Iceland's Kaupthing Bank agreed today to buy NIBC for about €3 billion in cash and shares, but left out the Dutch merchant bank's loss-making US subprime portfolio.
Kaupthing Chief Executive Hreidar Mar Sigurdsson said NIBC would help diversify the Icelandic bank's revenues, bring economies of scale, and give it a strong position in the Benelux region and a foothold in Germany.
"This is an excellent strategic fit," Mr Sigurdsson said on a conference call with analysts.
The purchase of NIBC follows a flurry of buyouts in the Netherlands. Dutch bank ABN AMRO is the subject of competing bids, and food group Numico and chemicals distributor Univar have agreed to be acquired.
Kaupthing, Iceland's biggest banking group, said it would not take on NIBC's exposure to the US subprime market, which will remain with NIBC's owners, led by private equity firm J.C. Flowers.
Mr Sigurdsson said the two banks had a complementary focus on small and medium-sized businesses and the deal would diversify Kaupthing's balance sheet, geographical footprint and revenues.
It will also give Kaupthing a base to build on in Germany, which "could be an interesting deposit market for us," he added.
Kaupthing, advised by Lehman Brothers, is paying 12.7 times NIBC's net earnings for the past 12 months. European banks are, on average, trading at around 10.5 times estimated 2007 earnings, according to Moody's.
Kaupthing shares were down 0.2 per cent at 1,099 Icelandic crowns at 10.40am.