Pohjola Pankki Oyj - Tender offer

OP-Pohjola launches public tender offer for all shares in Pohjola Bank

OP-Pohjola launches public tender offer for all shares in Pohjola Bank

STOCK EXCHANGE RELEASE
OP-POHJOLA GROUP CENTRAL COOPERATIVE
6 FEBRUARY 2014 AT 8:05

NOT FOR RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES,
CANADA, JAPAN, AUSTRALIA, SOUTH AFRICA, HONG KONG OR ANY OTHER JURISDICTION IN
WHICH THE OFFER WOULD BREACH APPLICABLE LAW.


OP-POHJOLA ANNOUNCES PUBLIC TENDER OFFER FOR ALL SHARES IN POHJOLA BANK. THE
BOARD OF DIRECTORS OF POHJOLA BANK HAS EVALUATED THE OFFER TO BE A REASONABLE
ALTERNATIVE.

The OP-Pohjola Group Central Cooperative (the 'Offeror') will make a voluntary
public tender offer to purchase all of the issued and outstanding series A and
series K shares (the 'Shares') in Pohjola Bank Plc (the 'Company') that are not
already held by the Offeror.

As at the publication of the tender offer, the Offeror holds approximately
37.2% of all Shares and approximately 61.3% of the related voting rights in
Pohjola Bank Plc. Together with the cooperative banks and certain other entities
belonging to the OP-Pohjola Group, the total ownership equals approximately
55.4% of all Shares and approximately 75.8% of the related voting rights in
Pohjola Bank Plc.

The consideration being offered is EUR 16.80 in cash for each series A and
series K Share (the 'Offer Price'). The total value of the tender offer is
approximately EUR 3.4 billion. The Offer Price represents:
  * a premium of approximately 30,5 % compared to the volume-weighted average
    trading price of the series A Shares on NASDAQ OMX Helsinki Ltd (the
    'Helsinki Stock Exchange') during the 12-month period preceding the date of
    the announcement of the tender offer;
  * a premium of approximately 23,3 % compared to the volume-weighted average
    trading price of the series A Shares during the 6-month period preceding the
    announcement of the tender offer, and;
  * a premium of approximately 18,1 % compared to the closing price of the
    series A Share of EUR 14,23 on 5 February 2014, the last trading day before
    the announcement of the tender offer.

The amount of distributed dividends or other assets payable for each Share will
be deducted from the Offer Price in the event that the Company decides on the
distribution of dividends or other assets before the Shares have been
transferred to the Offeror. The Company's board of directors proposes to the
annual general meeting a dividend for the financial year 2013 of EUR 0.67 per
series A Share and EUR 0.64 per series K Share. The proposed dividend payment
date is 3 April 2014.

The Company's board of directors has considered that the Offeror's initial
contact relating to the tender offer was of a serious nature as set out in the
Helsinki Takeover Code published by the Securities Market Association referred
to in the Finnish Securities Markets Act (the 'Takeover Code'). The board of
directors also deemed that entering into negotiations with the Offeror,
including allowing a due diligence review of the Company, was in the interest of
all of the Company's shareholders. According to the Company's board of
directors, the tender offer represents a reasonable alternative for the
shareholders in the prevailing circumstances, in which
(i) the Offeror directly and indirectly holds approximately 62,4 of the Shares
and 62,4 of the related voting rights in the Company and is the central
institution of the OP-Pohjola Group,
(ii) the Company faces a regulatory environment which is changing due to, among
other things, tightening capital requirements,
(iii) the capital adequacy targets of the OP-Pohjola Group may be increased in
accordance with the Offeror's announcement in connection with the announcement
of the tender offer, and
(iv) the liquidity of the Company's Share may be reduced as a consequence of the
tender offer.

