Nordic region


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MeritaNordbanken leads the pack to become the premier pan-Nordic bank. Alfred Berg overcomes adversity to claim the crown in equity and M&A. Christina White

Best domestic bank: Den Danske Bank

Best foreign bank: MeritaNordbanken

Best domestic bond house: Unibank

Best foreign bond house: ABN Amro

Best domestic equity house: Danske Securities

Best foreign equity house: Carnegie

Best foreign M&A house: Alfred Berg

Whether Den Danske Bank is measured by market capitalization, total assets, or market share, it remains Denmark's largest bank. As the choice bank for blue-chip corporates in Denmark, Den Danske Bank has a large share of a relatively small market.

With more than 35% of the retail market, Den Danske is also the largest retail bank. It balances its activities between the wholesale and retail markets, but is looking to strengthen its retail activities.

In 1999 the bank adopted Raroc (risk-adjusted return on capital) analysis, and since then the primary focus of the bank has been on capital efficiency. In a move towards the way in which Swedish and Norwegian banks operate, the bank has begun to make more of its financial information available to the public.

Den Dankse Bank is attracting new Scandinavian, European and American clients through what is called the Partner Bank, an agreement with global banks to handle the customers' Nordic banking needs.

Corporate and wholesale lending increased in the past year, and Den Danske remains a leader in the syndicated lending market.

Recent activity includes a e750 million ($789 million) syndicated loan for Danisco.

Among the three largest Danish banks, Den Danske was the only one to post increases in asset growth and income growth in the past year. Core earnings as a percentage of average total assets grew to 0.8% in 1999 from 0.5% in 1997, marking a healthy increase over the previous two years. The bank's return on equity has grown more rapidly than that of its competitors, to 23.5% in the first quarter of 2000 up from 16.9% in 1999.

In the move towards pan-Nordic banking, Den Danske is a key player. Its acquisition of Fokus Bank in Norway in 1999 adds to its earlier purchase of a smaller Swedish bank, and gives Den Danske Bank a presence in each of the markets.

The foreign bank with the largest presence in the Danish market is MeritaNordbanken. Even before the merger with Unidanmark its pan-Nordic strategy had identified Denmark as a core market for expansion.

With the ability to offer retail and wholesale services, MeritaNordbanken taps a larger market than other foreign banks. Its specialization in the Nordic region sets it apart from other large foreign banks that do not focus on the region. MeritaNordbanken's e-banking initiatives provide a channel for Danish clients to access banking in the entire region.

Now that MeritaNordbanken and Unidanmark are beginning to operate as one bank, the bank's role in Denmark will broaden. The bank's potential to increase its role in the Danish market is far greater than that of any other foreign bank.

The bond market in Denmark is largely restricted to mortgage and government bonds.

Of the domestic players in the Danish bond market, Unibank is the most active. It is also the domestic leader in issues by Danish corporates and sovereigns.

Two large deals it has participated in during the past year include a Kingdom of Denmark issue of a Skr1.5 billion ($169 million) bond and a Skr1 billion issue by Oresundskonsortiet, a building construction company.

Unibank also leads in quantity and size of issues in Danish krone among its domestic competitors. Market insiders confirm that Unibank has the largest presence in the Danish market. As part of Unidanmark, Unibank's presence in the Nordic region will benefit from the merger with MeritaNordbanken as its network with other Nordic investors will multiply.

Of the foreign competitors, ABN Amro has forged a good reputation in the Nordic region since it established itself in Copenhagen in 1982. Its history in the region contributes to its success in the Danish bond market.

According to insiders, ABN Amro is seen as the most knowledgeable and trusted bank in the region. Over the past year it has been the bookrunner for four issues by Danish institutions, mainly sovereign names.

Danske Securities, the domestic market leader in Danish equity with a 24.6% market share, last year posted a turnover of Dkr120 billion ($15.2 billion). Without significant domestic competition, Danske benefits from the Den Danske brand name and boasts a solid reputation.

Carnegie operates almost solely in the Nordic markets, but is 55% owned by Singer&Friedlander of the UK. Still, it maintains a firm Nordic identity and is a strong competitor in the regional markets. Among competitors in the Danish equity market, it is the largest operator. Respected for its research, Carnegie is familiar with the Danish markets. Despite the small market capitalization of the Danish equity market and the absence of blue-chip corporates, Carnegie succeeds with the smaller companies in the market. It is focusing its efforts on the biotechnology and technology sectors, which are particularly lucrative areas.

With insignificant domestic competition, Alfred Berg takes the award for its performance in Danish mergers and acquisitions. Owned by ABN Amro, the support of the Dutch bank gives Alfred Berg an international angle. Alfred Berg has been the most active in the Danish market in the past year, including its participation in Swedbank's acquisition of Danish FIH. Valued at $1 billion, it was among the largest takeovers of a Danish company by a foreign buyer.

