Nordea business will be integrated into UBS’ advisory platform.

UBS has agreed to acquire the Luxembourg-based private bank of Nordea, the Scandinavian banking group, for an undisclosed sum. The move is part of UBS’ move to build out an onshore European banking footprint following the establishment of Europe HQ in Germany two years ago.

The Nordea business will be integrated into UBS’ advisory platform, the Zurich-listed lender said in a statement yesterday.

“The decision follows a thorough strategic review of Nordea’s Private Banking International activities. The strategic review was part of the transformation of Nordea, with the aim to better manage risk, focus the business and deliver an even better bank for the clients. This led to the decision to concentrate Nordea's private banking activities on the Nordics,” UBS said.

The acquisition follows a similar move by rival Swiss lender Julius Baer in July, 2016, to buy Commerzbank International SA Luxembourg (CISAL). In that particular deal, a total of €78 million ($97.7 million), including €35 million of regulatory capital transferred as part of the transaction, was paid in cash. Total restructuring and integration costs are estimated to reach around €20 million.

Such a move also means UBS is acquiring a banking operation in a European Union member state, and one that is seen as potentially winning business from the UK as the latter country leaves the EU bloc. As well as private banking jurisdiction, Luxembourg is the world’s largest registration hub for pan-European UCITS funds and a domicile for international firms’ non-domestic operations. 

On December 1st 2016, UBS created UBS Europe SE (UBS ESE), with its head office in Germany and branches located in Luxembourg, Italy, Spain, Austria, Sweden and Denmark. UBS Luxembourg acts as a “competence centre” for hosting and serving cross-border business for clients domiciled in the European Economic Area and has an active growth strategy for the Nordics cross-border market, UBS said. 

While the business transfer agreement has been signed, the details of the transaction and its completion currently planned for the second half of this year remain subject to applicable regulatory approvals and a number of conditions.

UBS said the transaction will have a marginal positive impact on CET1 capital for Nordea. Assets under management for this business as per end of 2017 amounted to €13 billion.