Hello, welcome to the DNB investor call. My name is Jess, and I'll be your coordinator for today's event. For the duration of the call, your lines will be on listen only. However, there will be the opportunity to ask questions. This can be done by pressing *1 to register your question at any time. If at any point you require assistance, please press *0 on your telephone keypad and you will be connected to an operator. I will now hand you over to your host, Rune Helland, to begin today's call. Thank you.
Thank you so much. Good morning, everyone, and welcome to DNB's Investor and Sell-Side Call regarding our announcement this morning, to launch a cash tender offer for 100% of the shares in Sbanken. Our CFO, Ottar Ertzeid, will give you a brief introduction, before we open up for a Q&A. Please, Ottar.
Thank you, Rune. DNB has today announced a voluntary offer for Sbanken. We have entered into a transaction agreement with the company regarding the offer, and Sbanken's board of directors has recommended our offer and also obtained a fairness opinion that concludes that our offer is fair. Shareholders representing a total of 29% of the outstanding shares have undertaken to accept our offers, including the company's largest shareholder, Altor, with 25%. Additionally, DNB owned 1% of the shares in the company before the announcement, and we have just sent a stock exchange notice that we now owns more than 5% of the company.
The offer is an all cash offer of NOK 103.85 per share, valuing Sbanken at NOK 11.1 billion. The offer price represents a premium of 30% over the closing price yesterday, and 50% over the average volume-weighted share price the last six months, adjusted for dividends. The chairman of Sbanken has this morning commented that the board of directors of Sbanken is of the opinion that the offer reflects the financial and strategic value of Sbanken and implies an attractive valuation for Sbanken shareholders. Furthermore, that he and the board of directors believe that Sbanken and DNB as a combined entity will be strongly positioned to compete with the global technology leaders.
The complete details of the offer, which will be contained in the offer document after approval by the Oslo Stock Exchange, is expected to be available, or approved, next week. The acceptance period in the offer will commence following publication of this offer document and will last for 20 business days. Completion of the offer is subject to fulfillment or waiver by DNB of certain conditions, the two most important ones being acceptance to such extent that DNB becomes the owner of more than 90%, which we may waive to a level of two thirds, and secondly, obtaining regulatory approval from the Ministry of Finance and the Norwegian Competition Authority.
We have earlier today already filed the application to the Ministry of Finance through the Norwegian FSA. It is expected that the offer will be completed in the third quarter this year following receipt of regulatory approvals. If we acquire more than 90%, we intend to carry out a compulsory acquisition of the remaining shares and apply to de-list Sbanken from the Oslo Stock Exchange. The transaction is found, in our opinion, both from a financial and an industrial point of view. Our retail banking has in recent years become more like Sbanken, serving customers primarily through the mobile bank and the internet bank. Sbanken is located in Bergen, which is DNB's main hub in addition to Oslo.
The combination of Sbanken and DNB will create a strong technology organization in Bergen. Our chief executive has commented earlier today that we now have an opportunity to combine two of Norway's top providers of digital customer experiences into one large innovative environment. Sbanken is a leading pure digital retail bank in Norway with some 476,000 retail customers. We believe that Sbanken will further strengthen our position within retail banking in our home market. The loan book of Sbanken is entirely towards Norwegian personal customers. DNB's market share within personal customer mortgages in Norway is estimated to increase from approximately 24% to approximately 27%.
95% of Sbanken's NOK 83 billion loan book consists of high quality residential mortgages with a loan-to-value of approximately 53%. Sbanken's market share for deposits is approximately 3.6%, with NOK 59 billion in customer deposits. Sbanken has a market share in retail fund savings in Norway of approximately 8.1%, with NOK 23 billion in customer investments in mutual funds. Sbanken also has a position in the consumer finance market with close to NOK 2 billion in outstanding loans, and has also launched offerings in the SME segment with 8,000 customers at the end of last year. Sbanken will complement DNB within the savings area, which is a growth area for DNB, and will also add highly skilled technology resources. Some financial comments. We have been allowed to carry out a thorough due diligence of Sbanken since March.
