New Nordea CEO to focus on compliance and simplification

Nordea Bank has appointed Casper von Koskull new president and Group CEO and Torsten Hagen Jørgensen new Group COO and deputy Group CEO

Nordea Bank has confirmed the appointment as its new CEO of Casper von Koskull, who has been head of wholesale banking since 2010.

He will take over in November from Christian Clausen, who has been head of the Nordea – the largest financial services company in the Nordic and Baltic region – for the past eight years.

In the immediate aftermath of the news, chairman Björn Wahlroos was at pains to scotch rumours that Clausen had been ousted after a fine imposed in May by Finansinspektionen, the Swedish financial supervisory authority, over deficient anti-money laundering requirements.

This was a rare setback for the highly rated Nordea Group, but the fine amounted to just SEK50 million (€5.4 million) and Clausen’s good standing with the board seems to be confirmed by news he will stay on at the bank in an advisory role until retiring at the end of 2016.

In addition, he has accepted a nomination on to the board of Sampo, Nordea’s main shareholder.

Von Koskull, who joined Nordea after a long career in investment banking as managing director and partner at Goldman Sachs, talks of overseeing as CEO a “crucial focus on compliance” as well as “on simplification of our processes, cooperating as one Nordea team with our colleagues across the bank”.

The Nordic banks have become a byword as the success stories of European banking and Nordea is a leader within the region. In its first-half results, the bank showed a 16% common equity tier-1 ratio and still managed to deliver a return on equity of 13.7%.

It is in the middle of an effort to drive down the cost income ratio – now at 45.3% down from 50.8% at the start of 2013 – and is also constraining risk exposures, with loan losses at their lowest level since the third quarter of 2008.

Investors like the fact that fee income from asset management – Nordea is the largest asset manager in the Nordic region – complements net interest income off high-quality assets across a diversified business.

“I do sometimes wonder, given the sheer safety of Nordea and indeed the other Nordic banks, why they still trade on dividend yields of around 6%,” one analyst tells Euromoney. “One would think the equity market would attribute a stronger premium to that kind of performance.”

Credit rating analysts agree. Moody’s, for example, rates the bank Aa3, one of its highest ratings on any European bank, citing the one proviso of concern over Nordea’s relatively high dependence on wholesale funding.

What can investors, customers and employees expect at the bank under Von Koskull? They might find some clues in his discussions with Euromoney in December 2012 about restructuring the wholesale business.

“Nordea is very disciplined to allocate capital where it meets a return requirement rather than to grow market share,” Von Koskull told Euromoney. “And this customer relationship-driven strategy that every bank is now talking about, that is one Nordea has followed ever since its merger.

“But we do look very closely at our cross-selling ratios and at non-interest income as a proportion of client revenues. Providing loans is at the core of the customer relationship, particularly trade finance loans that enable customers to sell their products and services.”

He added: “And we have other sticky products like cash management. But also the risk management business and FICC, even though its capital consumption has gone up markedly, is very important and makes us relevant to clients. And it provides good returns.

“If you go back to before the crisis, even then all our FICC business was client driven, and since the crisis our FICC revenues have doubled, thanks to our client focus and partly thanks to higher volumes when some banks simply pulled out, and we kept a strong rating.”

Unashamed champion

Von Koskull’s task will be to continue efforts to make the disparate parts of Nordea, which was formed by a series of mergers from 1997 to 2000, work better together. He might talk of simplifying processes, but Von Koskull is an unashamed champion of the universal banking model.

“I do not believe that specialists will replace universal banks,” he said. “Our objective is to be as good, or better, than the specialists in each product and service. Having a universal bank that understands you, takes a holistic view and provides competitive products makes life easier for clients.

“If you completely unbundle financial services into specialist providers, then the pricing for everything will have to go up, possibly very significantly.”