Nordic banks: Jostling for supremacy

The Nordic region is chronically overbanked. Denmark's five million population alone is served by almost 40 listed banks. The sector is a tangle of cooperative banks, savings banks, small and medium-size domestic players and a handful of larger institutions with a variety of cross-border interests. Last year's merger of Finland's Merita and Sweden's Nordbanken created the region's largest bank but with €12 billion ($13 billion) market capitalization it still doesn't make Europe's top 20. The rest are tiny. SEB and Den Danske have market caps roughly half the size; Unidanmark, BG Bank, Den norske and Christiania Bank combined are smaller than MeritaNordbanken.

MeritaNordbanken's decision to join forces was driven by recognition of the economies of scale that a merger could produce - in particular those associated with information technology. "Information technology is an increasingly important means of competition among banks, and banks will...