Market announcement

Title

LHV Bank will open a branch in the United Kingdom

Message

The Financial Conduct Authority in the United Kingdom has granted LHV Bank an
approval to open a branch in the UK. LHV plans to register the branch in the
coming weeks and start London operations in March. 

As the next step, LHV Bank will register the branch in the UK Companies House.
The Estonian Financial Supervisory Authority approved the establishing of the
UK branch in the end of last year. 

LHV Bank will open the branch in London in order to develop the bank’s
financial service providers business line. Existence of the UK branch will
allow LHV Bank to join Pound Payments Systems and provide financial
intermediaries with real-time payments service in both euros and pounds. The
role of LHV is to be the link between new generation fintech services and
banking infrastructure. 

According to Erki Kilu, CEO of LHV Bank, servicing financial service providers
has already evolved to an important part of the bank’s business. “We are an
influencer bank. We strive to contribute to the development of financial
services. During the last six years, we have seen a rapid growth in the payment
services’ volume and more growth can be predicted, taking into account the
impact of the European Payment Services Directive (PSD2), which entered into
force this year, on the financial sector. In order to offer new solutions the
financial intermediaries need banking services, that means us,” Erki Kilu
commented. 

LHV Bank is already a direct member of the Euro Payments System and also
participating in the Instant Payments System working group. LHV intends to open
necessary accounts in the Bank of England and join the Pound Payments Systems
at the earliest opportunity. LHV plans to start servicing financial
intermediaries by the end of this year. 

“London has become one of the most important financial centres in which
financial technology companies from both Europe and the rest of the world are
represented. We already have a number of substantial and well-known
international payment intermediaries as our clients and more will accrue in the
future. We could also provide our payment services to banks, credit
intermediaries and other companies," said Erki Kilu. 

The UK branch will be managed by Andres Kitter, who serves as a member of the
Management Board of LHV Bank and has so far overseen the servicing of financial
service providers. “We are in the middle of recruiting suitable people for the
London office and our aim is to open our London office in the middle of March.
In addition to the branch manager, LHV will recruit customer service
specialists and new employees covering compliance and money laundering
prevention. We have already extended our software development team in Tallinn,”
said Andres Kitter. 

LHV intends to start generating additional income with the new branch in the
end of 2018, after the UK branch is established and joining Pound Payments
System has taken place. A greater increase in revenue has been planned for
following years after which the branch should become profitable. In 2018 the
planned costs will mainly contain payment system accession costs and costs of
developing the IT infrastructure. 

LHV will celebrate the opening of its’ UK branch on 19 March with a reception
and panel discussion, themed “Will global cities prevail over countries?”, as a
part of the Innovate Finance Global Summit. 

LHV Group is the largest domestic financial group and capital provider in
Estonia. LHV Group's key subsidiaries are AS LHV Pank and AS LHV Varahaldus.
LHV employs about 350 people and over 131,000 customers use LHV’s banking
services. Pension funds managed by LHV have about 178,000 customers. 


         Priit Rum
         Communication Manager
         Phone: +372 502 0786
         Email: [email protected]