Nordea, the largest universal bank in the Nordic region, has confirmed it will re-domicile its group headquarters from Stockholm to Finland.
This follows months of speculation in Nordic, but particularly Swedish press, about the move given a much publicised spat between the Swedish government and the bank over levels of taxation applied in that jurisdiction, particularly after proposals for a new type of income tax that would solely target workers in the financial services industry. Sweden also initiated tax policy changes this year that hit the venture capital community around the issue of carried interest and levels of remuneration.
Nordea said that the re-domiciliation would not affect its current operations in the region, but stressed that it saw advantages in moving to a jurisdiction, Finland, that would place it within a eurozone member state amid ongoing banking union objectives. It also stated that it “will continue to be a major tax payer in all four home markets.”
Finance Finland, previously known as the Federation of Finnish Financial Services, welcomed the move, stating that it highlights the advantages of being in a eurozone member state under the EU’s banking union regime.
Esko Kivisaari, acting managing director, said: “Finland offers a stable and competitive operating environment for the financial sector – for large and small companies alike. Finland’s attraction continues as long as our regulation remains at the EU level, with no additional national regulation or extra taxes or fees imposed.”
“The banking union comes with shared supervisory and resolution mechanisms – the single supervisory mechanism and the single resolution mechanism. It is in Finland’s best interest to share the same rules, the same supervision and the same high-quality investor protection. They safeguard the stability and reliability of European financial markets.”
Nordea said in its statement on the shifting of its corporate HQ that: “Domiciling in a country that is participating in the banking union will mean that Nordea will be subject to the same regulatory framework as our European peers, with greater consistency of application and therefore more of a level playing field,” adding “We see the move as an important strategic step in positioning Nordea on a par with its European peers. The level playing field and predictable regulatory environment offered by the banking union are, we believe, in the best interest of Nordea’s customers, shareholders and employees.”
One outcome of the shift is that the bank will have to set aside more money for resolution and deposit guarantee fees. It added that it did not know what the impact of the move would be on total capital requirements for the full Nordea group, but that it “intends” to maintain the capital and dividend policy. Shares will remain listed on the Stockholm, Helsinki and Copenhagen stock exchanges.
The re-domiciliation change will take place in the second half of 2018, subject to regulatory and shareholder approval.
Adding comment to the change, Anna Storåkers, head of Nordea’s Swedish business, said that the bank would “never leave Sweden.”
“Our business in Sweden will continue to be driven exactly as before. We will continue to be here for our customers and for our colleagues,” she said in a statement carried on Nordea’s Swedish language website.
She denied that the move was linked to any desire not to pay tax in Sweden, adding that the bank would continue to be one of Sweden’s biggest taxpayers.
Only a few people close to the group leadership would be moving along with the headquarters, she stated (see video below).
In terms of other local reaction, Claes Hemberg, one of Sweden’s best known commentators on personal finance issues, noted in his tweets that the loss of a larger company headquarters raised questions about the viability of other, long established companies located there. He also re-tweeted a comment from an investor, who noted that the bank’s balance sheet was about three times the GDP of Finland, in turn raising questions of how this would be managed the next time there is a financial crisis.