Merger: 1,000 jobs at risk (Aftenposten)

Den norske Bank (DnB) aims to save at least NOK 700 million a year through a merger with Storebrand. This means that between 700 and 1,000 jobs will have to go. Shareholders controlling more than half of Storebrand’s shares have already said yes to the merger. But customers will not be among the winners if Storebrand, as seems likely, becomes a part of DnB. There will be less competition, particularly in the life insurance sector.

DnB/Storebrand becomes state-owned giant (Verdens Gang)

Trade and Industry Minister Ansgar Gabrielsen confirmed yesterday that a merged DnB/Storebrand will be a state-owned financial services giant. The Government will ensure the company remains in Norwegian hands through its ownership of more than a third of the shares. "It is very important for Norwegian business to have a major financial services group with its headquarters in Norway. Blood is thicker than water, as many business leaders say," was Mr Gabrielsen’s comment. Mr Gabrielsen made it plain that under no circumstances would the proportion of state ownership drop below 34 per cent. The state currently owns 47.3 per cent of DnB through the Government Bank Investment Fund. According to sources VG has spoken to, the state’s stake in a merged financial services group will be around 37 per cent.

Storebrand shareholders forced to accept settlement in shares (Dagens Næringsliv)

Storebrand’s shareholders will have to content themselves with a settlement consisting mostly of DnB shares, with a smaller cash component than they had originally demanded. If the merger goes ahead it seems likely to be followed by massive job cuts in the asset management division. Dagens Næringsliv understands that the parties were very close to agreement late last night on the delicate matter of the swap ratio.

Tug-of-war over cash settlement (Dagbladet)

Fierce resistance on the part of Storebrand chairman Leiv Nergaard is thought to have been the main reason for the delays in the current round of negotiations regarding a merger between Storebrand and Den norske Bank (DnB). Mr Nergaard was extremely unhappy about the offer of payment in DnB shares – he wanted cash. But then Mr Nergaard has a bone to pick with DnB. When the Finnish financial services group, Sampo, attempted to take over Storebrand last year – with Storebrand’s blessing – DnB did all it could to prevent the deal going ahead.

Stock exchange raps merger candidates (Aftenposten)

The Oslo Stock Exchange has accused Storebrand and DnB of being far too slack in informing the market about their merger talks. Both Storebrand and DnB are experienced listed companies, but spent all of last week with their heads buried in the sand and with the lid firmly on – despite steadily increasing media speculation. And the companies’ share prices have shadowed the level of speculation. Yesterday morning the Oslo Stock Exchange had had enough of the merger candidates’ clam-like behaviour and requested that they tell the stock market what was going on. "We suspended the companies’ shares, but only reluctantly. We felt they had made such a mess for themselves that we could not risk letting trading in the shares continue," said Tor Arne Olsen, spokesman for the Oslo Stock Exchange.

Unions don’t trust Braathens’ promises (Dagsavisen)

SAS chief executive Jørgen Lindegaard and Braathens boss Vidar Meum yesterday won the backing of both Braathens’ board and Corporate Assembly for the closure of the company’s ground services operations – leaving 1,040 without a job. But the unions in the Norwegian company do not believe management’s promises to avoid redundancies. 1,040 is the magic figure in the bitter conflict over the two companies’ ground services functions. This is how many people will be surplus to requirements when Braathens closes its own ground operations and instead buys services from the new SAS company, SGS. However, Braathens boss Vidar Meum’s message yesterday was that this does not mean anyone will be made redundant.

Mild rebuke for Sponheim (Aftenposten)

Agriculture Minister Lars Sponheim will get away with a mild rebuke from the Storting over his handling of the Lillesand residence requirement affair – and is no longer under suspicion of bestowing favours on a fellow party member. This seems to be the conclusion after the Storting’s Scrutiny and Constitutional Affairs Committee yesterday held a wide-ranging open hearing on the issue, with the participation of representatives from central and local government, local residents and a law professor.

DNV chairman: Wise move from Midttun (Dagens Næringsliv)

Wilhelm Wilhelmsen, chairman of Den Norske Veritas, has described Helge Midttun’s decision to resign as chief executive of the company as a wise move. He himself will remain in his position as chairman. Dagens Næringsliv revealed on 19 March that Mr Midttun had bought shares in Royal Caribbean Cruises and Brøvig – both companies for whom DNV is the classification agent. Dagens Næringsliv followed up with 13 articles which revealed a DNV culture of secrecy and lucrative compensation packages for top executives. Last Friday the pressure on Mr Midttun had become so great that he announced at an extraordinary meeting of the board that he was leaving his post with immediate effect. Miklos Konkoly-Thege takes over as chief executive.

Worth Noting

1. Starting yesterday the stock exchanges in Norway, Sweden, Denmark and Iceland are now using the same trading system and the same set of rules. For a foreign investor they will in most respects act as one stock exchange. Yesterday’s move was probably the first step on the road to a single Nordic stock exchange. (Aftenposten)
2. Following lengthy mediation, even after the original deadline for an agreement had passed, a deal was struck on Tuesday morning between the licence-fee funded broadcaster NRK and the unions which represent 2,000 NRK employees. No strike action will therefore be taken. (NTB)
3. Be prepared for delays and chaos if you are planning to fly with Braathens. Staff absences due to illness, holidays and the training of summer relief staff could cause delays and cancellations. It was announced yesterday that Braathens will be cutting 1,040 jobs. (Dagbladet)
4. Delays in completing the luxury cruise-liner The World broke the financial back of the shipyard Fosen Mek. Verksted. The shipyard’s owner, Anne Synnøve Bye, was yesterday forced into debt settlement proceedings, with debts of NOK 220 million. Ms Bye blames the Government. (Aftenposten)
5. The Sami Assembly is refusing to accept the NOK 75 million which Prime Minister Kjell Magne Bondevik gave as compensation for the Norwegian state’s previous abuses of the Sami people. The Sami are angry over the guidelines for how the profits from the fund – which amount to just NOK 3-4 million a year – should be used. (Dagbladet)

Today’s comment from Dagsavisen

You can say a lot of things about Norwegian banking policy, but consistent it has never been. That is why it has been the banks themselves which have shaped our national banking structure. The politicians have had their work cut out just limping along behind. The sale of Kreditkassen to a Swedish/Finnish financial services giant is just one example. Despite the fact that the Storting had voted in favour of there being two national financial services groups in Norway, the politicians were pressured into selling one of the national pillars to foreign investors. As a result Den norske Bank (DnB) was left as the only partly state-owned commercial bank in Norway. Chief executive Svein Aaser was therefore given responsibility for strengthening DnB, at the same time as national ownership interests were taken care of. In reality the Storting asked Mr Aaser to merge DnB with the only available partner, Storebrand. Mr Aaser therefore had full political backing when DnB made sure that Storebrand was not acquired by foreign investors last year. After many bitter words between them, it now looks as though Storebrand and DnB can join hands in a Norwegian solution, which we believe could become a happy marriage. Continued state ownership should ensure that the new company remains in Norwegian hands. Only in this way can we retain the company’s head office in Norway. Experience from the Kreditkassen sale shows that the watering down of state ownership can be problematic. Foreign investors will not be scared off by something which is a big fish in Norwegian terms, but which is a minnow internationally. That is why the politicians must retain a substantial state investment in the merged financial services group. If they do not, Norwegian banking policy will be determined by millionaire capitalists, not politicians.