Being an in-market merger, we expect cost synergies, which allows us to defend the price being offered. We will not be specific today on cost synergy estimates. Areas where we expect cost synergies include information technology, cybersecurity, anti-money laundering, and compliance in general. The full effect of the synergies is expected to be realized over the next three to four years. DNB's size, both in Norway and in Bergen, makes it possible to achieve cost synergies during ordinary course of business and by replacing external IT consultants in DNB. We, thus, welcome all Sbanken staff to DNB. Capital-wise, Sbanken use standardized risk weights of 35% for residential mortgages. DNB uses Internal Ratings-Based models for capital requirements with currently 21% risk weight for mortgages. Thus, we expect potential for risk-weighted asset efficiencies.
This is partly offset by a two percentage point higher capital buffer requirement for DNB being a systemically important institution in Norway. We also expect some funding synergies, mostly with regard to additional Tier 1 capital, Tier 2 capital, and Senior Non-Preferred Debt, but these are less important. DNB has a broader product range than Sbanken, and we will naturally also strive to realize revenue synergies. This is an all-cash transaction and is thus expected to positively impact DNB's earning per share and return on equity. With those introductory remarks, Rune, I think we can open for Q&A.
Yes. Thank you, Ottar. Please.
If you would like to ask a question, please press *1 on your telephone keypad. Please ensure the line is unmuted locally as you will be advised when to ask your question. Once again, that's *1 if you would like to ask a question. We do currently have a couple of questions in the queue. The first question comes from the line of Adrian from Credit Suisse. Please go ahead.
Hi there. Thank you very much. Adrian Cighi from Credit Suisse. Thank you for taking my questions. To follow up on the synergies point you're making. You do not obviously provide any synergies for the proposed transactions, either on the cost or the revenue side. Using consensus estimates, you'd need to realize some NOK 400 million in synergies by 2023 to get a 12% ROI. First off, is this the right hurdle amount that you're looking at in terms of ROI? Can you give us any sense of how you look at the combined synergies amounts that you can maybe extract from this deal?
Maybe secondly, please, this transaction, as you noted, would take your mortgage market share to 27%. Have you had any input from the Competition Authority prior to today, or do you expect that process to just start right now? Thank you.
With regard to cost synergies, I made some remarks earlier on referring to what you would typically see in market transactions. I think it should be possible to make some rough estimates. At this point in time, we are not elaborating on that, although I'm pointing to areas, as I mentioned. We can come back to that at a later stage. With regard to the competition authority, we have, of course, made our own assessment and our own legal assessments before entering into this offer, and we have today initiated a contact with the Norwegian Competition Authority. Of course, in our opinion, there is no reason why this should not go through. Of course, we respect that it will be considered by the Norwegian Competition Authority. That should take from 25 to 100 business days to do.
Thank you very much. Very helpful.
The next question comes from the line of Sofie Peterzens from JP Morgan. Please go ahead.
Yeah. Hi. You're Sofie from JP Morgan. I was wondering if there are any one-off related costs, this transaction, that we should be aware of and when these one-offs potentially are going to be booked. My second question would be on Sbanken. It's a little bit of a timing question. Why are you bidding for it now? Why not earlier or later? Were there other bids from potentially other banks of Sbanken? If you could potentially talk a little bit about that. My third and last question would be, how should we think about M&A for DNB going forward? How do you view, is M&A now a bigger priority than returning capital to shareholders? How should we think about future M&A? Thank you.
With regard to one-off restructuring costs, the integration will take place in two phases. We have today applied for approval to own Sbanken, and we will shortly apply to merge with Sbanken. The latter application will take a bit longer time, so we'll do it in two phases. When we actually integrate it, of course, there might be some restructuring costs. That remains to be determined in the same way as the cost synergies. Of course, we have done a thorough due diligence, as I mentioned, and have taken this into consideration when putting forward the offer today. Again, we have to come back to the issue of the size of the restructuring cost.
