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Banks

Norwegian savings bank seeks $400 mln in state aid

OSLO, Aug 20 (Reuters) - Norwegian savings bank SpareBank 1 SR-Bank ROGG.OL said on Thursday it asked the government for an injection of 2.4 billion crowns ($396.7 million) to boost its core and preferred capital.

SpareBank 1 SR-Bank is one of the first lenders to have detailed an application for state help ahead of a Sept. 30 deadline. Many are watching whether Norway's biggest bank, DnB NOR DNBNOR.OL, takes part in the scheme and on what scale.

“The reason for the application is to strengthen the bank’s (finances) and facilitate continued normal lending activities,” SpareBank 1 SR-Bank said in a statement.

At the end of the second quarter, SpareBank 1 SR-Bank had a core capital adequacy ratio of 7.0 percent and a capital adequacy ratio of 9.5 percent. It aims to increase the core capital adequacy ratio to at least 9 percent, the bank said.

“An injection of capital from the Finance Fund will help achieve the core capital adequacy ratio target ... and facilitate normal lending activities also when the demand for loans rebounds,” it added.

The bank applied to the Norwegian state fund for an injection of core capital in the form of hybrid instruments worth up to 1.6 billion crowns and preferred capital of up to 800 million.

The final decision on an injection is “subject to the negotiations of acceptable terms with the Fund,” it said. ($1=6.050 NORWEGIAN CROWN) (Reporting by Wojciech Moskwa; editing by John Stonestreet)

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