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Moody’s: Nordic banks’ outlook bolstered by stable operating conditions, strong capital levels

“The outlook for Nordic banks is stable as operating conditions will remain supportive for banks in 2019 amid robust economic growth”, says Moody’s Investors Service in a report published on the 12th of December. The credit rating agency expects economic growth of 2 to 2.5% across the Nordic region to support loan quality in 2019, and protective features built into banks’ underwriting standards will mitigate the risks posed by high household debt and fast-rising house prices.

“Nordic banks are among the most strongly capitalized in Europe and we expect this to continue to be a key attribute,” said Jean-Francois Tremblay, an Associate Managing Director, at Moody’s. “Most banks have material headroom above their regulatory capital requirements and strong capital generation capacity.”

Large Nordic banks will remain more profitable than most of their European peers, supporting their robust capital levels. The banks are among the most cost-efficient in Moody’s rated universe.

Access to capital markets, an important source of funding for Nordic banks, will remain strong over 2019, although funding costs may rise marginally. Reliance on volatile market funding will be partly mitigated by the wide use of more stable covered bonds.

The report is available to subscribers here: moodys.com.

 

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10 reasons why you should consider expanding your business into the Nordic countries

Despite cultural, economic and business differences the Nordic countries have many positive aspects in common. The choice of where to locate a business in this part of the world will naturally depend on the specific nature of the business in question. Scandicorp will happily discuss with you about the benefits of a specific country for your business. In this article, we will look at 10 good reasons for a foreign business to establish a presence in the Nordic countries (Norway, Sweden and Finland).

1. High international rankings

The Nordic countries rank very high in international benchmarks in the top places of the most secure and best places to live, least corrupt countries and one of the best health systems in the world.

2. Reliability

Everything works. If something doesn’t work, it will usually be addressed as soon as possible. You save a lot of time and nerves when you can rely on the infrastructure, logistics and timekeeping etc.

3. English

Most Nordic people are fluent in English and will be more than happy to practice their English with you. Although a basic understanding of the local language will make everyday life easier for you.

4. Highly skilled workforce

Thanks to a good public schooling system and a high overall level of education, recruiting locals will be relatively easy in most fields of business.

5. Moderate corporate taxes

The Nordic countries have traditionally been perceived as high-tax jurisdictions. However, the corporate tax rates are very moderate in international comparison.

6. Business environment

The Nordic countries have a very strong financial sector, a stable, ethical and predictable business environment. This provides a solid base for a long-term business solution. Good logistics thanks to modern airports, efficient ports and railways.

7. Lively startup scene and pioneering new technology

The governments of the Nordic countries as well as local communities have encouraged and supported research and development, the creation of start-up hubs and events. The atmosphere for start-ups has proved to be very inspiring.

8. Relatively easy to find local partners

It’s good to find local partners who you could collaborate with on common projects as this will help build your credibility.

9. Over 25 million consumers

In a consistent market with a strong purchasing power due to the relatively high GDP per capita.

10. Good places to test new ideas and products

Nordic consumers and businesses are among the first to adapt to technologically, new products and concepts. Testing your new products and technologies in the Nordics first before going global may be a smart move.

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The Nordic nations among the most innovative economies

Bloomberg Markets recently published a survey ”The Battle of Ideas” ranking the most innovative countries in the World. South Korea topped the list. The silver medal was won by Sweden which climbed up one place from last year passing Germany.

The Nordic countries are still highly ranked on the list: Finland as number five, Denmark as eight and Norway as fourteen. Bloomberg ranks countries on the basis of parameters such as patent activity, number of high-tech companies, education and research.

Bloombergs survey correlates well with another recent report, the Global Talent Competitiveness Index 2017 (GTCI) published by Adecco and INSEAD. According to this report the Nordic countries rank among the top in the World. GTCI focuses on how technology affects talent competitiveness and the nature of work. Finland is ranked best in formal education, vocational enrolment, social mobility, environmental performance, employability, ease of finding employees and availability of scientists and engineers.

