Holders of Skandiabanken Norwegian krone-denominated covered bonds have approved the Swedish bank’s plan to convert their covered bonds into obligations of a new Norwegian issuer it is setting up as part of plans to spin off its Norwegian banking operations.

Sweden’s Skandiabanken is seeking bondholder approval to transfer two outstanding Norwegian krone senior unsecured FRNs to a new subsidiary in Norway it is establishing ahead of a fourth quarter IPO of its banking operations in that country.

Skandiabanken issued its first covered bonds backed by a cover pool of Norwegian residential mortgages on 26 September, pricing three and five year floating rate notes to raise Nkr3bn (Eu368m, Skr3.19bn).

Skandiabanken has joined the ranks of Swedish covered bond issuers, having last week inaugurated a new covered bond programme with a Skr3.3bn (Eu381m) dual tranche FRN issue backed by a cover pool of Swedish residential mortgages.

Sweden’s Skandiabanken plans to issue its first covered bond at the end of the month after having turned to the asset class as part of its plans to use the capital markets to diversify its funding sources and support the banks’ growth ambitions, an official told The Covered Bond Report.