The question of whether Nordea, the Nordic region’s biggest bank, will move its headquarters away from Sweden is set to dominate the company’s board meeting on 30 May – according to local media reports in recent days and weeks.
Speculation has been mounting of a formal announcement about a move, following comments from the bank contained in its first quarter results published on 27 April, as well as ongoing comments from Sweden’s minister for Finance Magdalena Andersson, who just this week stated that she did not see any risk of a fall in tax revenues should the bank move out of the country.
Expectations of banks moving their registered headquarters out of the country were triggered during the past year, as the government discussed both a new rate of tax payable only by those working in the financial sector, as well as other measures to force higher contributions from banks to offset perceived risks associated with another future financial crisis.
On 27 April this year, Nordea CEO Casper von Koskull referred to uncertainty around policy making affecting the banking industry in Sweden for the announcement that the bank would seek to change its headquarters.
“In recent years, the government policy in Sweden has become increasingly unpredictable and deviates significantly from the rest of EU, where most of our competitors are domiciled. A few examples are the different resolution regimes and removal of tax-deductibility for sub debt. In February, the Swedish government proposed to increase the level of the resolution fee and to make the fee permanent. The proposal will significantly increase the costs for Swedish domiciled banks and their customers, not only in Sweden but also in the other Nordic countries. We have been discussing the Swedish regulatory framework with the Swedish government for approximately a year and we maintain an open and honest dialogue. Given that the regulatory situation in Sweden does not offer a level playing field or predictable environment, we will also look at opportunities to move to Denmark or Finland. The focus on maintaining our AA rated business model will not be impacted by a potential move. The Nordea employees will continue to deliver value for all our customers, as we will keep on working with the Nordic operating model in the same way as we do today.”
Koskull also highlighted what he said were ‘myths’ about the bank. These included: Nordea is a risk to the entire Swedish economy, banks are excessively profitable, and Nordea is undertaxed. Koskull said Nordea had paid €9bn in corporate taxes along in the past decade.
That has not influenced Andersson’s view, as she has stressed the government’s interest in preserving financial stability, even if this means enforcing capitalisation requirements. She has noted that the Swedish taxpayer had to provide SEK70bn (€7.1bn) to save Nordbanken in the early 1990s – before it became Nordea when merged with Merita Bank in Finland, Unibank in Denmark and Christiania Bank og Kreditkasse in Norway. She has also stated that Sweden would not enter into competition with Denmark to retain any bank’s headquarters in Sweden.
Earlier in May, it was reported in media, including Bloomberg, that Nordea had been in discussions with Brian Mikkelsen, Denmark’s minister for Industry, Business and Financial Affairs. The bank claims over 10 million customers in the Nordic region and a top ranking for retail and corporate and institutional business in the region, which along with the amount of tax it pays, according to Koskull’s comments, would likely make it a valuable addition to any tax base.
Any decision to shift corporate headquarter would likely be followed closely by a number of funds that are invested in Nordea, either via equity or fixed income holdings. A brief filtering of Nordea shareholdings using FE’s database throws up the following list of funds that have at least a 1% portfolio exposure:
|Henderson European Growth I Acc in EU||2.89||10.28||19.93||18.78||45.11||120.02||75.91|
|Henderson Horizon European Growth R Dis EUR TR in EU||2.42||9.71||19.72||18.76||41.15||107.01||50.89|
|Artemis European Opportunities I Acc in EU||4.26||11.98||23.04||18.97||38.78||115.35|
|DWS Astra-Fonds in EU||1.86||4.53||12.01||19.23||37.60||61.83||29.03|
|DNB Scandinavia A EUR in EU||3.20||5.19||17.05||18.40||35.04||101.88||70.74|
|Old Mutual Henderson European U2 Acc GBP in EU||2.95||10.00||18.53||19.44||33.71|
|DJE Dividende & Substanz PA EUR TR in EU||1.36||2.62||9.31||15.92||32.23|
|Danske Nordic A in EU||4.11||6.01||15.89||14.52||31.69||83.14||30.95|
|Standard Life Investments European Equity Income Ret Platform 1 Acc in EU||6.75||8.08||15.78||16.12||30.10||95.48|
|Standard Life Investments European Equity Growth Ret Platform 1 Acc in EU||7.52||8.79||17.93||21.02||29.61||98.46||39.95|
|Standard Life Investments European Ethical Equity Ret Platform 1 Acc in EU||7.97||9.81||18.55||19.81||28.09||101.79|
|DPAM INVEST B Equities Europe B in EU||3.76||11.25||20.11||22.18||26.82||81.03||34.27|
|Amundi ETF MSCI Nordic EUR in EU||3.32||6.87||17.70||14.38||23.94||85.24|
|Threadneedle Pan European Equity Dividend Z Inc GBP GTR in EU||2.83||6.51||13.67||9.10||22.36||84.81||46.99|
|HSBC US Dollar Liquidity A TR in EU||-3.22||-5.73||-5.64||-0.12||22.23||12.92||27.77|
|Threadneedle Pan European Equity Dividend Ret Acc GBP in EU||2.78||6.32||13.26||8.29||19.60||78.64||41.97|
|Raiffeisen Salzburg Invest Klassik Aktien Europa T GTR in EU||4.90||5.17||13.80||17.50||16.63||65.46||6.58|
|Danske Sweden A in EU||3.03||4.53||15.19||19.37||14.21||70.69||64.89|
|Swisscanto (LU) Bond CHF AA TR in EU||-0.88||-3.15||-2.07||0.15||14.19||14.85||82.58|
|Swisscanto (LU) Portfolio Green Invest Yield (EUR) AT in EU||0.22||-0.34||2.43||4.05||12.72||22.33||39.81|
|Artemis High Income I Inc GTR in EU||0.18||1.15||5.41||0.53||12.27||58.92||56.98|
|Swisscanto (LU) Bond Medium Term CHF AA TR in EU||-0.94||-2.93||-2.00||0.80||10.93||10.01||67.85|
|Swisscanto (LU) Money Market CHF FT in EU||-0.96||-2.69||-2.01||0.68||9.97||7.87||52.95|
|Flossbach von Storch Bond Total Return R TR in EU||0.23||0.40||1.52||2.27||8.85|
|UBAM Corporate Euro Bond AD EUR TR in EU||0.24||0.04||1.37||2.46||7.77||22.59||47.06|
|Amundi ETF MSCI Europe Banks EUR in EU||2.12||12.25||20.62||30.78||6.82||84.95|
|Henderson Horizon Pan European Alpha X2 Acc EUR in EU||1.67||6.43||7.63||6.50||5.69||37.58||34.78|
|SSgA GBP Liquidity Institutional Stable NAV TR in EU||-1.55||-2.00||-1.78||-11.30||-5.25||-5.32||-13.40|
|COURTIERS Global (ex UK) Equity Income Retail in EU||-1.15||-1.49||3.09||17.15|
|(Source: FE, data to 24 May, 2017, gross return rebased in euros, shown in %)|