Nordea expects hadcount to dip to meet goals

Bloomberg

Nordea Bank AB will cut more jobs as Scandinavia’s largest lender looks for ways to lower its cost-to-income ratio by about one-fifth.
“Over time the headcount will be lower,” Chief Executive Officer Casper von Koskull said in an interview at Nordea’s headquarters in Stockholm. “A best-in-class retail bank operates today with a cost-to-income ratio in the low 40s. Surely we should be where the best-in-class is.”
The measures envisioned will go beyond headcount as von Koskull oversees a technology upgrade that will dramatically alter the way the bank does business. With the equivalent of about 30,000 full-time employees, Nordea’s expenses rose last quarter despite staff cost cuts. Its cost-to-income ratio reached 51.3 percent, excluding non-recurring items, versus 43.7 percent a year earlier. Part of that reflects Nordea’s decision to spend the next few years rebuilding its core banking platform and data payment systems at an eventual cost of about $1.1 billion.

Crowd Funding
“It’s not only about being efficient and cutting headcount,” von Koskull said. “If you can launch products faster and integrate them faster, the cost of that should actually come down dramatically.”
Nordea last month jumped on the peer-to-peer lending trend with a plan to offer crowd funding in Finland.
The bank wants to use the development to expand its client base by reaching a group of investors and businesses to which it generally wouldn’t lend, von Koskull said.
The negative-rate environment in which Nordea operates is strongly forcing it to scour its operations for new sources of revenue and for places to cut costs.
After slashing jobs in the wake of the financial crisis, banks in Scandinavia are now responding to the monetary policy climate and tougher regulatory demands with even more staff cuts.
Banks in Denmark, where interest rates have been below zero longer than anywhere else on the planet, have eliminated almost one in five jobs in the past eight years and will cut another 550 positions in 2016, according to the Employers’ Association for the Financial Sector.
If Denmark is any gauge, there’s still a lot of room in Sweden and Norway to reduce staffing costs. Banks in the two countries have so far pushed through less drastic cuts, shedding at most 7 percent of their employees over six years, according to association data.
“If you look at the period from the 1980s until the financial crisis, banking grew much faster than the underlying GDP,” von Koskull said. “We are not in that world anymore.”