Best domestic bank: Den norske Bank

Best foreign bank: Citibank

Best domestic bond house: Christiania Markets

Best foreign bond house: SEB

Best domestic equity house: Christiania Markets

Best foreign equity house: Alfred Berg

Best foreign M&A house: Alfred Berg

Since the merger with Postbanken, Norway's fourth-largest bank, was finalized in December 1999, Den norske Bank has extended its lead over the competition. As the integration between the two banks commenced, Den norske's domination of the commercial banking sector was apparent. And as it does not aim to be a universal bank, its focus on Norway and its wholesale clients abroad makes it the best domestic bank in Norway.

The merger with Postbanken has given Den norske Bank an even larger presence in the retail sector. Its 2.1 million retail customers amount to a significant lead in market share. The number of branches has increased considerably since the merger and services through the post offices are being retained. More than half of the largest companies in Norway bank with Den norske and the bank has more than 63,000 corporate clients. Den norske Bank is popular among shipping companies, which are vital to Norway's economy.

The integration of Postbanken over the past year has been a catalyst for other changes in the bank. A group restructuring in December 1999 led to organizational changes on the commercial banking side. Now all large corporates are managed together, including the shipping companies. A new department for developing internet-based services institutionalizes the importance of the internet.

Though Norway lags behind Sweden in internet banking, Den norske has more aggressive internet initiatives than its domestic competition. The bank's goal is to develop its role as an intermediary in e-commerce.

The bank has entered a joint venture with Telenor to serve as a portal for e-business and a new company that it has formed with Andersen Consulting and Norway Post will facilitate internet shopping. Den norske was the First Norwegian bank to offer Wap phone-based banking and the number of internet customers continues to grow by 3,000 customers a week.

The turnaround that Den norske faced in early 1999 in profitability continues. Clearly defined objectives, including lowering the cost-income ratio below 55% and cutting costs by Nkr400 million ($46.3 million) by 2001 are on track. The target of boosting the return on equity to 15% has already been met.

Citibank also caters to the Norwegian shipping companies and claims 15 of the largest corporates in the industry among its 35 clients. Citibank has had a full branch in the country since 1994 and in the past year doubled the number of countries in which it conducts business with Norwegian corporates.

One of the bank's most important deals of the year was the sole arrangement of a $120 million financing for Norske Skog's Asian J/V Papco, showing Citibank's global abilities.

Citibank's competition from pan-Nordic banks isn't as strong in Norway as in neighbouring countries, but if the deal between MeritaNordbanken and Christiania Bank is Finalized the scene will change dramatically.

Christiania Markets had the largest share of bond activity in the past year among both domestic and foreign players and it also increased its secondary market share to 16%.

In addition to being tipped by insiders as the most prominent competitor, Christiania's dedication to the new economy, including technology companies, implies a potential for growth, though the acquisition by MeritaNordbanken inevitably leads to uncertainty.

SEB, based in Sweden, has expanded into the regional markets with gusto over the past year. It now is the second most active bond house in Norway, behind Christiania. Known regionally as the bank that is the most savvy about the technology sector, SEB is poised for continued development.

In the equity market, Christiania Markets has made even further progress than in the bond market. Its share of turnover rose by 5% to 8.6% in 1999 and has continued to grow to 9.3%. As the leader in number of trades on the Oslo Stock Exchange, it is also the leader in the Norwegian market for trading over the internet.

The number of customers using the bank's internet dealing service rose 75% in 1999, indicating a familiarity with the tech market.

Drastic staff departures may be sweeping through Alfred Berg's offices now, but that did not affect the broker's performance in the Norwegian equity market over the past 12 months. The best at research according to insiders, it has been the market leader in the primary and secondary markets.

The support of parent company ABN Amro no doubt brings some business its way, but its specialization in mid-sized deals which are in highest demand in the region makes it most popular. Its knowledge of the markets and its local bases mean it is able to place large blocks of shares quickly.

Alfred Berg also tops the charts for Norwegian M&A. Again, its familiarity with local issues and strength in international markets contributes to its success. Notable deals in the past year include Star Cruises' acquisition of Norwegian Cruise Lines for $600 million and UK electronics retailer Dixons' acquisition of Elkjop for $700 million.

Best domestic bank: Skandinaviska Enskilda Banken

Best foreign bank: MeritaNordbanken

Best domestic bond house: Handelsbanken Markets

Best foreign bond house: Schroder Salomon Smith Barney

Best domestic equity house: Enskilda Securities

Best foreign equity house: Carnegie

Best domestic M&A house: Enskilda Securities

Best foreign M&A house: Carnegie

Skandinaviska Enskilda Banken (SEB) is not the biggest bank in Sweden, or even the second biggest, but its initiative makes it the most exciting. As the country's First bank to go online in December 1996, SEB has maintained its internet identity and is seen as one of the two most advanced internet banks in the Nordic region with MeritaNordbanken. The bank's vision is focused on being the leading e-centric bank.

