Handelsbanken plans $1bn extra payout after FSA thumbs up

Bloomberg

Handelsbanken AB, Sweden’s third-largest bank, plans to distribute a stake worth about $1 billion in investment company Industrivarden AB to shareholders.
“As a result of the bank’s good capital situation, the board of directors of Handelsbanken has resolved to convene an extraordinary general meeting and propose an extra dividend,” the company said in a statement. The bank’s capitalisation is “well above” the target ratio level, it said.
The move comes amid a lifting of restrictions on payouts by the country’s financial watchdog at the end of this month. Since the onset of the pandemic, Swedish banks have strengthened their balance sheets and the three main lenders are among the best capitalised in Europe with capital positions that are about 25% of their market capitalisation.
The payout “means that we refine the Handelsbanken share,” the bank’s chairman Par Boman told Dagens Industri. “We are just a bank, nothing else. We must support other companies, not own them.”
The bank’s shares gained as much as 3.4%, trading 3.1% higher at 97.08 kronor as of 9:02 am in Stockholm.
A close web of cross-ownership between Handelsbanken, Industrivarden and other associated companies started to unravel after a scandal involving alleged corporate-jet misuse in 2014, and the bank sold its direct holding of vote-rich class-A shares in 2016. The shares it now plans to distribute to shareholders are currently held by the bank’s pension foundation.
Industrivarden owns a 140 billion-krona portfolio of just seven companies, including stakes in Volvo, Sandvik, Essity and Handelsbanken.
The dividend of about 30.5 million class-A shares in Industrivarden corresponds to about 4.42 kronor a Handelsbanken share. The move will reduce exposure to pension management shares and increase long-term stability in its capitalisation, it said.
An extraordinary general meeting will be held on October 21 to vote on the proposal.