Nordea Switches Chairman as Bank Is Criticized for Weak Profits

(Bloomberg) -- Bjorn Wahlroos, the 66-year-old chairman of Nordea Bank Abp and one of the Nordic finance industry’s most outspoken personalities, is stepping down.

After chairing the board of the biggest Nordic bank for more than seven years, Wahlroos made his decision known on Thursday. The Swedish-speaking Finn oversaw Nordea’s dramatic shift toward automation, drastic cost cuts and a decision to move its headquarters into the euro zone. He will step down at the annual general meeting next month.

Wahlroos will be replaced by Torbjorn Magnusson, who has been chief executive officer of the biggest Nordic property and casualty insurer If.

Magnusson will also replace retiring Kari Stadigh to become CEO of Sampo Oyj, which is Nordea’s biggest shareholder and which owns If. Magnusson joined Nordea’s board last year.

“It appears that Sampo is making these changes to accelerate the pace at Nordea,” said Sauli Vilen, an analyst at Inderes in Helsinki, where Nordea is based. “A new chairman can have new ideas, and in that sense this is a logical move.’’

The announcement comes a day after Nordea published fourth-quarter results that drew criticism from activist investor Cevian Capital, whose co-founder Christer Gardell said the bank’s profits were “way too low.”

Nordea saw a drop in both revenue and profit at the end of last year, as the bank pushes ahead with a stringent program of cost cuts that includes axing 6,000 jobs.

Cevian holds about 2.3 percent in Nordea, while Sampo owns just over a fifth of the bank. “Sampo is the driver of this car and Cevian gets to sit on the passenger seat,” Vilen said.

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Magnusson said that the “foundations are in place for a new phase” in Nordea’s development. Shares in the bank rose more than 1 percent after Thursday’s announcement about the change in chairman. The Bloomberg index for European financial stocks was little changed.

Wahlroos has been the chairman of Nordea since 2011. He first joined the board in 2008, after Sampo built a sizable stake in the bank with the proceeds it got from selling its Sampo Bank unit to Danske Bank A/S in 2007. That deal famously exploded in Danske’s face last year when it emerged that a small Estonian branch that was included in the transaction became a hub for suspicious flows in Europe. Danske is now the target of multiple criminal investigations. Wahlroos has insisted that Sampo is blameless.

Since Wahlroos became chairman, Nordea’s shares have underperformed Swedish peers Swedbank AB, SEB AB and Svenska Handelsbanken AB, with an increase of only 21 percent. The benchmark Swedish OMX Stockholm 30 index of the country’s 30 most traded stocks is up 38 percent in that period.

Magnusson will be overseeing a bank whose total operating income has declined every year since 2015. As a result, the ratio of costs to income has actually gone up to its highest level since 2011, despite Nordea’s focus on cutting expenditures. The biggest Nordic bank lags behind its peers in Sweden, also when it comes to cost efficiency and return on equity.

Meanwhile, Nordea has ranked lower than most of its peers when it comes to customer satisfaction. The bank lost market share in Sweden and Denmark in the fourth quarter.

Wahlroos is known for being an outspoken titan of the financial industry in the Nordic region. One of his most notorious comments was made back in 2015, when he reportedly remarked that “roughly 80 percent of people are idiots” when it comes to money. “The financial industry is about shifting money from the 80 percent without ideas to the 20 percent of people who actually have ideas. The financial industry is a tunnel that channels money from idiots to people who are better with money.”

To contact the reporters on this story: Niklas Magnusson in Stockholm at nmagnusson1@bloomberg.net;Kati Pohjanpalo in Helsinki at kpohjanpalo@bloomberg.net

To contact the editor responsible for this story: Tasneem Hanfi Brögger at tbrogger@bloomberg.net

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