Nordea AB

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Nordea AB

Hamngatan 10
SE-10571 Stockholm
Telephone: (+46) 8-614-7000
Fax: (+ 46)8-105-069
Web site:

Public Company
Incorporated: 1997 as Nordic Baltic Holding
Employees: 19,300
Sales: EUR 5.89 billion ($5.6 billion) (2000)
Stock Exchanges: Stockholm Helsinki Oslo
Ticker Symbol: NBH
NAIC: 522320 Financial Transactions Processing,Reserve, and Clearinghouse Activities; 551111 Offices of Bank Holding Companies; 523110 Investment Banking and Securities Dealing; 522110 Commercial Banking; 522120 Savings Institutions

First off the starting block among pan-European banking mergersa trend expected to boom in the early years of the 21st centuryNordea AB has created Scandinavias largest bank, with primary operations in Sweden, Denmark, and Finland, as well as subsidiaries in Estonia, Latvia, Lithuania, and Poland. Nordeas main subsidiaries are MeritaNordbanken in Sweden and Finland, Unibank in Denmark, and Christiana Bank og Kredietklasse in Norway. One of Nordeas fastest-growing brands, however, has bypassed the national route altogether and has hitched the parent holding company to the Internet. Solo, Nordeas Internet-banking business, is the worlds leading Internet banking service, with more than two million active customers consulting the companys range of Internet-based services, which include its Solo Market, a network of some 1,000 online stores allowing secure online payment directly from the Solo web site. Nordeas total customer base of nine million private customers and 700,000 corporate clients, including such global heavyweights as Nokia and Eriksson, combine to give the company 40 percent of the Finnish banking market, 25 percent of the Danish banking market, 20 percent of Swedens banking sector, and 15 percent of the market in Norway. The company holds similarly strong positions in the Scandinavian life insurance markets. The company claims more than EUR 230 billion in assets in 2001. Formed through a long series of mergers, the immediate predecessor to Nordea was the 1997 Nordic Baltic Holding merger between Merita and Nordbanken. The additions of Christiana Bank and Unibank in 1999 extended the bank across most of Scandinavia. At the beginning of 2001, the bank adopted the new Nordea namestanding for Nordic Ideaswhile keeping its existing bank brands. Nordea is traded on the Stockholm, Helsinki, and Oslo stock exchanges.

A Trail of Bank Mergers into the 20th Century

The formation of Nordea at the beginning of the 21st century was the result of a long series of mergers through more than 150 years of Scandinavian banking history. Each of the major banks that made up the first pan-Scandinavianand one of the first pan-European bankstraced their histories to the 19th century and the beginnings of the modern Scandinavian banking industry. Many of the components that created the future Nordea group had also been operated as government-owned banking institutions.

Swedens Nordbanken alone represented more than 170 years of banking history and the product of the mergers of some 80 separate banks. The oldest of the Nordbanken banks was Wermlandsbanken, founded in 1832. Another early Swedish bank was Smâlands Bank, founded in 1837. In 1848, a group of merchants in Gothenburg founded their own bank, Gõteborgs Privat Bank. Like Wermlandsbanken and Smâlands Bank, this youngest bank operated primarily on local and regional levels.

The mid-19th century saw the formation of a number of other banks. In 1864, the Sundsvallsbanken was created and quickly became the primary financial institution for Swedens forestry industry. Skaragborgsbanken, founded in 1865, captured that local market; the same year saw the formation of Uplandsbanken.

The first mergers among Swedens banking industries began to appear toward the end of that century. Among these were the mergers of Goteborgs Privat Bank with Stockholms Enskilda Bank, which in 1898 merged with another Stockholm-based bank, Diskontobank. This step also marked an increasing tendency of the countrys largely locally and regionally based banks to begin consolidating towards a more nationally focused market.

