Nordic and Baltic Awards for Excellence 2011: By country

Denmark

Best bank: Nordea
Best investment bank: Morgan Stanley

Denmark has been perhaps the most troubled of the Nordic economies after Iceland. The bursting of a property bubble hit banks across the board, with the country’s largest bank, Danske, taking the most knocks. An unfortunate investment in Irish banks National Irish Bank and Northern Bank and overpaying for Finnish bank Sampo have further tarnished Danske’s record.

Meanwhile, Nordea has been making inroads into the Danish market, which is why it wins best bank for the country. Its 340-strong retail network is second only to that of Danske. Analysts say Nordea has "performed better than expectations", explaining: "Its asset quality matches that of its rivals. The bank also pays the same margins for funding, as it is a double-A rated bank. They have rolled out what they know and it has worked."

Nordea is also competing fiercely with Danske for local corporate business. Both claim to have the greater share of this market.

Morgan Stanley wins top investment bank in Denmark for a year in which it completed four M&A transactions worth a total of $5.4 billion.

The US bank was an adviser to TDC in its $3.3 billion sale of ­Sunrise, the largest private telecommunications provider in Switzerland. The transaction paves the way for TDC to become a purely Nordic telecom provider.

Morgan Stanley advised on the sale of FIH Erhvervsbank – ­Denmark’s sixth-largest bank, with assets of Dkr125 billion ($24 billion) – by the Central Bank of Iceland to a Nordic consortium. CBI had acquired FIH as security against a €500 million loan to Iceland’s Kaupthing Bank in October 2008, shortly before Kaupthing’s collapse. The deal ensured the survival of FIH in the Danish market, because it had been in the process of restructuring after the global crisis.

Morgan Stanley has also been strong in the equity capital markets, ranking second behind JPMorgan, but holding a unique accolade in being the only bank that advised on three big Danish IPOs last year: Pandora, TDC and health food company Chr Hansen.

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Estonia

Best bank: Swedbank

Swedbank has been involved in a number of M&A, capital-raising and project-finance transactions over the year, all of which confirm its position as the best bank in Estonia. Among these were the €187 million demerger of Elering, the electricity grid operator, from state-owned power company Eesti Energia. Elering was bought by the Estonian government as part of a scheme to open up the local energy market and conform with EU requirements.

Swedbank also acted as sole project financing bank for OÜ Aseriaru Tuulepark’s €35 million investment in a new 24MW wind-power park in Aseri, eastern Estonia. The wind farm has eight 3MW turbines and is expected to come fully on stream this year.

In ECM, Swedbank facilitated the first IPO in Estonia since the economic downturn, for AS Premia Foods, a frozen-food producer covering the Baltics, Finland, Sweden and Russia. The IPO attracted €13 million, mainly from Baltic and Nordic investors. With the proceeds, Premia Foods has acquired Russia’s second-largest ice-cream producer, Khladokombinat.

Nordea is Finland’s leading bank again in 2011, commanding 35% of the market, and for that reason in particular deserves to win ­Euromoney’s best bank award in Finland. Nordea’s operations in Finland account for 20% of its total business in the Nordic region. The bank has also put more investment into Finland than in any other market and is expected to reap the rewards from this in due course. However, for the moment, the country is proving tough going for all banks, as interest rates have been cut to eurozone levels, squeezing deposit margins. This is hurting Nordea’s group profitability.

The bank’s corporate and merchant banking business in Finland has made little headway over the past year. The country slowly recovered in 2010, with difficulties in the export, hi-tech, paper and pulp sectors holding back activity. These depressed conditions have led to little activity in Finnish M&A and ECM markets. However, many companies have used low interest rates and strong balance sheets to issue attractive revolving debt and refinancing facilities.

This year’s best debt house in Finland, HSBC, has enjoyed success in the Finnish financial sector during the year, maintaining its status from the previous year in the league tables. It has undertaken nine benchmark transactions, three for the sovereign, and has 13.1% of the market. HSBC has grown its covered-bond franchise and been ahead in developing new currencies and providing diversified options, both increasing liquidity in the markets and helping Baltic and Nordic issuers with access to east Asian investment opportunities.

In November 2010, HSBC acted as joint bookrunner on a €1 billion, five-year Finnish covered bond for Sampo Housing Loan Bank, the Finnish subsidiary of Danske Bank. The order book on the deal was open for less than one hour and generated €1.5 billion.

Best bank: SEB Banka

Conditions have been difficult for banks in Latvia, and the fallout of a crisis in which GDP fell by more than 25% in 2008-10 is still clearly evident. In such tough conditions, Euromoney’s best bank in Latvia, SEB Banka, has been keeping a close eye on NPLs and scrutinizing new customers carefully. During 2010 the bank granted more than Lats370 million ($747 million) in loans to companies and individuals. Improvements have also been made to SEB’s internet bank, leading to growth in the number of both transactions and users, of 17% and 15%, respectively.