As I mentioned, we have a platform both in Bergen and in DNB as a total, allowing us to do this in a smooth way, going forward over a period of three to four years. With regard to timing, of course, which is a good point, last year, we had removal of the Basel floor in Norway, meaning that the difference in risk weights between banks on the standardized risk models and IRB banks like ourselves became much bigger than previously. Our own capital situation is very comfortable, as I commented upon when we presented our Q4 results in February. Where I pointed to the fact that the headroom, at that point in time, even with the dividends for 2019 and the proposed dividends for 2020, was a higher headroom than we would normally work with over time.
The offer we are making today is, in that respect, consistent with our earlier communication. Of course, it's also important for us that we take a positive view, both with regard to the savings market in Norway and the growth we see in the savings market, where Sbanken has an interesting position, as well as the expected interest rate path from the central bank in Norway going forward, and Sbanken has 90% floating rate mortgages on their balance sheet. We believe this is an interesting time for both banks to enter into this transaction. DNB, for the reasons I mentioned, Sbanken because of the fact that they can then have the loan book on a bank with an IRB license from the Norwegian FSA. With regard to our dividend policy, et cetera, I can definitely confirm that that stands.
We are fully committed to our dividend policy, including the ambition of increasing nominal dividend per share every year. We have talked about that we might consider smaller bolt-on acquisitions within strategy as an alternative to share buybacks. It's our opinion that we have a sufficient capital situation to fully deliver on the dividend policy, sustain and support the organic growth of our present business, and also being able to exercise this opportunity.
Okay. That's clear. Actually, just maybe a follow-up. Just in terms of the dividends, it sounds like you're definitely standing by your dividend policy. On the share buybacks, this could be shifted a little bit more towards acquisitions. Was that a correct read?
We have been very clear that we give priority to deliver on the cash dividend part of the dividend policy and to follow and to grow with the targeted growth rate we have talked about and having the share buybacks more as a flexibility if there is surplus capital beyond that. Of course, the practical consequence of an M&A transaction like today is less potential for share buybacks. That's correct.
Okay. Maybe just, sorry, one final follow-up. Were there any other bidders for Sbanken, or were you in exclusive talks throughout the process with Sbanken?
I think that's a public question which needs to be addressed to Sbanken . They have, as I said today, recommended this offer. Also the main shareholder of Sbanken has also recommended this offer. There is some reading into those facts, of course.
Great. That's very clear. Thank you.
Your next question comes from the line of Christopher Adams from Kepler Cheuvreux. Please go ahead.
Good morning. Under what conditions can the 29%, which have accepted, pull their acceptance? Could they, for example, do so if there's a counteroffer? Secondly, will you be keeping the Sbanken brand name?
If the board of directors of Sbanken receives an offer which they believe is superior to our offer, they must notify us about that. In this case, we have the right to match that offer. If we decide not to match that offer, then they can recommend another offer. The same applies for those who have pre-accepted. As I mentioned, we have already become the owner of more than 5% of the shares.
Okay. Thank you.
The Norwegian financial regulations does not allow a Norwegian bank to own another bank. We actually have applied for a temporary approval to own Sbanken, and then expect to be required to merge Sbanken into DNB Bank, within a defined time horizon. The recent financial regulation does not allow a bank to operate under more than one name. The name of DNB Bank clearly has to be communicated to customers.
Okay. you wouldn't be able to run it kind of as a low-cost provider the way Sparebanken Vest has Bulder Bank, for example.
That is not our intention. We follow a different strategy, with a one-brand strategy. Our intention is to continue to do so. Again, there is also, to my knowledge, also a regulatory process with regard to those brand names you refer to.
Okay. Thank you very much.
Your next question comes from the line of Riccardo Rovere from Mediobanca. Please go ahead.
