The owners of Glitnir Bank and Byr savings bank have reached an agreement on beginning formal discussions on the merger of the two banks. On Friday the Financial Supervisory Authority (FME) agreed to change Byr’s status to that of corporation.
According to Morgunbladid, the owners of Glitnir and Byr will now estimate the value of both banks and decide what the exchange ration of the shares in the banks will be.
At the end of June, 2008, the capital position of Glitnir Bank was almost ISK 200 billion (USD 2.16 billion, EUR 1.50 billion) and of Byr ISK 45.2 billion (USD 488 million, EUR 339 million).
The financial strength of the banks is expected to increase if they merge. According to Morgunbladid’s sources the equity ratio will be close to 14 percent.
At the end of June this year, Glitnir Bank’s equity ration was 11.2 percent and 23.5 percent at Byr. By comparison, the equity ration at Landsbanki Bank was 10.3 percent and 11.2 percent at Kaupthing Bank. The equity ratio can never be lower than 8.0 percent.
The merge negotiations between Glitnir Bank and Byr are expected to happen swiftly and the government is expected to approve the merger.
Click here to read about other Icelandic banks merging.
