Kvika initiates process for sale or listing of insurance arm, TM

In a strategic move, Kvika banki hf. (“Kvika”) has announced its decision to kickstart a process for the sale or listing of its insurance subsidiary, TM tryggingar hf. (“TM”). This decision aligns seamlessly with Kvika’s vision to streamline its operations and bolster its core banking activities, underscoring the bank’s commitment to simplifying customer finances and fostering competition.

Following the divestment of TM, Kvika will sharpen its focus on commercial and investment banking, complemented by robust asset management capabilities. The move is expected to significantly boost Kvika’s capital base, empowering the bank to explore internal growth opportunities across its various business segments.

The bolstered capital reserves will enhance Kvika’s market positioning, both in retail and corporate lending, while effectively diversifying its loan book’s risk profile. Additionally, shareholders can anticipate a portion of the sales proceeds to be distributed in the form of dividends and/or the buyback of own shares.

Over the next few weeks, Kvika will appoint advisors and chart the course for the upcoming steps. The proposed sale or listing is projected to conclude in the second half of the following year.

A comprehensive presentation of Kvika’s post-divestment plans is slated to accompany the bank’s third-quarter results, scheduled for release on November 2.

Ármann Þorvaldsson, CEO of Kvika, expressed optimism about the move, stating, “The sale or listing of TM will be an important stepping stone for Kvika and will create an opportunity for the bank to increase its market share in all business segments. The bank’s operations and structure will be simplified, income generation more stable, profitability improved and growth opportunities greater.”

He also emphasized that while parting ways with TM is a strategic choice, the bank is confident in TM’s potential for growth and success under new ownership. The separation will enable both Kvika and TM to pursue their respective paths to prosperity, building on the strong foundation laid during their collaboration.