Another piece of the puzzle that was to become Nordbanken was the creation of Lantmannabanken in 1917. This bank was formed specifically to focus on Swedens agricultural market. After a financial collapse in 1923, Lantmannabanken was restructured as Jordbrukarbanken and placed under the Swedish governments controlbecoming the countrys first state-owned bank. This bank was subsequently renamed Sveriges Kreditbank, underlying its national character.

The formation of the predecessor to Sveriges Kreditbank was accompanied in the private sphere by a series of mergers that transformed Uplandsbanken into a major nationally operating bank. That bank merged with Sundsvall Handelsbank in 1917, then with both Gefleborgs Folkbank and Hudiksvails Kredibank in 1920. The newly enlarged bank became known as Uplandsbanken. Meanwhile, the Goteborgs bank was also growing, acquiring Kopparsbergs Enskilda Bank in 1922.

This same period had seen similar activity in Finland, leading toward the creation of Merita Bank in the mid-1990s. Finlands first commercial bank was formed in 1862 operating under the name of Suomen Yhdyspankki. Where Swedens banks remained largely local and regional, however, the new Finnish bank established national operations from the outset. The bank gained new competition in 1889, when Kansallis-Osake-Pankki was founded. The two banks remained limited to commercial and corporate banking until after World War II, when both banks established private customer services. In the meantime, the Suomen Yhdyspankki bank, renamed Pihjoismaiden Yhdyspankki after a merger in 1919, had become one of the countrys leading commercial banks.

In Norway, meanwhile, Christiania Bank had followed a steadier course than its Scandinavian neighbors. Formed in 1848 in what was then known as Christianiabefore the Norwegian capital citys name was changed to Oslothe bank was originally known as Christiania Kredietklasses, before changing its name to Christiania Bank og Kredietklasse in 1851.

Lastly, in Denmark, Privatbanken had been founded in 1857 and grew to become that countrys largest bank. Led by Danish financial baron CF Tietgen, who had been behind such large-scale Danish companies as Tuborg, DFDS, the Great Northern Telegraph Company, and De Danske Spritfabrikker, Privatbanken faced competition from other nationally operating rivals. These included Andelsbanken, founded in 1925 and which had its origins among the countrys agricultural community before investing in Denmarks manufacturing industry. Another large-scale Danish bank was SDS Bank, which represented the grouping of many of the countrys local and regional banks.

National Mergers in the 1970s

The formation of the European Community led to increasing consolidation among Scandinavias banking communities in the 1970s. Each national market saw the mergers of many of their major players to create more powerful nationally operating banks with more capacity to compete on an international level, and to compete against other international banks which were by then making strong inroads in their domestic markets. The process of consolidation created a small number of dominant players in each of the Scandinavian markets, including Nordbanken, Unidanmark, Merita, and Christiania Bank og Kredietklassethe major components of the future Nordea.

Consolidation in Sweden began in earnest in 1972 with the merger of Goteborgs Bank with Smalandsbanken, forming Göteborgs Bank Two years later, Sveriges Kreditbank merged with another state-owned bank, Postbanken, operated by the countrys postal system. That merger created Post-och Krediet-banken, or PKBanken, then the largest bank in Sweden. That bank was to sink to third place, behind SE Banken and Svenska Handelsbanken, after the recession of the early 1980s. Teaming up with Oslos Christiania Bank og Kredietklasse, however, PKBanken began its first international operations, opening joint-venture locations in Asia, the United States, the United Kingdom, and Brazil. After the Swedish government placed PKBanken on the Stockholm stock exchange, the bank ended its association with Christiania Bank to focus again on the national market. PKBanken made two major acquisitions at the end of the 1980s, those of Sveriges Investeringsbank, founded by the Swedish government in 1967, and another state-owned body, the Carnegie Fondkommision brokerage house, acquired in 1988.

