Danske Bank A/S (CPH:DANSKE) (PINK:DNSKY) has fired its Chief Executive Officer Eivind Kolding after less than two years on the job, saying it needed someone with more experience, report Frances Schwartzkopff and Peter Levring for Bloomberg. Kolding will be replaced by executive board member and long-time employee Thomas Borgen.
Kolding’s lack of experience to blame
Kolding came to Danske Bank A/S (CPH:DANSKE) (PINK:DNSKY) from a container shipping company, and this lack of expertise is being blamed for the reason Danske is recovering more slowly than its competitors—its share price has gone up 26 percent, compared to 38 percent for Nordea Bank AB (STO:NDA-SEK) and 56 percent at SEB. Kolding was also behind a rewards plan for customers who did the most business at Danske Bank A/S (CPH:DANSKE) (PINK:DNSKY) that was ridiculed by local press (partly for its ad campaign).
“The board of directors has assessed that, notwithstanding Eivind Kolding’s professional and personal qualities, it is in this phase necessary to have a CEO with stronger qualifications within banking,” said Chairperson Ole Andersen.
Kolding faced tough circumstances during his employment as CEO
Kolding wasn’t around during the financial crisis, and the bad loans that damaged the bank weren’t his fault, but he was an unlikely candidate to take control of a bank during the most difficult period in decades. He was faced with a challenging business climate, an uncertain regulatory environment, and weak financials. It would have been more surprising if he had succeeded.
“It’s not my impression that Eivind Kolding has done a bad job,” said Jyske Bank A/S (CPH:JYSK) analyst Christian Hede. “He’s had a very specific task: developing and implementing a new way of going about business. I’m not going to change my estimates based on this.”
CEO position to go to long-time employee Thomas Borgen
Borgen is expected to continue with Kolding’s basic framework, but with a greater focus on customer satisfaction and years of hands-on operation experience. He will have to face the same obstacles as Kolding, but with Europe’s economy starting to come back, he may end up getting credit for what was largely a change in trends.
Danske Bank A/S (CPH:DANSKE) (PINK:DNSKY) was designated as one of five banks that are systemically important to Denmark, forcing it to adhere to stricter capital requirements. Denmark’s Financial Supervisory Authority has said that Danske needs to add another $18 billion in risk weighted assets.