EESTI ÜHISPANK

ANNOUNCEMENT

18.11.98

 

ÜHISPANK TO RAISE EQUITY BY UP TO USD 65 MILLION

(EEK 859 MILLION) VIA STRATEGIC PARTNERSHIP WITH SEB

 

Yesterday,  on  17  November  1998,  Eesti Ühispank the second largest

banking group  in Estonia  and the  Baltics, has  reached an agreement

with the leading Swedish financial services institution  Skandinaviska

Enskilda Banken (SEB)  on a strategic  partnership which will  involve

SEB acquiring a 32 per cent  stake in Uhispank.  Under a  separate but

related  development,  International  Finance  Corporation  (IFC),   a

member of the  Word Bank Group,  has agreed in  principle to subscribe

to a loan,  convertible into ordinary  shares, of USD  20 million (EEK

259 million).

 

The aim of the co-operation  agreement between SEB and Ühispank  is to

develop a  close business  relationship covering  business between the

Nordic  countries  and  the  Baltics.  The  two banks will share their

individual  know-how,  products,  and  technical  and  human resources

expertise, so  as to  expand and  enhance their  businesses. Under the

terms of the agreement, Ühispank will carry out a capital increase  of

15 million new  shares, which will  be subscribed solely  by SEB at  a

price of  EEK 40  each. The  price paid  for the  new issue values the

enlarged bank at EEK 2.6  billion (USD 194 million). According  to the

agreement, S E B has acquired a further 6 million shares of  ühispank.

As a result of the agreement  with S E B, Uhispank's capital  adequacy

will increase to 16.39 per cent, well above the required 10 per cent.

 

As  a  strategic  partner,  and  the  largest  shareholder,  SEB  will

nominate two members to the  Supervisory Council of Uhispank. SEB  has

also  entered  into  a  shareholder  agreement with Swedfund Financial

Markets AB, which currently holds 6.3 per cent of the share capital.

 

In addition, IFC  is considering to  grant an 8-year  loan of EEK  259

million  (approx.  USD20  million)  convertible,  for  a period of six

months, into 7  million new shares  at a price  of EEK 37  each, which

has been agreed  in principle. IFC  expects to seek  approval from its

Board of Directors in December.

 

Subsequent to the capital increase  and the conversion of IFC's  loan,

Ühispank's  capital  will  increase  to  EEK  2.6  billion, making its

capital base one of the largest of banks in the Baltic region.

 

Ain Hanschmidt,  President of  Eesti Ühispank,  said "As  a result  of

these agreements,  Eesti Ühispank  will acquire  2 major international

financial  institutions  as  shareholders.  Besides  strengthening the

Bank's  capital   base,  they   will  provide   Eesti  Ühispank   with

significant  benefits  in  terms   of  know-how,  market   penetration

capacity  and   product  sophistication,   operational  strength   and

stability. It is  a reflection of  the quality of  Eesti Uhispank that

these two high  profile institutions, after  an extensive and  careful

analysis, decided  to become  strategic shareholders  and partners  of

the bank."

 

Mr. Lars Thunell, President of  S E B said "The  strategic partnership

with Ühispank is in line with our  strategy to develop S E B into  the

leading  financial  services  institution  in  Northern  Europe, which

includes the Baltic Rim  countries. It will improve  our possibilities

to serve our Nordic clients  already present in the Baltics.  The bank

that we are investing  in is leading in  its home market, with  strong

market positions and good  management. Considering close ties  between

the  economies  of  Sweden  and  Estonia,  the  strategic  partnership

between  S  E  B  and  Ühispank  offers  an excellent base for synergy

enabling both banks to offer the clients a new perspective in  banking

services."

 

Mr. Harold Rosen, Director of IFC added " IFC evaluates carefully  all

the  investments  it  makes.   Ühispank  is  a  high-quality financial

institution capable of offering valuable services and products to  its

clients and we believe that the loan will provide significant  support

to the Estonian banking sector."

 

Ühispank will hold an extraordinary shareholder's meeting on  November

26, 1998, in Tallinn, to approve  the directed issue of shares to  SEB

and the directed convertible loan issue to IFC.

 

For further information, please contact:

 

Mr Margus Schults, Vice President, Ühispank,  +372 6 110 600

Mr Janek Mäggi, Vice President, Ühispank,   +372 6 104 300

 

Lars Gustafsson, Vice President, S E B,  + 46 70 763 8003

Gunilla Wikman, Head of S E B Group Communications,  + 46 8 763 8125

 

Edward Strawderman, Investment Officer, IFC,  +1 202 473 3538

 

 

 

Notes to Editors

 

Eesti  Ühispank  was  founded  in  1992  from  the  partnership  of 10

independent  local  banks.   The  bank  subsequently merged with North

Estonian Bank  (AS Pohja-Eesti  Pank) in  1997, and  Tallinna Pank  in

1998. On  29th July  1998, the  Bank's merger  with Tallinna  Pank was

entered into  the commercial  register. As  of end  October 1998,  the

bank holds a 35.1 per cent  market share in terms of assets,  34.6 per

cent in  terms of  deposits and  33.8 per  cent in  terms of  loans in

Estonia. The bank holds a 13 per cent market share in the Baltics.

 

Eesti  Ühispank  operates  through  a  network  of  14 offices located

throughout the main regional centres  in Estonia and 83 branches.  The

bank  offers  a  wide  range  of  financial  services  such  as  lease

financing, electronic banking and corporate finance complementing  its

core  retail  banking  activities.  The  bank  has total assets of EEK

13,840 million (US$ 1,040 million) as at 31st October 1998.

 

Skandinaviska Enskilda Banken is the second largest Swedish bank  with

assets of USD 91.4 billion  and market capitalisation of nearly  USD 7

billion.

 

International Finance Corporation,  a member of  the World Bank  Group

established in  1956, is  an international  financial institution with

authorized  capital  of  USD   2.45  billion  comprising  174   member

countries as its shareholders.

 

 

Press conference

 

On November  18 1998,  at 12  noon Eesti  Ühispank will  hold a  press

conference in  the conference  hall of  the Bank's  headquarters at 13

Tartu Avenue, Tallinn.