The Nordbanken name first appeared in the mid-1980s, with the merger of Sundsvallsbanken and Uplandsbanken in 1986. When PKBanken acquired regionally focused Nordbanken in 1990, the latter name was maintained for the whole of the newly merged bank. That same year saw the creation of Gota Bank, formed through the combination of Göteborgs Bank Wermlands-banken, and Skaraborgsbanken. Nordbanken then acquired Gota Bank in 1993. By then, however, Nordbanken had once again come under full control of the Swedish government, which had been forced to rescue the bank from its financial collapse in 1992. Crippled by the global recession and the bottoming out of the countrys real estate market, Nordbanken underwent replacement of its management, the sale of its bad debt portfolio to the Swedish government, and a reduction of its staff by some 20 percent.

Company Perspectives:

Vision: We shall be valued as the leading financial services group in the Nordic and Baltic financial markets with a substantial growth potential. Ambition: We shall be number one or number two or show superior and profitable growth in every market and product area in which we choose to compete. We shall have the leading multichannel distribution with a top world ranking in e-based financial solutions. Mission: We help customers fulfil their aspirations. By creating value for our customers we create value for shareholders. We offer opportunities that enable us to keep, develop and attract employees with the highest competence and talents.

By 1995, Nordbanken once again took a public listing on the Stockholm exchange as the government reduced its ownership position. Meanwhile, its Finnish neighbors were also undergoing a consolidation process. Phjoismaiden Yhydspankki, which had begun expanding internationally, anglicized its name to Union Bank of Finland in 1975. The bank had also begun to pioneer the use of electronic banking systems during that decade. In 1986, Union Bank of Finland was boosted by the merger with Bank of Helsinki, then the countrys third largest bank. The recession of the early 1990s forced the breakup of another leading Finnish bank, Suomen Sãástõpannki (Savings Bank of Finland), in 1993, with Union Bank and Kansallis-Osake-Pankki each taking a share of that banks operations. By then, Kansallis-Osake-Pankki had grown through the 1992 merger with Suomen Tyõvãen Sãástõpannki, the savings bank operated by the Finnish labor movement. Three years later, Union Bank of Finland, through its holding company Unitas Ltd., was merged with Kansallis-Osake-Pankki, creating Merita Bank.

In Norway, Christiania Bank had grown through mergers with Andresens Bank in 1980 and Fiskernes Bank in 1983. Hit hard by the recession of the early 1990s, Christiania was rescued by the Norwegian government, which became the banks sole shareholder. By the late 1990s, however, the Norwegian government had placed the bank back on the public market, reducing its holdings to just 35 percent by the end of the decade.

The recession had also brought losses to Denmarks Unibank. That bank had only been formed in 1990, merging the operations of Andelbanken, SDS Bank, and Privatbanken. Recovering from the crisis, Unibank strengthened its investment banking wing in 1996, when it established Aros Securities in a merger between its own equity business and the international investment operations of the ABB Group. That company became Fleming Aros in 1998 in another joint venture, which was ended after Unibanks entry into Nordea.

Unidanmark, parent company of Unibank, merged with the largest Danish insurance company, Tryg-Baltica, to create an enlarged financial services company. Unibank next looked toward Sweden, where it bought up a controlling share of Trevise AB, an asset management business. Unibank then converted Trevise into a full-fledged private bank operation with offices in Sweden and Finland. Unibank also moved into Norway, acquiring that countrys Vesta, making Unibank one of Scandinavias leading insurance companies.

Cross-Border Mergers for the 21st Century

Unibanks moves across Scandinavia represented the first of several sudden consolidations within the Scandinavian banking industry. Sharing similar and often intertwined histories, the Scandinavian countries were seen as good matches for partnerships. The coming of the single European currency spelled the dawn of a new era for the European banking industry as a whole, which had remained largely centered on domestic markets. While the banking industries in most of the European Community countries concentrated on consolidating their domestic marketsa process that remained largely unfinished at the turn of the century, the Scandinavian markets, which had already undergone national consolidation efforts, were able to look beyond their borders for future growth.

