COPENHAGEN (Reuters) - Jyske Bank has agreed to buy the Danish operations of Sweden's Handelsbanken for an undisclosed sum, it said on Monday, sending shares in the Danish lender up more than 11%.
Handelsbanken, one of Sweden's oldest banks and a major mortgage lender, said in October last year it would exit Denmark and Finland as it saw little chance to grow in those markets without making major investments.
While the exact deal value was not disclosed, Handelsbanken said on Monday that an amount based on the present value of the assets would be paid in cash on the transfer date, in addition to a premium of 3 billion Danish crowns ($424.4 million).
The transaction will bring synergies worth 300 million Danish crowns, Jyske said in a separate statement. Shares in Jyske Bank were trading 11.5% higher at 0708 GMT.
For Jyske, Denmark's third-biggest lender, the acquisition will offering the scale needed to compete with larger peers Danske Bank and Nordea.
"The acquisition of Handelsbanken Denmark will further strengthen Jyske Bank's market position, expanding the size of our business by around one fifth," Jyske said in a statement.
Handelsbanken has 43 branches and roughly 600 employees in Denmark, and the transaction includes more than 130,000 clients, around 66 billion crowns of loans and 36 billion crowns of deposits, Jyske Bank said.
Last week the two banks confirmed they were in talks about a deal in response to market rumours and media reports.
Jyske shares had shed one-fifth of their value over the previous six trading days, amid speculation that it would be willing to pay a high price and need to issue new shares to fund the transaction.
"Investors will probably breathe a sigh of relief that the capital increase did not materialize," said Nordnet analyst Per Hansen.
($1 = 7.0566 Danish crowns)