Danske Bank Names Chairman Kolding CEO as Straarup Retires

Eivind Kolding will move from serving as Danske Bank A/S’s board chairman to becoming its chief executive officer as Denmark’s largest lender faces a deteriorating market at home and persistent losses in Ireland.

Kolding, who has served 10 years on Danske’s board, becomes the Copenhagen-based lender’s first chief executive from outside the company on Feb. 15 when he replaces Peter Straarup, who’s retiring. Kolding, 52, will step down from his position as CEO of Maersk Line, the container unit of A.P. Moeller-Maersk A/S, Denmark’s biggest company and Danske’s biggest shareholder.

“It’s good that we see a new CEO coming in to rebuild trust between Danske Bank and the capital markets,” Mats Anderson, a Stockholm-based analyst at Credit Agricole Cheuvreux SA, said. The market’s perception is that the lender’s difficulties are “very much Danske Bank’s own doing,” he said.

Danske is the worst performing of the six large Nordic banks. The lender reported last month its first quarterly loss in more than two years, and shares have plunged 46 percent since January as twin housing and banking crises in Denmark exacerbated losses in Ireland.


The bank is eliminating 2,000 jobs as part of a three-year effort to cut 2 billion kroner ($350 million) in costs by 2015, it said Nov. 1 after reporting a third-quarter loss of 384 million kroner. The bank said then that Straarup, 60, will retire. Danske interviewed candidates both inside the bank and out before choosing Kolding, Ole Andersen, Danske’s new chairman, said.

“He is the first external CEO recruit in Danske Bank’s history, so he may bring some new DNA to the bank,” Andersen said in a phone interview. “He has proven that he is able to execute on strategic changes and also to motivate his organization and convince them to walk extra mile.”

Under Kolding, Maersk Line has cut costs and invested in more efficient ships, making the company more profitable than peers. In the first six month of the year, earnings before interest and tax margin were 3 percentage points higher than the industry average, the company said last month. It’s the most reliable of the world’s shipping companies, delivering the most containers on time, according to Drewry Shipping Consultants.

House Bubble

“It’s very important that he comes from the outside and can see the bank with fresh, unbiased eyes,” Credit Agricole’s Anderson, who has Danske shares on his select list, said in a phone interview. “He has brought about a certain change at Maersk Line which has been beneficial.”

Danish banks are reeling from the fallout of a housing price bubble and a funding crisis sparked by senior creditor losses after the February failure of regional lender Amagerbanken A/S. Consumer demand for loans has plummeted, while rising funding costs have locked most banks out of the market and led the central bank to expand its lending program.

Fitch downgraded Danske last week, citing the deteriorating quality of its Danish and Irish assets and a weaker profit outlook. Fitch lowered Danske’s long-term issuer default rating to A from A+ and said the outlook was “negative.”

Both the Danish and Irish economies are on the brink of a recession. The Irish economy contracted 1.9 percent in the third quarter, and Fitch Ratings said Dec. 16 that it may downgrade the country.


Danish house prices fell in the third quarter to the lowest in six years, the Association of Danish Mortgage Banks said today. Prices dropped an annual 6.6 percent and were down 4.3 percent from the second quarter, the Copenhagen-based organization said.

Denmark’s economy contracted 0.8 percent in the third quarter from the previous period after households spent less and the state cut expenditure, the statistics agency said Nov. 30.

“It is a difficult environment” for any financial institution, Kolding said by phone. “That I am aware of. But that will be no excuse for not trying to really make the best of it and bring the bank back to the position that we need to have.”

The spread between the costs of insuring against a default by Danske compared with Stockholm-based Nordea Bank AB widened to 142 basis points on Dec. 1, the most in at least seven years.

Danske rose as much as 3.5 percent in Copenhagen trading today. The stock gained 1.6 percent to 72.95 kroner at 1:44 p.m. local time.

Kolding, who has a Master’s degree in law from the University of Copenhagen, joined Maersk in 1989, and was named chief financial officer in 1998. He became a member of Danske’s board in 2001.

Maersk, Denmark’s biggest company, owns about 23 percent of the bank, according to data compiled by Bloomberg.

Maersk named Soeren Skou new CEO of its container unit, it said in a separate statement.

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