Sampo Finance Ltd, jointly owned by Sampo Insurance plc
and Kaleva Mutual Insurance Company, has offered to purchase
Eesti Pank's 57.9 per cent interest in Optiva Pank. The
terms of the offer have been agreed to in principle by Eesti
Pank. The offer is subject to the approval of the Boards and
to a due diligence review to be performed by Sampo Finance
plc. The parties expect to conclude the transaction by 30
June 2000. Following this, Sampo Finance Ltd. intends to make
a follow up offer to Optiva Pank's minority shareholders.
In order to facilitate this transaction, the Eesti Pank as
a major shareholder in a credit institution, has provided a
temporary conditional guarantee in the amount of EEK 70mln to
support the value of specific loans held by Optiva Pank AS.
The terms of this arrangement do not increase Eesti Pank's
outstanding exposure to Optiva Pank beyond the maximum
availability under Eesti Pank's existing guarantee
facilities.
Upon the execution of the sale and purchase agreement,
this exposure will be included in an indemnity to be issued
by Eesti Pank in respect of non/strategic assets identified
by Sampo Finance plc which, given the lack of a liquid
market, are difficult to value. The final list of assets to
be covered by the indemnity will be formalized prior to
closing. These are non-liquid assets most of which are
currently in the process of being realized by the bank.
Payments under the indemnity will be triggered only where the
proceeds from the realisation of the assets are less than
their carrying value in Optiva Pank's balance sheet. The
indemnity will be issued for a period of up to two years.
Eesti Pank's exposure under the indemnity extends to 100%
of the first EEK 70mln of any losses realized by Optiva Pank
on the sale of certain assets and 75% of any excess losses.
Eesti Pank's acquisition of its controlling stake in
Optiva was part of several radical steps taken in October
1998 to stabilise the banking sector and prevent a possible
systemic crisis. The investment was motivated entirely by
monetary and banking policy decisions and was to have been of
a temporary nature. Eesti Pank had committed itself to
sourcing a strategic foreign investor for Optiva Pank by the
end of the first half of 2000.
By selling its shares in Optiva Pank, Eesti Pank will meet
one of its strategic targets, i.e. fully give up its shares
in commercial banks operating in Estonia. With the same
purpose, the central bank sold its 1.38 per cent share in
Hansabank in December 1999. The central bank's disposition
of its remaining shareholdings in the commercial banking
sector may be regarded as a successful conclusion to another
phase in the banking reform in Estonia. In the course of the
reform, Estonian banking system has considerably
strengthened, become better capitalised and more transparent
as well as more reliable to all its customers.
Eesti Pank considers the entrance of a new strategic
investor, Sampo Group into the Estonian banking market as a
positive development. The central bank is convinced that the
new owner of Optiva Pank, using its international know-how,
will soon be able to further strengthen competition in the
Estonian banking sector and offer new possibilities, such as
joint insurance and banking services, to customers.
Attracting strategic foreign investors into the Estonian
banking sector has been one of the priorities of the central
bank in recent years.
