Half a year after DNB said they wanted to buy Sbanken, the Norwegian competition authority stopped the merger
. The reason? The acquisition will weaken competition in the market for savings in funds. This is a surprising conclusion considering Sbanken has a market share of ~8% of fund distributions in Norway. And savings in funds is only ~3% of the total volume of Sbanken. Last week I wrote about the importance of design
. In Sbanken’s case, their profile and communication as a challenger to the traditional banks might be the main reason this acquisition was stopped. If we remove that part of the equation, it’s hard to imagine the acquisition not going through smoothly.
The future of Sbanken is still uncertain for three reasons:
- Sbanken must hold 75% more equity behind each mortgage than IRB-banks like DNB. If an IRB-bank buys Sbanken and consolidates their balance, they immediately get a nice return on their investment.
- Altor, a PE company, owns ~25% of Sbanken and has an exit strategy that they pursue aggressively. They will not stop because of this roadblock.
- The door has been opened. The door of selling has now been opened, and won’t be closed before another buyer is standing at the doorstep.
So who will the next buyer be? Nordea? Danske Bank? Or will we see the entry of a foreign bank? The funniest twist of this saga would be if Skandia bought back their daughter after being separated for 7 years.