Repairing Danske Bank's reputation
Danske may be one of the best known brands in Denmark, but it is far from the best loved, its reputation sullied by the financial crisis, a fraud scam and its investment in National Irish Bank, writes CLARE MCCARTHY
WHEN MICHAEL Krohn-Dehli slipped past the Dutch defence to score the goal that secured his country’s surprise victory over the Netherlands in the UEFA Euro championship last month, it’s a fair bet that Danske Bank’s marketing crew cheered louder than most.
For Danske, which is Denmark’s largest bank, with more than 50 per cent of the domestic market, took over as lead sponsor for the national squad at the start of 2012. The deal, costing just under €10 million over four years, is designed to help rehabilitate the bank’s image, erasing the reputational fallout of the financial crisis, a fraud scam it didn’t see coming and its ill-starred foray into Ireland.
However, it will take more than a few lucky goals to persuade Danes that Danske is a credible and competitive outfit with fine leaders adept at innovation and the ability to act responsibly.
According to the 2012 image analysis of Danish companies published by the Berlingske newspaper, the bank is far and away Denmark’s best-known corporation. By topping the rankings for brand recognition, Danske beat more than 100 other entities including the national railway company, the post office, Lego and Carlsberg.
It may be well known but it is not well loved. Danske’s overall ranking in the survey was 104th (down from 94th last year) and it also tumbled down sub-rankings tracking leadership, quality, competitiveness, innovation and responsibility.
This fall from grace contrasts sharply with Danske’s once pristine reputation as among the finest of Danish blue-chips. Its stock – literally and figuratively – was high and it was known for following an extremely conservative lending policy.
Cracks started to appear in this image in 2008 when it emerged that Danske had allowed itself be duped to the tune of €47 million in the most spectacular example of corporate fraud in Danish history.
Stein Bagger, a smooth-talking internet entrepreneur with a fake doctorate and an improbably flashy lifestyle, forged large sales orders to create fictional revenue for his company, IT Factory. The fraudster was eventually jailed for seven years for the racket that cost IT Factory’s investors and creditors an estimated €67 million in all.
Embarrassingly for Danske, the bank apparently continued its dealings with Bagger, despite knowing that he had previously been investigated by police for fraud as early as 2003.
But the real nightmare for Danske was its decision in 2004 to spend €1.4 billion buying National Irish Bank and Northern Bank.
Peter Straarup, then chief executive, was initially praised for his move into the fast-expanding Irish market. But the dream came crashing down when Lehman Brothers collapsed in 2008, triggering the deepest financial and economic crisis since the Great Depression.