Of course the adoption of internet banking means changes to bricks and mortar banking.

The bank unflinchingly talks about the closure of 51 branches of the bank in the past six months alone, a quarter of all the branches.

The lack of embarrassment arises from the fact that almost 30% of the bank's customers use online banking.

Scheduled expansion of SEB's internet banking to other countries in the Nordic region, Germany and the UK will only increase its exposure. The acquisitions of BfG Bank in Germany and Orkla Securities in Norway within the past year provide hard evidence of the plans.

The bank has historically attracted large corporate clients and as a result tailors its services to that market. It focuses on investment products and is the largest Nordic asset manager. Assets under management rose by 82% in the past year to Skr930 billion ($105 billion). The group also sold its non-life insurance business, Codan, in 1999 to focus more on corporate banking.

Although SEB has in the past suffered from high cost-income ratios (65% for the banking division in 1999), a new strategy targets a 55% cost-income ratio by 2001. Other Financial figures are more uplifting: return on equity was up to a remarkable 23.5% from 16.5% last year.

MeritaNordbanken has been a significant player in the Swedish market ever since the cross-border merger that created the bank in 1997.

Since then it has established its dominance in pan-Nordic banking, activity that continues in the Danish and Norwegian markets. The bank's popularity originates with corporates who operate throughout the Nordic region.

Insiders observe that with MeritaNordbanken's success and expansion in the Nordic markets, other large foreign banks are backing off.

With a concentration on the Nordics, MeritaNordbanken has become the brand name of choice. Its internet service helps as it provides a network throughout the region.

Good profitability with net profits increasing by 56% in 1999 is expected to continue. A return on equity of 22.7% in 1999 was 7.7% higher than in the previous year.

Handelsbanken is a stalwart in Swedish banking, and its more traditional banking methods make it the most successful domestic bond house in Sweden. As the most active trading house in Sweden, Handelsbanken Markets is the top performer in the primary and secondary markets and the Firm has worked on some of the largest issues in the last year.

A September 1999 issue by vehicle manufacturer Volvo for e1 billion was co-lead managed by Handelsbanken. It has conducted numerous deals in the Nordic markets including an issue by the Kingdom of Denmark for Skr1.5 billion in August 1999.

Schroder Salomon Smith Barney is a long- established player in the Swedish bond markets and it is improving its position further, according to insiders. In addition to participating in the most deals involving Swedish issuers in the past 12 months, it has also been active in large deals. The e1 billion Volvo issue for example was the largest-ever Nordic bond tranche.

As a division of SEB, Enskilda Securities extends its expertise in the technology sector to the Swedish equity markets. It recently opened a branch in Silicon Valley in the US, the bread basket of the hi-tech industry. And this year's purchase of Orkla Securities in Norway ensures expansion into the Nordic markets.

Enskilda is the largest player in the local market with the highest volumes traded. In addition to producing quality research, it has helped bring numerous issues to market recently including Framfab and Telelogic, an IPO that was followed by three block trades.

Enskilda is involved in telecoms company Telia's initial public offering, one of the most important deals this year. Valued at $29.5 billion, it is the largest deal ever in the Nordic market and the largest issue in Europe this year.

Another player involved in the Telia issue is Carnegie. As a solid player in the Swedish markets, it boasts reputable research and remains active whereas its major competitor, Alfred Berg, has not logged as much performance in the last year.

Enskilda Securities also excels in the domestic M&A market. With 75 deals worth $66.67 billion in the Nordic region last year, it is the most active of the domestic players, benefiting from established links with the hi-tech sector, whose companies are increasingly active participants in mergers and acquisitions. Enskilda Securities participated in its parent's takeover of BfG and advised on a large acquisition of Celsius by Saab.

Carnegie is one of Enskilda's strongest competitors in the Swedish mergers and acquisitions market. Its Figures for the Nordic region are competitive with larger investment banks in the region: 43 deals worth $14.9 billion in 1999.

Among the more sizeable deals it worked on in Sweden, it advised Enator during the $1.2 billion merger with Tieto, a Finnish information technology consulting company.

Carnegie has advised on particularly large deals over the past year and has gained more experience in the ever-popular technology sector.

Best bank: MeritaNordbanken

Best foreign bank: Citibank

Best domestic bond house: SEB

Best foreign bond house: Salomon Smith Barney

Best domestic equity house: Enskilda Securities

Best foreign equity house: Alfred Berg

Best domestic M&A house: Enskilda Securities

Best foreign M&A house: Alfred Berg

For non-eurozone countries Denmark, Norway and Sweden, isolation from the continent makes links with each other more important. In banking, the three countries have much in common and as consolidation blows through the region, the race to become the pre-eminent pan-Nordic bank is on. MeritaNordbanken - just renamed Nordic Baltic Holdings - is winning.

