REUTERS SUMMIT-Nordea CEO eyes higher dividends, prefers raising payout policy

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(For other news from Reuters Nordic Investment Summit, click on http://www.reuters.com/summit/Nordic13)

* CEO prefers raising payout ratio to paying extra dividend

* Does not know when advanced IRB models will be approved

* Forecasts moderate growth in main markets

* Says Denmark crisis is over

By Mia Shanley and Oskar von Bahr

STOCKHOLM, Sept 29 (Reuters) - The head of Nordea said the Nordic region's biggest bank would have plenty of capital to raise dividends and preferred to raise its payout policy rather than hand out an extraordinary dividend.

Nordea, with operations both in the Nordics and the Baltics and a big lender to the shipping sector, has like many of its regional peers served as a safe haven for investors, offering steady growth and paying non-stop dividends throughout Europe's financial crisis.

"We will probably raise dividends," Christian Clausen told Reuters in an interview at the Reuters Nordic Investment Summit, adding that the decision would be made at the end of the year.

Asked whether the bank preferred to pay an extra dividend or raise its payout policy of returning at least 40 percent of net profits to shareholders, Clausen said: "I don't think we will make extra dividends."

"If you want to drive long-term value, and create long-term value, you do not want to do extraordinary dividends. You want to create a dividend policy that is rock solid. That would be our preference."

Nordea, which has a bigger market capitalisation than Deutsche Bank (LSE: 0H7D.L - news) , has a payout policy which is smaller than Swedbank (Other OTC: SWDBF - news) 's 75 percent ratio, and some analysts believe it has the leeway to go as high as its Swedish rival.

Clausen, head of the bank since 2007, said while an analyst could easily make that calculation, it would depend on how much money the bank earned by the end of the year.

"You want to look ahead and create a situation where you have enough capital, and some possibilities to grow," he said, adding that there was still some regulatory uncertainty.

Regulatory concerns have been intensifying across the Nordics with authorities eyeing high levels of household debt and taking a closer look at how banks assess their own risk.

Nordea, which expected a green light on its advanced internal based ratings models for its corporate loan book earlier this year, will no longer speculate about when an approval may come through. An approval would help get its risk weights down, releasing capital for shareholders or growth.

To rein in household lending and cool a booming property market, Swedish authorities have also been toying with the idea of forced amortisations and even higher risk weights on banks' mortgage portfolios - as high as 35 percent.

The Swedish government, which last week sold its remaining 7 percent stake in Nordea saying its job was to regulate banks not own them, has said countercyclical buffers ought to start at the high end of a 0-2.5 percent range due to worries over high household debt.

Clausen was sceptical.

"You want to use the right tool to cure the right problem. If you want to cure the problem of household debt you don't want to add in more capital because it impacts much more small and medium enterprises to a higher extent," he said.

"Risk weights would be better, or amortisation," he said. "This is not cyclical. This is a very specific structural issue. To use a countercyclical buffer to dampen household debt is not a very good tool."

Despite Sweden's tough talk, Clausen said he believed the bank's 13 percent core tier one capital goal stood up well.

In Denmark, a property bubble has already burst and Clausen said the country was moving nicely out of crisis mode.

"Consumer confidence is coming back for many reasons. House prices have dropped a lot, but are now moving up a bit."

He likened it to the recovery in the United States.

"House prices went up, consumption went up and all of a sudden we had 2.5 percent growth out of nowhere. And that will happen here as well, although maybe not 2.5 percent," he said.

Asked about acquisition opportunities in Denmark, Clausen said it was cheaper for the bank to grow organically.

"It is cheaper to open the door Monday morning and customers come in than it is to pay another bank for customers... Buying them is not the preferred route."

Clausen expects Nordea to benefit from moderate growth in its main markets in the next two years and for the region's safe-haven status to remain despite a rising appetite for risk.

"I think for the foreseeable future the Nordics, and Nordea in particular, will be regarded as a safe haven, or a very strong and trustworthy entity."

Follow Reuters Summits on Twitter @Reuters_Summits (Reporting by Mia Shanley; Editing by Alistair Scrutton)