A combined Norwegian Finans Holding ASA and Nordax Group AB (publ) would leapfrog Sweden's Landshypotek Ekonomisk Förening, Sparbanken Skåne AB (publ) and Skandiabanken Aktiebolag (publ), and Norway's Sparebanken Møre in terms of total assets, to rank 17th among banks in the two countries, according to S&P Global Market Intelligence data.
Swedish consumer finance lender Nordax launched an improved takeover offer for Norwegian Finans, the parent company of online bank Bank Norwegian ASA, in May after the Norway-based company rejected an initial bid. Under Nordax's new indicative offer, it would pay 100 Norwegian kroner in cash per share, excluding a dividend of 5 kroner per share, up from its initial March 4 bid of 95 kroner per share including the dividend. Norwegian Finans granted Nordax access to a confirmatory due diligence process after the revised bid.
If the deal completes, the combined entity would see its total assets rise to 97.40 billion Swedish kronor, based on March 31 figures, more than Landshypotek Ekonomisk Förening's 95.24 billion kronor, which is based on Dec. 31, 2020, figures.
A pro forma combined entity also would have the highest problem loan ratio among large Swedish and Norwegian banks if the two companies' aggregated impaired loans and aggregate gross customer loans were summed up, according to S&P Global Market Intelligence data. Nordax Group's problem loans totaled 15.51% of its total customer loans at March 31. Norwegian Finans Holding's stood at 26.16%. For a pro forma combined company, the figure would be 21.51%.
"Comparing aggregate impaired loans across banks is difficult due to differences in offerings and whether the bank regularly sells defaulted loans," a spokesperson for Nordax said in an email. "All our activity is underpinned by data-driven and responsible lending, evidenced by loan losses of 1.6% in 2020."
Bank Norwegian said it was unable to comment on this matter.
Nordax focuses on unsecured consumer lending in the Nordic region and Germany, making loans of up to the equivalent of 600,000 kronor in Sweden, 500,000 kroner in Norway and €60,000 in Finland. Subsidiary Svensk Hypotekspension AB offers secured loans to Swedish citizens aged 60 and older. For mortgages, Nordax mainly targets customers who fall outside the narrow framework of the major banks in Sweden and Norway.
In 2020, it derived 64% of its gross interest income from Sweden and Norway, with much of the rest coming from Finland and some from Germany.
Bank Norwegian, launched by the co-founder of Norwegian Air Shuttle, is a digital bank focused on consumer finance in the Nordics, but it has embarked on a European expansion project that will initially see it launch its consumer loans, credit cards and savings accounts in Germany and Spain.
The proposed acquisition would make Bank Norwegian part of the leading consumer finance bank in the Nordic market, according to a report by S&P Global Ratings. The transaction could delay Bank Norwegian's expansion plans, and hinder its agility, but a merged entity would have a broader offering and a wider customer base, and could deepen risk expertise by combining credit data across markets and portfolios, according to Ratings.
Finnish bank Sampo Oyj is an investor in Nordax.
As of June 14, US$1 was equivalent to 8.31 Norwegian kroner and 8.32 Swedish kronor.