Nordea Bank cuts 6,000 jobs in digital bet

Banks can watch and learn after 6,000 jobs cuts, says Nordea Bank owner

One week after Nordea Bank AB said it will cut 6,000 jobs in a digital bet, a key investor says the rest of the industry would do well to watch and learn.

Sampo Oyj, Nordea’s biggest owner with about one-fifth of its stock, says digital adequacy is overtaking capital adequacy as a top consideration for investors.

“In the Nordics, it’s a race against time more than against capital,” Sampo Chief Executive Officer Kari Stadigh said in an interview on Thursday. “Those who started early on, and do it in a more determined-enough way, they are going to get the clear distinction” and “also client satisfaction”, he said.

The transition is not cheap and Nordea suffered a market thrashing the day it announced its job cuts, and the associated transition costs. Stadigh, speaking on an investor call, said the selloff reflected a misunderstanding in the market of how Nordea is handling the costs. He also said Nordea could have communicated the transition a bit better.

The investment into becoming a digital bank will drive scale benefits, Stadigh said, and that in turn pushes down unit costs.

“Only high profitability allows you to do these investments,” Stadigh said. “We’re going to see a big discrepancy, for instance, between central European banks and Nordic banks, because the central European banks can’t afford to do these investments.”

Nordea is not alone cutting jobs to make room for robots. National Australia Bank Ltd. said this month it will cut 4,000 jobs in the face of technological advances.
[Bloomberg]

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