Nordea move has Riksbank chief warning of dangerous fallout

Bloomberg

Nordea Bank AB’s relocation from Stockholm to Helsinki in pursuit of a friendlier regulatory environment is drawing expressions of dismay from some of Sweden’s highest-ranking officials.
Stefan Ingves, the governor of Sweden’s Riksbank and the chairman of the Basel Committee on Banking Supervision, called the decision “dangerous for everyone in the Nordics and Baltics” if Nordea’s intention was to reduce its capital requirements. Speaking at a Riksbank press conference, Ingves also questioned whether Finland, which is in the euro zone and banking union, had bitten off more than it could chew in welcoming a bank with assets that are more than double the country’s GDP.
Ingves said the example ought to drive closer Nordic cooperation. “When businesses are moving ahead of nation states, then nation states have to cooperate in some way,” he said.
Whether the goal is to have supervisors put up a united front to stop mega banks shopping around for rules, or to create a level
playing field so banks stay competitive, closer coordination is emerging as the main catch phrase as the dust settles after Nordea’s move.
Nordea Chief Executive Officer Casper von Koskull says the failure to develop a more harmonised regulatory environment across Sweden, Finland, Denmark and Norway left his bank weaker.
“Frankly, these four home markets that we have, they are all part of the European single market,” von Koskull said. “We should have that level playing field and same regulatory regime in not only those four countries but more broadly in Europe. That’s the only way. Otherwise you get distortions. And we have already seen where size, and our Nordic footprint, has put us in a weaker position being where we were. I mean it’s quite clear.”
Von Koskull says a bank operating across regulatory jurisdictions will always become “dependent on the lowest common denominator,” a situation that became untenable for Nordea. When the bank published second-quarter earnings, von Koskull made clear that being in the European banking union (of which Finland is the only Nordic member) was key to management’s decision on where to move. He says he hopes Denmark and Sweden will also join.
Thomas F. Borgen, the CEO of Copenhagen-based Danske Bank A/S, has made a similar point, and recently urged Nordic regulators to reconsider their differences.