Yes. Good morning to everybody. I just wanted to get back one second. This question is made by Sofie five minutes ago. If I understand well, clearly this transaction erodes, well, it consumes 100 basis point of capital. By definition, your surplus capital gets lower on the back of this transaction. This lower amount of capital will be, how can I say, kind of deducted from the buyback eventually, not from the cash dividend. The cash dividend remains the main way to return capital to shareholders. Do I get it right?
You are correct that the estimated effect on DNB's Common Equity Tier 1 level is approximately 100 basis points, which is still well above the regulatory requirement. In the short and medium term, we are well-capitalized to continue to deliver on the dividend policy, as I stated. Longer term, the increased income from the acquisition of Sbanken will actually strengthen our position to pay dividends going forward. Again, it means that the capital, of course, it will be 100 basis point lower, but it will, as stated, is sufficient for growth and cash dividends. It leaves less room then for using the same capital for other purposes like share buybacks.
Okay. The priority will remain cash. Cash remains the priority.
We have been clear all the way that delivering on the cash dividends on more than 50% of profits in cash dividends, and an ambition of increasing normal dividend per share every year is the most important one. Bearing that in mind, this will increase net profit over time. Should also just form the basis for delivering on the cash dividend also going forward, including an even better position for delivering also the increased nominal dividend per share every year.
Okay. Thanks. Very clear.
Your next question comes from the line of Phil Streeton from SeaPort. Please go ahead.
I do apologize. All my questions have been answered, so please remove me from the queue.
The next question comes from the line of Hans Christiansen from Danske Bank. Please go ahead.
Yes. Hello, everyone. Just to follow up on the share buyback and M&A trade-off that Sofie and Riccardo has already asked about. I was just wondering how we should think about the 100 basis point CET1 capital consumption. With regards to this, if you could just remind us what you've said about your management buffer above the capital requirement of future countercyclical buffer requirements previously, and if anything has changed with regards to this transaction.
Nothing has changed. The capital requirement currently with regard to Common Equity Tier 1 is 15%, with expected Pillar 2 guidance above that of 1 percentage point, giving a capital expectation of 16% presently. In long term, we expect that the countercyclical buffer requirement in Norway will revert to the pre-COVID maximum level, which will imply a capital expectation of 17.1%. Our actual capital level at the year-end was 18.6, 18.7. It's important to bear in mind the strong capital generation we have every quarter on top of that. In our view, this gives still a comfortable headroom to the regulatory capital requirements and capital expectations. Also, taking into account the full countercyclical buffer requirement, which we'll probably have at the earliest in 2023.
Okay. Thank you. Just perhaps a bit of a specific question, do you anticipate that there's any kind of customer overlap between the two because of this in-market transaction? The other question is, how many external IT consultants do you currently have in DNB?
There will probably be some overlap in the customer base with regard to single product use. We haven't quantified that, but we have some rough estimates internally following the due diligence process. With regard to technology consultants, we have a strategic partnership with TCS, and is an extensive buyer of IT consultants. At the same time, we have communicated an ambition to replace those with building up more technology staff internally in the bank, sitting very close together with the business. We believe this transaction give us a very good opportunity of actually accelerating that program and that intention we already had. In our view, this is really a good match for both organizations.
Okay. Thank you very much.
The next question comes from the line of Jacob Kruse from Autonomous. Please go ahead.
Thank you. Jacob from Autonomous. Just two questions. Firstly, the IRB transition on the acquired assets. Can you do that immediately, or do you need to get an approval specifically for the assets you acquire, or can you just sort of shift them onto your currently approved books? Secondly, this transaction, should we view that as a bit of a shift in your strategy? Could you just talk a bit about how you view acquisitions going forward, and perhaps in particular in outside of Norway with respect to the Nordic countries or even Europe? Thank you.
