Næringsbanken – whose Finanstilsynet last winter refused to issue new loans, and which last week had to ask shareholders for help to raise capital – is now offering maximum deposits without restrictions to clients.
In the Finanportalen overview, Næringsbanken comes out on top in terms of deposits over NOK 100,000 in a deposit account, without any kind of association membership requirements, age, minimum duration of deposits or any other restrictions on the customer, such as that the money must be used to buy a house :
- Næringsbanken now offers 4.62 percent for deposits, thus securing first place.
- Admittedly, it is not better than the rebooted Balansebank by more than one basis point, which is owned by Sandnes Sparebank.
- Askim and Spydeberg Sparebank, which together with reboot bank Bank2 and microloan bank Svea Bank offer 4.60 percent for deposits.
- Totens Sparebank then gives 4.50 per cent for deposits, and from there it’s a small step to the next specialist banks.
In dire need of capital
2023 has been a very turbulent year for Næringsbanken, and six years after the bank obtained its licence, it was last week forced to appeal to shareholders to inject NOK 230 million in new shares. The capital requirements are due to loan losses of NOK 130 million in the third quarter and stringent capital requirements from the Norwegian Financial Supervision Authority.
In the investor presentation sent to relevant investors before the weekend, it was stated that the bank had NOK 3.3 billion in net lending. Deposits exceeded loans by NOK 20 million, 89 percent of which were guaranteed deposits, according to management, which wrote in the presentation:
“(…) The Bank has faced critical challenges related to both its staffing status and its corporate governance and internal control systems. This has led to the replacement and departure of key personnel, as well as the discovery of serious violations of the Bank’s internal guidelines and procedures.”
During the first nine months of the year, the bank’s lending volume shrank by half a billion kroner, and it is stated in the presentation to investors that the number of current 520 loan clients will decrease to 150, although the lending freeze by the supervisory authority ended early. . summer.
Even if the bank has very limited growth in 2023 – if it has growth at all – the bank will pay more for new krone deposits.
– He has problems
– There is no doubt that Næringsbanken has problems, which is evident from the statements of the Financial Supervision Authority and the issue that was launched, says credit analyst Thomas Itzen at SEB.
He believes the bank’s deposit offer of 4.62 per cent can be looked at in two different ways:
– The bank is likely to make sure in the first place that it prevents the flight of deposits, rather than capturing new savings crowns from customers. Because if customers start withdrawing money from the bank in large quantities, FCA men will be on the bank’s steps in no time.
– At the same time, it is not the case that the bank is offering 6.62 percent, which would be just a declaration of bankruptcy. The bank will likely do what it has to in order to retain its existing customers, and new customers may prefer to choose Sandnes Sparebank, says Itzen.
The bank’s relatively short history contains two major resignations, staff defections, and a Tilsynet lending freeze. At the bank’s head office in Moelv in the municipality of Ringsaker, the entire management team will be employed in 2023.
Bank Director Johan Lin will not answer DN’s questions on Tuesday, and will forward DN’s email to CFO Runar Hauge:
Deposits are the bank’s most important source of funding, and it is important to ensure correct pricing to maintain the required funding mix. Næringsbanken has a long history of ranking highly in Finansportalen with its Nettspar product, and makes periodic adjustments in relation to the competition to ensure a consistent pool of deposits in this product, Hauge wrote.
When consumer loan banks emerged a few years ago, many of them reported that their deposit customers were very price sensitive, and that these smaller banks were able to quickly finance new growth by positioning themselves at the top of Finansportalen. However, Hauge will not answer whether Næringsbanken shares this experience.
He also does not want to directly answer why the bank, with deposit coverage of more than 100 percent, low lending volumes and little prospect of lending growth, was stable at peak rates, but he comments:
At the same time, the bank also offers bond products within 31- and 90-day deposits. The bank’s funding must be adequate in relation to the bank’s lending, and over the course of the year the bank has gradually reduced its deposit balance to reflect this. Stable and balanced financing – as we see today – will remain the goal in the future.
You should pay more
In the credit market, Næringsbanken has one hybrid bond and one subordinated loan that are included in the capital hedge. In order to finance the lending, Næringsbanken, in addition to borrowing in the retail market, has bonds worth NOK 200 million. This continues until September next year. According to credit analyst Eitzen, the credit market now assigns a small risk premium to Næringsbanken, compared to other local and regional banks.
If the bank issues bonds worth NOK 200 million today, the market would demand a risk premium of 140 points above NEPOR. It is slightly lower than the one-year risk in real estate companies, says Itzen, who stresses that one cannot place too much emphasis on this reference price.
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