The supervisory board of Coop Pank commissioned its management board on Monday to begin preparations for the public listing of the bank's shares on the Tallinn Stock Exchange (TSE). Coop Bank's initial public offering (IPO) is expected to take place in autumn 2019 at the earliest.
According to Coop Pank Supervisory Board Chairman Jaanus Vihand, for the majority shareholder, Coop Eesti, listing shares on the stock exchange will mean delivering on the promise made in 2017, following the acquisition of the bank, that clients would be able to become the bank's shareholders in the future.
"We would primarily like to see our bank's clients as our shareholders," Vihand said. "This is why were are planning to give preference in the course of subscription to our shares to the investors who have become active uses of Coop Pank's services by then. In the next few years, Coop Pank's shares will mainly be growth shares, and could be of interest to Estonian retail investors as this will be a unique opportunity to take part in the history of the growth of a domestic bank and purchase company shares at an early stage."
The supervisory board commissioned the bank's management to initiate operations for the preparation for public listing. The process is estimated to take approximately half a year, meaning that Coop Pank's shares could be issued publicly this autumn at the earliest. The exact timing of the IPO will depend on the global economic situation and how it is reflected by stock markets.
Margus Rink, chairman of the management board of Coop Pank, said that the bank intends to use the money to be raised in the IPO to increase its amount of business, cover new clientele segments as well as develop technologies.
"We can see that the current situation on the banking market in Estonia as well as prospects for the next few years favor the banks based on domestic capital with an ambition for rapid growth and that are prepared to focus on product innovation," Rink said. "We believe that exponential growth is currently possible in lieu of linear growth."
The bank's loan portfolio and market share might increase up to threefold, provided favorable developments, he added.
"As we have achieved the smooth functioning of primary banking services by now, we would like to expand the scope of the clientele segments on which we focus," the board chairman said. "In addition to the segment of customers residing outside of major cities, we will also start targeting urban customers who value convenient, domestically-provided banking, and we will put more emphasis on providing gas-related services to business customers."
Coop Eesti, which currently has an approximately 60 percent holding in the bank, will remain Coop Pank's strategic partner following the planned IPO.
New phase of growth
"Coop Pank is entering a new growth phase, and considers the involvement of a broad-based scope of investors who are simultaneously its customers and shareholders important," Vihand said. "Some of our current financial investors, who have a 33.6 percent holding in the bank, are selling their shares. These investors had initially identified themselves as financial investors with an investment period of about 2-3 years. We are grateful to these investors for their contributions to the development of the bank thus far."
Based on Estonian capital, Coop Pank is one of five universal banks currently operating in Estonia. According to the bank, it aims to harness the synergy generated by the interaction of retail business and banking and bring everyday banking services closer to people's homes.
The bank's primary shareholder is domestic retail chain Coop Eesti, which includes 330 stores across the country. Consolidating 19 associations, Coop Eesti has 80,000 cooperative shareholders and nearly 600,000 loyal customers.
Editor: Aili Vahtla