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Danske Bank riding high despite poor image
A staggering 35 percent of Danske Bank customers are considering leaving the bank, according to a survey that Megafon compiled for Politiken newspaper and TV2.
Economist Kim Valentin from financial advisors Finanshuset i Fredensborg said it was remarkable that such a large and established company is so unpopular with its own customers.
“It’s completely unbelievable that such a comprehensive bank can blunder to the point that it has here,” Valentin told Politiken. “But the whole mess is magnified by the apathetic response it has had to the customers who are leaving the bank. It doesn’t just mean lost customers but a dwindling loyalty amongst the ones that remain.”
Danske Bank's troubles began in November of last year when it launched its now-infamous advertising campaign, ‘New Standards’, which featured a number of issues that didn’t reflect the bank's image, including an image that referred to Occupy Wall Street, a movement that has been very critical of large banks and the role they played in the global economic downturn.
“That must go down as one of the worst campaigns in history in regards to their target group,” John Norden, the CEO of banking price comparer, Mybanker, told Politiken. “That advert should have been sent as a DVD with a bottle of champagne to 500 of the biggest stock holders, because that’s who it appealed to. To normal people, it proved that the bank hadn’t understood that the public's trust in financial institutions had eroded.”
Danske Bank has also ostracised many of their customers by discontinuing face-to-face transactions at 131 of its branches.
But, although Danske Bank continues to receive negative press attention and angry customers continue to flock to its rivals, the bank recently announced that it ended 2012 with a nearly five billion kroner profit, its best in years.
And since the bank announced late last year that it would begin charging many of its customers fees up to 480 kroner a year just for having a standard account, share prices have risen by ten percent.
The share price was at 97 kroner when CEO Eivind Kolding indicated that the bank would charge its customers more on 20 December 2012. Last week, shares ranged between 107-110 kroner.
Stock analyst Jakob Brink, who keeps tabs on Danske Bank stock for ABG Sundal Collier investment bank, argued that even though Danske Bank may be taking a beating in the public forum, investors see the customer fees as a sign that the bank is working hard at shedding weak customers and generating more money.
“To investors, it is obviously positive that customers that Danske Bank loses money on move to other banks,” Brink told Politiken. ”Every day there have been debates on how bad the bank is. That may result in fewer customers, but I don’t think the negative press will affect the bank’s business in the long run.”