Reykajvik (IFN) Icelandic bank Landsbanki Islands has sold its 19.8% stake in Swedish investment bank Carnegie AB via Deutsche Bank for SEK162 a share, generating a capital gain of EUR110 million, Landsbanki said in a statement on Thursday.
Landsbanki has long been rumoured to be mulling a takeover of Carnegie, but the bank's chief executive Sigurjon Arnason told IFN that a takeover was unrealistic as shares in Carnegie have inceased in value, making it almost impossible for Landsbanki to make a move on the Swedish bank.
The shareholding in Carnegie was Landsbanki's single largest equity holding for its own account, or approximately 25% of the total position.
The sale will reduce Landsbanki's equity holdings to around 3% of Landsbanki's total assets and have a significantly positive effect on the its capital ratio, or CAD, the bank said. Landsbanki said it will have no ownership interest in Carnegie following completion of the sale.
Prior to the sale Landsbanki held 13,643,280 shares in Carnegie. The shareholding was acquired as a part of trading assets received in the merger with the investment company Burdaras hf. announced on Aug. 2, 2005.
Landsbanki said the sale is consistent with the bank's strategy of actively managing its trading portfolio positions, realizing capital gains when appropriate and focusing the bank's effort on integrating international operations.
According to the international financial reporting standards, Landsbanki said the position has been marked to market and the sale therefore won't have a material impact on Landsbanki's second quarter results as the gains are already accounted for in Landsbanki's accounts for 2005 and the first quarter of 2006.
Arnason said the "sale demonstrates Landsbanki's ability to successfully manage its trading portfolio in a manner which is consistent with the bank's long standing strategy of profitably investing in projects or companies which offer the bank the expectation of superior returns while continuously maintaining the overall risk characteristics within prudent levels."
The shares were sold to international institutional investors through an accelerated bookbuilding offering.
Deutsche Bank managed the offering as sole bookrunner with Carnegie having been appointed as selling agent.
Icelandic Financial News (IFN) is available on Factiva, a joint venture between Reuters and Dow Jones Newswires, FT.COM, LexisNexis, Comtex, Gale and Thomson via the Nordic Business Report.