Danske to Hire Currency Traders in U.S. as Branch Plan FailsFrances Schwartzkopff
Danske Bank A/S, which last week gave up ambitions to open a New York branch, still plans to hire bankers to expand currency trading operations to the U.S.
Denmark’s biggest bank wants to provide foreign exchange services in the U.S. to existing customers, Jens Peter Neergaard, Danske’s global markets head, said in an interview. Demand for European fixed-income products, including government and mortgage bonds, may also warrant additional hires in the New York office, he said.
Danske fired three of its New York employees last week after delays in its application for a U.S. banking license led it to abandon the bid. The Copenhagen-based bank had planned to provide money market and foreign exchange services out of the branch. Though it won’t be able to accept deposits now, the bank doesn’t need as much dollar funding as it did when the application was made four years ago, Neergaard said. Danske will seek to expand its foreign-exchange business by tapping its U.S. broker-dealer, he said.
“It’s been a good business that we’ve built in bringing the Nordic fixed-income products to the U.S. investors,” Neergaard said. Government bonds, particularly those associated with Europe’s debt crisis, have offered “a tremendous recovery trade,” he said.
Yields have fallen to six-week lows, with Spain’s 2015 bond declining to about 1.792 percent today, its lowest since May 22, according to data compiled by Bloomberg. Improving economic data and a lack of new bond issuance are driving the gains, RBC Capital Markets said.
Danske reported a 46 percent gain in net income last quarter after loan losses dropped and the economies of its main markets picked up. The bank, which has navigated its way through burst property bubbles in Ireland and Denmark, said last year it needs to eliminate 3,000 jobs to stay competitive.
Still, the bank is expanding in areas where there’s growth. Danske said in February it’s hiring bankers for a bond underwriting unit as demand for corporate debt issuance grows. So far, the bank has only offered foreign exchange services from its Copenhagen office.
“We operate a 24-hour shift here and that has worked well for us, but we think it’s better to have a local presence and that is why we would like to be on the ground there,” Neergaard said.
Danske opened its broker-dealer office in New York at the beginning of 2010. That followed a 2004 announcement that the bank was closing its U.S. operations because the implementation of Basel II rules posed a threat to its business. A year later, Danske entered the Irish market.
Shares of Danske have risen 20 percent this year, compared with a 13 percent increase in Bloomberg’s 44-member index of European banks. The bank traded at 114.40 kroner on Friday, compared with a 2007 peak of 252.63 kroner.