Evaluating the Nordea Experiment: Evidence from Market and Accounting Data

This paper discusses results and difficulties of comparing banks' performance based onpublicly available data for the case of Nordea, a pan-Nordic bank created through mergers ofimportant national banks. The objective of the performance comparison is to determine whetherNordea's unique strategy of functional intergation across four countries can be advantageous. For stock-market data, however, Nordea does not have stable betas on risk factors, as illustrated by market betas, and thus the comparables method must be used with great care. The Nordea holding company performed about as well as the comparables, both in terms of stock-market and accounting data. Nordea banks in individual countries outperformed comparable holding companies; by arithmetic, Nordea non-bank operations are not as profitable as its bank operations. In event studies, the market views Nordea's acquisitions as adding value.