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1 Changing strategy Lars Mørch CEO, Danske Bank Sweden 24 April 2012.

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Presentation on theme: "1 Changing strategy Lars Mørch CEO, Danske Bank Sweden 24 April 2012."— Presentation transcript:

1 1 Changing strategy Lars Mørch CEO, Danske Bank Sweden 24 April 2012

2 2 Content Change Management Our bank and position – at a glance The environment – macro and competitors Our strategy 2010 – Status – hard and soft Lessons learned

3 3 History Founded by a bishop in 1837 – accelerated by Danske Bank in 1997 Selected milestones 1837Östgöta Enskilda Bank founded by bishop Johan Jacob Hedrén 1920Office in Stockholm 1994Acquisition of Bohusbanken in Gothenburg and opening of the first provincial banks in Halmstad, Örebro and Karlstad 1997Östgöta Enskilda is acquired by Danske Bank Utilising the idea of provincial banks with high level of decision power and local “boards” as a differentiator 2004HQ moved to Stockholm 2011Full-service bank with a solid platform Single brand - All provincial banks rebranded to Danske Bank Our bank and position – at a glance

4 4 Why do we change? The world is changing Weak and uncertain economc recovery New regulations Customer behavior is changing Big potential Improve profitability Improve the way we work Growing with improved business mix Our bank and position – at a glance

5 5 History and positioning Stronger and weaker = different and new possibilities Situation Pre crisis - GROWTH Strong growth Vision: “Double the bank” Branch mangers: “The power hub” Top customer satisfaction and most satisfied employees Low profitability and business mix not in balance During crisis - ADJUSTMENT Bottom-up model ineffective Declining employee and customer satisfaction (08 and 09) Reduced lending (SEK 255 bn to SEK 228 bn) Profitability in line with competitors Lending volumes (SEKbn) C/I ratio: 2007-2011 2008200920112010 Danske Bank Sweden incl CIB Our bank and position – at a glance

6 6 History and positioning Stronger and weaker = different and new possibilities Situation Pre crisis - GROWTH Strong growth Vision: “Double the bank” Branch mangers: “The power hub” Top customer satisfaction and most satisfied employees Low profitability and business mix not in balance During crisis - ADJUSTMENT Bottom-up model ineffective Declining employee and customer satisfaction (08 and 09) Reduced lending (SEK 255 bn to SEK 228 bn) Profitability in line with competitors Post crisis - DEVELOPMENT Better financial results than ever – also on a comparative basis More customers, higher volumes than prior to crisis (2007) High customer satisfaction in priority segments Stronger platform than ever (branding, product and integration) Funding limits possibilities Less attractive “contract” for some employees and customers than before crisis: Less local “freedom” on some matters, e.g. price and processes. However, no loss of key people and EOS again significantly above industry Lending volumes (SEKbn) C/I ratio: 2007-2011 2008200920112010 Danske Bank Sweden incl CIB Our bank and position – at a glance

7 7 MediaLending to the public, 1998-2011 (SEK bn) Lending – 4 banks with 76% market share Competitive landscape Many banks, four dominate and only one full scale challenger Deposits – 4 banks with 74% market share Swedbank and SEB in serious trouble during 2008-2009. However, criticism has almost totally disappeared during 2010 Nordea now being heavily criticised for ROE target (15%) Late 2011 banks again heavily criticised: “greedy” Source: SCB 24%16%22%14%6%20% Other 20%18%20%16%5%21% Other 199820022006 2011 The environment – macro and competitors

8 8 Other competitors – market share of 20% (lending) and 21 % (deposits) Competitive landscape Successful “new” entrants – agile and popular, but with limitations Selected “international” competitors 244 129 Selected local competitors Lending SEK bn Deposits SEK bn The environment – macro and competitors

9 9 Some key challenges Addressed in 2010 strategy Lending/deposit ratio – challenge for Swedish banks Customer satisfaction advantage continuously eaten up Allocated capital and economic profit per segment BASE Portfolio can tilt towards real estate – easily Relative to peers – 3-year moving average (SKI) Utilised volumes, excluding LCC, as of 31 December 2010 SEKbn SHB DBSE Swedb Nordea UniCredit SEB Santander Commerzb RBS Barclays BNP Deutsche HSBC UBS Credit S Funding, cost and availability Our strategy 2010 -