With regard to the timing of the RWA efficiencies from using the internal rating base models, we need to have the merger before we are allowed to do so. That's why we will progress as fast as we can also with the merger. Realistically speaking, I can estimate it will take one to two years to get that book on DNB's IRB models. At least that is our best estimate, and it is an estimate. I can assure you that there's no change in DNB's strategy. We have been doing smaller bolt-ons in-market transactions historically. Last year, we bought smaller pension firm in Norway, and also the third largest ERP provider in Norway.
We have been doing and might also in the future consider a small bolt-on and acquisitions clearly within strategy, if we believe such transactions will be value creating for our shareholders, which in this case, definitely believe. There's no change with regard to our strategy, and there's no change in how we view among other kind of international M&A deals.
Okay. Thank you.
The next question comes from the line of Sindre Sørbye from Arctic Asset Management. Please go ahead.
Yes. Hi, Ottar. Thank you for taking my question. Looks like a good deal financially, but on the brand level, you said it was not the intention to run it like a DNB Bank concept, more like a one brand strategy. Given that Sbanken has a special history and also that had the highest customer satisfaction among Norwegian banks for a number of years, isn't there a risk from a marketing perspective to integrate all those customers under the DNB brand? prolonging that argument, isn't a risk that you need to, let's say, offer very competitive mortgage rates, let's say, to keep them in there? if you can give some thoughts about that. Secondly, also on the savings area, will it close down the Sbanken platform and integrate into DNB's highly successful platform?
I think with regard to strategy and the business proposals, I think, 20 years ago when Sbanken started, they were obviously quite different from traditional banks, being a pure digital bank. Over the last years, I think we have become much more similar. We also serve our customers now in the retail, primarily through the mobile bank and the internet bank. In that respect, we have become much more similar. With regard to pricing, Sbanken last year, it was quite clear that they have changed or gradually adapted their pricing policy with regard to stop chasing the price changes. In our opinion, our strategies have been much more aligned and that should reduce the risk you are pointing to. Of course, we are very aware of the facts you are pointing to, and we'll obviously address that going forward.
I think it's too early to comment on those aspects. We are now in a phase where we have put forward an offer. After having received the regulatory approvals, we will be allowed to sit down together with the excellent team in Sbanken to find out how to make these two banks even better banks for the customers going forward by combining the resources and expertise of both banks.
In the savings area, what are plans there?
It's again, we will have to do the same. I think Sbanken has an interesting position and has a good track record in that area, which we believe is an interesting area in Norway going forward. Again, we'll sit down and find how to ensure that the combined bank will be definitely the bank with the best customer offerings in Norway with regard to digital customer experiences, et cetera, going forward. Again, that remains to be discussed after the close of the transaction, when we are allowed to sit down to discuss such items.
Okay. If I may have a brief follow-up. Are there any clauses in the, let's say, deal with Sbanken that keeps any key management there?
At this point in time, I cannot comment on that. If there were obligations or strings, that would be something that Sbanken will have to disclose in the board statement from Sbanken.
Okay. Thank you.
Your next question comes from the line of Jan Erik from ABG. Please go ahead.
Yes. Good morning. Some just additional questions from my side. On the competition side, have you also considered deposits as well as mortgages and savings when it comes to the competition? Also their sort of the latest SME offering. How do you think the competition authority would review these four sort of key markets? What's the differences and how much great market share we're going to actually get in those four markets, if you can shed some light to that?
We believe that there is no reason to conclude that the competitive landscape in Norway will change through these transactions and that there should be no reason why this transaction should not go through as far as our experts on competitive law is evaluating the situation. Historically, in the early years of the 20th century we have done even higher market share in deposits. Again, we believe this is not an issue competition-wise. There is still strong competition in the Norwegian market with a significant number of banks, a well-functioning market.
Thank you. The second question goes to the mortgage margin pressure. You have seen sort of a market share go from below 40% to currently 24% over 18 years. What would hinder you now from sort of get back to 27% then lose every year half to one percentage point again going forward because you have higher prices than your peers?
