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Glitnir ASA in Norway Sold under Value

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Glitnir ASA in Norway Sold under Value

The subsidiary of Iceland’s Glitnir Bank, Glitnir Bank ASA in Norway, was sold for NOK 300 million (USD 42 million, EUR 33 million) on October 21, 2008, or ISK 5.5 billion, but its current worth is estimated at ISK 36.5 billion (USD 281 million, EUR 217 million).

Glitnir headquarters in Reykjavík. Copyright Icelandic Photo Agency.

The bank’s book value has thus increased by ISK 31 billion (USD 239 million, EUR 185 million) in three months, Morgunbladid reports.

Glitnir ASA was bought by 20 savings banks. The takeover was led by Finn Haugan, the managing director of Sparebank 1 SMN that acquired a 25-percent stake in the bank.

According to Morgunbladid, Haugan is also the chairman of the board of the insurance fund of deposit holders in Norway that revoked Glitnir’s loan channel, demanding that the bank be sold.

Haugan said he had not participated in granting the loan channel to Glitnir when it was discussed by the board. “I immediately stepped aside from the board and was not given any information on that process. I don’t know for how long the loan channel was supposed to remain open, but I do know that it was for a limited time.”

According to Morgunbladid, Glitnir in Norway was granted a loan of NOK 5 billion (USD 700 million, EUR 540 million) after the collapse of the banks in Iceland in October 2008 so that it could withstand the crash. Then the loan channel was suddenly revoked after a meeting between the Norwegian central bank, financial supervisory authority and insurance fund.

“The parent bank in Iceland needed to sell Glitnir here in Norway within a certain timeframe that was set by Norwegian authorities,” Haugan said, stating there was nothing wrong with the takeover price. “Anyone could make offers for this bank and several did. This highest offer was [NOK] 300 million.”

Haugan also does not see anything strange about how much the bank’s value has increased in three months. “Because of the problems facing Glitnir it could no longer support the bank in Norway. However, the Norwegian bank was never in trouble and everyone knew that. But since the parent company couldn’t support the subsidiary, the subsidiary had to be sold.”

Glitnir Bank ASA in Norway was re-branded BN Bank on January 1, 2009.

Click here to read more about the acquisition.

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