Do you want to set up your business in one of the most innovative regions of the world? Feel free to contact Scandicorp who will happily provide you with any help and information.

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Download the full GTCI report

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The Nordic countries lead the world in the rule of law

Denmark, followed by Norway, Finland and Sweden turned out to enjoy the world’s best and fairest rule of law according to a new global ranking report by the World Justice Project (WSP). Rule of law is a fundamental condition for liberal democracy.

More than 100,000 households and experts were surveyed to measure rule of law in 113 countries. The index is based on the primary factors of: constraint on government powers, absence of corruption, open government, fundamental rights, order and security, regulatory enforcement, civil justice and criminal justice.

Here are the top four performers in each of the index’s main categories:

Constraints on Government Powers – Denmark, Norway, Finland, Netherlands
Absence of Corruption – Denmark, Singapore, Norway, Finland
Open Government – Norway, Denmark, Finland, Netherlands
Fundamental Rights – Norway, Finland, Denmark, Austria
Order and Security – Singapore, Finland, Sweden, Denmark
Regulatory Enforcement – Singapore, Netherlands, Norway, Sweden
Civil Justice – Netherlands, Germany, Norway, Singapore
Criminal Justice – Finland, Norway, Austria, Singapore

One more good reason to establish a business presence in the Nordic countries?

Read the full report

Image from “Polisen” the Swedish Police

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Increasing Demand from Property Investors for the Nordics

Catella is a leading specialist in property investments, fund management and banking, with operations in 12 countries across Europe. Catella recently published a Nordic Market Tracker.

Investment Opportunities

The Northern European property market is increasingly featuring in the pan-European real estate portfolios of institutional investors. Compared with other European countries, the economic transparency and prosperity of the markets in the Nordic countries makes them a popular option. Also, the availability of capital opens up new investment opportunities. Catella foresees these opportunities, especially for investments in the office and retail markets.

In general, some 90% of invested capital in the Nordic countries is based on domestic markets (Sweden, Denmark, Norway and Finland), with a high share of Swedish capital – but this will change. Demand from German, French and UK investors rose in the past three quarters, not least through pressure from capital markets to look for a stable income stream.

“Many markets offer clear potential for portfolio diversification. Copenhagen and Helsinki display a correlation that is slightly negative, as does Berlin. Stockholm’s correlation is below the level identified, for example, for the German cities of Cologne and Dusseldorf, and also from the perspective of Lisbon, Warsaw and London investors. Against this backdrop, combining a Nordic segment with a German, Spanish or Belgium office property segment could be a successful strategy for anyone interested in risk diversification,” explained Dr. Thomas Beyerle, Head of Group Research at Catella, talking about the investment strategy from an international perspective.

Catellas report concludes

Catellas report concludes: “The Nordic countries are not as homogeneous as international stereotypes often suggest. There are marked differences to be aware of when investing. Not only do investors need to know how Sweden, Norway, Denmark and Finland differ when it comes to their social, economic and political arenas, but there’s something else international observers should keep an eye on, as well: intra-Nordic investment patterns. This report thus concludes that the northern European countries represent enormous potential when it comes to diversifying multinational portfolios. Furthermore, they also demonstrate structural stability for long-term investors with multi-country and multi-asset funds/strategy.”

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Nordea Bank launches platform for crowdfunding

Sweden’s Nordea Bank, the largest bank in the Nordic region, is launching a platform for crowdfunding where individuals can participate in the financing of unlisted companies through purchasing shares in such companies. The bank appears to be taking up the fight against startups in the fintech business.

The platform is being announced today in Finland, where the Finnish Crowdfunding Act is scheduled to come into force in July 2016. According to the Bank’s Twitter account, the platform will be announced in Sweden tomorrow in connection with the quarterly report.

