest fund raising. “This capital raising rather is aimed at strengthening our competitive position in our four home markets, those being Sweden, Estonia, Latvia and Lithuania.”
The rights issue should raise the bank’s core Tier 1 capital ratio to a pro forma 12.1% from 9.8% as of June 30. Existing shareholders including Folksam, 48 independent savings banks and affiliates and The Swedish Export Credit Corporation have agreed to subscribe for and underwrite 46.6% of the offering. Bank of America Merrill Lynch and Credit Suisse have agreed to underwrite the remainder.
The terms of the rights issue will be announced on September 14, with the capital raising put to shareholders the following day. The results are expected in mid-October. The subscription rights will be traded on NASDAQ OMX Stockholm.
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