Götabanken/GOTA

After an analysis of the banking sector in the mid-1980s, Proventus concluded that the Swedish banking industry was about to experience fundamental changes. The international trend towards a liberalization of financial markets was expected to open opportunities in areas previously closed to banks and Swedish banks would require a strategic repositioning to capitalize on such opportunities.

Banks in general were traded at a discount to net asset value, despite consistently high returns on equity. The Proventus analysis focused on Götabanken, a bank whose operating performance could be improved considerably. Furthermore, the bank’s ownership structure and size was such that Proventus could achieve an influential position in order to bring about a strategic reorientation.

The strategic plan developed by Proventus for Götabanken was a several-step process. First, the bank needed to focus its operation to serve segments of the market where it could reach critical mass, and adapt its services to new customer demands. The second step was to expand the bank’s operation to include new products and services not traditionally offered by commercial banks in Sweden. Finally, the bank needed to become a major financial player in the Nordic region.

During 1985, Proventus built a 43% holding in Götabanken. After strengthening the board of directors, Proventus acquired a number of financial companies throughout 1986-1987, including the investment bank Jacobson & Ponsbach and the investment company B & B Invest with its subsidiary Wermlandsbanken. In early 1987, all of these companies, together with Götabanken, were combined in GOTA, Sweden’s first bank holding company with operations in private and corporate banking, investment banking and leasing activities. In 1988, GOTA became majority owner in the regional bank Skaraborgsbanken, which was subsequently incorporated into GOTA.

GOTA had been created to be a true competitor in the Swedish financial market. The size of Proventus ownership position created an unusual situation in the Swedish financial community, where banks did not generally have such concentration of ownership. Such a large ownership share caused Swedish authorities to enact legislative changes, popularly known ad Lex GOTA, to restrict an individual shareholder’s influence over a publicly traded bank.

For GOTA to gain competitiveness and create the strongest balance sheet in the Nordic commercial banking market at the time, Kansallis-Osake-Pankki (Kansallis-Osake Bank), a major Finnish bank, along with other Finnish interest, jointly acquired 40% of the Proventus holding in 1988. Kansallis-Osake-Pankki was at that time rated with Aaa by Moody’s.

GOTA had been forged into a major financial services group with a new strategic position. By 1990, GOTA’s market value had grown substantially and an analysis conducted by Proventus indicated that a continued improvement would require additional diversification into other financial areas. The original plan was for GOTA’s cooperation with Kansallis-Osake-Pankki to evolve into a Pan Nordic financial group. However, when Kansallis-Osake-Pankki experienced difficulties in the Finnish market, Proventus looked for another partner for GOTA. In the autumn of 1990, after negotiating with several Swedish banks and financial institutions, Proventus sold its shares in GOTA to SPP, Sweden’s largest mutual insurance company.