On 7 December 2023, Sandnes Sparebank (rated A-/Stable) announced its intention to merge with Hjelmeland Sparebank, a neighbouring local savings bank. The Boards of Directors of the two banks will propose that their respective Boards of Trustees approve the merger on 15 January 2024. The merger will also be subject to regulatory approval by the Norwegian Financial Supervisory Authority.

Sandnes Sparebank will be the acquiring bank and will be issuing equity capital certificates to complete the transaction. Hjelmeland Sparebank also operates in Rogaland County and had on-balance sheet assets of NOK 3.4bn as of 30 September 2023. The merged bank will be named Rogaland Sparebank and have on-balance sheet assets of more than NOK 37bn. The merger is expected to be completed in the second half of 2024.

In Scope’s view, the merger does not fundamentally change the sound credit profile of Sandnes Sparebank. The merged bank will benefit from a strengthened market presence, with offices in Jorpeland, Hjelmeland, Stavanger and Sola in addition to the headquarters in Sandnes. As both banks are part of the Eika Alliance, this will facilitate the integration process. Management expects to realise approximately NOK 30m per annum in synergies from 2026, of which about NOK 15m will be cost synergies.

Scope notes the growing pace of consolidation within the Norwegian savings bank sector, with smaller banks combining to achieve greater scale and efficiencies in light of increasing regulatory requirements.

This monitoring note does not constitute a credit rating action, nor does it indicate the likelihood that Scope Ratings will conduct a credit rating action in the short term. Information about the latest credit rating action connected with this monitoring note along with the associated rating history can be found on www.scoperatings.com.

This monitoring note is issued by Scope Ratings UK Limited at 52 Grosvenor Gardens, London, SW1W 0AU, +44 207 8245180
Lead analyst Pauline Lambert, Executive Director

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