The Estonian branch of Nordea is to hand over operations to DNB following the merger of the two banks' Baltic operations which will form Luminor Bank.
This transition process will take place as a business transfer and will allow both organizations to combine their Baltic banking into a jointly owned bank, Luminor Bank AS, Nordea said. The transfer will take place in multiple stages and simultaneously in all Baltic countries.
Upon closing, the business transfer will be carried out with all of Nordea's assets and current agreements in all Baltic countries to be transferred to the common legal entities.
The business transfer process will have no impact on customer service and Nordea said that business will continue as usual. Customer accounts and payment processing will be maintained in the two separate existing core banking systems before the customers will be migrated to one common core banking system in each Baltic country.
Necessary applications for the merger of the subsidiaries of DNB and Nordea in the Baltic region were submitted to local competition authorities last year.
Merging the two banks will be dependent on securing approval from the three countries' financial supervision and competition authorities and is planned to be completed in the fourth quarter of 2017. Until this permission is granted, both banks will continue with the present managements and as competitors.
In August 2016, Nordea and DNB announced their plan to merge operations of the two banks in Estonia, Latvia and Lithuania. In November 2016, Erkki Raasuke was appointed CEO and Nils Melngailis chairman of the board of Luminor. The new bank is slated to become the second largest bank in the Baltics, with an estimated market share of 20 percent.
Editor: Aili Vahtla