Today the Board of Directors of Kvika banki and the Board of Directors of TM agreed to commence discussions on the merger of the two companies. Discussions are based on the premises that TM will become Kvika banki‘s subsidiary and that Lykill fjármögnun hf., TM‘s subsidiary, will merge with Kvika banki. It is also expected that TM‘s shareholders will receive a 55% share in the merged company in return for their shares in TM, based on the companies‘ issued share capital today.Discussions will take place in the coming weeks as well as due diligence procedures. Since both companies are issuers of listed securities, and as such have an ongoing disclosure obligation, the due diligence process is not expected to take long. The forthcoming merger is subject to the approval of relevant supervisory authorities and shareholders of both companies.The Board of Directors of the two companies believe that synergies in excess of ISK one billion a year, excluding transaction- and one off costs, is a realistic target. The largest part of synergies will result from lower funding costs.The merged company will be financially strong and in a position to increase competition in the financial market. The companies have a large group of clients that will have access to the products and services of both companies.