The board of directors will make an overall evaluation of the tender offer and
its merits to the Company and its shareholders, after which the board of
directors will make public its statement as required in the regulation governing
tender offers (on or about 14 February 2014 at the latest). For the evaluation
of the tender offer, the Company's board of directors has established an
independent working group comprised of non-disqualified members of the board
that are independent in relation to the Offeror or the tender offer. The members
of the working group are Tom von Weymarn (chairperson of the working group),
Jukka Hienonen and Mirja-Leena (Mirkku) Kullberg. In questions related to the
tender offer that require a quorum, board members Jukka Hulkkonen and Marjo
Partio have also attended the meetings of the board. Mr. Hulkkonen and Mrs.
Partio are not disqualified in the matter, but they have certain connections
relating to the tender offer as referred to in the Takeover Code. Mr. Hulkkonen
and Mrs. Partio have not participated in the preparation of decisions related to
the tender offer. Reijo Karhinen (chairman of the board), Tony Vepsäläinen
(deputy chairman) and Harri Sailas (board member) have not participated in the
preparation of matters related to the tender offer or in decisions concerning
these matters.

The Offeror intends to purchase Shares outside of the tender offer in trading on
the Helsinki Stock Exchange or otherwise in such a way that the purchase price
of the Shares will not exceed the Offer Price and the other terms and conditions
of such purchases will not be better than those of the tender offer.

If the Offeror acquires more than ninety (90) per cent of all Shares and related
voting rights in the Company, the Offeror intends to redeem any existing
minority shareholdings and apply for a permit from the Helsinki Stock Exchange
to remove the Company's series A Shares from the stock exchange list.

On the date of this stock exchange release, the Company's share capital amounts
to EUR 427,617,463.01. The number of series A Shares issued amounts to
252,009,866 and the number of series K Shares issued amounts to 67,541,549. The
Offeror holds 58,351,020 series A Shares and 60,641,131 series K Shares. In
addition, the cooperative banks and certain other corporations belonging to the
OP-Pohjola Group hold a total of 51,076,001 series A Shares and 6,900,418 series
K Shares.

Comments from Executive Chairman Reijo Karhinen

'The main reasons for the tender offer are the high degree of concentration of
voting rights in Pohjola, Pohjola's non-independent role as part of a
conglomerate of cooperative banks and the need for more centralised steering of
the Group resulting from new tightening regulation.

A model consisting of two different types of ownership structures is no longer
functional. In this situation, we are making a clear strategic choice based on
our basic mission. The OP-Pohjola Group was originally created as a customer-
owned group. This will be the foundation for the group's future development.

Through the public tender offer, we are offering Pohjola's shareholders a good
and fair opportunity to divest their shares, and we will be offering customers
better service through an even stronger group.'

BACKGROUND FOR THE TENDER OFFER

The OP-Pohjola Group is a cooperative financial services group comprised of
independent cooperative banks and the group's central institution and its
subsidiaries operating with joint and several liability that was established in
1902. In practice, joint and several liability has formed a strong financial
dependency between the Company, which is the central bank for the group, and the
cooperative banks that is stronger than usual in a cooperative group.

The group's success lies on a strong foundation of promoting the financial
success, well-being and safety of its owner-members, customers and business
partners. Being Finnish is an important part of the group's identity.

The group's rise to become a market leader has been based on a strong customer
proposition, a strong presence in its customers' day-to-day lives and a
successful financial conglomerate model.

The Company, which acts as the group's central bank, was listed on the Helsinki
Stock Exchange in 1989 under its old name Osuuspankkien Keskuspankki Oy ('OKO').
Being listed was beneficial, among other things, when the deregulation of the
financial markets rapidly changed the nature of the entire banking industry in
the 1980s. In 2005, OKO together with the OP Group at the time acquired Pohjola
Yhtymä Oyj through a public tender offer. Then Pohjola Yhtymä Oyj merged with
OKO to form the current listed company Pohjola Bank Plc. Pohjola Insurance Ltd
was listed already in 1912.

OFFEROR'S STRATEGIC PLANS

1. A Group with More Efficient Steering and More Dynamic and Competitive
Business Operations

In the context of the long history of the group, the listed company phase has
been successful but short. In the current shifting regulatory and operating
environment, a model consisting of two different types of ownership structure is
no longer functional from the perspective of the entire group.

