Risks stemming from Nordea will not decrease following change of domicile

4 June 2018

Changing the domicile of Nordea’s parent entity to Finland will not decrease the risks posed to financial stability in Sweden. Further, the ability of Swedish authorities to avert and manage these risks will shrink, the Swedish National Debt Office says in a statement to Swedish Financial Services Authority (Finansinspektionen).

Change of domicile impacts the prerequisites for effective crisis management

The Debt Office specifically outlines the consequences which a change of domicile might have on the Debt Office’s roles in financial crisis management. This applies both to preparatory work and in a crisis scenario:

  • When planning for a crisis scenario, the Debt Office’s ability to protect Swedish interests will shrink since the main responsibility for resolution planning will shift to the Single Resolution Mechanism.
  • The preconditions for effective crisis management are likely to deteriorate since the minimum requirement for own funds and eligible liabilities (MREL) set for Nordea will decrease in qualitative terms. Nordea will also belong to a resolution financing arrangement which, in relation to the banking sector it covers, is smaller than the equivalent Swedish arrangement.

Swedish requirements should be maintained

In its statement, the Debt Office confirms that it is currently unknown how important elements of resolution planning and supervision will be carried going forward. The Debt Office considers it crucial that the levels of the requirements set for Nordea are maintained following the change of domicile. 

Depositors to be covered by the Finnish deposit guarantee scheme

Following the change of domicile, depositors in Nordea will be covered by the Finnish deposit guarantee scheme. The Swedish and Finnish deposit guarantee schemes are established through the same EU Directive and provide protection corresponding to EUR 100 000. There are certain differences between the Swedish and Finnish application of the guarantee scheme. These differences may be covered through an affiliation of Nordea to the Swedish deposit guarantee scheme.

Read the Debt Office’s full statement on Nordea’s merger plan to Finansinspektionen (pdf – in Swedish only).