Danske bank has returned a disappointing result for the Third Quarter of 2013 and has reduced its forecast for 2013 as a whole by a billion kroner. The bank has also announced it is to wind down its private business in Ireland.
“The Q3 result shows some progress, but market conditions are still difficult. In order to remain competitive and provide long-term value for our clients and shareholders, it is necessary to concentrate more on our customers, simplify our operations and considerably increase efficiency,” says CEO Thomas Borgen.
The bank’s result for the first nine months of 2013 was at 5.2 billion kroner. It has reduced its forecast for the entire year from 6.5 – 9 billion kroner to 6-8 billion.
As part of its strategy, Danske Bank has announced that it is to close its Irish business for sales of products to private customers, and concentrate on the business segment. No more private customers will be accepted into the bank in Ireland, and those private customers who are there, will be wound down during 2014.
“The decision regarding the personal and business banking divisions is necessary to stem the losses that continue to accrue in those units. Against the backdrop of the difficult economic and trading environment in Ireland, the bank has been unable to re-establish a sustainable retail banking business model,” Gerry Mallon, the head of Danske Bank UK and Ireland told the Irish Times.
The bank’s decision to close its private business in Ireland has come as a shock to employees in Ireland. Danske Bank entered Ireland in 2005 by acquiring Northern Bank in Northern Ireland and National Irish Bank in the Irish Republic. It currently has some 350 staff, 150 of whom are expected to be made redundant.
“We are shocked and feel betrayed. We have urged Danske Bank Group to reconsider this decision in the interests of its Irish customers as well as its staff,” says Larry Broderick, chairman of the Irish banking union IBOA.
“They were happy enough to come here during the good years, but when it gets difficult they pull out. It’s particularly disappointing at a time when the Irish economy is beginning to improve. One could have expected a bit more loyalty,” Broderick says.
Danske Bank is not, however, the only bank to reduce or close its business in Ireland. The Irish Times disclosed today that ACCBank, which is backed by Rabobank, has announced this week that it is to hand in its banking licence.
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Edited by Julian Isherwood