Evaluation of banking internationalization : -a case study on Nordea in Poland and SEB in Germany

Abstract: The purpose of this thesis is to gain a deeper understanding in the internationalization process that Swedish banks go through. This will be achieved by evaluating Nordea and SEB and their internationalization to Poland and Germany. The concept of internationalization is constantly being explored, leading to different forms of results and theories within this area of research. Nordea is one of the largest providers of financial services in the Nordic and Baltic Sea region. Nordea has a strong focus on expanding their internationalization. SEB’s biggest markets are the Nordic countries, the Baltic’s and Germany. SEB has diverse strategies and structures in the different countries that the bank operates in. The methodology for this thesis is of a deductive approach performed with qualitative and quantitative data. A case study on Nordea and SEB is performed. To complement the case study results, a CAMEL rating is conducted on Nordea and SEB to assess the risk and earnings performance on each bank and and their specific internationalization locations. Evidence from this thesis confirms that the amount of knowledge and experience put in by the bank to the location is essential for the success of internationalization. This research found Nordea’s incentives towards Poland were the higher potential in growth in emerging markets. For SEB the incentive was mainly to follow customers which confirm that SEB has a strong commitment to the home market which leads the bank to new activities. The authors found the CAMEL rating to be a valuable tool for evaluating foreign operations. The authors believe an external CAMEL rating should be assigned each parent company along with their internationalization locations. Both banks obtained very low ratings according to these measures which indicates good and solid performance with little need for supervision. Nordea and SEB are both stable banks in Sweden as well as abroad. The international operations assess a slightly higher CAMEL rating for both banks which shows that the banks have a more stable business in the domestic countries. The CAMEL rating showed that Nordea and SEB’s parent companies are well prepared for the new Basel regulations which will be implemented in 2013 while the acquisitions in Poland and Germany must make adoptions to the new set of requirements.