Danske Bank Fires Star Executive Who Overcharged Retail Clients
Danske Fires Ex-Interim CEO Nielsen Due to Overcharging
(Bloomberg) -- Denmark’s biggest bank, already struggling to recover from a money-laundering scandal, fired the man who until last month was interim CEO because some clients paid too much for an investment product.
Danske Bank A/S said Monday that it had dismissed Jesper Nielsen, head of banking in Denmark, after it emerged that tens of thousands of domestic customers were improperly charged. The lender now owes them a total of 400 million kroner ($61 million) in compensation.
Nielsen, 50, ran the bank as interim CEO following the $230 billion dirty-money debacle and was tipped as a potential permanent leader before Danske picked Chris Vogelzang, a former ABN Amro banker, for the top job. The bank’s shares have plunged 60% since early 2018, as the laundering affair unfolded, and fell as much as 2.7% after Monday’s announcement.
Nielsen “did not to a sufficient degree ensure that the Flexinvest Fri product was suitable for the bank’s customers,” Chairman Karsten Dybvad said in a statement. “Therefore, we find that Jesper cannot continue in his position.”
Danske fired CEO Thomas Borgen in October over the laundering scandal and Nielsen had acted as interim CEO until June. Nielsen, a Danish national, had been with Danske since 1996.
Vogelzang apologized to clients in a statement. “Misguided management decisions” meant that Danske didn’t give customers “proper advice,” he said. “We will take all the steps necessary to prevent something similar from happening again in future.”
Danske said that 87,000 customers were overcharged during the implementation of new MiFID II regulation in 2017. The bank said the fees were too high compared with expected returns in a low-interest environment, making the product “unsuitable for some customers.”
What Bloomberg Intelligence Says:“At just 2% of pretax profit Danske Bank’s financial hit is low from a $60 million writeoff to compensate customers overcharged for Flexinvest Fri products, but reputational damage and customer flight may prove costlier. The dismissal of former interim CEO Jesper Nielsen is more bad publicity following the alleged $230 billion money-laundering scandal.” |
While Danske searches for a replacement for Nielsen, Glenn Soederholm, who’s head of banking in the other four Nordic countries, will take over the Danish banking division.
Danske said it had informed the Danish Financial Supervisory Authority, which is looking into the matter. “We expect to receive justified and severe criticism from the FSA,” Danske said.
Danske said it was made aware of the issue through an employee’s report in September. The lender was criticized for not taking internal whistle-blower reports seriously during the nine years through 2015, when its Baltic operations were allegedly used to launder Russian money.
To contact the reporter on this story: Christian Wienberg in Copenhagen at cwienberg@bloomberg.net
To contact the editors responsible for this story: Tasneem Hanfi Brögger at tbrogger@bloomberg.net, Nick Rigillo
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