Danske Bank to axe over 1,000 jobs

Bloomberg

Danske Bank A/S may need to cut at least 1,000 jobs if it’s to meet its latest cost goals, according to analysts monitoring the lender.
Danske’s chief executive, Chris Vogelzang, told Bloomberg that he’s planning “significant” staff cuts in an effort to bring expenditure under control.
Given the lender’s stated cost targets, that entails a “low four-digit number,” according to Mikkel Emil Jensen, an analyst at Sydbank. Jyske Bank analyst Anders Haulund Vollesen predicts up to 1,000 job cuts this year alone, with more in 2021.
“It will be hard for Danske Bank to reach its cost cutting goals without cutting a large number of jobs,” Jensen said by phone. It will be “at least 1,000,” he said.
Danske spokesperson Mads Sixhoj said the bank won’t comment beyond the guidance it gave last week. In an interview with Bloomberg, Vogelzang declined to give a number, but said the planned cuts will be “more than we have been doing.”
The goal is to reduce costs by 3 billion kroner ($460 million) next year, and to reach that, “we have to take the unfortunate decision to actually lay off staff right across the organization,” Vogelzang said. “Personnel costs are a very high part of all of our costs.”
Analysts at Deutsche Bank highlighted Danske as a standout example of a Nordic lender that exceeded expectations for second-quarter results. Deutsche is among a handful of banks and brokers to have raised Danske’s price target since the lender published results on Friday.
Danske employs over 20,000 people. Its workforce has grown in recent years after the bank started hiring to build up its compliance department. Focus on the unit became a priority after Danske got mired in a money laundering scandal that’s still being investigated in the U.S. and Europe.
“One of the areas were Danske can cut is in anti-money laundering,” Jensen said. “While Danske faces an increased amount of tasks in this area with new regulation and will want to make very sure that nothing is missed, it should be possible to start automating many of the procedures and thereby cut staff.”
The plan to reduce headcount comes amid evidence that Danske is fixing some of the issues that previously drove investors away. The bank’s second-quarter profit trounced market expectations and on Monday, its share price soared as investors digested the development.
But Denmark’s main finance workers’ union has issued a warning to Danske.
“It’s a complicated situation and we acknowledge that it’s tough to run a financial institution in such a long period of low and negative interest rates,” said spokesperson Kirsten Ebbe Brich. “But we must warn that if Danske Bank cuts too deep then the bank loses the opportunity to pursue growth, because it’s the employees who generate the revenue.”
Vogelzang said that Danske “will now get into discussions with all the parties involved to actually get this done. It will be done.”
The bank is “open for discussions” on “the manner” in which the cuts are made, he said. “We’re trying to do this in a respectful and considerate manner together with the unions and employee union representatives.”