Nordea Is Hit by Record Mortgage Client Defections in Sweden

(Bloomberg) -- Nordea Bank AB has been losing mortgage customers in Sweden for five consecutive months, marking an unprecedented development at the biggest Nordic lender.

The bank, which has cut prices on some loans in an effort to fight the trend, has seen its Swedish mortgage book contract 0.9 percent since September, according to Bloomberg calculations based on Statistics Sweden data published on Tuesday.

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The development marks a record among Sweden’s four biggest banks, where monthly outflows in the past 16 years never persisted longer than two consecutive months. What’s more, the customer exodus coincides with rapid market growth.

Nordea has been losing clients since September, when it unveiled a plan to move its headquarters to Finland from Sweden in pursuit of a more hospitable regulatory climate inside Europe’s banking union. Customers are also leaving Nordea as smaller (often online) competitors grab market share by offering cheaper mortgages. Nordea responded in January by cutting prices on many home loans.

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There are some signs the bank’s latest price reductions may be slowing the development. Nordea lost 125 million kronor in volumes in February, compared with an average monthly decline of 951 million kronor in the previous four months.

But with mortgage lending in Sweden growing an annual 7.2 percent last month, Nordea’s portfolio expansion of just 0.5 percent shows it’s still losing market share.

Lansforsakringar Bank and state-owned SBAB grabbed 14 percent and 17 percent of new lending in February, respectively, much more than their overall market share.

©2018 Bloomberg L.P.

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