(Adds background, details)
STOCKHOLM/COPENHAGEN Oct 3 Swedish lender SEB
and Denmark's Danske Bank are discussing a
large structural deal, a Swedish newspaper reported on Thursday,
which could produce the second-biggest bank in the Nordic
Business daily Dagens Industri on Thursday reported that the
chief executive of Investor, which owns about one fifth of SEB,
believes the bank is too small compared with rival Nordea
, the region's biggest bank by market value.
Danske Bank, SEB and Investor all declined to comment.
By 1120 GMT, Danske Bank shares were up 1.4 percent and SEB
shares were up 0.9 percent.
There has been speculation that SEB and Danske, which has
suffered from the collapse of a property bubble and weak
agriculture sector in Denmark, could link up amid long-running
talk of consolidation among the region's banks.
SEB and Danske are similar in size, with SEB's current
market value $23.7 billion and Danske's $22.3 billion. Nordea
has a market capitalisation of $49.5 billion.
The Swedish bank has recovered from a downturn in the
Baltics in 2008/2009, making a 14 percent return on equity in
the second quarter of this year, more than twice Danske's
SEB and Danske could save money from economies of scale in
their Swedish, Baltic and head office operations, but they may
struggle to get approval from regulators who are keen to limit
the size of big financial firms, analysts said.
"A key issue we would see is a further concentration of
Nordic banks, which might not be appreciated by regulators,"
said Ronny Rehn, analyst at Keefe, Bruyette & Woods.
The paper said SEB Chief Executive Annika Falkengren could
take over from Borje Ekholm as head of Investor, leaving Danske
Bank's new chief, Thomas Borgen, to lead any combined financial
Ekholm has been CEO of Investor, the listed
investment vehicle of Sweden's Wallenberg family, since 2005,
two years longer than he had intended, the paper said.
"If you look at the curve of the two banks right now, SEB
is very fit and well run, and Danske Bank is in the gym working
to improve its shape," Sydbank analyst Bjorn Schwarz said.
"But one cannot rule out that a merger would make sense in
Speculation about an SEB-Danske deal picked up in November
2011 when Swedish activist investor Cevian took a stake in
Danske, which it increased to 9 percent this year.
Another option could be for the banks to seek cost savings
from their Baltic operations.
Borgen, whose predecessor Eivind Kolding was ousted last
month after less than two years in the job, told Reuters on
Wednesday there was scope for cost-cutting. He also aims to
restore a dividend, which the bank has not paid for five years.
(Reporting by Mia Shanley in Stockholm, Mette Fraende in
Copenhagen and Steve Slater in London,; Editing by Erica