The man about to take the helm at Scandinavia’s biggest lender says shaping banker behavior will be the next frontier in cutting capital costs after all other models have been used to the fullest.
“The rebalancing probably has been done, a lot of it, then it becomes more of a behavioral and cultural thing,” Casper von Koskull, who will take over from Christian Clausen as chief executive officer of Nordea Bank AB on Nov. 1, said in an interview.
Nordea’s path toward improving its efficiency will require job cuts in areas where digital technology is taking over, von Koskull said. “Then again, we will employ people in other areas,” he said. “Just looking today at the new compliance environment we’re operating in has required hundreds of new people. Like in many other industries, it’s about shifting needs.”
Should the bank’s cost cutting result in excess capital, that will be fed back to shareholders, von Koskull said. After half a decade at Nordea as the head of its wholesale unit, the 54-year-old underscored his commitment to continuing the same strategy that saw the bank emerge from the global financial crisis stronger than most competitors.
Von Koskull will be measured on his ability to live up to Nordea’s goals of ensuring average annual costs don’t increase by more than 1 percent from 2016 to 2018. The bank also targets a return on equity that’s above the average for Nordic peers while keeping its risk exposure largely unchanged. Nordea has told investors it wants to pay them a dividend that represents at least 75 percent of net income -- the highest ratio among all Nordic banks.
To live up to its profit and cost targets, Nordea closed down its commodities trading unit last year. Will more units be axed if they aren’t able to perform? “The answer has to be categorically yes,” von Koskull said. “Nothing is binary but I think we need to continuously question critically are we doing the right thing, are we serving customers in the right way, and if we run something that is not relevant to customers and is not profitable we should definitely take the right action.”
Shares in Nordea gained as much as 1.8 percent on Thursday after slipping in the two days since the bank announced it is changing CEOs.
Adrian Cighi, an analyst at RBC Capital Markets, says investors keen on Nordea continuing its existing strategy should take “comfort” in the appointment of von Koskull. He also notes that the new CEO cut capital usage by 30 percent while head of Nordea’s wholesale banking unit.
As he prepares to move into the role of CEO, von Koskull says the strategy he’ll be following amounts to “kind of changing the whole engine room of the bank.” Achieving many of the bank’s goals will depend on “whether we can simplify the way we conduct ourselves,” he said.