Crowdfunding and crowdlending have become popular in the Nordic region. In Sweden, examples are Fundedbyme , Toborrow , Pepins , Tessin and Kameo, all of which have entered the business from slightly different different angles. These players have been able to act undisturbed by major banks for more than five years , but now Nordea becomes the first traditional bank to embark in the crowdfunding area .

Nordea on Twitter

Photo: Outi Järvinen/Kl/Arkisto

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Nordic countries are the best for business

Forbes gauged the World’s Best Countries for Business by grading 144 nations on 11 different factors: property rights, innovation, taxes, technology, corruption, freedom (personal, trade and monetary), red tape, investor protection and stock market performance. Denmark scored first, Norway third, Sweden fifth, and Finland sixth. New Zeland was second and Ireland fourth.

For full article

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The Nordic countries among the top five in English skills

The EF English Proficiency Index 2015 (EF EPI) attempts to measure the Worldwide English Proficiency when it comes to English as a Second language. The Nordic countries ranked among the top five in the world: Sweden 1st place, followed by the Netherlands, Denmark, Norway and Finland. This year’s EF EPI report profiles all 70 ranked countries, using test data from 910,000 adult English language learners.

The report reveals a correlation between countries English abilities and innovation metrics such as R&D expenditure and high-tech exports. There is also a high correlation between English skills and quality of life, GNI per capita, and internet connectivity.

As English is widely spoken in the Nordics it will reflect on the ease of doing business. Download our free corporate fact sheets for Norway, Sweden and Finland.

EF Education First is a Swiss based education company specializing in language training. The company was founded in Lund, Southern Sweden.

 

For full report see: EF EPI

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Should we appoint an external auditor or not?

Today the Nordic countries have small company provisions making it unnecessary to appoint an external auditor if certain conditions depending on size of turnover, number of employees, and size of balance sheet are met. In the start-up phase of a company it may seem appropriate to save on costs and revert to the issues of appointing an auditor later on.

A frequently asked question by SCANDICORP clients setting up companies in the Nordic region is whether they should appoint an auditor in connection with incorporating the company or save that decision until later.

In most cases our advice to the client has been that it makes sense to appoint a qualified external auditor from the very start in connection with registering the company. Naturally this will depend on the business activities of the company, the structure of ownership, appointed directors and other factors to be considered on a case-by-case basis.

The Pros of having an external auditor:

  • Clients, suppliers, collaborators, banks and other parties involved with the company will be more comfortable in their dealings with the new company.
  • There is less risk of unforeseen problems due to the professionalism and qualifications of the auditor.
  • A way to ensure that the company complies with legal and tax regulations.
  • Having access to independent advice and guidance on short notice from someone who knows the company.
  • Giving the shareholders assurance that the accounting, management and directors have performed up to required standards.
  • A foreign investor or director in a Nordic company, not being totally aware of local rules and regulations, will be more comfortable compared to if the company has no external auditors.
  • The tax office may also be more comfortable with tax returns from an audited company.

The Cons of having an external auditor:

    • The costs associated with external audits.
    • Faster preparation of Annual Reports and tax returns.

SCANDICORP is happy to introduce clients to qualified external auditors suiting their particular needs. Some clients may opt for one of the international “Big Four” firms or maybe the next tier of international firms that are all present in the Nordic countries, while other clients might prefer a smaller local audit firm more suited for their particular business.

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High Nordic rankings in ease of doing business

The Nordic countries ranked high in the world for doing business by the World Bank’s annual Doing Business 2016 report.

Surveying a total of 189 countries, the list is widely considered the most authoritative in the world.

The index takes into account regulations that affect facilitating the smooth flow of business. A total of 10 different areas were assessed, included everything from starting a business, to dealing with construction permits, getting credit, paying taxes, trading across borders and enforcing contracts.

Denmark ranked third, Sweden, Norway and Finland as eight, ninth and tenth. repectively

Singapore once again topped the list this year, followed by New Zealand.

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