New regulations require more unified group operations, unified financial goals
and the management of the group balance sheet as a single entity. As more active
steering from the OP-Pohjola Group is required, situations may arise where the
best interests of the central institution and the cooperative banks on the one
hand and those of the minority owners of listed company Pohjola Bank Plc on the
other not aligned. In order to function properly, intensifying group steering
requires that ownership governance is built on a unified foundation. For this
reason, it is necessary to remove the potential conflict between the management
and goal-setting of business operations undertaken by a cooperative and a listed
company.

Alignment of the ownership base will allow further development of the group's
business operations, balance sheet management and competitiveness in a more
comprehensive and effective manner. Ultimately, the customers of the enhanced
customer-owned financial group will benefit from this improved efficiency.

Tightening regulation is not the only factor requiring improvement of structures
and processes. The strong progression of digitalisation and the radical changes
to the operating environment require the OP-Pohjola Group to be more agile and
effective.

2. More Streamlined Structure and Decision Making for the Group Central
Cooperative

A unified ownership base for OP-Pohjola Group Central Cooperative Consolidated
will make it possible to carry out significant structural reforms, remove
overlaps, clarify management and streamline decision making.

The plan is for the foundation of the management of the business operations of
the OP-Pohjola Group and OP-Pohjola Group Central Cooperative Consolidated to be
formed by three business areas: Banking, Asset Management and Non-life
Insurance.

If the tender offer is completed in accordance with its terms and conditions,
the intention of the Offeror is for Pohjola Insurance Ltd and Pohjola Asset
Management Ltd, which are owned by the Company, to be transferred through
various structural arrangements to the Offeror as fully owned direct
subsidiaries as well as for the Company and Helsinki OP Bank Plc to be merged.

Banking will in the future be comprised of a new company to be formed by the
Company and Helsinki OP Bank Plc as well as of OP Mortgage Bank Plc and OP Card
Company Plc. Asset Management will be comprised of Pohjola Asset Management Ltd,
OP Life Assurance Company Ltd and Aurum Investment Insurance Ltd as well as OP
Fund Management Company Ltd. Non-life Insurance, on the other hand, will be
comprised of Pohjola Insurance Ltd and its subsidiaries, A-Insurance Ltd as well
as Omasairaala Oy.

3. A More Uniform Customer Experience from Deeper Integration of Banking and
Non-life Insurance

Having a single owner will create opportunities to benefit more from the
integration of banking and non-life insurance operations through the
standardisation of the customer benefits, internal functionality, corporate
culture and sales management of both the banking and non-life insurance
operations.

The product and service expertise of Non-life Insurance and the cooperative
banks can be further integrated into an enhanced offering, thereby boosting
their ability to compete.

4. A New Strong Operator in the Helsinki Metropolitan Area

The planned merger of the Company and Helsinki OP Bank Plc is expected to
bolster the OP-Pohjola Group's ability to compete in the Helsinki Metropolitan
Area. The merger will strengthen the new bank's capital base and standardise the
range of our products and services especially in the corporate banking and asset
management sectors. The arrangement will enable the more efficient use of the
OP-Pohjola Group's capital base in financing the Company's major customers in
the future.

Our goal is to become the number one operator in all business segments in the
Helsinki Metropolitan Area. The new bank will be significantly better equipped
to handle customer service. Customers, in particular, will enjoy the increased
transparency when services are provided only by one operator. With regards to
Asset Management, and especially Private Banking, the Group will be in a
stronger position to provide even more comprehensive and flexible customer
service not just in the Helsinki Metropolitan Area, but also elsewhere in
Finland.

A strong new bank will mean better opportunities for financing the growth of
Finnish undertakings and for creating success on a global arena.

