Danske Bank to cut 3,000 jobs

Tue, Oct 30, 2012, 00:00

Danske Bank unveiled plans to cut 3,000 jobs and sell 7 billion kroner (€900 million) in shares as Denmark's largest lender looks for ways to increase its capital buffers.

The measures were announced together with Danske's third-quarter report, showing net income of 1.31 billion kroner, compared with a loss of 384 million kroner a year earlier.

Danske's share sale will be through an accelerated book building process to help achieve a core Tier 1 capital ratio in excess of 13 per cent by the end of next year.

The bank also announced plans to provide shareholders a return on equity after tax of 12 per cent by the end of 2015.

Danske is responding to a recession and burst housing bubble in its home market with job cuts, raising its target for staff eliminations by 1,000 from its previous goal of 2,000 cuts.

Chief executive officer Eivind Kolding, who took over from Peter Straarup in February, is pushing through an overhaul of the bank's strategy to help boost competitiveness and squeeze better returns out of the lender.

Danske's business conditions "have changed radically," the bank said today.

"The group's focus on streamlining operations, closing branches, improving and automating customer service, as well as changed customer behaviour, will lead to a headcount reduction of 2,000 in the period 2013-15," the bank said.


That's on top of the 1,000 job cuts planned by the end of this year, it said.

Danske shares slumped as much as 7.7 kroner, or 7.4 per cent, to 96 kroner in Copenhagen trading, its steepest intraday decline since November 1 last year.

The shares, which have gained 35 per cent this year, were down 5.7 per cent at 11.07am local time.

The bank said today it won't propose any dividend payment for 2012.

Danske, which last passed on profits to shareholders in 2008, aims to resume dividend payments of about 40 percent of profit "as soon as it is justifiable," it said.

Danske Bank, which is rated A at Fitch, A- at Standard and Poor's and Baa1 at Moody's Investors Service, said the capital increase will help "accelerate rating improvements and achievement of our capital targets, strengthen our funding position and better align us with our Nordic peers."

The bank aims to improve its credit ratings by at least one level "as soon as possible" to reduce funding costs, it said.

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