Kaupthing bank acquires Dutch merchant bank

The ninth largest Nordic bank, Kaupthing Bank, recently agreed to buy NIBC, a European merchant bank, for the sum of nearly three billion euros in cash and shares.

While Kaupthing Bank currently operates in ten countries including the UK and the US, the bank’s chief executive, Hreidar Mar Sigurdsson, said on Wednesday that the new acquisition would help the bank explore further business opportunities in Germany and the Benelux region.

Before the purchase can proceed, however, regulatory authorities need to approve the 2,985 million euro deal. Officials at NIBC said they expect approval to be forthcoming in this year’s fourth quarter.

Last week, NIBC announced a loss totalling 137 million euros on its American asset-backed securities portfolio. Bank officials say the portfolio is worth some 390 million euros. At the same time NIBC reported a 98 per cent decline in its net profits for the first six months of the year. The subprime losses largely responsible for the decline from the US subprime portfolio will not be part of the current deal.

The news is only the latest of the Kaupthing Bank’s recent acquisitions. In Britain, the Icelandic bank purchased Singer & Friedlander, a broker and asset manager. In Denmark Kaupthing bought out FIH, a corporate bank.

Kaupthing is the largest banking group in Iceland. In the second quarter of this year, the bank made a net profit of 25.5 billion Icelandic kronur. Last month the bank announced it was willing to spend up to three billion euros in acquisitions in order to expand its operations.