Danske Bank in $1 billion deal to create Denmark's largest private pension fund

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By Teis Jensen

COPENHAGEN (Reuters) – Danske Bank has agreed to buy the Danish pension assets of Sweden’s SEB in a $1 billion (£0.7 billion) deal to create Denmark’s largest private pension fund.

Danske Bank said the purchase would bring its market share to 19.2 percent, surpassing the current market leader PFA.

According to figures from lobby group Insurance & Pension, Danske Bank’s pension unit Danica Pension had a market share of 13.4 percent in 2016.

“This gives us the options to invest in products and services in the growth areas in the market: health and digitisation,” Danica’s chief executive Per Klitgaard said in an interview.

Under the deal, which still needs approval from the authorities, Danske Bank will pay 5 billion Danish crowns ($795 million) in cash for the assets after SEB has paid itself 1.5 billion crowns in dividend.

Klitgaard estimated synergies from the merger would be in a range of 150-175 million crowns per year.

SEB Pension was too small a player in Denmark to bring down its costs to competitive levels and to make the needed investments, its chief executive Soren Lockwood said.

“This makes good strategic sense for Danske. The larger you are, the more administrative costs you can cut off, and the more money you can make,” Nykredit analyst Ricky Rasmussen said, adding the price seemed “fair.”

The SEB unit has around 275 employees, more than 100 billion crowns under management and around 200,000 customers.

Danica made a pretax profit of 1.0 billion crowns in the first six months of 2017, while Danske Bank Group’s total pretax profit was 13.3 billion.

Danske expects final approval in the first half of 2018.

(Reporting by Teis Jensen; Editing by Jacob Gronholt-Pedersen, Adrian Croft and Mark Potter)

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