Danske bank, Denmark’s largest bank and the second-biggest financial group in Northern Europe by assets, announced that is planning to scale down its business in the Baltic states, opting to focus on subsidiaries of Nordic customers and global corporates with significant presence in the Nordics.
Exit from serving local companies and individuals will be implemented gradually while existing day-to-day private banking and business products will continue to be supported until further notice. "Our exit from the local business and private banking sector will occur gradually," the bank said in a press release. "This means that we will no longer open accounts for new local clients."
"The decision is a strategic one based on our overall ambition of focusing on customers in the Nordic region. Therefore, we continue to align business activities in the Baltics accordingly. This way we can deliver most value to our customers operating in the Nordics through expertise and global services and solutions," said Frederik Bjorn, Executive Vice president, Business Banking, International.
"The decision will, of course, affect our business volumes in the Baltic countries, however, we will take a consistent approach in all three countries, and we will continue to serve our local customers for some time as well as ensure that all our current obligations are fulfilled," he added.
The bank also said that from now on, it will no logner publish its economic results for the Baltic countries separately. The financial performance of the Baltic branches will be consolidated into the banking group’s financial reports.
The decision to reposition business activities in the Baltic countries will have no consequences for the Group’s shared service centres - Danske Group IT Lithuania and Global Services Lithuania. Danske Bank's Global Services Center set up in 2012 in Vilnius, handles financial transactions and provides non-banking services to the group.
Danske Bank's IT services center, opened in the Lithuanian capital in 2014, develops and supports electronic financing solutions for the bank's customers. The two centers employ about 2,000 IT professionals.
Last year, Danske Bank was the employer that created the biggest number of new jobs in Lithuania, and the branch of the Danish company intends to maintain a similar growth rate this year according to Rosita Vasilkevičiūtė, head of the Global Services Centre.
Vasilkevičiūtė, told Invest Lithuania that the branch of Denmark’s Danske Bank in Lithuania increased last year from 2,011 to 2,500 people. According to Danske Bank estimates, in 2017 it hired two new employees almost on a daily basis, and this year the rate should be similar – the branch intends to hire approximately 400 new employees.
Over the last 3 years Danske Bank Global Services Lithuania and Group IT Lithuania have won a number of prestigious local and international awards:
- Employer of the Year (2017), Best SSC in the Baltics (2017)
- Most unique services provider in CEE (2017)
- Investor of the year (2016), Best Employer among Shared Service Centres in CEE (2016)
- Best Office in the Baltic States (2015).
Danske's reputation in the Baltic states especially in Estonia, was hit by money-laundering scandals that involved billions of Danish krona, Danish newspaper Berlingske reported. The move to exit the Baltic market is not a reaction to the ongoing investigations by the Estonian Financial Services Authorities and others, but part of the bank’s overall strategy, Chief executive Thomas Borgen (pictured) told broadcaster TV2 News.
Founded in 1871 and headquartered in Copenhagen, Danske is the largest bank in Denmark. The Danske Bank branches in Baltic states (Estonia, Latvia and Lithuania) began operating in 2008 after Finnish Sampo Bank was acquired by Danske Bank Group in 2007 for €4.05 billion. Danske Bank in 2016 divested its retail banking business in the Baltic countries, selling its operations in Lithuania and Latvia to the Swedbank Group.
Danske Bank started 2018 with a stable financial performance, posting a net profit of DKK 4.9 billion in the first quarter, against DKK 5.5 billion in the first quarter of 2017. The return on shareholders’ equity after tax was 12.6%, against 14.4% in the first quarter of 2017, when trading income was strong. The bank expects net profit for the year to be in the range of DKK 18-20 billion.