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Moody’s Global Company Profile Banking
March 2008 Sparebanken Nord-Norge Tromsø, Norway
Analyst Contacts: Company Overview
London 44.20.7772.5454 Sparebanken Nord-Norge (also known as SpareBank 1 Nord-Norge) is a regional savings bank with operations in northern Norway. It is active in the regions of 12 Eeva Antila Nordland, Troms and Finnmark, providing a full range of financial products and Analyst services within retail and corporate banking. It holds leading regional market 12 Janne Thomsen shares of around 30% in retail lending and 25% in corporate lending. In addition, Senior Vice President the bank has a representative office in Murmansk, Russia. 12 Reynold R. Leegerstee Managing Director Sparebanken Nord-Norge is one of the largest member banks of the SpareBank 1
Alliance and one of the four founding members in 1996. The Alliance is a broad- based collaboration comprising 22 savings banks with total assets of over NOK350 billion. The Alliance is coordinated through the jointly owned financial group SpareBank 1 Gruppen AS, which is owned collectively by Sparebanken Midt- Norge, Sparebanken Nord-Norge, SpareBank 1 SR-Bank, Samarbeidende Sparebanker, Sparebanken Hedmark and the Norwegian Confederation of Trade Unions/Federation of Trade Unions.
Sparebanken Nord-Norge’s Primary Capital Certificates (PCCs) are quoted on the Oslo Stock Exchange. Ownership is diversified and the largest owner has 4.2% of the PCCs. The 20 largest PCC holders accounted for 28% of the PCCs as of end- December 2007.
At year-end 2007, Sparebanken Nord-Norge’s total assets amounted to NOK61 billion (€7.7 billion) with net income for 2007 totalling NOK707 million (€89 million).
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Sparebanken Nord-Norge 2005-2007 Financial Highlights (as Reported)
Note: The financials presented below are those reported by the entity and are not adjusted for Moody’s analytic purposes. For Moody’s generated ratios on Sparebanken Nord-Norge, please see
Sparebanken Nord-Norge % change % change 31-Dec-07 31-Dec-06 31-Dec-05 2007 2006 NOK million, Period end Total Assets 60,819 54,962 48,630 11% 13% Total Capital 5,358 4,898 4,236 9% 16% Tier 1 Ratio 8.94% 9.77% 8.69% - - Net Income 707 767 557 -8% 38%
Business Activities
Sparebanken Nord-Norge is a regional retail and commercial bank. Its well-established market position is based on close customer relationships and a good product range. Products are mostly developed at the group level for cost-synergy purposes, but Sparebanken Nord-Norge also operates a local real estate agency, the largest in its home region. Furthermore, it has subsidiaries providing securities brokerage, leasing, factoring and vehicle financing, real estate management as well as investment services. Cross-selling has been the bank’s focus in recent years.
Retail Market The retail market division provides financing and investment services, as well as payment facilities, pensions and life and non-life insurance. With its origins as a savings bank, the retail market is a core business for Sparebanken Nord-Norge and it has a regional market share of close to 30% in this segment. Retail lending accounted for 64%1 of total loans at year-end 2007 and retail market generated 37% of the group’s pretax income in 2007.
Corporate Market This division of the bank primarily provides services to SMEs and has a regional market share of over 20% in the corporate segment. The largest corporate sectors for the bank are property management and fisheries/fish farming. The public sector is also included under corporate market and is one of the bank’s priorities – Sparebanken Nord-Norge currently services a significant part of the region’s public sector. Corporate lending accounted for 36% of total loans at year-end 2007 with the corporate and public sectors generating 25% of the group’s pretax income in 2007.
