Nordea has named Torbjorn Magnusson as its next chairman, replacing seven-year incumbent Bjorn Wahlroos, a day after activist investor Cevian Capital criticised the profits of the Nordic region’s biggest bank for being “way too low”.
Mr Magnusson, who is also due to become chief executive of Nordea’s biggest shareholder Sampo, will take over next month at the bank’s annual general meeting, replacing 66-year-old Mr Wahlroos, who has led the board since 2011. Mr Magnusson himself joined Nordea’s board last year.
The Scandinavian bank on Wednesday posted a disappointing set of quarterly results, with profits falling 21 per cent, which prompted its chief executive Casper von Koskull to promise deeper cost cuts and to accelerate a programme to axe 6,000 jobs. Revenue has declined every year since 2015 while expenses have been slower to come down.
Helsinki-based Nordea has also faced sharp regulatory criticism of its lax money-laundering controls. Cevian also previously owned a stake in Denmark’s Danske Bank, which has been caught up in a €200bn money-laundering scandal.
In December, Cevian Capital, Europe’s largest activist investor, revealed a 2.3 per cent stake in the lender, urging it to speed up cost cuts, improve its technology and catch up with local rivals on profitability. Cevian also sought a seat on the nomination board that chooses directors.
On Wednesday Christer Gardell, co-founder of Cevian, told reporters the bank’s performance was not good enough, profit was “way too low” and the bank needed to “significantly step up” its efforts to improve performance before he would be happy.
Next year Mr Magnusson will also become chief and president of Nordic insurance and financial holding group Sampo, which is the largest shareholder in Nordea. He is the former chief executive of Nordic property and casualty insurer If, which is owned by Sampo.
Investors welcomed the change in Nordea’s chairman. “He’s a really good guy, did an impressive job at If taking it from being a laggard to being one of the best-run insurers in Europe,” a person close to Cevian said of the new chairman. “He’s a no BS guy, understands what’s important and gets it done. We fully support him.”
Shares in Nordea fell by almost a third last year, but the stock has started to recover this year, rising slightly on Thursday after the chairman news broke. Citigroup analysts said after the poor fourth-quarter results they expected “low to mid single-digit” cuts to 2019 estimated earnings “due to the ongoing challenging revenue environment”.
Cevian’s Mr Gardell told the Financial Times in December that he believed the bank was the “standout” investment in the region, especially because it traded at a discount of 30 per cent to peers due to its lower profitability. Cevian previously owned a stake in Danske, which it sold for a healthy profit more than a year ago.
The activist investor is pushing Nordea to cut its annuamenal costs to SKr4.4bn ($476m) by 2021 from its current target of SKr4.8bn and to aim for SKr4bn by 2023. The activist has previously shaken up companies such as ABB and Thyssenkrupp.
* This story has been amended to clarify that Cevian previously owned a stake in Danske
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