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One of Europe's Largest Buyout Firms Turns Its Attention to Scandinavia

Updated on
  • Bridgepoint says JV with FCG opens door to $20 billion market
  • Proliferating rules will ensure continued double-digit growth

One of Europe’s largest buyout firms is turning its attention to Scandinavia, where the business of helping banks navigate their way through a growing mountain of financial regulations promises to be lucrative.

The global market for expert advisory services for banks, insurance companies and asset managers is worth roughly $20 billion, and growing by double digits each year amid an ever-expanding maze of rules, according to Johan Dahlfors, a partner at Bridgepoint. The London-based company agreed last week to pay an undisclosed amount to form a joint venture with FCG Holding Sverige AB to meet the demand.

“There’s a large number of regulatory frameworks impacting the financial services industry,” Dahlfors said in an interview. “And there’s more coming.”

Bridgepoint typically targets domestic and regional companies that want to expand internationally, he said. FCG has roughly 10 percent of the 300 million-euro ($371 million) Nordic market for independent governance, risk management and compliance services, thanks to an annual growth rate of more than 30 percent, according to Dahlfors.

“They’ve been growing faster than their independent competitors and we expect them to be able to continue to do so,” he said. “There are a number of international frameworks being implemented or about to be implemented over the next few years. Some firms do it well with in-house, but most financial institutions seek external support.”

A decade after the financial crisis revealed how inadequate the existing regulatory framework was, a myriad of new rules has been formulated to ensure the global economy isn’t dragged through a repeat.

Earlier this month, a revision of Europe’s Markets in Financial Instruments Directive went into effect, and finance firms are still digesting the full scope of the changes it brought with it. MiFID II comes on top of stricter capital requirements, with regular additions and adjustments adding to the list of rules.

Denmark’s industry association, Finans Danmark, estimates that as much as 70 percent of investments in information technologies are made to ensure banks can keep up with the growing set of rules. Nordea Bank AB, the Nordic region’s largest lender, says industry savings from branch closures are largely being channeled into hiring more compliance and technology staff.

“Whether you’re very large or very small, it’s quite challenging and costly to maintain expertise around all regulatory frameworks in-house,” Dahlfors said.

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