1 Does not include mortgage loans transferred to SpareBank 1 Boligkreditt
2 March 2008 Company Profile Moody’s Global Banking - Sparebanken Nord-Norge
Company Profile Moody’s Global Banking
Sparebanken Nord-Norge
Loan Portfolio As of Dec-07 Pretax Income per Segment in 2007 Total Portfolio NOK 50 billion Total NOK 900 million
Leasing Unallocated, 3% inc. bank's Corporate investment lending activities 35% (including public sector) 36% Retail lending 64% Retail market 37% Corporate and public market 25%
Source: Sparebanken Nord-Norge Source: Sparebanken Nord-Norge
Distribution Capacity and Market Share
Sparebanken Nord-Norge operates 81 branches and has over 800 employees. The main office is in Tromsø with regional offices in Tromsø, Hammerfest, Harstad, Bodø and Mo I Rana. Sparebanken Nord-Norge is a leading player in northern Norway, where it benefits from strong local brand name recognition. In 2007, the bank opened a representative office in Murmansk, Russia. In addition, the bank has signed a letter of intent with Tavrichesky Bank, St. Petersburg, Russia with regard to Sparebanken Nord-Norge's purchase of a 10% stake in Tavrichesky Bank.
As is the case for traditional local banks and other members of the SpareBank 1 Alliance, Sparebanken Nord- Norge has opted for a multi-channel strategy, with its branches remaining key to distribution in regional markets. It also offers Internet banking services that have been upgraded in co-operation with Swedbank and SpareBank 1 Gruppen. Similar to most other Nordic banks, a significant proportion (over 50%) of Sparebanken Nord-Norge’s customers are active users of Internet banking.
Sparebanken Nord-Norge’s market includes five regions covering the three most northern counties in Norway, where it has market shares of around 30% among retail customers and about 25% among corporates. At year- end 2007, the bank’s client base consisted of 246,000 retail clients and 18,500 corporate clients. The majority of the bank’s loans are to retail customers – over 60% of total lending is to the retail sector and mainly in the form of mortgages. In 2007, lending to the corporate sector increased by 16% and to the retail sector by 12%.2
Regional market shares of Sparebanken Nord-Norge 2006
Retail Lending 28% Commercial Lending 24% Retail Deposits 34% Commercial & Public Deposits 41% Mutual funds 45% Individual Pensions 31% Life insurance excluding saving 50% Non-life insurance 21% Source: Sparebanken Nord-Norge
2 Includes mortgage loans transferred to SpareBank 1 Boligkreditt
3 March 2008 Company Profile Moody’s Global Banking - Sparebanken Nord-Norge
Company Profile Moody’s Global Banking
Sparebanken Nord-Norge
Ownership and Structure
As a Norwegian savings bank, Sparebanken Nord-Norge has a specific ownership status. It is an independent foundation which has Primary Capital Certificate (PCC) bearers instead of stockholders or traditional owners. The main differences of PCCs compared to ordinary shares are that PCCs give ownership rights to specific parts of a bank’s capital, and that the governing bodies of a savings bank have a broader representation than at a commercial bank.
No single entity holds more than 5% of the PCCs, and the 20 largest PCC holders together accounted for 28% of the total as of end-December 2007. The PCCs are traded on the Oslo Stock Exchange (Ticker: NONG).
TOP 5 PCC Holders of Sparebanken Nord-Norge PCC holder 31-Dec-07
Pareto Aksjer Norge 4.2% Frank Mohn AS 2.3% MP Pensjon 1.9% Pareto Aktiv 1.8% J.P. Morgan Chase Bank – client account 1.8%
Subsidiaries: SpareBank 1 Finans Nord-Norge AS
The company’s main products are factoring, leasing and vehicle financing. The company’s factoring services are also distributed through SpareBank 1 member banks. It is wholly owned by Sparebanken Nord-Norge. Profit after tax was NOK19 million in 2007.
SpareBank 1 Nord-Norge Invest AS
The company invests in companies based in north Norway. It was established in 2006 and has an overall investment limit of NOK180 million. It is wholly owned by Sparebanken Nord-Norge. Profit after tax was NOK13 million in 2007.
Eiendomsdrift AS
The company manages, operates and rents out properties. The entire property portfolio in located in north Norway. It is wholly owned by Sparebanken Nord-Norge. Profit after tax was NOK3 million in 2007.
