Danske bank offers voluntary redundancy to 2,000 Danish staff

Embattled bank looks to reorganise itself following money laundering probe

                                

Danske Bank has offered 2,000 Danish employees voluntary redundancy. This is part of a reorganisation attempt following a substantial money-laundering scandal.

Founded 149 years ago, Danske Bank is the largest bank in Denmark and operates a number of banks across Scandinavia and Ireland, with more than 5 million retail customers.

In an email Danske Bank’s interim chief HR officer Anne Knos stated: “As part of our plan to become a better bank, we need to reduce costs to be able to, among other things, invest significantly in becoming a more digital, simple and efficient bank.”

The firm’s desire to keep up with the trend of digital banking is well known. In November last year Danske Bank announced that it would spend 1.5-2bn krone ($220-300m, £170-230m) in 2020 on cost management and digitalisation. While this may be bad news for the 21,000 current employees, the bank hopes to restore shareholders’ return on equity from the current 5-6 per cent to 9-10 per cent by 2023.

It is unclear to what extent Danske Bank’s streamlining of its workforce is motivated by a desire to keep up with the trend of digital banking or by the need to respond to the pressures placed on it by the scandal of 2017-18.

However, the bank has seen a fall in its customer base and successive poor earnings reports since it became embroiled in the European Union’s biggest ever money-laundering scandal.

The bank is under investigation by authorities from the EU and governments in Denmark, Estonia and the United States for the alleged laundering of €220bn of funds from Russia and other states from the Caucasus into Europe through its Estonian branch in Tallinn.

CEO Thomas Borgen resigned following the scandal and has been charged with neglect, as has Danske Bank’s former finance director Henrik Ramlau-Hansen. Although not facing charges himself, the former CEO of Danske Bank Estonia, Aivar Rehe, committed suicide in September 2019.

With the firm being hit with a €197m lawsuit from disgruntled investors over Christmas, it is possible that the push for digitalisation is providing a helpful figleaf for Danske Bank as it faces the consequences of its association with money laundering.

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