(Corrects which banks are advising which side in paragraph 22)
* Nordics increase share of Europe's M&A, listings
* Global banks compete with strong locals for share of fees
* SEB is traditionally the go-to bank, Nordea's profile
By Mia Shanley
STOCKHOLM, May 15 Scandinavia has become a hot
spot in Europe's corporate dealmaking scene this year, almost
doubling its share of merger and acquisition activity and
listing more companies than anywhere but Britain.
With others in the pipeline, global banks are building up
their presence, but face stiff competition from Swedish banks
SEB, the established frontrunner, and Nordea,
a relative newcomer to the top table with big ambitions.
Regional exchange operator NASDAQ-OMX hopes for up to 20 new
listings before the end of June, with biotech companies among
those expected to float, according to Adam Kostyal, the
exchange's European head of listings.
"We also see traditional Nordic sectors, such as
industrials, coming to the market, and a lot of private equity
portfolio companies," he said.
In a region which has been a constant outperformer in Europe
thanks to its solid public finances and strong companies, many
banks stand to benefit this year from a flurry of pent-up
activity now that confidence is returning.
SEB CEO Annika Falkengren sees industrials as a key source
of future deals. "They are all cash rich, have good balance
sheets and have done well for a long time," she told Reuters.
Led by Denmark, the Nordics have seen $3.4 billion in
listings in just over three months of 2014, making up nearly
one-fifth of European IPOs, and putting the region in the number
two spot, Thomson Reuters data shows.
"We're not a Tokyo or a London but we are becoming sort of a
mini-hub," said Jan Olsson, Head of Global Banking for the
Nordic Region for Deutsche Bank.
His bank is busy recruiting staff in Stockholm and others
have been bolstering their resources.
Casper von Koskull joined Nordea as head of wholesale
banking from Goldman Sachs in 2010. The Nordic bank has risen
from 14th in terms of fees and commission earned from M&A and
equity capital market (ECM) activities in 2008 to number three,
just below his old employer.
A number of big takeover attempts reflect the confident mood
in the region, which groups Norway, Sweden, Denmark and Finland,
and Nordea did not want to waste the opportunity, von Koskull
said. Still, both SEB and Nordea say Europe's recovery looks a
little patchy while geopolitical concerns over Ukraine and
Russia could impact overall business sentiment.
"I think at the moment there is a reasonable amount of
activity," von Koskull said. "Let's see how long it can last."
Last summer, just before the wave of listings took off,
Nordea poached Annika Sigfrid from ABG Sundal Collier, where she
handled two of the few post-crisis IPOs in Sweden, to head its
Swedish ECM division.
Bank of America Merrill Lynch - ranked No. 11 in
terms of fees for 2013 - recently nabbed Johan Lustig from
JPMorgan - No. 4 - to lead its Nordic investment banking
division, saying the region was important for European fees.
Even smaller players see potential. Greenhill, a U.S.
boutique M&A firm, opened offices in downtown Stockholm in 2012.
The region's renewed appeal to foreign banks is a challenge
for the locals, but one they say they are well equipped to deal
"They are definitely here again, and I think that
competition will always be here and it is quite fierce," SEB's
Falkengren said. "Of course, in the Nordic arena, all banks have
a lot of capital - we are all eager to lend to our customers."
The Nordics' share in European M&A activity jumped to 13
percent in the first quarter of this year compared with eight
percent for the same period in 2013, Thomson Reuters data shows,
putting it second only to France.
Highlights from recent months include Swedish steelmaker
SSAB's $1.6 billion purchase of Finland's
Rautaruukki, a $5 billion bid attempt by Britain's Weir
for Finnish rival Metso < and U.S. Mylan Inc's
bid to buy Swedish drug maker Meda.
Bankers say buoyant equity markets, solid economies and
returning corporate confidence will drive business further.
If it comes off, Volkswagen's $9.1 billion offer
for truckmaker Scania would be the biggest acquisition
of a Nordic firm in nearly a decade.
The deal has become a sort of who's who in Nordic
dealmaking: Morgan Stanley and Deutsche Bank are advising Scania
while Volkswagen has Goldman Sachs, Rothschild, Citigroup, SEB
and Nordea, which von Koskull said was a testament to its
For fees earned through early April in M&A and ECM, SEB has
already earned nearly as much as it did for the whole of 2013,
retaining its No. 1 position by attracting over 11 percent of
total fees earned. Goldman Sachs is No. 2 with 10 percent
plus with Nordea close on its tail at 9.5 percent.
In 2008, Danske Bank ranked No 1, SEB No. 2 and JP Morgan No
3. Goldman Sachs was 17th and Nordea 14th.
Unlike SEB and Swedbank, Nordea was not as badly affected by
large loan losses when the global financial crisis hit the
neighbouring former Soviet Baltics, where many Nordic banks had
built up exposure.
Nordea's large balance sheet and relatively low funding
costs also helped it stand by corporate clients at a time when
Wall Street banks were busy getting their own houses in order.
Von Koskull said it was not a single moment but rather key
deals with blue-chip firms when he realised Nordea had truly
arrived on the regional M&A scene.
He rattles off highlights: a $3.1 billion transaction in
Sweden for Nordic grocer ICA, a 2.7 billion euro deal
by Finland's Outokumpu to buy ThyssenKrupp's
stainless steel business and the listing of Danish
services firm ISS.
Nordea is expected to report a near 20 percent increase in
profits this year, gaining strongly on a two percent rise in
2013, according to Starmine SmartEstimates, due to healthy
economic growth, a recovery in the shipping sector, cost-cutting
and active capital markets.
The bank has 200 people employed in investment banking and
is hiring more "selectively", von Koskull said, quashing the
idea of any M&A within the banking sector itself by saying the
major players remained wary about making big commitments.
UBS analyst Nick Davey said both Nordea and SEB's shares
were outperforming more retail-focused players Swedbank and
Handelsbanken due to the stronger corporate sentiment, with
cost-cutting at Nordea giving it an extra advantage.
"Tied in together, with a positive slant to IPOs and M&A
against a declining cost base, then you have good earnings
momentum," he said. "That's a nice cocktail."
($1 = 6.4942 Swedish Crowns)
(Additional reporting by Ole Mikkelsen in Copenhagen, Sven
Nordenstam in Stockholm; editing by Alistair Scrutton, Carmel
Crimmins and Philippa Fletcher)