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Enough of strict regulations – Nordea Bank relocates its headquarters to Finland News

Sunday, September 10th, 2017 | Economy

With the decision of Nordea Bank AB to move the headquarters from Sweden to Finland, the only global, systemically important bank in the Nordic region is entering the Eurozone. After months of offending Swedish efforts to pay the banks more to protect taxpayers, Nordea has made this decision. The bank estimates that the move to Helsinki will save up to € 1.1 billion in regulatory costs.
The relocation, which will take place in the second half of next year, promises to be a test case, as Nordea paves the way for regulatory arbitrage.
Nordea said Wednesday that the relocation will only have a "limited" effect on the workers and is expected to keep all Nordic operations "unchanged". Customers would not notice any significant difference in the day's business, the bank said. But the regulatory landscape of the Nordic region will change.
The Swedish authorities have already warned that their ability to deal with financial crises is affected by the move.
Hans Lindblad, head of Swedish debt management, said he regretted Nordea's decision. "The risks do not move with the headquarters," he answered by e-mail to questions from Bloomberg. The bank is now likely to have a lower requirement for bail-in-capable securities (MRELs), and Sweden is "a bit worse when it comes to the conditions for dealing with banking crises and securing financial stability as well as the Swedish economy." he.
Hard core capital can now be reduced
According to Citigroup, the company's headquarters in Norgea could enable Nordea to reduce its current requirement for core core capital CET1 of 17.6 per cent of the risk-weighted assets by around 6.8 percentage points. According to estimates by the Citigroup, Nordea's savings of € 1.1 billion would also be higher by € 200 million. Analysts at the DNB estimate that the earnings per share will be increased by about two percent as a result of the relocation and that the CET1 requirement could drop by up to 6 percentage points of market capitalization.
During a press conference on Thursday in Helsinki, Nordea CEO Kasper von Koskull said the management wanted a tough regulatory environment. He said that the business activity within the Nordea banking union would provide equal opportunities with its competitors, he said.
While Sweden lamented Nordea's decision, Finland welcomed the move. Minister of Finance Petteri Orpo responded quickly: "Welcome to Finland," he tweeted. Finance Finland, the industry association, underlined the importance of not having rules that are stricter than the EU average.
(Bloomberg)

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