January 23, 2017, 15:17 / Finance

Nordea transfers clients to Sovcombank

A subsidiary of the Scandinavian banking group has closed a deal to sell its retail portfolio Olga Adamchuk

Sale of a retail loan portfolio is part of Nordea Bank’s strategy to build a corporate investment bank in Russia / M. Stulov / Vedomosti

Nordea Bank sold its retail loan portfolio to Sovcombank. As of January 1, 2017, the size of Nordea Bank's retail loan portfolio was 16 billion rubles, almost the entire volume of which was mortgage loans (97.3% of the portfolio). From January 23, all individual borrowers switch to services from Sovcombank .

The sale of the retail loan portfolio is part of Nordea Bank’s strategy to build a corporate investment bank in Russia, which the bank has been implementing since 2015, according to the words of the Chairman of the Board of Nordea Bank, Mikhail Polyakov, in a press release. “All the calculations have been made, the deal has already been closed,” Polyakov clarified to Vedomosti, refusing to comment on the terms of the agreement.

S&P upgraded Sovcombank's rating

Finance / Banking

Sovcombank is acquiring high-quality retail assets from sellers with an impeccable reputation, the deal brings it closer to achieving the strategic goal of 50% of secured loans from the total size of the retail portfolio, the message cites a comment from the deputy chairman of the board of Sovcombank Sergei Khotimsky, who promised to make the transition comfortable for borrowers. According to IFRS data for nine months, Sovcombank’s loan portfolio before reserves is 165.7 billion rubles, the retail portfolio is 64.9 billion rubles, while 97% of Sovcombank’s retail loan portfolio accounts for unsecured loans, says Promsvyazbank analyst Dmitry Monastyrshin .

Nordea Bank's decision to abandon retail lending was made following the results of the fourth quarter of 2014, when at the beginning of 2015 the bank analyzed the dynamics of household incomes, the impact of devaluation, inflation and the unemployment rate. “Retail lending has ceased to be profitable, rates are at prohibitive levels, and the risks are very high, in these conditions we do not see an opportunity to increase the retail loan portfolio,” Igor Bulantsev, the former chairman of the bank’s board, told Vedomosti at that time.

A Sovcombank representative has not yet provided a comment.