5. The Profits Will Fully Benefit the Group and Its Customers

Following the acquisition of the Company's Shares, the OP-Pohjola Group will
once again become a truly customer-owned group that continues its basic mission
and whose profits will remain within the group in its entirety to strengthen
capital adequacy and create better opportunities for growth. Ceasing the
distribution of dividend outside the group will also contribute to the
strengthening of the Company's capital adequacy.

6. Synergy Benefits

The arrangements that will take place after the transaction are expected to
generate approximately EUR 50 million per annum in synergy benefits for the OP-
Pohjola Group, of which approximately EUR 20 million is estimated to come from
cost synergies and EUR 30 million from revenue synergies. The cost synergies are
limited due to the extensive streamlining project implemented in OP-Pohjola
Group Central Consolidated at the end of 2012. OP-Pohjola Group Central
Consolidated is expected to generate the majority of the synergies. The
synergies will be fully implemented over approximately five years.

An estimated EUR 20 million of restructuring charges will be incurred, the
majority of which will be incurred in 2014-2015.
7. Status of the Company's Management and Employees in the Future

The possible impact of the planned arrangements on the status of the management
and employees of the Company and OP-Pohjola Group Central Cooperative
Consolidated will be specified at a later date in connection with the re-
organisation and integration planning that will take place after the completion
of the tender offer.

FINANCING OF THE TENDER OFFER

The Offeror intends to finance the purchase of the Shares of approximately EUR
3.4 billion through cooperative capital, supplementary cooperative capital, debt
financing and internal liquid assets in the following manner:

  * The cooperative banks intend to invest approximately EUR 2.2 billion in the
    Offeror, which comprises approximately EUR 0.5 billion in cooperative
    capital, EUR 0.9 billion in additional cooperative capital and EUR 0.8
    billion in debt financing. The investment made by the cooperative banks in
    the Offeror will be financed from the market as part of the OP-Pohjola
    Group's debt issues in addition to using internal liquid assets.
  * The remaining part will be financed using the Offeror's liquid assets
    amounting to approximately EUR 1.2 billion. In addition, the Offeror has
    entered into an arms-length credit line arrangement with the Company in line
    with the Company's obligation to act as the central bank of the OP-Pohjola
    Group with a purpose to provide funding according to the needs of the OP-
    Pohjola Group. This credit line ensures the fulfilment of the certain funds
    requirement in relation to the tender offer, in accordance with the
    Securities Markets Act.

ACTIONS TAKEN TO STRENGTHEN THE SOLVENCY OF THE OP POHJOLA GROUP

The pro forma core tier 1 ratio (CET1) of the OP-Pohjola Group in accordance
with the CRR/CRD4 regulatory changes as at 1 January 2014 before the completion
of the tender offer was 17.6%, and its total capital ratio was 19.6%. The pro
forma core tier 1 ratio of the OP-Pohjola Group after the completion of the
tender offer is estimated to be 11.7%, and the total capital ratio is 13.7%.

In light of increased regulatory requirements and the need to preserve the OP-
Pohjola Group's competitive position towards customers, rating agencies and
funding markets, the Offeror has decided to raise the core tier 1 target for the
OP-Pohjola Group from 15% currently to 18%. The target is to be reached by 2016.

It is estimated that the core tier 1 ratio of the OP-Pohjola Group will reach
the new 18% target by 2016 through the strong internal capital generation of the
OP-Pohjola Group and through the issuance of new profit shares. The OP-Pohjola
Group intends to issue a total of approximately EUR 1.3 billion in new profit
shares from the cooperative banks' customer owners during 2014 and 2015 in order
to strengthen its core capital adequacy. In addition, the intention is to
convert approximately EUR 0.6 billion of the existing supplementary cooperative
capital into profit shares. As part of its capital adequacy-strengthening
actions, Helsinki OP Bank Plc also intends to issue approximately EUR 0.2
billion as a Tier II subordinated debenture loan.

The completion of the tender offer will also lower the capital adequacy ratio of
the OP-Pohjola Group under the Finnish Act on the Supervision of Financial and
Insurance Conglomerates. The core capital adequacy-strengthening actions
mentioned above, the group's strong internal capital generation and the issuance
of new profit shares will also increase the capital adequacy ratio under the Act
on the Supervision of Financial and Insurance Conglomerates.

