DBRS Designates Nordea Entities as Critically Important Banks in Nordic Countries–Ratings Unaffected

DBRS has today designated the four main operating entities of the Nordea Group (together, Nordea or the Group) as Critically Important Banking organisations (CIBs) in their respective countries. Nordea Bank AB, the Swedish bank holding company of the Nordea Group, has been designated as a CIB in Sweden. Concurrently, DBRS has designated Nordea Bank Danmark A/S as a CIB in Denmark, while Nordea Bank Finland Plc has been designated as a CIB in Finland, and Nordea Bank Norge ASA has been designated as a CIB in Norway. Today’s action has no effect on the ratings for the Group. All rated Group entities retain Senior Unsecured Debt & Deposits ratings of AA and Short-Term Debt & Deposits ratings of R-1 (high), with a Stable trend.

The designation of the Nordea entities as CIBs follows DBRS’s introduction of floor ratings in Denmark, Finland, Norway and Sweden. For CIBs in these countries, DBRS has assigned a floor rating of A (high) for senior long-term debt & deposits and R-1 (middle) for short-term debt and deposits at the bank level. In the cases where there is a holding company, the floor has been set at “A” and R-1 (middle). The trend on the aforementioned floor ratings is Stable. The level of the floor ratings reflects DBRS’s expectation that the governments of Denmark, Finland, Norway and Sweden will provide support, if necessary, to prevent their CIBs from weakening below this rating level. DBRS views A (high) / R-1 (middle) as the level of creditworthiness that market participants demand for CIBs to be viewed as essential counterparties in financial markets, as CIBs need to be perceived as reliable partners in undertaking a wide range of financial transactions. DBRS views the floor as the level of support at which the four Nordic governments will sustain their CIBs, if necessary, to ensure that their financial systems are fully functioning.

CIBs will usually be banking organisations that have extensive involvement in a country’s financial markets and perform critical roles in the flow of financial transactions. In DBRS’s view, the loss of the market’s confidence in a CIB’s ability to perform as a counterparty could impact the market’s perception of other participants and lead to a degradation of the functioning of the financial markets. In the view of DBRS, the actions taken to date by the Danish, Finnish, Norwegian and Swedish governments clearly demonstrate their commitment to support their CIBs at this level.

DBRS continues to ascribe implicit systemic support for Nordea, as reflected in the SA-2 support assessment for the rated Nordea entities. For institutions with a designated SA-2 support assessment, DBRS expects some form of external support, if needed, ideally with a timeliness element in it.

For more information on the floor rating concept, please see the press releases published earlier today entitled “DBRS Expands Its Floor Rating Concept to Denmark”, “DBRS Expands Its Floor Rating Concept to Finland”, “DBRS Expands Its Floor Rating Concept to Norway”, and “DBRS Expands Its Floor Rating Concept to Sweden”, which are available at www.dbrs.com.

The applicable methodologies are Analytical Background and Methodology for European Bank Ratings, Second Edition and Enhanced Methodology for Bank Ratings – Intrinsic and Support Assessments, which can be found on our website under Methodologies.

This is a Corporate (Financial Institutions) rating.