A 3.25% return target for OP-Pohjola cooperative banks' Income Shares
At the end of March, the first OP-Pohjola Group cooperative banks will launch
Income Shares which provide customer-owners with a way of investing in their own
OP-Pohjola cooperative banks. A cooperative bank will annually pay interest on
Income Shares on the basis of its financial performance. The return target for
2014 is 3.25%. It will be confirmed annually.
- An Income Share forms a new investment instrument available only to OP-Pohjola
Group cooperative banks' customer-owners. It has features of both an equity and
fixed-income investment. With a sum as small as 100 euros, customer-owners can
become investors. Income Shares have been designed as long-term investments on
which the bank will annually pay interest, explains Timo Liukkonen, Executive
Vice President of Banking, OP-Pohjola Group.
- The first Group cooperative banks will begin to sell Income Shares at the end
of March: Turun Seudun Osuuspankki on 19 March and Keski-Uudenmaan Osuuspankki
on 20 March. Other Group cooperative banks will gradually follow suit during the
spring according to their own schedules. Helsinki OP Bank Plc is a limited
company which intends to issue a debenture loan during the spring.
Before selling Income Shares, each Group cooperative bank must approve
alterations of the Cooperative Bylaws required for their sale. The governing
bodies of the cooperative banks will meet on slightly different dates to decide
on this matter.
Opportunity to invest in one's own Group cooperative bank
An Income Share is an equity investment. Each cooperative bank's Annual
Cooperative Meeting or Representative Assembly will annually confirm afterwards
interest on the Income Share. Interest will be paid, provided that the
cooperative bank concerned has distributable reserves.
- As banks with a very good financial standing, cooperative banks are good at
meeting this criteria. At OP-Pohjola Group, the aim is that interest payable on
Income Shares would be as consistent as possible across Group cooperative banks.
The 3.25% return target is quite a competitive interest rate compared with other
instruments in the market, points out Liukkonen.
- Banks will be subject to ever-tightening regulation as a result of, for
example, the new CRD IV and CRR within the EU. Given that the minimum
requirements for capital adequacy actually double, stronger capital buffers are
required. In February, OP-Pohjola Group increased its target for the CET1 ratio
to 18%: Income Shares will play an important role in achieving this target, in
addition to measures aimed at improving profitability.
- OP-Pohjola Group has a strong and solid capital base, points out Liukkonen.
- We aim to further improve it in the long term. A strong capital base is a
bedrock on which a lot of things are built; for example the ability to provide
customers with financing and a good credit rating.
- As a financial services group owned by our customers, we can offer them a
long-term investment with a reasonable risk, which supplements benefits from
using us as their main bank and insurer, concludes Liukkonen.
For more information, please contact:
Timo Liukkonen, Executive Vice President, Banking, OP-Pohjola, tel. +358 (0)10
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Source: Pohjola Pankki Oyj via GlobeNewswire