Best bank: Swedbank

The Baltics have been Swedbank’s bust as much as its boon. Three years ago, losses from the Baltics all but brought down the Swedish bank; fortunately, the Swedish government came to the rescue. Now analysts talk of a near-death experience, followed by a remarkable recovery. That recovery was prompted largely by the revitalization of the Baltic economies, and today the bank – the largest in the Baltics – has had the best share performance of any European bank over the past year. Swedbank’s turnaround is recorded by the strength of its 2011 price/earnings ratio, 15.4, which exceeds those of rivals SEB (14.6) and Handelsbanken (12.6). Swedbank has topped up its Basle II core capital to 13.9%, higher than any other large local bank operating in the Nordics and Baltics.

Swedbank, which is awarded best bank in Lithuania, is active in both retail and commercial banking in the country. In 2010 it provided the sole project financing for three separate wind-power projects in Lithuania. Taken together, these will have the capacity to generate more than 20MW of electricity. The bank also took part in the joint financing of Lietuvos elektrin’s new 445MW combined gas turbine – a project worth €360 million.

Swedbank also saw through three large M&A transactions in Lithuania: the disposal of Tele2 cable TV operations (€4.7 million), the acquisition of the mortgage portfolio of Allied Irish Banks’ local branch (€12.7 million) and the acquisition of UAB Eco Holding, the country’s leading municipal waste-management company. In DCM, Swedbank was the co-lead manager and sole underwriter of a US dollar/euro cross-currency swap, involving a 10-year Eurobond placement. This was valued at $750 million.

Euromoney’s best bank in Norway, DnB Nor, is the country’s largest, and one of the region’s few universal banks. It is not only dominant in the Norwegian retail market – where its market share is 25% – but is also a global player in industrial sectors such as oil services, shipping and fish farming.

Besides this scale, DnB Nor has a record of profitability in each of the four quarters from mid-2010 to mid-2011. The bank also has a steady history of rising profitability over the past five years. DnB Nor’s return on net asset value (tangible equity), for example, is projected to be 12% in 2011, the highest in the Nordic region. Pre-provision profits of Nkr19.95 billion ($3.6 billion) are slightly down on the previous year but analysts at Carnegie expect it to bounce back.

Euromoney’s best M&A house, Citi, executed $8 billion in Norwegian transactions during the year. In a $4.9 billion deal, Norsk Hydro acquired the aluminium assets of Vale, the Brazilian metals and mining company. The purchase has secured Norsk Hydro’s supply of raw materials for decades to come. The deal also gives the company control of Paragominas, the third-biggest bauxite mine in the world.

Citi was also an adviser on the $2.5 billion merger of Acergy and Subsea 7, the largest European oilfield services transaction since 2008, creating one of the world’s largest seabed engineering companies. Apart from size, the Acergy/Subsea 7 transaction was important for being the first big deal within the deep-water engineering industry since the Deepwater Horizon explosion and oil spill in the Gulf of Mexico.

Svenska Handelsbanken is Sweden’s dominant retail bank and a universal bank across the Nordic region, achievements enough to make it Euromoney’s best bank in Sweden. Analysts describe ­Handelsbanken as a strong defensive play, whose management handled the recent crisis faultlessly. The bank’s return on equity for 2011 is projected by Carnegie to reach 13%.

Handelsbanken has become the gold standard for Swedish retail banking, with almost 500 branches and a solid reputation for management quality, customer care and satisfaction. One analyst says: "Handelsbanken has a track record in terms of both cost control and asset quality. It has dominated the market since the recession in the early 1990s and sailed through the more recent one."

The bank’s strength is recognized in its earnings per share of Skr17, which far outstrip those of local contenders SEB (Skr4), Swedbank (Skr7.5) and Nordea (€0.70 or Skr6.4). The bank has a double-A rating, an accolade shared only by Nordea in the region.

Chosen as the best investment bank in Sweden, Morgan ­Stanley has advised on the country’s largest M&A transactions. Its 20 years of experience in the region have guided it to the top ranking in the league tables, with six completed transactions valued at $5.2 billion.

Morgan Stanley also advised SEB on the sale to Santander of the former’s German retail banking subsidiary, which was incurring heavy losses because of the difficult macro environment. The transaction was valued at €555 million and took nearly three years to put into place.

The bank has also proved a force in capital-raising. In ECM, Morgan Stanley was a joint bookrunner in Nordea’s accelerated bookbuild offering/privatization for €2.2 billion, undertaken for the Kingdom of Sweden, a transaction that is the second-largest Nordic ABO in the past 10 years.