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Danske Talks Down Market Bets It’s Cutting Thousands of Jobs

Bloomberg logoBloomberg 1/14/2020 Frances Schwartzkopff
a large brick building: The headquarters of Danske Bank A/S stand in Copenhagen, Denmark.© Bloomberg The headquarters of Danske Bank A/S stand in Copenhagen, Denmark.

(Bloomberg) -- Danske Bank A/S says it doesn’t have a target for job cuts after offering 2,000 of its Danish employees a sweetened package to quit.

The Copenhagen-based bank says there’s no expectation that all employees who receive the offer will accept the terms. It also points out that a similar package in 2016 targeting 8,000 employees led to roughly 250 voluntary departures, with only 77 subsequently being forced out.

The bank, which says its compliance costs are still growing in the aftermath of a vast dirty-money scandal in Estonia, has promised shareholders it will find savings as part of its 2023 plan to become more profitable. In October, Danske announced an organization-wide hiring freeze as it braces for fines potentially in the billions of dollars for money-laundering missteps.

Claus Jensen, Danske’s head of investor relations, said the bank hasn’t set a goal for job cuts.

“We do not have a specific expectation as to how many will apply for a voluntary redundancy agreement,” Jensen said on Tuesday. Danske currently employs a little under 22,000 so-called full-time equivalents.

“We expect to be fewer employees the coming years, but we do not have a specific target,” Jensen said.

Danske’s offer of voluntary redundancy focuses on support staff and other positions at its headquarters in Copenhagen. The bank will protect employees working in compliance, as well as those working closely with customers.

The bank’s shares traded about 0.4% higher by 3:20 p.m. in Copenhagen, after having gained about 1.5% earlier in the day. Danske sank 16% last year and 47% in 2018, amid concern over the fallout of the laundering scandal.

Chief Executive Officer Chris Vogelzang has already fired employees working in the bank’s fixed income and currency unit, in addition to the hiring freeze, as he targets a return on equity of 9-10% three years from now. The bank expects a return of 5-6% for this year.

Denmark’s bankers’ union said it welcomed the decision to limit any job cuts to voluntary redundancies, but also warned that it will be difficult to maintain the same level of service with fewer people.

“The case right now is that everyone is working really hard, and I have some trouble seeing how fewer employees will be able to lift the same tasks,” said Kirsten Ebbe Brich, a union representative and an employee representative on Danske’s board. “But that’s the bank’s decision.”

(Adds shares in eighth paragraph)

To contact the reporter on this story: Frances Schwartzkopff in Copenhagen at fschwartzko1@bloomberg.net

To contact the editor responsible for this story: Tasneem Hanfi Brögger at tbrogger@bloomberg.net

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©2020 Bloomberg L.P.

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