Šiaulių Bankas, the largest bank with Lithuanian capital, and Invalda INVL, the leading investment management and life insurance group in the Baltic region, are merging their retail businesses to form a modern and customer-focused next generation financial market participant that will subsequently increase competitiveness in the Baltic market.
Šiaulių Bankas and Invalda INVL signed an agreement on 22 November regarding the merger of part of their retail businesses. After the closing of the transaction, the Šiaulių Bankas group, in addition to the financial services it already offers, will manage second-and third-pillar pension funds and mutual funds in Lithuania and will provide life insurance services throughout the Baltic countries. It is planned that the life insurance business in Lithuania, Latvia and Estonia will be taken over by SB draudimas, a subsidiary of the bank, which has been operating in Lithuania for 22 years, meanwhile, a new Group company will be established in Lithuania for the management of pension and investment funds.
“The Šiaulių Bankas group already holds a strong market position for financing, in addition to a solid reputation for continually meeting customer needs, achieved through the largest network of customer service points in Lithuania and digital solutions, enabling customers to choose how they want to be serviced, while also ensuring the highest quality of service. Aiming for market leadership, we are also now strengthening our position in the retail business offering. By combining Šiaulių Bankas and INVL team that already has experience and knowledge of retail financial solutions needs, we will now enter a new chapter of development. This will see Šiaulių Bankas as a next-generation financial services provider, offering an extensive range of services from a single source, having flexibility to adapt to the needs of each customer and each unique solutions providing financial partner. We have no doubt that the synergy from combining experience of these two strong Lithuanian businesses will spur further competition in the market and create more economic value for Baltic countries,” says Vytautas Sinius, the CEO of Šiaulių Bankas.
Šiaulių Bankas, which this year is marking its 30th anniversary, is one of the longest operating financial institutions in Lithuania, with deep experience in corporate and retail banking. The bank’s shares are listed on the Nasdaq stock exchange’s Baltic Main List. Since 2020, Šiaulių Bankas has been directly regulated by the European Central Bank. Its supervision is thus governed by the same principles and rules as the largest euro zone banks.
The distinctiveness of Šiaulių Bankas lies in its strong ties with customers, its openness and its flexibility. Striving to be closer to customers, the bank maintains the largest branch network in Lithuania and puts great effort into human relationships and understanding customers’ needs and situations. The Šiaulių Bankas group employs more than 850 financial services professionals.
“The merger of these retail businesses will deliver greater value for clients, employees and investors. INVL’s existing clients will continue to receive professional saving, investment and life insurance solutions as well as having additional access to the bank’s wider suite of services. The combined team’s shared aim is for the bank’s services to be the best choice available for customers. Employees, for their part, will have increased opportunities to develop and realise their potential. A bank that is actively growing, expanding its portfolio of services, maintaining high profitability and is attentive to its share value should become even more attractive to institutional and private investors,” Invalda INVL President Darius Šulnis says.
“This deal benefits Invalda INVL shareholder’s both due to anticipated faster growth in the value of the company’s stake in Šiaulių Bankas and the disclosure of fair value of the INVL’ retail business included in the process of the transaction. As required by international accounting standards, Invalda INVL’s entire core investment management business is accounted for using the equity method which does not reflect its fair value, which is significantly higher”, Darius Šulnis added.
The INVL group’s 237,500 retail clients and EUR 1.04 billion of retail-client assets under management (as of 30 September 2022) are to be incorporated into the combined retail business. INVL Group offers life insurance services to its clients in Estonia and the Group’s assets under management in Estonia amounted to EUR 34.5 million at the end of September this year.
Completion of the merger of the retail businesses of Šiaulių Bankas and Invalda INVL is planned in late 2023. The transaction will be completed after it is approved by extraordinary meetings of the shareholders of Šiaulių Bankas and Invalda INVL and after all required regulatory permissions are obtained.
Talisman acted as financial advisor to Šiaulių Bankas during the transaction, and Ernst & Young Baltic performed an independent valuation of Invalda INVL’s retail business. Walless law firm advised Šiaulių Bankas on legal issues, while Sorainen advised Invalda INVL.
The equity value of the transaction is EUR 40.2 million. Once the deal is completed, Invalda INVL will obtain 9.39% of the share capital of Šiaulių Bankas. To finalise the transaction, Šiaulių Bankas will issue a targeted share issue for purchase by the Invalda INVL group, at the price of EUR 0.645 per share (a premium of 5% over the bank’s share price on the Nasdaq Vilnius exchange as of 22 November 2022). Completion of this and other announced planned share acquisitions will increase the Invalda INVL group’s equity stake in Šiaulių Bankas to about 20%.
Following completion of the transaction, the Invalda INVL group will remain active in the management of private equity and alternative investments, providing Family Office services as well as managing second-and third-pillar pension funds in Latvia.
About Šiaulių Bankas
Šiaulių Bankas, established in 1992 and still the largest bank with Lithuanian capital, is a stably and consistently growing financial partner with a special focus on customers and their needs. Šiaulių Bankas serves customers in 37 Lithuanian cities. A mystery shopper study for 2021 ranked Šiaulių Bankas as the bank in Lithuania with the best customer service for a third time.
In Lithuania, Šiaulių Bankas offers a full range of everyday banking services, giving priority in the retail segment to consumer finance and housing loans. In the corporate segment, the bank is especially strong in financing for small and medium-size businesses. For over than a decade, Šiaulių Bankas has been taking part in multi-apartment building modernisation programmes and is the larger financer of a multi-apartment building renovation programme.
About Invalda INVL
Invalda INVL is a leading Baltic investment management and life insurance group. Growing and developing with an open approach, it creates well-being for people through its work. The group’s companies operate across Lithuania, Latvia and Estonia and serve 300,000 private and institutional clients from the Baltic region and abroad. Those clients have entrusted the Invalda INVL group with the management of more than EUR 1.7 billion of assets in a variety of asset classes including pension funds, mutual funds and life insurance commitments as well as individual portfolios, private equity and other alternative investment activities. The shares of Invalda INVL have been traded on the Nasdaq Vilnius stock exchange since 1995.