Swedbank Explores Strategic Options for Payments Unit

(Bloomberg) -- Swedbank AB, Sweden’s oldest savings bank, is exploring options for its payments unit including a potential sale, people with knowledge of the matter said.

The Stockholm-based lender is considering alternatives for the business, including divesting part or all of its stake as well as strategic partnerships, according to the people. While deliberations are at an early stage, Swedbank could start gauging interest as soon as the second half of this year, the people said, asking not to be identified because the information is private.

Shares of Swedbank have fallen 27% this year, giving it a market value of about $12 billion.

Any funds from a potential sale would help Swedbank at a time when its costs are increasing because of the Covid-19 outbreak and the financial impact of money-laundering probes. Like other banks, Swedbank is preparing for higher impairments on loans that sour as a result of the coronavirus crisis.

No final decisions have been made, and there’s no certainty the discussions will lead to a transaction, the people said. A representative for Swedbank declined to comment.

Swedbank said in April it would set aside 2.2 billion kronor ($224 million) for credit provisions in the first quarter, mainly linked to the viral pandemic. The group has also been entangled in regulatory probes into suspicious money flows into the West via the eastern outposts of Nordic banks.

It was fined 4 billion kronor by Swedish regulators earlier this year and remains under investigation by U.S. and European authorities, meaning it could face additional penalties. The bank said in April that it would “further strengthen its work against economic crime” following the conclusions of investigations completed so far and increased estimates for its 2020 expenses by 1.5 billion kronor to 21.5 billion kronor.

Any sale by Swedbank would add to a steady stream of dealmaking in the payments sector, driven in part by demand for alternatives to traditional banking services.

Italy’s Intesa Sanpaolo SpA agreed late last year to sell its payment systems unit to Nexi SpA in a 1 billion-euro ($1.1 billion) deal. In February, Worldline SA agreed to buy French rival Ingenico Group SA for 7.8 billion euros to form one of the largest payment-services providers.

©2020 Bloomberg L.P.

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