Nordea and DNB have entered into an agreement to combine their operations in Estonia, Latvia and Lithuania, to create the second largest bank in the Baltic region.

The merger re-iterates the dominance of Nordic banks in the Baltic region. Sweden headquartered Nordea’s operations will build upon its position within the large corporate segment, whereas Norway headquartered DNB will focus on the SME segment. Nordea’s and DNB’s Baltic operations have 1,300 and 1,800 employees and EUR 8bn and EUR 5bn in assets respectively.

Nordea and DNB will have equal voting rights over the combined bank, while having different economic ownership levels that reflect the relative equity value of their contribution to the combined bank at the time of closing. The transaction is conditional upon regulatory approvals and conditions, and is expected to close around Q2 2017. The banks will operate independently until all necessary approvals have been received.

“Combining knowledge of the Baltic market, close cooperation with our customers and developments in digital banking, Nordea has over the years built a solid and successful bank in the Baltic region with a strong position as number three in the Baltics. Now it is time to take the next step and build for the future. Together we will have the scale, stronger geographic presence and broader product offering enabling us to become the main bank for customers in the Baltics,” says Inga Skisaker, head of banking, Baltic countries, Nordea.

 “With over 70 branches in the Baltics, DNB have created a dynamic and customer-centric operation. Scale is key in banking today, with larger banks having more efficient use of resources. The new bank will be better equipped to counter increasing competition in the region and capitalise on scale in order to become the main bank for more businesses, customers and partners in the Baltics,” says Mats Wermelin, head of Baltic division, DNB.