03 June 2008

Euroclear to acquire Nordic Central Securities Depository

The four Scandinavian banks that own the Nordic Central Securities Depository (NCSD) have signed a preliminary deal to sell their stakes in the business to European depository Euroclear.

The four Scandinavian banks that own the Nordic Central Securities Depository (NCSD) have signed a preliminary deal to sell their stakes in the business to European depository Euroclear.

 

Nordea, SEB, Svenska Handelsbanken and Swedbank - which together hold more than 99% of NCSD - have each signed a memorandum of understanding to sell their respective shares in the business to Euroclear.

 

NCDS was created through the merger by OMX of its Finnish central securities depository (CSD) business, APK, with Swedish depository, VPC, in 2004. Under that deal the four owners of VPC - FöreningsSparbanken, Nordea Bank, Skandinaviska Enskilda Banken and Svenska Handelsbanken - each took a stake in the combined business.

 

Euroclear has not disclosed how much it has agreed to pay for the business, but all four banks say they will book the capital gains from the sale.

 

Nordea says it will see a capital gain of EUR90 million from the sale of its 24.82% shareholding in NCSD, while Swedbank will book a gain of around SKr650 million for its own 24.82% stake. Svenska Handelsbanken says it will realise a Skr700 million gain for its stake - also 24.82% - and SEB is expected to book a capital gain of SKr750 million.

 

Euroclear says it expects to complete the merger of NCSD with its operations in the fourth quarter 2008, subject to regulatory approval and the signing of a final agreement.

 

Based on year-end 2007 data, the combined group would settle the equivalent of more than EUR575 trillion in securities transactions, representing 198 million domestic and cross-border transactions, says Euroclear.

 

Pierre Francotte, CEO of Euroclear, says the merger with NCSD adds breadth and depth to the Euroclear group.

 

"The Nordic markets are dynamic and vibrant markets; the Finnish and Swedish markets, in particular, are taking the opportunity to participate actively in shaping a pan-European platform to meet the capital market's post-trade needs," he adds.

 

NCSD will transfer its Swedish and Finnish transaction processing activities to Euroclear's Single Platform immediately after completion of the new platform, which is expected in 2011.

 

Using the Single Platform, NCSD's clients will be able to settle cross-border transactions as if they were domestic transactions with counterparties in seven markets - rather than two - at domestic settlement prices.

 

Says Kjell Arvidsson, CEO of NCSD: "After extensive market consultation and work on platform consolidation for the Finnish and Swedish markets onto a single platform for settlement, corporate-action processing and safekeeping, we have reached the conclusion that Euroclear's Single Platform is ideally suited to provide the features and functions that our clients require, without having to create a totally new platform ourselves."

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