LHV Pank and Danske Bank Consummate the Purchase-sale Deal of Bank’s Private Loan Portfolio

The transaction between AS LHV Pank and Danske Bank A/S that began in June this year has been finalized. According to the transaction, AS LHV Pank is to acquire the private customer loan portfolio of the Danske Bank A/S Estonia branch.

Madis Toomsalu, CEO of LHV Group, said earlier that,

“This is an important event for us. LHV’s loan portfolio will increase by 40% as a result of the transaction taking place, and the importance of retail banking in LHV’s business will increase dramatically.”

This will also include the transfer of leasing as well as the collateral agreements and other related agreements to  the unit. As an outcome of this event, the loan portfolio of LHV Pank grew by 393 million euros. The speculated final financial result of the transaction is in line with forecast that was previously made.

At the time when the transaction was proposed, Erki Kilu, the Chairman of the Management Board of LHV Pank,

“After the transaction is finalised, we will certainly invite new loan clients to use all other LHV services as well. We can serve the new clients in the best possible way: we offer all banking services, the best service in Estonia, a network of ATMs across Estonia, and an extremely comfortable internet and mobile bank.”

 To finalize the pact, LHV Pank added a sum worth 450 million euros to the current deposits in the summer. In order to raise extra funds for the covenant, AS LHV conducted subordinated bond issues, Tier 1 bond own fund issues along with an extra share issue.

The transaction involves around 10,000 private customers. After the transaction, all reasonable credit agreements inferred by the clients are reported to have been transported by Danske Bank to LHV Pank.

Even all the papers and customer data, like personal information linked to loan performance, has also been transferred. Over 90% of this data includes home loan covenants. It will also consist of some consumer loans as well as student loans. Along with the unit, the LHV Pank is also to take over the contracts of employment of 4 employees.

Through the weekend, the two parties in the deal updated all customers linked to the deal regarding the change of agreements. They also allowed the corresponding borrowers, sureties, the co-applicants, along with the known collateral holders regarding the transfer. The cooperating partners, related insurance corporations were also updated.

The transfer is now made smoother and easier for the clients as LHV Pank designed a private account linked to each client with a loan consensus, where the client must redirect the loan payments. Loans are to be automatically transported to LHV, so there is no need for  acknowledging fresh loan pacts with LHV.

And the mortgages linked to the loans are also to be laid down under LHV, with no extra costs incurred by customers. In the case of lease agreements, the lessor and owner of the object of the lease will be LHV Pank.

For future, the customers must redirect the loan payments to the private accounts at LHV Pank rather than their old accounts. After transfer, all proposals to modify the covenants linked to transfer are to be sent to LHV. The service fees by LHV Pank is to be applied to all customers as per the price list.