Best bank:
Svenska Handelsbanken
Best debt house:
ABN AMRO
Best equity house:
Enskilda Securities
Best M&A house:
Enskilda Securities
Best at risk management and treasury:
Nordea
Best at transaction services:
Nordea
Two themes dominate banking in the Nordic and Baltic region – cross-border expansion and technological innovation. Over the past decade, the leading players in the Nordic countries have sought to expand their operations throughout the region, as illustrated by a series of cross-border acquisitions by such banks as Nordea, Svenska Handelsbanken and SEB.
With the Nordic regional banking sector now dominated by these three, attention has turned to the Baltic states as the emerging battleground. Swedbank now has a majority holding in Estonia’s Hansa Bank, Skandinavska Enskilda Banken (SEB) increased its stake in Lithuania’s Vilniaus Banka to almost 98% in late 2000, and Merita (Nordea) and Handelsbanken have ventured into the Estonian banking sector.
These banks have been renowned for their use of internet technology to fight the battle for new customers and increased revenue. It is hardly surprising that the Nordic banks have set the pace in applying new technology to banking, given the region’s well-known facility in this area. Nordea has traditionally taken the lead, with such innovations as its Solo platform, but it is our pick for best bank in the Nordic and Baltic region, Svenska Handelsbanken, which is now reckoned to have the highest internet penetration among clients of the Nordic banks.
An example of this strategy is its introduction of its E-Bud internet service – an online auction service for the property market. E-Bud not only provides an additional service to prospective clients but also gives Svenska Handelsbanken exposure at the very beginning of the home-buying process, providing a valuable advantage in the increasingly important and competitive Scandinavian mortgage market. The bank has also taken the unusual step of allowing its local branches to create their own home pages – an example of Svenska Handelsbanken’s dedication to a decentralized, local approach aimed at bringing the bank closer to its customers.
The bank is also making progress in encouraging corporate clients to move online, with more than 50% of these clients now transacting business with Svenska Handelsbanken over the web. The bank claims that its internet activities actually had a positive impact on its profit and loss account in 2000 – a rare achievement – by enabling a 4% reduction in branch staff numbers over the year. This is a good example of the kind of economies that the much-vaunted new technologies are supposed to deliver to business.
Svenska Handelsbanken has also worked to expand its product range with the purchase of SPP Life, Sweden’s biggest name in the occupational pension market. The deal, which was approved on February 12 2001, gives it a dominant position in the Swedish life insurance and pensions market.
Svenska Handelsbanken’s acquisition of Midtbank shows commitment to expand further in Nordic region. Handelsbanken has pursued a strategy of purchasing local institutions throughout the region, and has also recently opened a branch in Vienna and expanded its operations in the UK.
Handelsbanken has continued to be a strong, though not spectacular, competitor in the Nordic fixed-income markets, providing government and mortgage bonds in the region and having a strong presence in commercial paper. But the Nordic debt markets are dominated by foreign banks. Of these, ABN AMRO is in the top two of bookrunners in each country in the Nordic region, a testament to its pan-Nordic presence. For all Nordic issuance in the past 12 months, ABN AMRO leads the way, with a market share of almost 12% in the period from a total of 27 issues. Credit Suisse First Boston has been another active lead manager of smaller deals.
Crucial to ABN AMRO’s success in the debt market is its excellent distribution for issuers, thanks to its regionalized distribution capacity, with 14 dedicated sales units throughout Europe. This provides access to investors from all over the continent for Nordic issuers, rather than merely concentrating on those issuers’ home markets. Justin May, managing director of origination at ABN AMRO, says: “We take care to not only focus on the core investor bases of Germany, France, the Netherlands and the UK, but to also concentrate on the peripheral investors, such as Italy, Spain, Portugal and Austria. This provides more support for a transaction, creates price tension and further diversifies the issuer’s investor base.”
ABN AMRO is also leading the way in innovation in the market. The Dutch bank has launched its E-bookbuilder.com service, which enables clients to see the building of their order books in real time. The service has been used in ABN AMRO’s issues for Ericsson, Electrolux, Birka Energy and the Republic of Finland.
Maintaining its position as best M&A house in the Nordic and Baltic region, after another year of domination throughout the Nordic countries, is Enskilda Securities. In terms of value alone, Enskilda does not top the overall regional league table, but the true extent of its presence in the region is indicated by the number of deals in which it has acted as an adviser. In the period June 2000 to May 2001, Enskilda acted as adviser to the bidder or target in a deal on 17 occasions each. Only the Carnegie Group comes close to this level of reach across the Nordic markets.
A spokesman for Enskilda says: “We have a long history of top-quality performance in corporate finance and have always had a very high share of the market in public deals. The region has been pretty active in terms of M&A in the past year,” he continues, “in contrast to the slowdown of activity in this sector in the rest of Europe and the US. A lot of this activity has been driven by public to private deals and Enskilda has had an excellent record of involvement in these areas.”
Key deals that Enskilda has advised on include SEB’s bid for ForeningsSparbanken and as target adviser to Svedala Industri in its deal with Metso of Finland.
Although the bulge-bracket firms have achieved a high level of involvement in the region’s M&A market, particularly in the big deals, such houses as Enskilda and Carnegie have held their own. Enskilda feels that its main competitors are still its Nordic rivals. “We are involved in many more deals than the US firms,” states Enskilda’s spokesman. “We benefit from being involved in a large number of small private deals as well as large public deals.”
Local knowledge and reputation still seems to carry a great deal of weight.
Enskilda Securities has employed this local knowledge to good effect in the Nordic equity market also, to such an extent that it wins the award for best equity house in the region. As well as retaining a very high position in terms of secondary market share on the various Nordic stock markets, Enskilda has made improvements in its research capabilities, an aspect of the business that is becoming increasingly important. It has strengthened its reputation as the number one house for Nordic equity business outside its domestic borders.
Enskilda has continued to enlarge its team of analysts and has widened its understanding and coverage of stocks across Europe and all the key sectors of Nordic industry. The group continues to enhance its reputation outside Scandinavia. “A defining change for Enskilda in the past year is that we have emerged as the number one house for Nordic equity in the UK, as well as further strengthening our position in the US,” says a spokesman.
Although edged out by Svenska Handelsbanken in the overall best bank award for the Nordic and Baltic region, Nordea picks up the awards for best at transaction services and best at risk management and treasury.
Nordea’s extensive range of treasury products is sufficient to meet all the needs of its corporate clients, and the bank achieves a very high level of client satisfaction. Nordea trades all convertible currencies, with the bulk of its business the euro, sterling, US dollar, yen, Swiss franc and Scandinavian currency markets. Nordea’s hedging products, such as swaptions, basis swaps, asset swaps and forex options, are provided in selected Baltic currencies, in addition to the main currencies. Nordea feels its innovative approach to product development is what gives it its edge. “The broader the product portfolio, the competence and the investor base are, the better are the products and services the group can develop,” says a spokesman.
In expanding its operations throughout the Nordic market, Nordea has evolved a highly sophisticated and efficient transaction system.
The group provides a very effective cross-border service to its clients, enhancing its progress toward the goal of becoming the region’s premier bank for corporates and financial institutions. The Nordea group delivers international payments, and its work in custody services is also unparalleled in its region.
