Danske 'not planning' Irish sales

Mon, Dec 19, 2011, 00:00

The chairman elect of Danske Bank has said the group does not plan to dispose of its Irish banking interests.

Danske, which owns National Irish Bank in the Republic and Northern Bank in the North, today announced that its chairman, Eivind Kolding, is to take over as the group's new chief executive in February.

He is to be succeeded as chairman by Danske board member Ole Andersen.

"The overall strategy is in place," said Mr Andersen. "The strategy is that Danske Bank must regain a leading position…We must get the profitability of the bank back," he added.

Mr Andersen said the strategy did not include a sale of the bank's troubled Irish units which have experienced high loan losses that have dented recent group results. National Irish Bank last month posted a loss of some €600 million for the first nine months of this year.

"No one in this bank thinks it has been a fantastic acquisition. There are no considerations at all regarding selling the banks," Mr Andersen said. "We will do everything we can to get the best out of the situation we are in."

Last month, Danske Bank said it would cut costs by 10 per cent, axing 2,000 jobs in the process, after quarterly profit was wiped out by a drop in trading income, making it the latest Nordic lender to combat slow revenue growth and high funding costs.

Mr Kolding (52) is chief executive of container shipping company Maersk Line, part of the AP Moller-Maersk group which is Danske Bank's biggest shareholder.

Danske’s current chief executive Peter Straarup has come under criticism for expanding to Ireland and Northern Ireland in 2005 as the onset of the financial crisis left the group exposed to heavy writeoffs on loans made during the property boom.

He last month described Danske’s €1.4 billion purchase of NIB and Northern Bank in 2005 as “unfortunate”.

“But there are many fine qualities in this institution and once the Irish calamity has been sweated out, I think the bank will prove itself to do very well,” he said.

Additional reporting: Reuters