Danske Bank cutting another 1,000 jobs

Staff levels at Danske Bank will be significantly reduced as the bank opts for fewer branches and more online services in order to boost profits

October 30th, 2012 1:39 pm| by admin
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Danske Bank will fire 3,000 employees by 2015 according to a new cost-cutting strategy unveiled today.

The announcement increases the number of expected job losses by 1,000 from the bank’s previous statements and will be found through closing bank branches and a greater reliance on automated and online services.

The bank explained that the move was in response to a changing market where customers were increasingly choosing to conduct their business online.

“If we want to become a good and effective bank we cannot maintain the old structures that the customers aren’t using,” Eivind Kolding, Danske Bank’s chair, told Finanswatch. “We have a duty to adjust the structure and customers have already chosen the online channels.”

The bank’s New Standards strategy hopes to get more of its customers to consolidate their business with Danske Bank instead of buying different services from different banks.

“Not all customers take advantage of our full product portfolio but we have plenty of services that could be of interest to them and we can make it advantageous if the use them. Customers that want to do more business with us will be given special advantages. It will be a fair solution for all but it will also be fair for the bank. The income and costs have to add up.”

Danske Bank’s move toward online its services means that customers will only be able to receive personal consultation “when it is needed”.

The bank justifies the move as necessary to bring down costs and become more competitive. But customers will also be able to do more from home and, according to Kolding, the application process for 90 percent of the loans it offers will be possible entirely online.

“While major changes are not always welcome at first, we remain fully committed to attaining a high level of customer satisfaction,” the bank stated in the press release.

The banks also announced that it would be keeping its pension and investment arms, Danica and Danske Capital respectively, though it would sell off its poorly performing Irish portfolio when market conditions permit.

Danske Bank also plans on raising 7 billion kroner by issuing new stock, though it said that it will not be offering a dividend payout this year, a move intended to strengthen its capital base.

“It is the group’s ambition to resume dividend payments of about 40 percent of net profit as soon as it is justifiable.”

Last May, two of the most powerful rating agencies, Standard & Poor's and Moody's, downgraded Danske Bank. The bank now hopes to improve its credit rating by one notch as soon as possible in order to improve access to short-term money markets and its position in relation to its Nordic competitors.

The announcement today arrives after the bank posted pre-tax profits for the third quarter of 2.2 billion kroner, a significant improvement on 10 million kroner at the same time last year.

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