Icelandic bank Landsbanki has sold its 84 per cent shareholding in Dublin stockbroker Merrion to Icelandic investment bank Straumur-Burdaras for an undisclosed fee.
In a statement today Straumur-Burdaras said it would pay €380 million for a package of Landsbanki's overseas corporate finance and brokerage assets. This includes 100 per cent of Landsbanki Securities and Landsbanki Kepler.
Landsbanki paid around €88 million for its stake in Merrion and had paid about €41 million for an additional 17 per cent stake in February.
Merrion's profitability has increased over the last three years. In 2005 Merrion reported profits of € 8 million, which trebled the following year to €24 million and rose again in 2007 to €25.5 million.
Under the terms of the deal the remaining 16 per cent of Merrion was to have been purchased by Landsbanki by March 2009 although it is not yet clear if this arrangement will transfer to Straumur-Burdaras.
Earlier this week Iceland's unveiled the part-nationalisation of Landsbanki's smaller rival Glitnir to prevent it going bust. Glitnir issued a profit warning today.
Iceland's banks and its economy have come under close scrutiny during recent financial market turmoil, made worse by a sharp slide in the Icelandic crown.
"Straumur has been able to take advantage of this unique opportunity to become a substantially broader and more client-focused bank with a truly pan-European investment banking and securities platform," Straumur Chief Executive William Fall said in a statement.
Shares in Straumur were down 2.75 per cent at 12.05pm. Iceland's crown was down 3 per cent at a fresh record low of around 154.10 against the euro.
Straumur said the businesses it was buying employ 680 people in nine European countries and the United States.
They had combined revenues of €232 million and made a profit before tax of €30 million in 2007.
Landsbanki's net income was €1.25 billion in 2007 and it made a pretax profit of €520 million. Straumur made a pretax profit of €191 million in 2007 on revenues of €330 million.
Landsbanki said in a statement the deal with Straumur would result in "no material loss or gain" for the company and would strengthen its Tier 1 capital ratio.
Agencies