Nordbanken and Merita were also among the first and largest to surf the new wave of cross-border mergers. The two banks merged in 1997, forming MeritaNordbanken. An important product brought to the new bank was its Solo Internet-based banking operation, which was fast on its way toward becoming one of the worlds leading online banking services. That name soon proved too tight a fit as the newly enlarged banking group looked across Scandinavia for other potential partners. The next member joined in March 2000, when Unidanmark agreed to merge with MeritaNordbanken in a deal valued at $4 billion.

The new company, which took on the larger name of Nordic Baltic Holding in order to contain its continuing Nordbanken, Merita, and Unibank banking and financial services brands, soon added to its scope. At the end of December 2000, Christiania Bank og Kredietklasse became part of the leading financial services company in Scandinavia, a process begun in September 1999. By the time Christiania was added, Nordic Baltic Holding had chosen a new name for itself. The bank was now to be known as Nordea, a name built from the wordsNordic andIdea, suggesting the banks willingness to extend its success beyond its Scandinavian base to the global scale.

Key Dates:

Merger of Gõteborgs Bank with Smalandsbanken forms Gõtabanken.
Sveriges Kreditbank merges with Postbanken to form PKBanken.
Phjoismaiden Yhydspankki changes name to Union Bank of Finland.
PKBanken is listed on Stockholm stock exchange.
Union Bank of Finland merges with Bank of Helsinki; Sundsvallsbanken and Uplandsbanken merger forms Nordbanken.
PKBanken acquires Carnegie Fondkommision.
PKBanken acquires Sveriges Investeringsbank.
Unibank is formed; PKBanken acquires Nordbanken, adopts Nordbanken name; Gota Bank is created.
Nordbanken acquires Gota Bank
Union Bank of Finland merges with Kansallis-Osake-Pankki to form Merita Bank
Nordbanken and Merita merge to form Nordic Baltic Holding.
Unibank and Christiania Bank og Kredietklasse join Nordic Baltic Holding; company changes name to Nordea AB.

While Nordea pledged to continue operating under its national brands, the company nonetheless moved to the integration of its operations to create a single, pan-Scandinavian brand. One such move toward this end was the renaming of the former Unibanks Aros investment banking unit as Nordea Securities in April 2001. As analysts forecast a coming wave of cross-border banking mergers in a rapidly consolidating European industry, Nordea appeared in a prime position to take a leading place in the world banking market in the new century.

Principal Subsidiaries

Nordea Companies (Finland) (NCF); Nordea Companies (Denmark) (NCD); Christiania Bank og Kredietklasse (Norway); Merita Bank (Finland); Nordbanken; Unibank (Denmark); Bank Komunalny (Poland); NB Industrikredit; Merita Finance (Finland); Nordea Finance (Latvia); (Latvia); Nordea Finance Lit (Lithuania); Nordbanken Finans; Norgeskreditt (Norway); K-Finans (Norway); Unifactoring (Denmark); Unifinans (Denmark); Unikredit Realkreditaktieselskab (Denmark); Unileasing (Denmark); Christiania Forsikring (Norway); Fondforsikring (Norway); Livsfõrsákring AB Livia; Livia II; Merita Life Assurance (Finland); Norske Liv (Norway); Tryg-Baltica (Denmark); Vesta Forsikring (Norway); K-Fondene (Norway); K-Kapitalfõrvaltning (Norway); Merita Asset Management (Finland); Merita Fund Management (Finland); Nordbanken Kapitalfõrvaltning; Nordea Securitiesz.

Principal Competitors

Den Danska Bank; SE Banken; Svenska Handelsbanken; Swedbank.

Further Reading

Brown-Humes, Nordea Plans Online Boost, Financial Times, February 22, 2001.

E*Europe: Bank Leads by a Click over Mortar, Time International, May 1, 2000, p. 54.

Merita, Nordbanken Merge, Want Others to Join, Reuters Business Report, October 13, 1997.

Scandinavian Models, Economist, May 20, 2000.

Wallace, Charles P., Admire Our Busy Signal, Time, June 19, 2000, p. B22.

M. L. Cohen