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LHV Pank starts development of a new business line

Teade

LHV Pank, a subsidiary of AS LHV Group, has decided to initiate a new line of
business. In addition to retail banking, private banking and corporate banking,
LHV will start servicing payment service providers. 

According to Madis Toomsalu, CEO of LHV Group, LHV will with this stepposition
itself even more as a new generation bank and as a link between traditional
banking and new generation fintech services. 

"In the coming years we can expect a rise in the business volumes of payment
service providers, as the new EU Payment Services Directive, coming into force
in 2018, will extend payment service providers’ rights of mediating their
customers payments that use their bank accounts in the process. Payment service
providers need a bank to offer their services to customers," Toomsalu
explained. 

The target customers of LHV’s new business line will be European payment
service providers. The main product for them will be real-time payments in
euros and in pounds, LHV plans to begin offering this in 2018. The service can
be expanded to banks, credit brokers and other companies. 

"We already service many companies that provide different payment services. For
example TransferWise or Coinbase, to name a few more well-known. We have
catered for payment service companies for five years already. This field of
business has grown important to us and we see that it continues to grow. Our
plan is to concentrate all existing and new customers that offer payment
services under this new business line," said Erki Kilu, CEO of LHV Pank. 

"LHV is a direct member of the Euro Payments System and we also participate in
the Instant Payments System working group. Whereas many payment service
providers also operate in the United Kingdom, joining the real-time Pound
Payments Systems is also a high priority for us. To accomplish this we will
start establishing a LHV branch in the UK, in London. After the branch is
founded, it will be possible to open accounts in the Bank of England and join
the Pound Payments System. Our aim is to be able to kick off our new service in
2018," Kilu explained. 

In developing the new UK branch LHV will pay close attention to composing a new
team. For the London office, LHV will recruit a branch manager and in addition
to that customer service specialists and new employees covering compliance and
money laundering prevention. LHV will also create an additional software
development team based in Tallinn. 

"LHV is an organization of brave ideas. We continue to concentrate on Estonian
businesses and private customers, but in doing so we also want to look at the
world with a wide and up-to-date perspective. Payment service providers’
business is growing and gaining significance – if we can be one of the few in
the world, who will in the coming years offer both real-time euro and pound
payments, we can position ourselves to benefit from this growing business. This
is an investment into the future," Madis Toomsalu commented. 

LHV intends to start generating income with the new branch in the second half
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 2017 the planned
costs will mainly contain payment system accession costs and costs of
developing the IT infrastructure. According to Madis Toomsalu the AS LHV Group
profit prediction for 2017, disclosed in the Financial Plan in February, will
remain unchanged, as the first two months of this year have generated a profit
that exceeds the predictions by EUR 1 million, furthermore the tax cost of
dividend payments will be lower than previously planned. 

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 300 people and over 110,000 customers use LHV’s banking
services. Pension funds managed by LHV have about 180,000 customers. 


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