Danish Pension Snaps Up Banking Crisis Casualty

The former Cantobank will be used to provide investment and savings products for PFA’s pensioners.

(June 21, 2013) — Denmark’s largest privately owned life insurance company PFA Pension has bought formerly troubled consumer bank Cantobank.

In March this year, the Financial Stability–which was founded in October 2008 as part of an agreement between the Danish government and the banking sector to help secure financial stability after the financial crisis–took over Cantobank.

Financial Stability’s primary role is to dismantle the activities acquired from distressed banks as soon as possible, and make them financially feasible again.

And it appears it can now count Cantobank as a successful project, after PFA agreed to buy the bank in full, with a view to complete ownership by the end June 2013.

PFA takes over the bank with the necessary permits to continue running it as a bank and benefit from its connection with the Danish banking infrastructure.

“PFA’s payment bank will primarily offer investment and savings solutions to the PFA customers who are moving to or already in retirement. In this way, we want to extend the value creation for customers at PFA,” said Lars Stouge, the future director of PFA’s payment bank, in a statement.

The deal has been welcomed by Financial Stability too: Henrik Bjerre-Nielsen, executive director of Financial Stability, said in a separate statement: “We are pleased with the outcome of the sales process. The agreement with PFA means that the Financial Stability get settled another of the activities acquired in a quick and cost-effective manner.”

Pension funds buying up banks might become the next big thing. Denmark already has form for it: In 2010, a consortium consisting of ATP, PFA Pension, Folksam, and CPDyvig agreed to acquire FIH Erhvervsbank A/S for DKK5 billion ($890 million).

ATP’s former investment chief Bjarne Graven Larsen later left his role to join FIH Erhvervsbank as its chief executive officer.

Perhaps it’s just that Danish banks and pension funds are becoming much closer than before. After all, ATP’s announced a former banker will take over from Lars Rohde as CEO, as Rohde headed to chair the country’s central bank.

Elsewhere, several Icelandic pension funds have reportedly signalled their interest in buying up the country’s newer banks Islandsbanki and Arion Bank–which were set up when Kaupthing and Glitnir failed in 2008–from their current foreign owners.

NewsofIceland.com reported in March that informal discussions had taken place and that the Enterprise Investment Fund, owned by many of Iceland’s largest pension funds was leading negotiations, along with Landsbankinn, a publicly owned bank.

If formal discussions begin, it is believed that the pension funds will be given a discount of 30% – 50% on the asking price of ISK220 billion ($1.79 billion) for Islandsbanki and Arion Bank.

Related News: What’s Danish for ‘Outperform’? and Danish Pension ATP Names Banker as CEO

«