Too-big-to-fail banking finds regulatory loophole in Scandinavia

Copenhagen

THE financial watchdogs of Finland and Denmark want the European Union (EU) to step in and address a gap in regulations that the two countries say has the potential to destabilise their markets as they lose control of the region's biggest bank.

At issue is a plan by Nordea Bank AB to turn subsidiaries across the Nordic region into branches of a group that will be headquartered in Stockholm. The manoeuver essentially hands oversight of a global systemically important bank (with a market value almost twice Deutsche Bank AG's) to Sweden's regulator. But in Finland and Denmark, Nordea won't answer to local regulators on a number of key issues, despite being on each country's too-big-to-fail list.