Føroya Banki P/F - Company Announcement

Føroya Banki acquires parts of Sparbank's branch network

Announcement no. 5/2010

Føroya Banki acquires 12 of Sparbank's branches in Jutland, on Funen and in
Greenland with combined deposits of DKK 3.6 bn. and loans and advances of DKK
3.9 bn. The branches have approx. 30.000 customers and 136 employees. 

Føroya Banki has a strategic intention of expanding the business in the North
Atlantic and in Denmark. This acquisition provides Føroya Banki with a firm
and profitable platform for expanding the banking activities in these areas.
In Greenland Føroya Banki will be one of only two banks providing financial
services. The growth in loans and advances amounts to 50 per cent compared with
the figures for Q3 in 2009. 

“These branches are all in interesting regional markets, and are consistent
with our strategy to expand beyond the Faroes, where we have a 40% market
share. The customers in these areas will see, that a new bank has arrived in
town, which has both the focus on the area and the financial strength to make a
difference”, says Janus Petersen, CEO of Føroya Banki. 

“Føroya Banki has maintained sound profits for many years, but it has lacked
the distribution power to utilise the strong capital position. We have, for
some time now, been determined in our efforts to expand in Denmark, and
Sparbank's wish to sell some of the well driven branches was a good strategic
fit,” says Janus Petersen. “Greenland is a natural new market for the bank,
since there have always been close commercial connections between Faroese and
Greenlandic corporations.” 

”We will continue to focus on servicing retail and smaller corporate customers
and emphasise low credit risk. That is how we run the Bank in our home market,
and it has provided us with good profitability and a very high solvency ratio,”
says Janus Petersen. He has been CEO of Føroya Banki since 2005 and joined the
Bank as managing director in 1994 after years in various positions in the
Danish financial sector. 

Føroya Banki will take over all assets and liabilities in the 12 branches and
will pay an additional goodwill amounting to a total of DKK 335 million. The
payment is due upon acquisition, which is contingent on approval from the
Danish Financial Supervisory Authority. 

Føroya Banki has had the opportunity, prior to the acquisition, to assess the
operations in the 12 branches and has critically evaluated most of the
branches' exposures. The Bank has ascertained a fully satisfactory granting of
credit and profitability in accordance with Føroya Banki's strategy and
policy. 

The customers in the 12 branches will be serviced by the same advisers as
before, and will continue to maintain an unaltered connection to the bank and
its employees. However, the name of the branches will be changed to Føroya
Banki. 

The employees will continue their former conditions of employment, and will in
the future be covered by Føroya Banki's HR policy. The branches in Denmark will
be supported by the efficient specialised departments in the Bank's
headquarters in Tórshavn. Foroya Banki is subject to Danish supervision
authorities. 

Føroya Banki was founded 104 years ago and Is among the best consolidated
financial institutions in the Nordic region. The acquisition of the branches in
Jutland, on Funen and in Greenland is expected to increase the Bank‘s profits
going forward, while the utilisation of the Bank's very strong capital base
will improve significantly. The profit guidance for 2010 will be published in
connection with the publication of the Bank's 2009 annual report, which is
scheduled for 18 February 2010. 


Further information:
Janus Petersen, CEO, phone (+298) 330 340
Johnny í Grótinum, Head of IR, phone (+298) 230 380