We focus on profitable growth and profitability and believe that we have a competitive offering to our customers and definitely expect to continue to have that also going forward. We do not target a specific market percentage as such. I communicated an expectation that we believe we should be able to grow with an annual loan growth of 3%-4% going forward, which we believe is a sustainable and a level for DNB, which it should provide interesting opportunities profitability-wise for our shareholders.
Thank you. Finally, on the IT system, which kind of IT system would you continue with here? Would you scrap the Sbanken system, or is that really what you would go forward with and add to your current DNB system and scrap your own ones? How should we rethink the SME plans, the mortgage offering, and as well, the savings offering, as Sindre referred to?
These are topics which will be evaluated and considered with a joint team from both banks after the regulatory approvals have been obtained. This is too early to speculate on that. Of course, in today's world, there is a high fixed cost with regard to technology and compliance, for example, which is the reason why we say that we expect cost synergies following these transactions. We have not concluded with regard to the selection of technology systems, for example.
Okay. Thanks a lot for your questions so far.
The next question comes from the line of Martin Leitgeb from Goldman Sachs. Please go ahead.
Yes, good morning. I have three questions. Should I just give them all in one go, or you prefer doing them one by one?
It's your choice.
Let's do it all in one go. Just a clarification on capital. The 100 basis point impact on capital, is that net of essentially rolling DNB's IRB approach onto mortgages at Sbanken so that benefit arising from moving from standard to IRB is already included in that 100 basis points? Other way around, is the capital impact slightly less than 100 basis points if one were to consider that? The second question, just again, on the rationale of this transaction, just looking at, obviously, the capital impact, if we just look at the pro forma financials for Sbanken, one could argue if you would have returned the capital to shareholders, EPS and return on equity would have increased at DNB. I'm just trying to gauge what is the main attraction of that deal.
Is that on the revenue side, is that on the cost side or a combination? With respect to revenues, it seems that this deal would bolster, in particular, net interest income as opposed to fee income. My sense from the capital markets day 2019 was that there was a focus at DNB, in particular, growing capitalized fee income. Does that transaction help you in that regard to growing capitalized fee income? Final question, the third one, just in terms of funding. I appreciate the comments on the capital earlier. Is there any obvious funding synergies arising from the deal in a way that DNB could fund potentially much cheaper in certain areas as compared to Sbanken? Thank you.
Thanks for the questions. With regard to capital, we say approximately 1 basis point effect on a Common Equity Tier 1, with some positive effects over time, with Sbanken being included on DNB Internal Ratings-Based models sometime in around one to two years from now. In calculations, we should assume around 100 basis points effect on capital. With regard to strategic rationale and industrial rationale, I think it's worth starting with what you mentioned about fee revenue, for example. Sbanken has a higher market share for deposits than loans, and deposits we believe is attractive in an environment where the central bank has forecasted that it will start to hike interest rates from later this year and continuing through 2022, 2023, 2024, will be close to 150 basis points in increased policy rate from the central bank.
On top of that, Sbanken has a much stronger higher market share in savings, in mutual funds, than in balance sheet products. We strongly believe that this is an opportunity to grow fee and commission income in the savings area at a higher rate. This is fully in line with our guiding that we expect a higher growth in net commission and fees than with regard to loan growth. That also partly illustrates some of the strategic rationale for this transaction, both with regard to the savings area, of course, the point in time we are actually entering into this transaction with regard to the interest rate environment we expect going forward in Norway with the current situation in Norway, with the different situation of the IRB banks versus the standard banks.
On top of that, we have communicated that we would like to build even more technology into our business areas. This is also an opportunity for us to have a highly skilled technology staff becoming part of DNB, helping us to ensure that our customers also going forward, will have the best customer digital experiences, which we believe is the way we should serve customers going forward. As which the COVID period has definitely confirmed is a sensible strategy.
