SCANDINAVIA - As one of largest financial players in the Nordic region, Nordea still could not see its institutional custody business as being sustainable in competition with the ‘big boys'.

This is the perception of Birger Gezelius, head of financial institutions at Nordea, who told IPE in an interview today: "[The market is] moving in a direction where there will be very few global custodians who can really be competitive."

Commenting on the announcement revealing JPMorgan will buy Nordea's €200bn institutional global custody business, Gezelius added: "Despite the fact that Nordea has the largest volumes in the Nordic region of any bank in the Nordic region, we still could not see that, over time, our business would be sustainable in competition with the more aligned global custodians such as JPMorgan, State Street or BNY Mellon."

According to Gezelius, global custody servicing is a large scale game which requires financial providers to have "enormous volumes" to guarantee ongoing product development and refinement.

The bank today announced an earlier strategic deal made in 2005 between Nordea and The Bank of New York - now BNY Mellon - to provide global custody and selected related services to Nordea's institutional clients in the Nordic and Baltic Sea regions, would be cancelled. (See earlier IPE story: JP Morgan pushes into Nordic custody)

Gezelius commented: "We tried to make it work, but found the complexities of making it work were such that it really was too ambitious a plan, we couldn't really oversee investment needs and cost consequences well enough."

Nordea subsequently decided 18 months ago to scale its cooperation back to a marketing alliance with BNY Mellon, but this was also to be insufficient.

"Hence, we took the next step and decided to concentrate on where we have our competitive advantages, which are not in global custody for the largest institutional clients. We decided to sell the business," concluded Gezelius.

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