Specialist Finnish issuer expected under ‘One Nordea’ plan

Nordea is expected to establish a distinct Finnish covered bond issuer as part of a strategy whereby its Danish, Finnish and Norwegian banking subsidiaries will become branches of the Swedish parent, a move that will be put to the group’s annual general meeting next month.

Proposals to be put to the AGM include the merger into Nordea Bank AB (publ) of Nordea Bank Danmark A/S, Nordea Bank Finland Abp and Nordea Bank Norge AS, all planned to occur on 2 January 2017.

“A branch structure will decrease the administrative complexity and make the operations of Nordea more efficient,” said CEO Casper von Koskull earlier this month. “The change will support our work to increase our agility and make us more competitive to the benefit of our customers.”

Nordea Bank Finland has hitherto been the main part of the group to issue covered bonds in euros, with the Danish (through Nordea Kredit) and Swedish arms active in their respective local currency markets and the Norwegian arm (via Nordea Eiendomskreditt) in foreign currencies apart from euros, such as US dollars and sterling.

However, in respect of the Finnish merger the group notes that the mortgage credit operations of Nordea Bank Finland will not be included in the respective merger, since the branch will be a non-Finnish company and therefore “not able to obtain the necessary covered bond licence pursuant to the Finnish Covered Bond Act”.

It is expected that Nordea will therefore establish a new, specialist Finnish covered bond issuer.

Nordea Bank Finland’s most recent benchmark was a Eu1.25bn seven year deal in October.

Nordic banking groups have adopted and adjusted their covered bond strategies across the different jurisdictions in a variety of ways, most recently with Danske at the beginning of the month announcing plans to establish a Swedish covered bond issuer.