On the funding side, I'm sorry. Is there any-
I briefly touched upon that already. We do not expect material funding synergies as Sbanken also have a covered bond subsidiary issuing covered bonds and the price difference for covered bonds are negligible. With regard to additional Tier 1 capital, Tier 2 capital, and also the new requirement for MREL debt or Senior Non-Preferred Debt, we expect that our better credit rating will give some funding synergies on these capital instruments.
Very clear. Thank you very much.
The next question comes from the line of an Analyst from Allianz Global Investors. Please go ahead.
Hello, you can hear me?
Barely. Sorry, we can't hear you.
As we are having technical difficulties with Analyst's line, we'll go to the next question. The next question comes from the line of Hari Sivakumaran from KBW. Please go ahead.
Hi there. I just wanted to come back to the tech aspect of the deal and how significant that was in your thinking. There's been some discussion of platform staff. I think I heard cybersecurity earlier on. How do you weigh up acquiring technology compared to developing it internally?
My reflection on cybersecurity was more, I would comment that this involves a big fixed cost for a digital bank these days. That in the area of cybersecurity, there is obviously a significant cost synergies. This was an example of a cost synergy area going forward. We believe technology has become more important, and that's why we have reorganized the bank, putting more technology into the business area, and also stated that we would like to increase the replace consultants by technology staff in the bank going forward. This is just an example of one of the attractions we see with Sbanken working together with the resources of DNB, and two banks together having the opportunity to deliver even better solutions.
Thanks.
The next question comes from the line of Christopher Adams from Kepler Cheuvreux. Please go ahead.
Thank you. I want to go back to the question of antitrust approval again. With a 24% market share, DNB is by far the largest retail bank in Norway, and with this acquisition potentially going through, that will increase to 27%. Sbanken has historically been one of the most important challenger banks in Norway. It's not inconceivable that the antitrust authorities will have a problem with this transaction. What are you telling antitrust authorities to alleviate any concerns they may have?
That, of course, is something we will come back to with the Norwegian Competition Authority. We believe that the strategy of these banks have been quite similar over recent years. The challenger position was definitely a clear one if you go back 10 or more years in time. As I mentioned, both the strategy, the pricing strategy, and the business in general has become much more similar over the last few years. The combined market share should still be below the thresholds the Competition Authority use as benchmarks in competitive assessments.
Okay. Thank you.
The next question comes from the line of Vegard Toverud from Pareto. Please go ahead.
Good morning. Thank you for taking my questions. I have three. What kind of churn assessments have you made for the customer base of Sbanken in your calculations? That's number 1. Number 2, in the due diligence, have you found any difference or significant difference in pricing of customers? Number 3, I understand that you will go through the IT systems later, but if we look at the customer fronts, will the Sbanken customer maintain their customer fronts? Will they change to DNB fronts? Will the DNB fronts potentially be adjusted to some of the structures of the current Sbanken customer fronts? Thank you.
With regard to churn, we have obviously made assessments of that and all our risk mitigating actions to address that potential. Of course, we are also taking that possibility into account when considering the offer price in the transaction. We believe this is a financially valuative transaction for DNB shareholders, also with conservative assessments. With regard to the choices on technology and what technology we will have to our customers in the future, that is too early to be commented upon. We are still in a phase where we actually launched an offer. That offer has to be considered. We need to go through the regulatory approval and then when we have the regulatory approval, we will sit down with Sbanken to evaluate that issue.
Through the due diligence process, we are of course aware of what technology and systems they are using today, and have taken that into consideration when launching the offer.
Is it possible to say some more about your churn assessment? Have you assumed the same as you would assume for the market as a whole, or is it possible to give us some more information about that?
We cannot comment upon anything more than that. We can refer to the positive statements made by the board of directors of S Bank and how they consider this attractive, and the two banks' joint ambitions for what we are going to deliver to our customers going forward.
Okay. Thank you.
There are currently no questions in the queue, so as one last reminder, please press *1 if you would like to ask a question. We have no further questions in the queue, so I'll hand the call back to your host for any closing remarks.
All right. Thank you all for your participation. We hope you have a nice day going forward. Thank you very much.