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OP CorporateBank plc (31VN)


Friday 08 June, 2018

OP CorporateBank plc

OP Financial Group plans to transfer its statutory pension insurance to a mutual pension insurance company

OP Financial Group plans to transfer its statutory pension insurance to a mutual pension insurance company

OP Corporate Bank plc
OP Cooperative
Stock exchange release
8 June 2018 at 3.30 pm EEST

OP Financial Group plans to transfer its statutory pension insurance to a mutual pension insurance company

At its meeting of 8 June 2018, the Board of Trustees of OP Bank Group Pension Fund, which manages statutory earnings-related pension for OP Financial Group, decided to begin negotiations to transfer the management of its pension liability worth around 1,100 million euros to Ilmarinen Mutual Pension Insurance Company. The decision follows a competitive bidding process, where Finland's largest mutual pension insurance companies were invited to submit their bids. The pension insurance portfolio under discussion accounts for approximately 90 per cent of OP Bank Group Pension Fund's total pension liability. The final decision is to be accepted in July 2018, in which case the transfer would take place by the end of 2018. Based on the initial plan, the remaining pension liability would be transferred to Ilmarinen at a later date, but no earlier than at the end of 2020. The transfer will not affect the retirement plan or pension coverage of OP Financial Group's staff or pensioners.

"We have assessed the option of transferring the management of our employee pensions in the past. At the time market conditions were not favourable for the transfer but right now the investment environment is unusually favourable. If the transfer were to be carried out, it would strengthen the entire OP Financial Group's capital base and would reduce its volatility, says Harri Luhtala, CFO of OP Financial Group.

Should the transfer be carried out, it would improve OP Financial Group's CET1 ratio by an estimated 0.5 percentage points. Furthermore, the transfer of pension liabilities would generate a non-recurring item in OP Financial Group's financial statements due to valuation principles of pension liabilities in compliance with IFRS-based financial statements that differ from the Finnish practice. According to the present-day estimate, the non-recurring item would improve OP Financial Group's earnings for 2018 by 230 million euros. Stock price performance and market interest rates, for example, will affect the final amount of the item, with an earnings effect by the date of the transfer.

Following the possible final decision to transfer the employee pension insurance portfolio, OP Financial Group will review its earnings outlook for 2018.

OP Bank Group Pension Fund is responsible for statutory pension insurance cover for all OP Financial Group employees, in accordance with the pension plan under TyEL Employees Pensions Act. OP Bank Group Pension Fund looks after the pension insurance of approximately 260 employers, 12,000 employees and almost 9,000 pensioners. At the end of 2017, the Fund's pension liabilities totalled roughly 1,300 million euros.

The transfer of the portfolio of employee pension insurance is subject to approval of the transfer and related agreement by OP Bank Group Pension Fund's Board of Trustees and Representative Assembly, the pension insurance company, as well as regulatory approvals, including the Financial Supervisory Authority.

OP Corporate Bank plc
OP Cooperative
Carina Geber-Teir
EVP, Corporate Communications

Further information and requests for interviews:
OP Communications, tel. +358 (0)50 523 9904, [email protected]

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OP Financial Group is Finland's largest financial services group whose mission is to create sustainable prosperity, security and wellbeing for its owner-customers and in its operating region by means of its strong capital base and efficiency. OP Financial Group consists of about 160 member cooperative banks, its central cooperative OP Cooperative, and the latter's subsidiaries and affiliates. The Group has a staff of 12,000 and 1.8 million owner-customers.

This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: OP Yrityspankki Oyj via Globenewswire

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