Irish
Icelandic bank Landsbanki acquires Ireland's top independent stockbroker Merrion Capital
By Finfacts Team
Nov 15, 2005, 14:53

Landsbanki is Iceland's oldest full-service commercial bank and has played a leading role in the successful economic progress of Iceland since its inception in 1885. The Bank was transformed into a limited-liability company on 1 January 1998, while still 100% state-owned. Through an Initial Public Offering (IPO) in September 1998, which represented the first step toward privatisation, the state's holding was reduced to 85%, and was further reduced to 72% in December 1999 through another public offering. The state’s stake in Landsbanki was again reduced, this time to 48.3%, after the Icelandic government successfully sold 20% of the Bank’s total share capital in June 2002. An agreement was signed on 31 December 2002 for the sale of the state's remaining 45.8% interest in Landsbanki to the holding company Samson Holding. The privatisation of Landsbanki was completed on 25 February 2003, when the government disposed of its remaining 2.5% of Landsbanki’s capital through a public offering. Landsbanki's present shareholders number around 14,000.

The initial investment will value Merrion at €55.3 million (ISK 4.010 million). The subsequent acquisition price will be based on future profits generated by Merrion. The investment is subject to regulatory approval, due diligence and finalization of contracts. The acquisition will be financed through internal resources.

Established in 1999, Merrion is a leading independent stockbroking and corporate finance firm in Ireland with between 5-10% share in its various markets. Merrion employs 75 people. Today 70% of its shares are held by staff and 30% by New York based investment bank, Allen & Company Inc. Merrion has been profitable since its inception and is expected to generate pretax profits of between €7 - 7.5 million in 2005. The acquisition will not have a significant impact on Landsbanki's balance sheet.

Landsbanki is the leading provider of banking and financial services in Iceland. Established in 1886 as the National Bank of Iceland, it was listed on the Icelandic stock exchange in 1998 and fully privatized at the end of 2002.

The bank is rated by Moody's and Fitch with A2/P1 and A/F1 ratings respectively. The Bank is the 9th largest bank in the Nordic region with a market cap of € 3.3 billion and a total balance sheet of €15 billion. The bank has enjoyed significant growth internationally over the last few years with total asset growth from€5 billion in 2003 to over €15 billion at 30 September 2005.

For the first nine months of 2005, Landsbanki reported a net profit of €218 million after tax. Landsbanki is an internationally growing bank with operations in 11 countries, emphasizing corporate and investment banking services. As such it is involved in various banking operations in the UK including Teather & Greenwood, a leading stock broker to the mid-cap sector in the UK. On the continent Landsbanki is involved in the pan-European brokerage business through its ownership of Kepler Equities which has offices in all major financial centers in mainland Europe and in New York.

John Conroy Chief Executive Merrion Capital

Merrion Chief Executive John Conroy said that he was delighted to welcome Landsbanki as a partner for Merrion as it embarks upon a further exciting phase in the group?s development. "In a relatively short period of time, Merrion has built up a strong positioning in an Irish market which, we believe, offers enormous opportunities for ambitious and dynamic financial services companies. Merrion wants to build on its success and we are attracted by Landsbanki's vision and its commitment to developing a strong presence in Ireland."

Sigurjon Th. Arnason, Landsbanki's CEO said that the Irish financial services market is of strategic interest to Landsbanki due to its size, location and characteristics. "We believe that our size and capabilities are relevant for the Irish financial services market. We have been impressed with the Merrion success story as a leading independent stockbroking and corporate finance firm in Ireland. This partnership will enable us to accelerate Landsbanki's progress towards developing its corporate and investment banking offering in Europe. It will further diversify our income streams, while broadening both sector and geographic coverage."

Halldor J. Kristjansson, Landsbanki's CEO said that the favorable outlook for European equity markets offers an opportunity for Landsbanki to develop its combined pan-European brokerage services and to expand into Ireland. "We believe that Merrion provides a very good strategic fit and provides synergies with our other European and New York based brokerage services. The partnership between Landsbanki and Merrion will generate value to customers through the combination of Merrion's client relationships and expertise in Ireland and Landsbanki's banking expertise and financial resources."

Allen & Co Inc will continue to be a key shareholder and Managing Director Paul Gould said "Merrion's management have a very good track record in creating value for shareholders and we are delighted to continue as shareholders in the new partnership."

Merrion's current senior management will continue to work with the Company following the transaction and will continue to lead the group.