Landsbanki may seek Nationwide's accounts

Icelandic bank Landsbanki will seek full audited accounts for 2007 from the Irish Nationwide should the process to sell the building society not be finalised before the end of the year.

The bank, one of several parties interested in bidding for the building society, has carried out due diligence but has only received half-year accounts for the society up to the end of June.

Irish Nationwide has enjoyed a strong performance in 2007, according to sources both inside the building society and close to the Icelandic bank.

Landsbanki is expected to seek full-year accounts showing exact figures on how well it has performed this year if the sale process is not completed before the end of December, a source close to the Icelandic bank said. This could extend the sale process into next year, delaying the payment of about €10,000 to each of the building society's estimated 120,000 members from the proceeds of the sale.

Investment bank Goldman Sachs has been appointed to handle the sale of Irish Nationwide. The society's auditors, KPMG, have already conducted vendor due diligence.

Irish Nationwide managing director Michael Fingleton is under increasing pressure to complete a sale, as he will have to leave the board of the society when he turns 70 in January. The building society said earlier this year that it expected a trade sale to be agreed before the end of 2007.

The valuation of Irish Nationwide was thought to have fallen due to the turmoil in the international markets and the wild fluctuations in financial stocks in recent months.

However, the sale price could eventually be close to the €1.5 billion suggested last year, when new building society legislation came into effect, paving the way for the sale. The society had net assets of more than €1 billion at the end of 2006 and it is expected to add between €200 million and €300 million to its coffers from strong trading in 2007. Its pre-tax profits grew 34 per cent in 2006 to €237 million.

Stronger profits in 2007 could drive the sale price well above €1 billion, especially when the potential gains from the society's stakes in commercial property ventures are taken into account.

Landsbanki does not expect to offer any less than the value of the building society's net assets, which could be worth between €1.3 billion and €1.5 billion by the end of the year. Irish Nationwide, which lends to some of the country's most prolific property developers, holds stakes in commercial property ventures that it has financed. It is also involved in property development - it owns a large residential development, yet to be completed, on the Stillorgan Road in south Dublin.

Among the other parties to have expressed an interest in the building society is a consortium comprising Bank of Scotland (Ireland) and Dublin private equity firm Quinlan Private. Other interested parties include German property investment bank Hypo Real Estate and US lender GE Money.

Landsbanki has just raised €281 million in capital to bolster its balance sheet, putting it in a strong position to continue acquiring businesses outside Iceland.