Sparebanken Sør: new equity strategy, significant increase in ECC ownership ratio and increase in return on equity target

Sparebanken Sør is Southern Norway's largest savings bank and one of Norway's
major regional savings banks. The bank's board of directors wants to increase
the listed share of the bank's equity in order to better reflect the size of the
bank and to have an ECC ownership ratio in line with comparable banks.

Main points
o	Conversion and issuance of equity capital certificates (ECCs) to be
transferred to Sparebankstiftelsen Sparebanken Sør (the Foundation)
o	Sale of ECCs by the Foundation
o	New dividend policy
o	Introduction of customer dividends (see separate stock exchange notice)
o	New financial targets

Conversion and possible sale of ECCs
The Board is proposing to convert a part of the primary capital in Sparebanken
Sør to equity certificate capital by issuing new ECCs that will be transferred
to Sparebankstiftelsen Sparebanken Sør in full. Prior to the conversion, the
Foundation is the bank's largest owner of ECCs (51%).

Sparebankstiftelsen Sparebanken Sør is planning to carry out a secondary sale of
most of the newly issued ECCs. This is subject to the Foundation changing its
statutory minimum ownership share of the ECCs in the bank from the current 35%
to 25%.

Today, the board of directors of Sparebanken Sør therefore proposes to the
Supervisory Board to convert approximately NOK 2.9 billion of the bank's primary
capital into ECC capital. The proposal will be resolved at the Supervisory
Board's annual meeting 31 March 2022. Following the conversion, the ECC
ownership ratio in Sparebanken Sør will increase from 15.7% to 40.0%, and the
listed ECC capital will amount to approximately NOK 6.4 billion, based on the
current trading price on Oslo Børs.

The conversion will be based on book equity in the parent bank as of 31 December
2021 (adjusted for 2021 dividends), and 26,039,113 new ECCs will be issued, each
with a face value of NOK 50 and at a conversion rate of NOK 112.100589279. The
conversion and new ownership ratio of 40.0% implies that the ECC capital
pursuant to the bank's articles of association is increased by NOK
1,301,955,650, in addition to a premium of NOK 1,617,044,262.

The conversion is subject to approvals by the Supervisory Board and the
Financial Supervisory Authority of Norway, and that the proposed amendments to
Sparebankstiftelsen Sparebanken Sør's articles of association are approved by
the Foundation's general meeting. A potential secondary sale of ECCs will,
subject to acceptable market conditions, at the earliest be carried out after
the necessary approvals have been obtained and the new ECCs have been
transferred to the Foundation.

New dividend policy - equal distribution
Today, the board of directors has, as an additional measure to strengthen the
ECC, decided to change the bank's dividend policy, implying that the primary
capital and the ECC capital will have the same pay-out ratio. This implies that
the new 40.0% ECC ownership ratio will remain stable going forward. The board of
directors decided that the pay-out ratio shall be in the range of 40-50 %, in
line with other comparable banks taking into account the bank's need to retain
capital for growth and any regulatory changes.

Increased target for return on equity
The bank's board of directors has today increased the target for return on
equity to more than 11% by the end of 2025. Profitability improvements through
improved capital efficiency, increase in other income, effect from the proposed
customer dividend and positive effects from a possible approved IRB application
will be the most important elements to increase the return on equity.

More attractive ECCs
The board of directors expects that the combination of a significant increase in
ECC ownership ratio, a significant secondary sale of ECCs from the Foundation, a
dividend policy with equal distribution and the introduction of customer
dividends will make the ECCs in the bank significantly more attractive as an
investment for Norwegian and international institutional investors.

The increased market capitalization, combined with the substantial secondary
sale of ECCs by the foundation, will provide a basis for substantially better
liquidity in the bank's ECCs. In total, the board of directors expects that
these measures will imply a more efficient pricing and contribute further to a
positive development for the ECCs of the bank.

Following a potential secondary sale, the Foundation will be a financially
strong and liquid foundation with the ability to contribute positively to the
bank's development in a longer perspective. 

Geir Bergskaug, CEO: "Sparebanken Sør's board of directors has today decided to
change the dividend policy, introduced customer dividends and proposed a
significant conversion of primary capital into ECC capital. With these measures,
Sparebanken Sør will have a renewed equity strategy and the ECC will be
significantly more attractive to institutional investors. At the same time, it
is the board of directors' desire that the sale process of ECC will be
structured to make it attractive for retail investors, customers of the bank and
the bank's employees to become owners of Sparebanken Sør. Furthermore, customer
dividends will make it even more attractive to be a customer in the bank". 

The implementation of the conversion of the primary capital is inter alia
conditioned by (i) positive resolution by the Supervisory Board in the bank;
(ii) necessary amendments of the Foundation's articles of association; and (iii)
approvals from the Financial Supervisory Authority of Norway.

Pareto Securities AS and Swedbank AB (publ.) in cooperation with Kepler
Cheuvreux are engaged as Joint Global Coordinators og bookrunners, and Norne
Securities AS as Joint bookrunner for the transactions. Advokatfirmaet Selmer AS
is engaged as legal advisor.

Sparebanken Sør will host a presentation (in Norwegian) on Friday 11 March 2022
at 11:00 CET at Hotel Continental, Oslo, where the proposed changes will be
presented. The presentation will also be livestreamed through the following link!/hegnarmedia/20220311_4 
and via a link on the bank's IR web page. Those who attend the presentation
digitally will have the opportunity to submit written questions during the
presentation and the subsequent Q&A session. A recording will be made available
through the same link immediately after the presentation.

Contact persons in Sparebanken Sør: 
CEO, Geir Bergskaug, tel.: + 47 901 27 206
Head of finance, Steinar Vigsnes, tel.: +47 906 13 135

About Sparebanken Sør:
Sparebanken Sør is a solid and well-managed regional savings bank with  total
assets of approximately NOK 145 billion. The bank, which is one of Norway's
largest savings banks, has its market in Agder, Vestfold & Telemark and in
Rogaland. Sparebanken Sør is an attractive employer with strength and ambition.
The bank has skilled employees with a high professional level and is known for
effective decision-making processes. Focusing on new technology and
digitalisation ensures good customer experiences across all channels.

This information constitutes inside information and is subject to the disclosure
requirements in accordance with the Market Abuse Regulation (MAR) and Section
5-12 of the Securities Trading Act. The notification will be published on behalf
of Sparebanken Sør by Tone Hermansen, Group Secretariat, at 17:00, 10 March

Click here for more information

© Oslo Bors ASA, source Oslo Stock Exchange

Sallie R. Loera