EiendomsMegler 1 Nord-Norge AS
The company provides real estate brokerage related to residential, commercial and industrial properties. The company employs about 30 people and has offices in Tromsø, Alta, Bodo, Hammerfest and Kirkenes. EiendomsMegler 1 Nord-Norge belongs to the nationwide EiendomsMegler 1 chain, which is the second- largest real estate brokerage chain in Norway. The company showed a loss of NOK0.3 million in 2007.
SpareBank 1 Nord-Norge Securities ASA
The company is active in securities brokerage and asset management. Sparebanken Nord-Norge owns 54% of the shares with the rest owned by First Securities and the staff. Profit after tax was NOK5 million in 2007.
4 March 2008 Company Profile Moody’s Global Banking - Sparebanken Nord-Norge
Company Profile Moody’s Global Banking
Sparebanken Nord-Norge
Associated Companies: SpareBank 1 Gruppen AS
Sparebanken Nord-Norge is part of the SpareBank 1 Alliance, a broad-based collaboration comprising of 21 independent savings banks and SpareBank 1 Gruppen with total assets of over NOK350 billion. The Alliance is coordinated through the jointly owned financial group SpareBank 1 Gruppen AS, which is owned collectively by Sparebanken Midt-Norge (SpareBank 1 Midt-Norge), Sparebanken Nord-Norge (SpareBank 1 Nord- Norge), SpareBank 1 SR-Bank and Samarbeidende Sparebanker, each holding a stake of 19.5%, Sparebanken Hedmark, holding 12%, and the Norwegian Confederation of Trade Unions/Federation of Trade Unions, holding 10%.
SpareBank 1 Gruppen AS was mainly established to allow cost-sharing, economies of scale and critical mass among members of the Alliance. This led to the creation of joint product companies (including fund management, insurance and real estate), joint marketing efforts and the development of common IT and Internet platforms. The sales strategy remains decentralised so as to safeguard close customer relationships.
SpareBank 1 Boligkreditt AS
This is a covered bond company wholly owned by certain SpareBank 1 Alliance banks but it is not a part of SpareBank 1 Gruppen. The owners include SpareBank 1 SR-Bank, Sparebanken Midt-Norge, Sparebanken Nord-Norge, Bank 1 Oslo and 15 small savings banks belonging to Samarbeidende Sparebanker AS. Through the covered bond company, the banks have the opportunity to place well-secured mortgage loans in the market, thus reducing their funding costs. By the end of 2007, the mortgage company had issued loans amounting to NOK14 billion.
Company Management
Company Directors Current Title Tenure Hans Olav Karde Chief Executive Officer Since 1989 Oddmund Åsen Deputy CEO Since 1996 Olav Karlsen Senior Group General Manager, Corporate Banking Market Since 1999 Stig-Arne Engen Senior Group General Manager, Retail Banking Market Since 2005 Rolf Eigil Bygdnes Senior Group General Manager, Economy/Finance Since 2004 Geir Andreassen Risk Manager Since 2004 Elisabeth Utheim Senior Group General Manager, Internal Services Since 2005
Board of Directors Affiliation Tenure
Outside Directors Kjell Olav Pettersen Chairman of the Board, Managing Director, COOP Nord BA Chairman since 2005 Tom Veierød Vice-chairman of the Board N/A Åse Annie Opsjøn Member of the Board N/A Erik Sture Larre jr. Member of the Board N/A Elisabeth Johansen Member of the Board N/A Rolf Pedersen Member of the Board, Executive Chairman, Alta Motor A/S N/A Vivi Ann Pedersen Member of the Board, Head Staff Representative N/A Hanne P. Bentsen Member of the Board N/A
5 March 2008 Company Profile Moody’s Global Banking - Sparebanken Nord-Norge
Company Profile Moody’s Global Banking
Sparebanken Nord-Norge
Company History
SpareBank 1 Nord-Norge was created via a series of mergers between 1989 and 1992, starting with the merger of Sparebanken Nord and Tromsø Sparebank in 1989 and the absorption of Nordkapp Sparebank and Sparebanken Nordland in 1991 and 1992, respectively. However, the bank’s roots can be traced back to 1836, when Tromsø Sparebank was established.
