Nordea is going to cut the workforce with 10% according to CEO Christian Clausen.
Christian Clausen is also President of the European Banking Federation representing the 31 banking federations in Europe:
The bank announced last year that 2000 jobs would be cut during 2012. The bank still isn’t done cutting in Christian Clausen’s estimate.
Simultaneously the banks must have 12% of the risk weighted assets before 2015. The banks will have to find that money somewhere.
The mean should be cutting of staff and rationalisation – and sending the bill on to the customers.
No doubt about it Nordea – like other banks will have to rationalise – but there is more to it than that. If you look at the Swedish banking system, which is the “big four” it isn’t Swedish at all!
Nordea is one of the largest banks in all other Nordic countries – except Iceland where we all know what happened – from a bank-owned state it became state-owned banks. Nordea is 20% owned by the Swedish state as a remnant of a banking meltdown in Sweden some 20 years ago.
Only 1 in 4 of Nordea’s employees is actually employed in Sweden. For the “big four” – as a gang – the number is 1 in 3!
Now Sweden is not a member of the Euro-zone – in fact only Finland is of the Nordic countries. Norway isn’t even a member of the EU! This means that Nordea is a major opponent to CB CEO’s of at least 4 other countries. I will not contemplate the involvement in f.i. the Baltic countries or elsewhere – there is all the misery needed in the Nordic countries.
I think it is important to separate the debate about the European Union in twain:
One: The real economy of trade and production, which reasonable if by no means jubilant (ok, for some European countries downright depressing); but certainly not without hope. The hope is primarily a fairly efficient industry with Germany as the ringleader. One should not be blind to the fact that the import content of German products is to a very high degree from other EU members – German businesses don’t care who made the part – as long as price and quality is in order. There is precious little nationalistic jingoism left in European industry. German workers are well paid indeed; but they are remorselessly fired if they are not up to scratch. True the BRIC markets may not have the potential they used to have; but there is a vast market in Russia – a market that can pay with things better than cash: Oil.
Two: The financial side involving the banks and shifting of large sums of debt, which to a large extend is – if not rotten, then in very poor health. On the other hand there is large accumulated savings in pensions – with nowhere to be invested. This problem is universal – and not an EU specific problem and neither are the banks.
The ECB is primarily for the Euro-zone – or is it? The standards for banking in the Basel III agreement is a global regulatory standard on bank capital adequacy, stress testing and market liquidity risk agreed upon by the members of the Basel Committee on Banking Supervision in 2010–11, and scheduled to be introduced from 2013 until 2018.
The problem with any standard is the enforcement: There is a more or less global standard that you shouldn’t cheat on your spouse; but as one in ten or four (numbers vary) have another farther than the one we think – the enforcement of that standard leaves much to be desired.
On to the banking scene comes the ECB – in recognition of a common problem: Banks making legal arbitrage across political unions and currencies. The Basel III standards are going to be enforced simply because they represent a common problem for Central Banks.
When Christian Clausen somewhat flippantly say the customers will have to pay, he is simultaneously saying that he sees little hope of raising that amount of capital for Nordea Bank AB (STO:NDA-SEK) on the market. Seen in this light his bank to a severe blow in the SAS crisis, where the origin was that Nordea had no confidence in SAS actually making the rationalisations needed – especially with their zoo of different workers unions. Nordea then closed the credit on SAS – unless the national governments coughed up with more money. The threesome harmony of PM’s just crooned: “NO way!”
It was not going to happen – there might be pay cuts of 20%; but the countries were fully prepared to let SAS go bankrupt. They even reregistered some of the newest airliners to Norway where the receivership does not have the same powers as they have in the EU. These aircraft were financed by a French bank. Birds have a habit of flying away – even aluminium ones –from the fowler.
Again Norway wasn’t that interested – they would have a domestic airline system with or without SAS, Denmark doesn’t need a domestic route network and the Swedish need a severe pruning.