POHJOLA BANK'S CURRENT CAPITAL ADEQUACY POSITION

The pro forma core tier 1 ratio (CET1) of the Pohjola Bank Group in accordance
with the CRR/CRD4 regulatory changes as at 1 January 2014 was 11.9%, and its
total capital ratio was 16.5%. The Company's capital adequacy position is
affected by the permission granted by the Finnish Financial Supervisory
Authority to the Company and OP-Pohjola Group to not deduct its insurance
investments subject to insurance conglomerate supervision from its own assets
and to risk weight these investments by 280% in accordance with the capital
adequacy calculation principles. At this stage it has not been clarified how the
insurance investments will be treated for capital adequacy purposes after 2014
when ECB assumes supervisory responsibility for the OP-Pohjola Group.

The Offeror has proposed to the board of the Company that the core tier 1 ratio
for the Company be raised to 15% on a front-loaded basis no later than year-end
2016. The increased target is driven by tougher regulatory requirements, the
need to adjust to higher peer group capital ratios thereby preserving its
competitive position and the requirement to contribute its share to the OP-
Pohjola Group's capitalisation whilst enjoying the support of the broader group
through the joint and several liability structure.

In order to ensure compliance with the new target and reflecting the uncertainty
around the capital treatment of the insurance investments, the Offeror has
proposed to the Company's board that the dividend pay-out ratio be reduced to
30% until the Company's core tier 1 ratio reaches the 15% target.

TENDER OFFER IN BRIEF

The acceptance period for the tender offer is estimated to begin on 24 February
2014, and
the tender offer is expected to remain in force until 1 April 2014. The Offeror
reserves the right to extend the offer period from time to time in accordance
with the terms and conditions of the tender offer.

The completion of the tender offer is conditional, among other things, on the
following preconditions for the completion being met or on the Offeror waiving
fulfilment thereof:

1) the offer is validly approved for Shares that, together with the other Shares
owned by the Offeror or those acquired thereby during or before the offer
period, represent more than ninety (90) per cent of the Shares and votes issued
by the Company;

2) all necessary permits, approvals and permissions are granted by the
authorities, including but not limited to approvals issued by competition
authorities (if any) as well as approval acquired pursuant to the notification
procedure concerning the acquisition of a percentage of holding as referred to
in sections 32a-32c of the Finnish Act on the Financial Supervisory Authority
(878/2008) in such a manner that the terms and conditions possibly included in
these approvals are acceptable to the Company;

3) after the tender offer is undertaken, no material adverse changes occur in
the business operations, assets, financial position or operating profits or
losses of the Company or its subsidiaries or in the financial markets or
authority regulations;

4) no competent court or authority has issued an order or undertaken actions
that could prevent or delay the tender offer from being completed or which could
materially affect the approval of the tender offer or which could prevent the
Offeror from owning the Shares; and

5) the Company's board of directors has recommended that the shareholders accept
the tender offer, and said recommendation remains in force without amendment.

The Offeror reserves the right to cancel the tender offer in the event that one
of the above terms is not met.

The detailed terms and conditions of the tender offer as well as instructions on
how to approve the tender offer will be included in the offer documents, which
the Offeror expects to publish by 21 February 2014.

The Offeror has agreed to comply with the Takeover Code.

ADVISORS

J.P. Morgan is acting as financial advisor to the Offeror. Pohjola Bank Plc's
Capital Markets Financing department is acting as a lead manager of the tender
offer. Castrén & Snellman Attorneys Ltd is acting as legal advisor to the
Offeror in connection with the tender offer.

Pohjola Bank Plc has appointed Deutsche Bank AG (London branch) as its financial
advisor and Hannes Snellman Attorneys Ltd as its legal advisor.

