Nordea’s relocation increases stability risks in the short term
News Nordea plans to relocate its parent company to Finland and thereby to the European banking union. It is the Riksbank’s assessment that a relocation slightly increases the risks to financial stability in the short term. The Riksbank therefore considers it to be a precondition for a relocation that Nordea’s capital and liquidity requirements do not become lower than they are today. This is the conclusion of the Riksbank in a statement to Finansinspektionen.
In September 2017, the Nordea Board of Directors made the decision to move the parent company to Finland and thereby into the European banking union. Nordea plans to carry out the relocation on 1 October this year, assuming that the ECB approves the application for a bank licence for the newly formed Finnish subsidiary and that Finansinspektionen approves the merger application.
A relocation of Nordea's corporate residence to Finland will not affect the bank's operations or customers in Sweden to any great degree. Nordea will remain one of the most important banks in Sweden. A relocation may nevertheless have significant consequences for the Swedish financial system and for Swedish financial stability. The Riksbank therefore considers that a necessary condition, in order for a relocation not to lead to increased risks to financial stability, is that Nordea's capital and liquidity requirements do not become lower than they are today. In the long term, once the European banking union is fully developed with efficient risk sharing among participating member states, the risks to Sweden could decrease as a result of the Nordea relocation. This presupposes, however, that the banking union is completed.
Nordea has submitted a merger application to Finansinspektionen and a decision is expected during the third quarter of 2018. Finansinspektionen has given the Riksbank the opportunity to comment on Nordea's application.