Danske Wins Maersk CEO Praise After Bank Replaced Its Management

Danske Bank A/S won praise from its biggest shareholder after Chief Executive Officer Thomas F. Borgen replaced a number of key management figures and cut the lender’s debt load.

“It looks like there’s more calm at the bank and motivation seems high,” Nils Smedegaard Andersen, CEO of A.P. Moeller-Maersk A/S, which owns about 20 percent of Danske, said in a phone interview. “We’re a satisfied investor at the moment. And we’re in any case a long-term investor.”

Borgen, who replaced Eivind Kolding in September, has reorganized the management team at Denmark’s biggest bank after a spate of consumer satisfaction surveys suggested Danske was falling out of favor. The CEO has also focused on cutting debt, which last month paid off as the Copenhagen-based lender had its credit rating raised one step to A at Standard & Poor’s.

“There have been some underlying challenges in operating a bank in Denmark, which have led to lower credit ratings,” Andersen said. “And then Danske Bank has been exposed heavily toward Ireland, which has been rather challenging.” He declined to comment specifically on the bank’s new management.

Since Borgen took the helm at Danske eight months ago, the bank has parted ways with a number of key departmental heads. Steen Blaafalk was fired from his role as head of treasury in October, ending a three-decade-long career at the bank. In March, Danske said Robert Endersby would step down as head of group risk management, after joining the bank just two years earlier.

Share Gains

At least seven top managers have either stepped down or been fired since the beginning of 2012 after the bank failed to match investor returns at its biggest Swedish competitors.

Danske, which plans to reduce its debt load by as much as 45 billion kroner ($8.2 billion) this year, is now benefiting from harmonization across Europe of bail-in rules. According to Moody’s Investors Service, that will help free Danish banks of the stigma they felt after senior creditors suffered losses when the state wound down Amagerbanken A/S in 2011.

Danske shares have gained 21 percent this year, compared with a 16 percent increase in the Copenhagen benchmark index of Denmark’s 20 most-traded stocks. Stockholm-based Nordea Bank AB, Scandinavia’s biggest lender, has advanced 9.8 percent.

The markets Danske operates in are also improving. In Denmark, property values are starting to recover from the 20 percent slump they suffered between their peak in 2007 and their trough last year. House prices rose 3.4 percent in February from a year earlier, Statistics Denmark said April 30.

Danske Bank on May 1 reported a 91 percent jump in first-quarter net income to 2.81 billion kroner. That beat the average analyst estimate of 2.58 billion kroner in a Bloomberg survey.

“We’re looking at the bank’s performance regularly, but we don’t evaluate the bank on a quarter-by-quarter basis,” said Andersen, whose company, Denmark’s biggest, controls more than 1,000 subsidiaries. “Sometimes we have a view on a matter, which we share at the board level, but we’re not a driving shareholder.”

Before it's here, it's on the Bloomberg Terminal.