Alone again (Dagens Næringsliv)

Storebrand CEO Idar Kreutzer is alone again after having been brutally dumped by DnB CEO Svein Aaser. The stock market reacted by sending Storebrand’s shares plunging. Storebrand board chairman Leiv L. Nergaard believes that DnB has deliberately tried to undermine trust in Storebrand. "I have never experienced anything like this," he said. "This has, in a way, become Storebrand’s main activity," said Mr. Kreutzer, referring to the group’s many attempts to find a partner. Major shareholder Stein Erik Hagen said that he and the other Storebrand shareholders were willing to accept a lower conversion ratio if DnB were willing to present its alleged finds to a third party.

Skeletons in the closet (Aftenposten)

Storebrand group CEO Idar Kreutzer refuses to admit that his company is rotten to the core. But the shareholders are wondering. Yesterday the value of the company’s shares dropped eight per cent. "DnB’s management have blackened your name. How do you feel about the sense of insecurity that is now surrounding the situation at Storebrand?" "It is very unfortunate," answered Mr. Kreutzer. "The uncertainty they have created regarding our financial situation is ungrounded." Why did the negotiations break down? DnB’s version: The losses at Finansbanken meant that the first price agreed on was much too high. There were 50 questions, both major and minor, that remained unanswered when the deadline ran out. It would have been irresponsible to use an additional four to six weeks to answer these questions. Storebrand’s version: It was DnB’s plan from the very beginning to use the sharp focus on our economy to force the price down. DnB was pressured by its own stockholders to abandon the plans for a merger, some because they did not want it, and others because they thought the price was too high.

Storebrand free to seek new partners (Aftenposten)

Storebrand now has a freer position that it has had for a long time, according to the company’s major stockholders, with the National Insurance Scheme Fund and grocery-chain millionaire Stein Erik Hagen at the helm. Storebrand is now free to merge with a foreign partner. The major stockholders were informed about developments throughout the weekend, but chose to reject DnB’s ultimatum. They were following the advice of Storebrand’s board and senior executives. "There was no objective reason to alter the conversion ratio to the detriment of Storebrand’s shareholders," said Tore Lindholt of the National Insurance Scheme Fund.

Regret earlier breakdown (Dagens Næringsliv)

Politicians are "making a note of" the breakdown in merger negotiations between DnB and Storebrand. But Jan Willy Hopland, Chief Executive of the Government Bank Investment Fund, regrets that previous attempts at a merger were stopped. "The politicians can talk all they want about the consequences the breakdown of the DnB-Storebrand merger will have for the Norwegian financial industry. But in retrospect it is clear that more and more people wish that the previous attempts to establish a major, competitive Norwegian financial group had borne fruit," said Mr. Hopland.

Nordby demands a clean-up at UDI (NTB)

Trygve Nordby, Director General of the Directorate of Immigration (UDI), intends to conduct a major house-cleaning at the directorate after TV2 revealed that a former UDI official, Terje Tune, has been selling false torture stories in order to secure asylum-seekers residency in Norway. Using a concealed camera, TV2 exposed Terje Tune, who now works as an assistant lawyer, inventing tales of torture for clients for pay, and revealed its findings Monday evening. Mr. Tune declined to comment to TV2.

In the front lines (Nationen)

For several days Norwegian special forces have been in the field in Afghanistan, participating in more front-line operations than the special forces of any other country. They have carried out the most dangerous missions, according to top defence officials. The Government believes that experience gained by the special forces and the other Norwegian units participating in the war on terror will form a basis for future Norwegian defences. Now the special forces are coming home, but in the course of the summer Norway will send six F-16 fighter aircraft to Afghanistan to take part in battles. Plans are to send them into combat against the enemy’s ground forces.

Norway has highest interest rates (Dagbladet)

Norwegians are currently paying the highest real interest rates of all the OECD countries. Several of Norway’s leading economists are now warning Svein Gjedrem, Governor of Norges Bank, against raising interest rates further. The fate of interest rates for the near future will be determined tomorrow at 14.00, when Mr. Gjedrem will present the decision of the bank’s board as to whether there will be an interest rate hike. After the board’s meeting in May Mr. Gjedrem was sending out clear signals indicating that it was more probable that "during the course of the next two years inflation will be higher than 2.5 per cent than lower". This was a decisive warning signal to people borrowing money. But the situation may have changed. The plunging stock market, the strong Norwegian krone and the increase in unemployment may mean that interest rates will not be raised after all.

Worth noting

• DnB has now got a stranglehold on Storebrand, and competition between the two financial titans has been disturbed, in the view of Rector Torger Reve at the Norwegian School of Management BI. Storebrand’s shares are plummeting on the stock market as a result of the failed merger, while DnB’s are rising. (Dagsavisen)
• According to a survey carried out by Norsk Gallup for Verdens Gang and TV2, the Progress Party has gained two percentage points to reach 27 per cent support. A fifth of all voters have turned their backs on the government coalition parties since the election last year. (Verdens Gang)
• Thus far this year 58 people have been awarded a total of NOK 2.6 million in compensation for wrongful surveillance by the national intelligence services. The average payment was NOK 45 000, and the upper limit was NOK 100 000. A commission was formed to handle complaints after the Lund Commission documented the scope of political surveillance since World War II. (Klassekampen)
• Russia wants to start exploratory drilling for oil in Petunia Bay, close to the former settlement of Pyramiden on Svalbard, in June of next year. Russia has reduced its presence on the archipelago from 2000 people to 950, and is trying to establish a new industrial base. Russia has already announced that it will open a fish processing plant in Barentsburg. (Aftenposten)
• Norwegian municipalities have an average debt of NOK 15 481 per resident, and the smaller municipalities are having most trouble paying their debts. In the view of researchers the discrepancies are chiefly caused by changes in government funding. (Nationen)
• According to a recent property survey, the homes owned by the Church for ministers and bishops are worth NOK 1.1 billion. Their value had previously been estimated at NOK 588 million. The Church Property Endowment Fund, which manages the property of the Church, thus has capital amounting to nearly NOK five billion. (Dagens Næringsliv)

Today's comment from Dagsavisen, Dagens Næringsliv and Verdens Gang:

It is almost impossible to believe one’s ears these days. First DnB convinced a very reluctant Storebrand to join in merger negotiations. After all parties claimed that the merger had been accomplished to everyone’s satisfaction, a last-minute announcement was made that the negotiations did not reach a conclusion after all. The merger fell apart due to the cost and person-to-person chemistry. It must also have been due to a lack of common sense and strategic thinking. (Dagsavisen) Once again it has been shown that there is a wide gap between carrying out commercial activities and satisfying political desires, if not to say dreams and visions. The "major Norwegian financial group" fell apart two nights ago, and all indications point to the probability that it will be a long time before anyone tries this again. It doesn’t help that the Government is one of the major owners when its negotiators cannot manage to agree with their counterparts, for whatever reason. (Dagens Næringsliv) The merger fiasco was not only a defeat for the parties involved, but so far for everyone who clings to the hope that it may be possible to keep major Norwegian financial institutions of this type in Norwegian hands. The Finnish financial services company Sampo met with fierce opposition from Norwegian political circles when it tried to buy up Storebrand last year. Norwegians were afraid that a foreign takeover would be unfavourable for both customers and employees. Yesterday the rumour began to spread that DnB may have found a more tempting morsel in Gjensidige NOR, which has been mentioned as a potential partner several times. A merger between these two would, in any case, satisfy everyone who has a fervent belief in a gigantic, Norwegian-controlled financial institution. This would make Storebrand’s shareholders the big losers in the game. (Verdens Gang)