The cross-border merger of leading Swedish and Finnish banks that formed the bank in 1997 set the stage for expansion. The bank publicized its intentions to acquire leading Danish and Norwegian banks to give it a notable presence in each country of the region and it has been true to its word. In the past year MeritaNordbanken acquired Unidanmark and has bid for Christiania Bank in a move endorsed by the Norwegian government.

Even though MeritaNordbanken is not the only bank in the region to acquire other regional banks, its acquisitions have been more aggressive and significant than those of its competitors. Provided the acquisition of Christiania Bank goes through, MeritaNordbanken will own a leading bank in each of the Nordic countries and will be the First Nordic bank with such a comprehensive regional presence.

The advanced high-tech market in the Nordic region extends to the banks as well. Nordic banks are regarded as some of the industry leaders in internet banking and MeritaNordbanken is at the top of the class.

The bank has the largest share of internet customers in Europe, with 1.5 million of its 9 million clients doing business over the web.

In an average month, the bank now logs 4 million payments and 5 million visits. Denmark and Norway have been less anxious than Sweden to take to the web, so as MeritaNordbanken enters these markets it will introduce an already established internet banking system.

In an effort to homogenize banking in the separate countries, the bank is currently introducing one new product a month and integrating products that only existed in one market. So, Wap phone-based internet banking debuted at the end of 1999. And in the fall of last year, a secure payment system, Solo, designed for an online mall of 900 shops was made available to all pan-Nordic customers.

As well as being the largest banking group in the Nordic region, Merita is also one of the most profitable. Operating profits increased 26% on the year and costs were reduced by 1%.

Improving return on equity, hovering at 21% during the last year, underlined the bank's results.

Of the foreign banks operating in the Nordic region, Citibank has the longest history. Its strategy of catering to multinational corporations means that it claims some of the largest Nordic institutions as its clients.

The list of services that Citigroup provides to its corporate clients is exhaustive. It remains a leader in corporate finance, syndicated loans, global custody and foreign exchange. Its major advantage is the size and scope of its network worldwide, and any other foreign bank would find it a formidable challenge to eclipse its success.

Skandinaviska Enskilda Banken (SEB) has been more active with Nordic issuers in the global debt markets than any other regional bank.

Ranked second in the number of issues it has been involved in, it is side by side with the largest investment banks in the world. SEB can attribute its success to its penetration of all of the Nordic markets and its acquisition during the past year of the German BfG Bank.

Issues for Financial and property institutions have pushed volumes up significantly.

With the largest market share of issues by Nordic corporates, Salomon Smith Barney benefits from the same global reach as its parent company, Citigroup. Large issues by recognizable names such as Volvo give SSB the lead over its competitors.

Enskilda Securities operates with the same vigour as its parent company SEB. Through its base in Sweden it has emerged as the best domestic equities house in the Nordic region.

As well as having the top market share on the Stockholm exchange, it is also very active in Helsinki, Olso and Copenhagen.

In addition to specializing in the Nordic markets, Enskilda Securities also targets niche sectors elsewhere in Europe. Its specialization in mid- and small-capitalization stocks research reflects its ability to concentrate and excel in its chosen areas as evidenced by the well-received IPO by the Swedish FramFab last year for $51 million, for which Enskilda was a lead manager.

The recent defection of almost the entire equities department at Alfred Berg in London to rivals Deutsche Bank and Enskilda Securities would seem to reflect poorly on the securities house, based in Stockholm but owned by ABN Amro. However, the excellence of its research compounded by its history and expertise in the Nordic region keeps it ahead of its competitors. As the market leader throughout the region, its distribution power regionally and internationally exceeds that of any other securities house.

Enskilda Securities is the most active domestic M&A house to compete with the larger foreign M&A houses. It boasts the most deals in the Nordic region last year, with 75 worth $66.67 billion to its name. Benefiting from its identity as a high-tech bank, it was particularly active in the sector. It advised Swedish FramFab, the leading internet consultancy Firm in Europe, on seven separate transactions, and also advised smaller companies on their acquisitions by large players such as Intel and Motorola.

Alfred Berg's M&A department hasn't been affected by the drama in equities. Instead, it has maintained its reputation in the Nordic markets and increased its activity in the region as the markets have heated up. With 36 deals worth $11.92 billion in the last year, Alfred Berg has concentrated on the technology, Financial, and property sectors.

Its in-depth knowledge of local issues is enhanced by its support from parent company ABN Amro, which provides it with an international angle.