10 10 Three imperatives in 2010-2014 strategy Implementation in progress Getting the result up Change in key focus: From quantity to quality On credits On customer service Rewire the platform to enable new growth and improved results New attractive and efficient customer service concepts tailored for most attractive (bigger and stronger) customers – build on group platform New vision – “number one for our customers” (=cross selling and customer satisfaction) Rebrand for efficiency in multichannel setup and attractiveness for “right customers” Clear premium brand positioning Organisational model: customer perspective and channel integration Improved funding position Value proposition Customer sizeLow segments High segments Premium Potential to position ourselves as a premium bank and to focus our marketing efforts etc on the higher value segment Basic Customer and value dimensions Our strategy 2010 -

11 11 Vision: Number 1 for our customers Goal: Balanced growth Strategy: Targeted customer concepts Position: Premium Bank Motto: Ambition welcome Our strategy 2010 -

12 12 A shared vision for all employees ” Nr 1” means: The Bank where our customers do most of their business The Bank that our customers like most for our customers Nr 1 ”for our customers” means Existing customers Customers that we want How?  Our employees' expertise and commitment to our customers  The ability to do the right skills available  Commitment to deliver the small but very valuable, additional  Focus on customers who want premium quality - regardless of channel Our strategy 2010 -

13 13 Strategy implementation according to plan Vision and position set to be fully achieved by 2014 New strategy Launch Organisational change Implementation Internal launch of new Vision and Strategy Performance management optimised New customer concepts Incentive programme Slimming of branches Positioning Name change Governance Changes in management New management forums from four to two Organisational Change Shift to segment structure All positions appointed Deliveries of concepts All customer concepts implemented Vision accomplished 2009 2010 2011- 2012 2014 Visiting branches and Finance centres to gather information Establish working groups – management team at the wheel Decision on New Strategy Our strategy 2010 - Communication - Mgt Conference Communication – Road shows Communication – Management info Communication - Headlines ANALYSISSTRATEGYSTRUCTURE AND IMPLEMENTATION ACCOUNTABILIT Y

14 14 New Strategy - owned by Management - open for organisation Strategy assessment in Brand Ex Co Intensive meeting schedule (branches, shared entities etc) Road show Our strategy 2010 - Nr 1 for our customers _________ _ Premium position

15 15 Launch Approved by Advisory Board (May 2010) Communicated at Management Conference (Sep 2010) Strategy Book Road Show First implications Our strategy 2010 -

16 16 Private Banking Jonas Predikaka Head of Global Sales, SEB PB CIB Joacim Nässén Head of Large Corporates, SHB Organisational change - People, structure and implementation Danske Capital André Vatsgar Executive VP, Fokus Bank SkandiaMäklarna Liza Nyberg Managing Director, Emric AB Danske Markets Berit Behring Head of Regional Sales, DM SE Communications Heléne Wernstedt Partner, Kreab Gavin Anderson Russell Reynolds: “The recent hires have significantly strengthened the management team, bringing a fresh perspective, new competences and a high level of professionalism.” Our strategy 2010 -

17 17 Operations Johan Löfgren * Two Management Teams: ** Country Management: All Heads of Danske Bank Business entitles and Heads of Resource and control areas * Executive Management: Executive management team of the retail bank CEO Lars Mørch** Business Banking Ann Krumlinde** Stf Anders Rex** Private Banking Jonas Predikaka** Group Functions Business Development Lars Sjögren ** Personal Banking Branches Personal Banking Liza Nyberg ** Contact Centers Customer Service Business Banking Branches Finance Center Mid Market Danske Direct Business Danske Markets* CIB* Danica* Danske Capital* SkandiaMäklarna Internal Audit (vacant) Wealth Management Private Banking on Finance Center Danske Direct Personal Danske Bocenter Finance Carina Jahn** Credits Jan Enmark** Legal Arne Peterson* Communication Heléne Wernstedt* HR Ing-Marie Frithiof* Other units Organisation, 1 January 2012 Our strategy 2010 -

