June 13, 2019 / 8:32 AM / 3 months ago

UPDATE 1-Sampo plans extra dividend in Nordea shares to boost solvency

(Adds details and background)

HELSINKI, June 13 (Reuters) - Finnish financial group Sampo said on Thursday it planned to pay shareholders an extra dividend in the form of shares in banking group Nordea .

Sampo is Nordea’s largest shareholder with a 21.3% stake. This would fall to around 19.9% following the dividend payout.

The company told investors in a blog post on its website that the proposal was a technical measure related to Sampo’s solvency.

Sampo said its capital requirements for holding the Nordea stake had increased due to Nordea’s re-domiciliation from Sweden to Finland.

“The increase in capital requirements has decreased Sampo’s solvency significantly,” the company said. But if the board approves the extra dividend in Nordea shares this would take Sampo’s holding below 20 pct which would significantly decrease the capital requirements, Sampo said.

Sampo said in a statement its solvency ratio amounted to 126% at the end of March 2019, based on Solvency II rules for insurers.

“Taking the hybrid capital of 500 million euros issued in May 2019 and the planned distribution of an extra dividend into account, the solvency ratio would have been approximately 169% at the end of March 2019,” it said.

Sampo’s board plans to decide on the extra dividend in a meeting scheduled for August 7. (Reporting by Tarmo Virki and Johannes Hellstrom. Editing by Jane Merriman)

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