The merger is expected to yield annual cost savings of SEK2.5 - 3billion, mainly at a central level, within the IT area and through branch closures. No redundancies will follow from the merger, although 2000 jobs are expected to disappear through natural wastage.

SEB's managing director and CEO Lars Thunell emphasises the importance of Internet services to the combined group: "Together, we will consolidate our successes within e-banking. Through the merger, resources for development will be released...we will be able to export our knowledge and start more operations on new markets."

Integration between the respective IT teams will take priority, says Thunell, as the bank seeks to capitalise on the opportunities for technology transfer and IT services co-ordination both domestically and internationally. The bank's Internet banking and broking operations in Germany and the UK will be a particular focus for investment.

The new group will have approximately 11 million customers in Europe, including two million Internet customers.

In scale it competes with near neighbour Nordea - formed by the merger of leading banks in four Nordic countries - which claims 2.1 million Internet banking customers out of a total of 10 million. Reporting a 17% increase in operating profit last year to EUR2.43 billion, Nordea chief executive Thorleif Krarup has set a target of 2.7 million Internet customers for the end of the current year. He believes the savings and revenue gains made from a mass migration to e-banking will help the bank drive down its cost income ratio to below 50% by 2003, from 55% today.