Max Bank and Skælskør Bank agree on the basis for a merger

Following targeted and constructive negotiations, the Supervisory Boards of Max
Bank and Skælskør Bank have agreed to propose to the Annual General Meetings of
the Banks to merge the two banks. The Danish State, being the principal
shareholder of Skælskør Bank, has expressed its willingness to support the
merger. The Bank will carry on under the name of Max Bank. 

The Bank will be deeply rooted in South and West Zealand with 13 private
customer branches and 5 corporate customer divisions distributed throughout the
entire market area. The head office will be located at Aquahuset near the
Næstved harbour which Max Bank moved into about a year ago. Both banks envisage
major synergy opportunities from this merger marketwise, costwise and
earningswise. 

Max Bank is generally twice the size of Skælskør Bank. Combined, the two banks
have today about 280 employees, and loans and advances, deposits and guarantees
total approximately DKK 14.5bn. 

Both banks have long histories in their local market places. The roots of
Skælskør Bank reach back to 1876 and Max Bank to 1901. They have both developed
from being largely private customer banks to today also being strongly
positioned in the corporate market area of Eastern Denmark. The branches of the
banks are quite complementary to each other, with only Slagelse overlapping. 

Capital structure in place 
Over the last two years, both banks have made considerable write-downs for
impairment - primarily of a few large corporate exposures. It has therefore
been a key point that both banks should have a strong capital, liquidity and
capital adequacy base prior to any merger. The capital base of Skælskør Bank
fell into place through the conversion of approximately DKK 100m in hybrid core
capital from the Danish State in March 2010. 

The new bank plans to increase its share capital by about DKK 100m in 2010 for
the purpose of strengthening its financial resources. The Danish State has
expressed its support of this share issue and will under certain conditions be
prepared to seek the Danish Parliament's endorsement of its proportional
participation in the share issue. 

Liquidity in place
Liquidity too is in place. Max Bank has been given an individual state
guarantee amounting to DKK 3.1bn, and Skælskør Bank has applied for a guarantee
of DKK 1.4bn. 

The Danish State's future role
The Danish State holds an equity interest of 53.5% in Skælskør Bank and another
3.5% through Finansiel Stabilitet A/S (the Financial Stability Company).
Expectations are that the Danish State's total direct and indirect equity
interest in the merged bank will be reduced by around 23%. The Danish State has
expressed its support of the merger. 

Both banks have wanted to create the best foundation possible for the
development of the merged bank. In view of this, the Danish State has indicated
that, as part of the merger, it is ready to declare that it will not, without
the approval of the Supervisory Board of the merged bank, sell its shares in
the merged bank for a period up until 1 May 2012 as long as the merged bank has
a capital adequacy ratio of 1.5 percentage units in excess of the capital
adequacy needs and does not convert further state hybrid core capital. 

The Danish State does however want to reduce its equity interest and is
therefore open to any purchase offers corresponding to the market value of the
shares which can be approved by or have been designated by the new bank. 

The Danish State will as soon as possible request the Finance Committee of the
Danish Parliament to endorse its participation in the merger. 

Exchange ratio for shareholders
Based on the banks' actual values and the Supervisory Boards' negotiations, the
conversion ratio has been fixed so that 5.5 shares in Skælskør Bank will be
converted into 1 share in Max Bank. Following this distribution, the
shareholders in Skælskør Bank will hold 40.3% of the shares in the future bank,
and Max Bank's shareholders will hold 59.7% of the shares. 

Management and strategy
The Supervisory Boards have agreed that the Executive Board of the merged bank
will consist of Henrik Lund of Max Bank as chief executive officer and Henrik
Borup Jeppesen of Skælskør Bank as executive officer. It has also been agreed
that Hans Fossing Nielsen, current Chairman of the Supervisory Board of Max
Bank, will take the seat as chairman of the supervisory board, and Peter
Melchior, current Chairman of the Supervisory Board of Skælskør Bank, will be
appointed vice-chairman. The plan is also to strengthen the merged bank in the
market area by setting up local bank committees. 

Hans Verner Larsen, current member of Max Bank's Executive Board, will be
assigned with integrating the two banks and developing them into one entity in
relation to the customers.  The overall strategy of the merged bank will be the
branding platform rolled out by Max Bank over a number of years with very close
customer relations, high availability and a unique setting of cafés. 

Shareholder value
The new size will provide the bank with an opportunity to optimise many
back-office functions, while at the same time enhancing competency levels. Many
of the synergy effects will feed through as early as in 2011, and the
Supervisory Boards estimate that a merger will improve core earnings already in
the short term. The two Supervisory Boards recommend that the approximately
8,000 shareholders of Skælskør Bank and the approximately 16,000 shareholders
of Max Bank vote in favour of the proposed merger. 

Perspective for further sector consolidation 
Following the merger and increase of share capital, the merged bank will be
strongly positioned in relation to further consolidation with other financial
institutions in the region. 

Schedule
Subject to adoption at the general meetings of the two banks and the approval
of the Danish Financial Supervisory Authority, the merger will become effective
from 1 January 2010. The final merger plan is expected to be published in June.
Expectations are that the merger will be carried through before the end of Q3
2010, and the share capital will be increased in immediate continuation
thereof. 


Further information:

Max Bank
Hans Fossing Nielsen, Supervisory Board Chairman, 
mobile phone number +45 40 70 32 40, or 
Henrik Lund, Chief Executive Officer, 
mobile phone number +45 21 72 17 86.

Skælskør Bank 
Peter Melchior, Supervisory Board Chairman, 
mobile phone number +45 40 55 11 42, or 
Henrik Borup Jeppesen, Chief Executive Officer, 
mobile phone number +45 61 56 60 00. 


Yours faithfully

Hans Fossing Nielsen, Chairman of the Supervisory Board of Max Bank	
Peter Melchior, Chairman of the Supervisory Board of Skælskør Bank


Facts about the merged bank

Name: Max Bank
Head office: Næstved, Denmark
Corporate customer divisions: Slagelse, Skælskør, Dalmose (agriculture),
Næstved, Vordingborg 
Private customer branches: Kalundborg, Korsør, Skælskør, Dalmose, Sorø,
Slagelse, Herlufmagle, Næstved City, Næstved Stor-Center, Haslev, Faxe,
Vordingborg and Direct centre for remote customers 
Executive Board: Henrik Lund, Chief Executive Officer, and Henrik Borup
Jeppesen, Executive Officer 
Chairmanship: Hans Fossing Nielsen, Engineer - Chairman 
Peter Melchior, Estate Owner - Vice-Chairman
Loans and advances: DKK 6.4bn
Deposits: DKK 6.5bn
Guarantees: DKK 1.6bn
Voting right restrictions: None
Ownership restrictions: None


Stock Exchange Announcement No. 19/2010