Dec. 7 (Bloomberg) -- Nordea Bank AB, Scandinavia’s largest lender, is cutting its workforce by 10 percent and will close branches to mitigate the impact of stricter regulatory requirements, Chief Executive Officer Christian Clausen said.
The Stockholm-based bank, which in August last year said it will eliminate 2,000 jobs by the end of 2012, needs to make even deeper cuts “over a few years,” Clausen said yesterday in an interview in Copenhagen. Job cuts to date are equivalent to 7 percent of the bank’s workforce, it said today in a statement to the stock exchange.
Nordea is slimming down as it adapts to stricter regulatory rules in Sweden than those set elsewhere. Finance Minister Anders Borg has told the nation’s four biggest banks to set aside 10 percent in core Tier 1 capital from January, and will raise the requirement to 12 percent of risk-weighted assets from 2015. More onerous regulatory standards leave banks with few alternatives besides cutting back, said Clausen, who is also the president of the European Banking Federation.
“It comes from operating costs, to become more efficient,” Clausen said. “To have fewer people, fewer branches, lots of things on operating costs. We’re taking that down significantly. We’re reducing staff over a few years by at least 10 percent.”
The bank is planning to send half of the costs created by tougher capital standards on to its clients, Clausen said.
Nordea currently employs about 34,000 people in the Nordic region, the Baltic states, Russia and Poland, according to its website. The lender achieved a return on equity of 12 percent at the end of September, though the ratio trails a target of 15 percent that the bank set itself in 2011.
Clausen, in his capacity as EBF president, has argued against stricter regulatory standards for European banks, which he says are undermining economic growth. Requiring banks to deleverage isn’t compatible with the goal of aiding a recovery, he said.
“Politicians should understand, we should and everybody should understand, that in this environment this regulation is not a huge growth driver,”
To contact the editor responsible for this story: Jonas Bergman at email@example.com