Since 1996 Sparebanken Nord-Norge has been a member of the SpareBank 1 Alliance, which it created together with three other Norwegian savings banks in response to the increasing competitive pressures in the banking sector. The Alliance was later extended to other members. The Alliance has no joint and several liability guarantees that legally bind members. However, there is a moral, business and reputation-based obligation among the banks (in the event of one of them experiencing a crisis). The arrangement is nevertheless complex since any member can veto a decision concerning SpareBank 1 Gruppen, which is a jointly owned financial company of SpareBank 1 members. An alliance was preferred to a merger, considering the strong local links of each member savings bank. In January 2004, one of the founding members - Sparebanken Vest - left the Alliance.
In 2000, SpareBank 1 Gruppen acquired Vår Bank. Each member bank integrated its operations with the Vår Bank units in its own region, while Vår Bank’s operations in Oslo were maintained as a group branch, currently known as Bank 1 Oslo.
In January 2003, the Alliance established a Nordic cooperation agreement with Swedbank (previously also known as ForeningsSparbanken AB); however, the agreement is no longer applicable as Swedbank divested all its interests in SpareBank 1 Group in 2006.
In December 2007, Sparebanken Nord-Norge signed a letter of intent with Tavrichesky Bank, St. Petersburg, Russia with regard to Sparebanken Nord-Norge's purchase of a 10% stake in Tavrichesky Bank. The letter of intent also includes the sale of Tavrichesky Bank’s branch in Murmansk to a separate bank owned by Sparebanken Nord-Norge (75%) and Tavrichesky Bank (25%). Tavrichesky Bank’s total assets amount to RUB12 billion (€340 million). The bank's branch in Murmansk has 21 employees and total assets of approximately RUB185 million (€5 million).
Peer Group
Aktia Savings Bank p.l.c.
Fionia Bank AS
Lansforsakringar Bank AB (publ)
Ringkjobing Landbobank A/s
Roskilde Bank
Sparebanken Midt-Norge
Sparebanken Vest
Sparebanken Øst
SpareBank 1 SR-Bank
Spar Nord Bank A/S
Sydbank A/S
6 March 2008 Company Profile Moody’s Global Banking - Sparebanken Nord-Norge
Company Profile Moody’s Global Banking
Sparebanken Nord-Norge
Related Websites and Information Sources
For additional information, please see the company’s website: www.snn.no
MOODY’S has provided links or references to third-party World Wide Websites or URLs (“Links or References”) solely for your convenience in locating related information and services. The websites reached through these Links or References have not necessarily been reviewed by MOODY’S, and are maintained by a third party over which MOODY’S exercises no control. Accordingly, MOODY’S expressly disclaims any responsibility or liability for the content, the accuracy of the information, and/or quality of products or services provided by or advertised on any third party web site accessed via a Link or Reference. Moreover, a Link or Reference does not imply an endorsement of any third party, any website, or the products or services provided by any third party.
Moody’s Related Research
Rating Methodology:
Bank Financial Strength Ratings: Global Methodology, February 2007 (102151)
Incorporation of Joint-Default Analysis into Moody’s Bank Ratings: A Refined Methodology, March 2007 (102639)
Credit Opinion:
Sparebanken Nord-Norge, March 2008
Banking System Outlook:
Norway, November 2007 (105877)
Banking Statistical Supplement:
Norway, September 2007 (104819)
To access any of these reports, click on the entry above. Note that these references are current as of the date of publication of this report and that more recent reports may be available. All research may not be available to all clients.
7 March 2008 Company Profile Moody’s Global Banking - Sparebanken Nord-Norge
Company Profile Moody’s Global Banking
Sparebanken Nord-Norge
Report Number: 107914
Author Editor Production Specialist Eeva Antila Nick Ashwell Nita Desai
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8 March 2008 Company Profile Moody’s Global Banking - Sparebanken Nord-Norge