Now the Scandinavian (Scandinavia is Denmark, Norway and Sweden – Nordic counties additionally include Finland and Iceland) had delivered. What we are seeing now is the next round with the ball in Nordea’s court – up to now Nordea has made a lot of swishing noises with the racket; but very little ball hitting. A 10% staff cut is not going to impress governments twisting arms for a 20% pay cut.
Nothing official has percolated yet; but the Danish Central Bank has of November 30th stopped quoting daily interest rates on sovereign bonds – where the papers has it that the 10 year actually dipped below 1%. What is hissed out between clenched teeth is rarely quotable.
My take on it (and it is thoroughly unconfirmed and only based on what is NOT said) is that Nordea Bank AB (STO:NDA-SEK) is kicked out of the Danish variable interest mortgage banking system, where Nordea (Sweden) will more or less permanently finance their variable interest one year real estate bonds. The interest of these bonds is so low, that they can’t be sold off without a guaranteed loss to Nordea Bank AB (STO:NDA-SEK) – which will keep them in the appropriate vault.
The Nordic countries have shown that they are perfectly prepared to hit the banks – the major banks: Nordea is in its own right a systemically important bank in at least three different countries and currencies. The Swedish reservations on the European Bank Inspection issue are understandable! No matter ever which way you turn it Nordea is coming under the European Bank Inspection – or will have to confine its activities to Sweden (SEB is another) the EU is hardly going to allow Nordea to run rough-shoed over the Finnish Bank Inspection (nor Denmark’s for that matter).
The promise/threat of Christian Clausen of a 10% staff cut is just a normal bankers way of waving away flies. My estimate is that he hasn’t quite understood that these flies have stings and a mean temper. If you are confused, you are certainly not alone: There has been broadcast a major television expose on the 5 old bank rescue of Danske Bank A/S (CPH:DANSKE) (PINK:DNSKY) with a lot of noise about who cheated whom. The only trouble is that the Government stands by the agreement and CEO of Danske Bank, Eivind Kolding states that nobody has been cheated; but Danske Bank A/S (CPH:DANSKE) (PINK:DNSKY) was not going to give away its shares to the Danish state at a time when they were at an all time low: The state guarantees have been paid for in full.
Honestly: I don’t think Danske Bank A/S (CPH:DANSKE) (PINK:DNSKY) is fully aware of what is going on. They have send in their obnoxious claques on different blogs to see if they could make someone divulge a bit of information – when a major player resort to that kind of intelligence gathering, they are very uncertain.
The more generally interesting part is that apparently the first shots are being fired against the large banks in Europe. Up to now the minor banks within the national bank inspections authority and capacity have been the focus of interest: Even in Spain all the noise has been on the smaller banks, where BANKIA SA (PINK:BNKXF) is just a merger of local disasters and in itself not a major international bank. The “big three” in Spain, such as, Banco Santander, S.A. (NYSE:SAN) (
This is probably the first move against the transnational banks from the European Union – or is it?
Deutsche Bank AG (ETR:DBK) (FRA:DBK) (NYSE:DB) – by far Germany’s largest bank – has come under the scrutiny of the US Securities and Exchange Commission where it has been indicated that the German BaFin has been less than diligent. This would bring stronger support to a European Bank Inspection – of the major banks. Germany’s position has been that only banks beyond the national bank inspections capacity should come under ECB’s Bank Inspection. Apparently because Germany knows that BaFin is not beyond reproach. We are talking about an inspection of the inspection; but under direct control of a board of governments. Sweden is as we have seen inclined to believe that such an Inspection would be disfavorable to the large Swedish banks, notably Nordea Bank AB (STO:NDA-SEK) and SEB. They might well be right for Deutsche Bank is apparently in for what they would see as cruel regulation and brutal enforcement – and the German authorities doing nothing to help those duck responsibility.
The EU is starting to enforce regulation on their major transnational banks.