Norwegian lender Sparebanken Hedmark has agreed to acquire Bank 1 Oslo Akershus by buying a 29.9% stake in the Norwegian Confederation of Trade Unions (LO) and a 29.6% stake in other Sparebank 1-banks.

Sparebanken will pay NOK1.9bn ($220m) for the acquisition deal, which is expected to create the country’s fourth-largest savings bank.

Majority of the payment will be done through issue of new equity certificates in Sparebanken to LO and the banks, which will make them Sparebanken’s co-owners.

Under the deal terms, Bank 1 will operate as a wholly owned subsidiary of Sparebanken for up to three years.

Sparebanken Hedmark CEO Richard Heiberg said: "In 2013, we made a strategic investment by increasing our ownership stake in Bank 1 Oslo Akershus AS (to 40.5 per cent). We now invest a further NOK 1.9 billion and acquire the entire operations of a bank that has close to NOK 54 billion in adjusted total assets.

"Bank 1 is a well-run bank, and combined we will become the fourth largest savings bank group in Norway. Together our two banks will form a forceful regional savings bank in Eastern Norway, with headquarters in Hamar. The recent conversion of Sparebanken Hedmark to an equity certificate bank was partly to enable structural initiatives like this.

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The transaction is subject to regulatory approval.