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International Internet Magazine. Baltic States news & analytics Monday, 01.06.2020, 23:14

Luminor to focus on increasing efficiency and business activity - CEO

BC, Tallinn, 13.09.2018.Print version
CEO of Luminor Group, Erkki Raasuke, said that instead of expansion, Luminor will focus on increasing efficiency and focusing its business activity, while the attractive segments include corporate customers and entrepreneurs.

"Luminor is too extensive at present," Raasuke said in an interview. He said that being a bank specialized on one region and a narrower field, which is possible due to the development of technology and stricter banking regulations, is more effective and profitable than a bank operating in many countries and across various fields.

Raasuke considers corporate customers and commercially active private persons as most attractive for Luminor. Even though Luminor is planning to be a universal bank across the Baltics, the bank will focus on the more economically active section of the society. The market share of Luminor in the entire banking sector should also remain at around 20% or even slightly below.

Blackstone's decision to purchase a majority stake in Luminor also goes together with the plan of making the bank more efficient. According to Raasuke, Blackstone is a so-called transformative investor that enters a business in a situation where it could be grown or made more efficient.

Nordic banks Nordea and DNB announced on Thursday morning that they will sell a 60% stake in Luminor to a consortium led by private equity funds managed by U.S. investment giant Blackstone for one bn euros.

As a result of the transaction, Nordea and DNB will each hold approximately 20% of Luminor and maintain ongoing representation on Luminor's board of directors, Nordea said. Additionally, Blackstone has entered into an agreement with Nordea to purchase their remaining 20% stake over the coming years.

The agreed purchase price in the upfront sale of the approximately 36% stake divested by Nordea is 600 mln euros, valuing Luminor, which currently generates a mid-single digit normalized return on equity, at approximately 1.7 bn euros, approximately equivalent to the financial group's price-to-book value (P/BV). Blackstone is to pay approximately one bn euros for the 60% stake.

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