OP-Pohjola Group Central Cooperative

Carina Geber-Teir
Chief Communications Officer

DISTRIBUTION
NASDAQ OMX Helsinki
LSE London Stock Exchange
SIX Swiss Exchange
Major media
op.fi, pohjola.com

Press conference

The OP-Pohjola Group will organise a briefing for the media at the address
Vääksyntie 4, Vallila, Helsinki at 12:00 noon on 6 February 2014. The briefing
will cover both the earnings for 2013 and the public tender offer concerning the
Company's Shares.

Additional information:
Reijo Karhinen, tel. +358102524500
Harri Luhtala, tel. +358102522433
Carina Geber-Teir, tel. +358405024697
Elina Ronkanen-Minogue (Investor Relations) tel. +358503038371

Any requests for interviews should be directed to OP-Pohjola Corporate
Communications, tel. +358505239904

OP-Pohjola Group is Finland's leading financial services group providing a
unique range of banking, investment and insurance services. The Group has the
mission of promoting the sustainable prosperity, well-being and security of its
owner-members, customers and operating regions through its local presence. Its
objective is to offer the best and most versatile package of loyal customer
benefits on the market. OP-Pohjola Group consists of some 180 member cooperative
banks and the Group's central institution, OP-Pohjola Group Central Cooperative,
with its subsidiaries and closely-related companies, the largest of which is the
listed company Pohjola Bank plc. With a staff of 12,000 OP-Pohjola Group posted
consolidated earnings of 705 million euros before tax in 2013 and had total
assets of 101 billion euros on 31 December 2013. The group has 4.3 million
customers.


www.op.fi

THIS RELEASE IS NOT A TENDER OFFER DOCUMENT AND AS SUCH DOES NOT CONSTITUTE AN
OFFER OR AN INVITATION TO MAKE A SALES OFFER. INVESTORS SHALL ACCEPT THE TENDER
OFFER FOR THE SHARES AND OPTION RIGHTS ONLY ON THE BASIS OF THE INFORMATION
PROVIDED IN THE TENDER OFFER DOCUMENT. OFFERS WILL NOT BE MADE DIRECTLY OR
INDIRECTLY IN ANY JURISDICTION WHERE EITHER THE OFFER OR PARTICIPATION THEREIN
IS PROHIBITED BY APPLICABLE LAW OR WHERE THE TENDER OFFER DOCUMENT WOULD HAVE TO
BE PUBLISHED OR REGISTERED OR THE OFFER WOULD BE SUBJECT TO OTHER REQUIREMENTS
IN ADDITION TO THOSE UNDERTAKEN IN FINLAND. THE TENDER OFFER IS NOT BEING MADE
DIRECTLY OR INDIRECTLY IN ANY JURISDICTION WHERE PROHIBITED BY APPLICABLE LAW
AND, WHEN PUBLISHED, THE TENDER OFFER DOCUMENT AND RELATED CONSENT FORMS WILL
NOT AND MAY NOT BE DISTRIBUTED, FORWARDED OR TRANSMITTED INTO OR FROM ANY
JURISDICTION WHERE PROHIBITED BY APPLICABLE LAW. IN PARTICULAR, THE TENDER OFFER
IS NOT BEING MADE, DIRECTLY OR INDIRECTLY, IN OR INTO, OR BY USE OF THE POSTAL
SERVICE OF, OR BY ANY MEANS OR INSTRUMENTALITY (INCLUDING, WITHOUT LIMITATION,
FACSIMILE TRANSMISSION, TELEX, TELEPHONE OR THE INTERNET) OR THROUGH A NATIONAL
SECURITIES EXCHANGE OF THE UNITED STATES, CANADA, JAPAN, AUSTRALIA, SOUTH AFRICA
OR HONG KONG. THE TENDER OFFER CANNOT BE ACCEPTED BY ANY SUCH USE, MEANS OR
INSTRUMENTALITY OR FROM WITHIN THE UNITED STATES, CANADA, JAPAN, AUSTRALIA,
SOUTH AFRICA OR HONG KONG.



[HUG#1759660]