TALLINN - OP-Pohjola Group, the second-largest banking group in terms of assets in Finland, is waiting for the opportunity to start operations with a branch office in Estonia, the daily Eesti Paevaleht reports.
The Estonian branch of Pohjola Bank PLC, registered in September, does not yet hold an operating license and is waiting for governmental approval. The decision will be made within two months of the arrival of the required information and documents.
Six months ago the deputy managing director of the bank, Timo Ritakallio, said Pohjola was not planning expansion into the Baltic states, at least not as a commercial bank.
Ritakallio said then that Pohjola is seeing demand in the Baltic states, primarily among businesses headquartered in Finland with subsidiaries operating south of the Gulf of Finland.
Nonetheless, the group started testing the lay of the land earlier, buying K-Finance (now Pohjola Finance) in January 2007 from the trade group Kesko for nearly 470 million kroons (30 million euros). K-Finance already had financial services and insurance operations in all three Baltic states.
Pohjola is even better known to Estonians through its subsidiary, the insurance company Seesam, which has been doing business in Estonia for more than a decade. Seesam controls 15 percent of the non-life insurance market in Estonia. Pohjola Group's Helsinki-based non-life insurance subsidiary has 1.6 million private and corporate clients, or about 25 percent of Finnish market share.
If Pohjola is to offer universal banking services in Estonia, it will face stiff competition from Swedbank and SEB. A recent report found that the two banks control 76 percent of the universal banking market in Estonia, of which 48 percent is controlled by Swedbank.
Nordea and Sampo (Danske Bank) control about 10 percent of the market.
After the collapse of Lehman Brothers, Pohjola disclosed exposure of about 12 million euros to the U.S.-based investment bank.
"Pohjola Bank has bond receivables at a nominal value of 10 million euro from Lehman Brothers Holdings Inc., and their market value stood at 2.6 million euro on 15 September 2008," Senior Vice President Markku Koponen said in a press release Sept. 16, the day after Lehman Brothers filed for bankruptcy protection.