18 18 Raising awareness and profile Our strategy 2010 -

19 19 Implementation - project in place Customer concept Results etc Vision accomplished Our strategy 2010 -

20 20 Branches and Finance centres Profit and employees Volumes 3,267 1,332 SEKbn SEKm/# 1 2 1. Including parent company Östgöta Enskilda Bank and subsidiaries Consensus Fondkommission AB and Östgöta Enskilda Fastighetsbolag AB 2. Danske Bank A/S, Danmark, Sweden branch (Retail, CIB and Danske Markets). 1996 2011 History and development Rapid growth, now earning more than the acquisition price once a year (#) # Status– hard and soft

21 21 Better, relative to peers than ever (Banking Activities Sweden) RoE*Deposits/Lending 2011 (average) Profit before credit losses index 2011/ 2008C/I - 2011 * Profit after credit losses/risk-weighted, Basel I *8% RoE* - Q1-Q2 2011 Status– hard and soft Source: Company data, BASE+CIB

22 22 Cross sales – Business advisory Increased cross sales on corporate and personal customers Cash Management penetration key to cross sales Cross sales – Personal advisory VIP/Premium VIP/Premium/Favör Status– hard and soft

23 23 Customer development – Business advisory 1 Customer development – positive trend Lost corporate customers mainly in commercial property business Customer development – Personal advisory 2 +3,000 business customers since Q4 2008 3 +8,000 personal customers since Q4 2008 4 1. VIP(49) and Kärn (39). 2. VIP (03) and Premium (09). 3. All business customers. 4. All personal customers. 2009 2011 2010 2009 2011 2010 Status– hard and soft

24 24 Business advisory 1 Customer satisfaction Only bank to improve on both corporate and personal (Swedish Quality Index) Personal – all customers 1. VIP(49) and Kärn (39). Internal surveys. Greenwich Midcorp 1. SEB 2. Danske 3. Nordea 4. Handelsbanken 5. Swedbank Swedish Quality Index 2 nd place in 2011 (-with margin) Private Banking Mystery shopping 2010: 9/9 2011: 4/9 (Nordea only large bank ahead) Swedish Quality Index 2 nd place in 2011 (-just) Status– hard and soft Relative to peers: Improved customer service and image. Satisfaction with prices develops negatively.

25 25 Our people: highly educated, loyal and happy by local standards... DBSE 2011Industry Satisfaction and motivation73+5 Loyalty79+4 Image77+1 Immediate superior78+7 Senior management73+6 Cooperation82+4 Daily work77+4 Remuneration690 Development70+6 Churn rate5.4% Main Score Explanatory factors 54% with academic degree – 38% women in management Status– hard and soft

26 26 Lessons learned Communication is key for success Enough time Find ambassadors Background analysis is crucial Communication is key for success Recurring information to staff Think ahead and plan stages - not all can be done at the same time Find ambassadors in the organisation

27 27

28 28 Deliveries and must wins DeliveriesEssential releases Regularly meetings are held to discuss different solutions Suggestions on solutions must always be approved by the Sponsors Deliveries are made monthly to gather all information from the projects to facilitate for the receivers (account managers) Communication is responsible for all information regarding deliveries in the projects Role descriptions, staffing and education are the corner stones for adapting the new way of working It is central to build a platform for solutions required from all or several sub projects. Cooperation agreement between concept and special & business supporting units. Accomplish the transfer of customers – start with customers to the Direct concepts. Focus Role descriptions and staffing Platform for business process – first up is Premium Banking Cooperation agreements – first up is Mid Market Packaging of products – first up is Premium Banking

29 29 Many benefits has already been seen, with expectation on more to come We see A strengthened management team A flatter organisation A clearer focus on implementation of customer concepts A clearer structure - one bank Less bureaucracy – from 4 to 2 management forums All staff functions to be shared Resulting in Quicker time to market Improved customer satisfaction Enhanced platform to attract new customers Increasing profit in all segments


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