Nordea Seeks New CEO to Put Revenue Drive Into a Higher Gear

(Bloomberg) -- Beset by years of a lackluster results, Nordea Bank Abp is switching out its chief executive officer to find new momentum in its search of top-line growth.

The biggest Nordic bank announced on Sunday that Casper von Koskull, 58, will retire by the end of next year, and could step aside even sooner as the search for a successor has started. The stock rose as much as 2.1% in the first hours of trading in Stockholm.

The person ultimately responsible for that search, Chairman Torbjorn Magnusson, said that the new CEO will need refocus the bank on customers to generate the expected revenue growth.

The Nordea that delivers is “a more offensive bank, it's a bank that takes market share and increases profitability,” said Magnusson, who took over in March, picked from the ranks of Nordea's main owner, Sampo Oyj.

Even so, he downplayed those expectations. “I don't expect dramatic, quick growth,” he said in an interview Sunday. “I expect us to change to some growth.”

Nordea investors have been putting pressure on management to deliver more than just cost cuts. Under von Koskull's 3 1/2-year watch, Nordea shed riskier businesses and responded to mounting regulation by simplifying its organization and moving its headquarters inside the European banking union. It also invested in money laundering controls.

Analysts also agree. The bank needs to regain market share in key areas such as retail and corporate banking, said Antti Saari, an analyst at OP Group in Helsinki.

“The main thing to resolve is how to find growth momentum,” Saari said on Sunday by phone. “Income has been falling for several years and that has to be stopped.”

What Bloomberg Intelligence Says:

“Cutting promised payouts until revenue and profit visibility improve will top the agenda of Nordea's next CEO, in our view.”
- Philip Richards, senior analyst and Georgi Gunchev, industry analyst, click here to read the research

Bringing in a new CEO “is one way to get the focus back on customer work and away from internal reorganization,” Saari said. “This year, we've already seen some early positive signs, for example in retail banking, that the market share begins to stabilize.”

External Pick

Nordea is likely to settle on an outside candidate since there's “no one obvious within the bank,” Saari said.

There's no shortlist yet, and the bank is looking both externally and internally to find a customer-focused person able to lead large organizations and communicate effectively, Magnusson said.

“Modern technology is such a big part of a bank that he or she will have some sort of experience of how to use modern technology in banking distribution,” Magnusson said.

Von Koskull, who turns 60 in September 2020, had originally intended to retire at that age, and made the decision on Sunday morning after consulting with the board, Magnusson said. Nordea cited speculation in the market as a reason for announcing his retirement.

“There's been speculation in the market for so long that they probably wanted to clear up the situation,” Saari said. “I don't think this will drag on anywhere near the end of next year. They're likely to do the handover as soon as the successor is able to start.”

Last week, Nordea was eclipsed as the biggest Nordic bank by Norway's DNB ASA in market value, after its shares lost more than 40% since a 2017 high. Nordea remains the biggest bank in the region by revenue.

DNB Eclipses Nordea as the Most Valued Bank of the Nordic Region

Von Koskull's departure will add to the wave of top-level switches at banks in the region. Danske Bank A/S, DNB and Svenska Handelsbanken AB all named new CEOs this year, while Swedbank AB is searching for a new top boss.

“Nordea needs to become the modern Nordic bank for all Nordic citizens and companies, and be that in the minds of all these citizens and companies, and I don't think that we're quite there yet,” Magnusson said. “That's the challenge for the new CEO.''

To contact the reporter on this story: Kati Pohjanpalo in Helsinki at kpohjanpalo@bloomberg.net

To contact the editor responsible for this story: Jonas Bergman at jbergman@bloomberg.net

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