SEB and Swedbank merger: A rude shock to domestic bliss
Within days of the EC unveiling proposed conditions on the merger of SEB and Swedbank, the banks called the marriage off. Had Brussels scuppered a sound deal, or were the fainthearted suitors getting cold feet anyway? The row hinges on the commission’s curious focus on the dominance the new combine would have boasted in its modest domestic market, not the European market as a whole. Critics argue this discriminates against smaller EU states and will curtail cross-border bank mergers.
When the decision was made two months ago by the boards of Sweden's Svenska Enskilda Banken (SEB) and Förenings Sparbanken (Swedbank) to abort their proposed merger, the recriminations were swift. The banks blamed the European Commission for imposing penal conditions that wrecked the logic of the deal, one of Sweden's largest.
But Brussels shrugged off such criticism, pointing out that the suitors failed even to wait for the final conditions to be negotiated. Could it be that the banks had repented of their marriage and were mightily relieved for an excuse to split?
The case raises thorny competition policy issues. Not least is the continued relevance of the notion of monopoly in smallish national markets when the talk among finance ministers is of creating a mighty single market in financial services within the EU by 2005.
At the outset, the boards of the two banks had seen themselves as an ideal fit, combining SEB's strength in Sweden's corporate market with Swedbank's expertise in the small- and medium-sized enterprise and retail sectors. The institutions also believed the merger would give them an excellent foundation for expansion in the Nordic and Baltic regions and provide a strong revenue base for investment in business expansion.