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Nordea to cut 6,000 staff after missing cost target
October 26, 2017 / 10:38 AM / a month ago

Nordea to cut 6,000 staff after missing cost target

STOCKHOLM (Reuters) - Nordea is to cut at least 6,000 jobs after saying it would miss its 2018 cost target.

The Nordic region’s biggest bank, which has invested heavily in IT over the last three years, said automation and digitalization meant it would shed at least 4,000 of its 32,000 employees and some 2,000 consultants.

One in five of Nordea’s customer meetings is now held online and the bank has introduced an artificial intelligence chatbot to answer common customer questions.

“We’re becoming more digitalized, more automated,” Nordea CEO Casper von Koskull told Reuters.

“This is not cutting cost within an existing structure, we’re changing the way a bank works. On one hand it’s very exciting, but on the other hand, of course, it results in the industry needing fewer people.”

Staff reductions would be spread evenly over geographical regions and business areas and generate a one-off cost of between 100 and 150 million euros which would be booked in the fourth quarter, he said.

“You will see this coming through in pretty much the whole industry,” von Koskull added.

However, the market was not impressed with the projected cost savings. Nordea said it saw costs of 4.9 billion euros for the full year 2018 and that it would take a further three years to meet its target of 4.8 billion in annual costs.

Nordea shares were 5.7 percent lower at 1027 GMT, underperforming the European banking index which was up 0.1 percent.

“What’s surprising is that they cut 6,000 employees, but you see almost no savings. They have so much underlying cost inflation that they have to do this to keep costs at this level,” Andreas Hakansson, analyst at Exane BNP Paribas, said.

Nordea posted operating profit of 1.09 billion euros ($1.29 billion) for the third quarter, matching the forecast in a poll of analysts but below a year-ago 1.15 billion. [nL8N1MV3FF]

The earnings report was the Nordic bank’s first since it announced it planned to move its headquarters to Finland, sparking fury among Swedish political leaders and labor unions.

The move, aimed at cutting the cost of complying with Swedish regulations, is the first time since the financial crisis that a major bank has shifted headquarters to avoid tougher rules.

Reporting by Johan Ahlander; Editing by Niklas Pollard/Edwina Gibbs/Alexander Smith

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