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Sweden sells remaining stake in Nordea for $3.4 billion

Nordea bank logo is seen on the Riga branch office June 10, 2013. REUTERS/Ints Kalnins
Nordea bank logo is seen on the Riga branch office June 10, 2013. REUTERS/Ints Kalnins

By Mia Shanley and Sven Nordenstam

STOCKHOLM (Reuters) - The Swedish state has sold its remaining 7 percent stake in Nordea, the region's biggest bank, giving the center-right coalition government another 21.6 billion crowns ($3.4 billion) to deploy in the national budget ahead of next year's election.

The latest sale was made on the first day the state was allowed to further reduce its stake after selling 260 million Nordea shares for $3 billion in June and takes total proceeds from Nordea sales during the government's years in office to $9.4 billion.

The government priced the latest sale of 284.2 million shares at 76 crowns per share, a 4 percent discount to Nordea's closing price of 79.20 crowns on Tuesday. Price guidance had been set at 75.50 to 76 crowns, two sources familiar with the matter told Reuters, while the discount was smaller than the 4.8 percent it offered in its last sale.

Final exits by a big shareholder, often known as clean-up trades, can usually be done at a tighter discount than previous sales as they remove the overhang effect on the stock. One of the sources said the offering was more than two times covered by demand.

Nordea's share price was down 2.7 percent at 77.10 crowns by 1021 GMT, when shares in rival Handelsbanken were down 1.5 percent at 280.90 crowns and Swedbank was 2.6 percent lower at 151.50 crowns.

STATE DEBT REDUCTION

The coalition government, which faces general elections next year and is trailing badly in polls, plans to use the proceeds to reduce state debt, already one of the lowest in Europe at about 30 percent of economic output.

It has long prioritized a full divestment of the state holding in Nordea, a legacy of the country's banking crisis in the 1990s, saying it is the role of the state to regulate banks not own them.

"In some sense, one could say today we put an end to the banking crisis which ravaged the 80s and 90s," Minister of Financial Markets Peter Norman said.

The sale also gives the government extra cash as it heads into a fierce battle for re-election next year. Plans to offload other assets such as its stake in telecoms operator TeliaSonera have been blocked by political opposition.

The minority government recently announced some $2.3 billion in income tax cuts as it strives to boost economic growth and secure a third term in office.

Last week the British government sold a 6 percent stake in banking group Lloyds for 3.2 billion pounds ($5 billion) ahead of a 2015 general election, recouping taxpayer cash five years after a bailout of both Lloyds and rival Royal Bank of Scotland (RBS).

"It is very rare you have two consecutive jumbo placements in banks. There is a lot of demand out there for banks and investors are looking to rebuild positions," one of the sources familiar with the matter said.

Sweden is one of Europe's strongest economies, but unemployment has remained stubbornly high while voters are expressing greater concern over the nation's fast-widening income divide and skepticism over further changes to their beloved welfare system.

Privatization has been a hot potato, with Swedes growing suspicious of more welfare cuts following scandals over private care homes for the elderly and for-profit schools.

Sweden, which has served as a safe haven throughout the European debt crisis thanks to its strong fiscal position and healthy banks, has not yet revised its borrowing needs.

"This is money in, so of course it will have an effect," Thomas Olofsson, head of debt management at Sweden's National Debt Office, told Reuters.

He added, however, that the revenues were one of many factors he would have to consider ahead of the debt management agency's next forecast in late October.

Expectations for reduced state borrowing lifted the Swedish crown against the euro on Tuesday though it came under pressure after weak consumer and manufacturing confidence data on Wednesday to trade at 8.6768.

NORDEA BUYERS

The Nordea sale was conducted through an accelerated bookbuilding directed at Swedish and international institutional investors.

Finnish insurance and investment group Sampo - Nordea's top shareholder with a stake of 21.4 percent - said it did not participate in the latest sale.

Sweden had appointed Morgan Stanley as global coordinator and joint bookrunner and BofA Merrill Lynch, Carnegie and Goldman Sachs International as joint bookrunners in the transaction. SEB served as co-lead manager.

($1=6.4053 Swedish crowns)

(Additional reporting by Johan Sennero and Johan Ahlander in Stockholm, Ritsuko Ando in Helsinki and Kylie MacLellan in London; Editing by Niklas Pollard and Greg Mahlich)

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